Do you think the barter system could work in today's world?

Question

When I learned about the barter system in school, I remember wondering why we stopped using it and began using money. I have always thought that having the barter system would be a good thing, because then everyone would have to have something to contribute in order to get by (no free-loaders, or at least that's what I'm thinking). What are your thoughts about this? Do you think the barter system could work in our modern societies?

Answer 1

The barter system works every day in our world. People, somewhere, even in the United States barters video games for video games, or fresh produce, it's just small-scale.

The creation of money, like an earlier poster said, relates the value of all goods to a single numerical amount of money. The problem with the barter system is that the demand of goods fluctuates greatly, but the value of money stays much more constant.  Finding a market equilibrium, or barter point for 2 goods without money involved is like hunting ducks from a moving vehicle. The ducks are moving, and the truck you're on is moving. You have to worry about two different things.

With money, however, you're hunting from your bunker. You dont have to worry about the value of anything except what you're buying. The money takes care of itself.

Answer 2

No, a modern society cannot properly run on barter for several reasons. One of them is that the fact that there are several persons whose contributions are not "tangible". For instance, I am an analyst and my work is to provide analysis and recommendations to the board of directors of the electricity generation company I work for. What would they give me in exchange: some of the lectricity I help to generate? Ok, but then how do I change that for the hundreds of things that I need or want: food, clothes, education for my kids, gasoline... It would be a knightmare. The use of money is simply a much easier solution.

Even if you produce tangible goods. Say you make shoes. Are you taking your load of shoes everytime you go to the market? How many shoes is worth a glass of Coke? Will people take your shoes for their goods? Think about it, barter only works in really simply economical systems.

Answer 3

Only on a local level... money makes our financial transactions easier... the concept of credit and immaterial wealth makes it easier still...

Answer 4

Suppose you have two goats, and your neighbor has a bicycle.

You want to give him a goat for his bicycle, but...

-He thinks a bicycle is worth more than one goat. You think it's worth less than two goats, but maybe more than one goat...but all you have is whole goats. So, the deal is no good.

Or

-He already has five goats, and doesn't need any more. You, on the other hand, only have goats to offer. So, the deal is no good.

That's an illustration of the problems involved in the barter system. It's very limiting in terms of the trades that can be made because you're forced to deal with items that aren't universally useful and, frequently, aren't easily divisible.

Money solves that problem; by having a universal means of exchange, many more and varied trades can take place.

Barter is also insufficient for the modern economy.

Consider an engineer and a project manager. The engineer develops technology for an organization, and the project manager organizes the projects of the organization. Both perform useful tasks, and both are necessary for modern life. But neither of them produces anything physical, and so neither has anything to offer in a barter system.

Barter rarely works in a large scale, and is of limited usefulness even in a small scale. It can work from time to time, but it's a totally insufficient solution for a large economy of any kind, much less the economy of a large and technologically advanced civilization.

Answer 5

No, it would not work on a large scale.  There's a lot of kooks who do it, or at least say they do.  Check out the magazine, The Mother Earth News.  Full of back-woodsie simpleton types who live off the land and eat cow p**p or something.

Answer 6

It already exists on a small scale, even in Western society.  I think that if the economy continues to spiral downwards out of control, that actual money will become more useless.  Actual services and products will have more value than the paper and coins.  I think that bartering will become much more commonplace and work fairly well for society.  We'll see it more and more.  It probably won't work on a large scale, as in businesses and such, but people will have to adapt to the problem of an axsphyxiated economy and will end up using bartering on a personal level alot.  

Today, I picked some of my neighbor's cucumbers, of which he has WAY too many.  In exchange, he'll receive some of the pickles I'll make, I'll help him in his garden (he's elderly), and we both get something out of the exchange.  Last week I traded baby-sitting for house cleaning.  The only limit to the possibilities is what we perceive as a limit.

Answer 7

It would be impossible.  Try paying for your books at amazon.com by bartering 12 sheep or 2 watches.  Trade is very difficult in the realm of exchanging goods for goods. That is the whole reason money exists in the first place.

Money is nothing more a tool to facilitate trade. because bartering has serious draw backs.

Answer 8

Our society is way to pro money and capitalism for bartering to happen again. We're all used to using worthless paper to settle our debts rather then trade goods that are actually of value. Money is so much easier and more convenient, that's why we use it. Now we have to worry about inflation and the weakening of the dollar.