Bitcoin Forum

In what situations is a barter economy better than a monetary economy?

Barter economy is only good if you live in a secluded-from-the-world economy. If you are part of the capitalistic global system you are instantly rendered out of business. Few communities have everything they need without needing export/import to other places. I cant actually think of a single one that does barter economy and has a decent life quality.

In a situation where confidence of the monetary system has severely diminished or non-existent. A barter economy will exist when there's little established government...when we start to see a barter economy we'll be in a very bad place. Then the people that survive will "enjoy" the new world.

A zombie apocalypse or a situation of complete isolation from the rest of the world except your surroundings. Assuming there is a tsunami and all shops are destroyed, all the money is gone and there has already been a lot of damage to life and property. People usually provide services and take duties in exchange of other work and that is an example of barter system. For example, men go and clean streets and re-build the place while all women cook together and serve to the whole neighborhood. People exchange goods with each other for use too.

in the used market it work best especially with things that has a low value, it's also more practical and you can get rid of fiat in some cases

it work especially good with things that are collectible

This.
Paper money requires a state and a complex and costly infrastructure in order to work, barter is completely cost-free.

When everyone has a robot and can produce everything he basically needs, so he don't need money to survive

It will take a lot of time reach that point. Also, you may have the robots, but no the natural resources in your country. Therefore, you will need to negotiate and do business with foreign countries to get resources that your country lacks. For example, you may live in a very cold country where you don't get any quality fruits, and countries that live in warmer places have abundant high quality tropical foods. You would need to negotiate with them and I don't think barter will be better than cryptocurrency.

Every successful currency needs to be supported by users, and the users will access their currency once their is a system which manages and renders this currency and provide benefit. If there is no way to transfer bitcoins or mine it, then why will people use bitcoin, the same goes for fiat currency too. If there is no paper to exchange, there will be regulations and problems with unit of value, durability, portability, etc.

There are markets in which price is not the primary clearing mechanism. They are called matching markets. One example is kidney donation. Selling a kidney for money is illegal in most countries, so there must be some other mechanism for matching donors and recipients.

Barter economy is free of usury.

How about sharecropping? You can borrow my land, but you have to give me half of your crops.

Barter economy is pretty good for food. For example, trading fruit for spice herbs (or cannabis) / vegetables for dried beef. There's less of a reliance on "double coincidence of wants" that stifles most barter economies since people in general enjoy a wide variety of food.

I think we conquered this idea a long time ago. Move forwards not backwards guys

This. It's absolutely nonsense to consider barter economy again. There isn't a single thing that's better about barter economy than monetary economy. We just didn't had no other options back then but bartering, until we came up with the idea of money.

And now everybody is so tired of the concept of money, they start considering ways like barter system? wow, humans are evolving backwards. We have a technology that is completely digital, defeats the purpose of carrying around money and letting banks steal it from us legally, something which helps us not overpay for simple services like transactions, something which empowers and represents us. Its called Bitcoin, and people ask questions about how barter could be useful. Dayum.

The barter economy is better when there is no greedy and bad people. They will take the advantage of this situation by scamming their 'buyer' with the stuff that have lower value than the stuff from the 'buyer'. It sounds impossible to be realized, and thats why the barter economy isnt suitable for the world nowadays.

That's crazy. There is no situation where a barter economy is better. Even if there were some global disaster and the entire world reverted back to subsistence farming, money would be a major benefit.

If you have a job at McDonald's, how will you be paid? In Big Mac's? If you are getting a degree, how would you pay for it? Think about your life now. How would you pay for anything in a barter economy?

Sorry professor, but I think you should quoted my whole comment  ::)

I hope I dont work there

Yes I have

PS: The barter economy is better when you get stuff with higher value than what you give. Have you heard about American Barter Exchange? Take a look here http://americanbarter.com and you may give your opinion there. Good luck.

That's a stupid thing to say. The only reason he did not quote your full comment was because it was as irrelevant as your existence. As far as knowledge goes, you won't even get a job at Mcdonalds. Barter system was the most terrible way people handled transactions. 'The barter economy is better when you get stuff with higher value than what you give', you say. There are two parties involved in barter system, making the deal for the other person always bad as he will not be able to get stuff of equal value. That means half of the world will not get things/services at the value they deserve. Wow, terrible concept bro.

Sorry. You are right. I should have read the whole comment. I didn't read past the first part.

Hey, I just explained the example of when the barter economy is better. Let me explain you another example
You have much water in your house, and your neighbor feel very thirsty and want to get your water. Then he offer you his gold for you to barter it with your water, and you accept it. In your mind, gold has higher value than water. But, in his mind, he need the water more than gold. So it will be win-win situation right? Feel free to refute my opinion.


P.S.  I should quote the main point from my previous comment here

Why would I exchange it with gold because gold is worthless to me, as I would like television to watch movies at home rather than having gold. What will I do of a shiny object? You have failed in every aspect of giving an example because you were giving me an example of barter system but then you involved gold which made it an example of exchanging gold which was started when Kings started ruling, and then came money.

::) Yeah you can barter it with anything you want, Miracal. You can take the book, telly, bag, bike, car, even smartphone. I once heard that we could be smart with a smartphone in our hand. It sounds very suitable for you. And, do you know that the main purpose of gold is to make jewelry, not as exchanging tools?

In all situations with no exception, a barter transaction is more direct and better to all involved parties.  Unfortunately it's often slower and more involved and the lazy option is to use a monetary token and accept the loss in efficiency.   

for the umpteenth time, the ancient barter economy is a myth.

https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

https://www.youtube.com/watch?v=zSnReXI4gKk

Keep in mind that the question is about a barter economy and not a barter transaction. A barter economy is one in which there is no money.

If you have a job in a barter economy, you are going to be paid in chickens or cabbages or coal, or whatever. You will have to pay your phone bill with chickens or cabbages or coal, or whatever, though I don't believe a barter economy could even support a phone system.

Yes. When there is no money, consumable stuff will have to be your means of payment. Envision hauling a sack of potatoes downtown to pay for a haircut. Some preferred good will develop into money.

Money can disappear in hyperinflation. It happens all the time somewhere in the world. See

http://www.cato.org/publications/working-paper/world-hyperinflations (http://www.cato.org/publications/working-paper/world-hyperinflations)

Until a new money system can be established, or foreign money can be imported, it will have to be barter. It can happen in a localized area also in a war zone, the money can, locally, be of no value because food and medicines will be valuable, and noone can afford to take money in exchange.

Well you haven't thought about it very hard then.  Whether you call a particular commodity "money" is up to you.  Typically we refer to those commodities we are most likely to part with as "monies", as defined by Gresham's law.  Now can you tell us please how whether you like to call your tradeable commodities "money" or not has any influence on a phone system.  

And what will they give as salary to the people who made the smartphone? The whole point of having a currency was that every note had a value to it. The number of coins or notes we give, according to the services and products we chose in exchange of providing its value. There is no way barter is better because things couldn't be divided. The main purpose of Gold is not to make jewelry, that became a secondary purpose later. Read this: https://en.wikipedia.org/wiki/Gold_standard

Well it depends how deep you wanna go, on the surface scope is obvious difference. The core give and take principle, however, remains exactly the same in both. To answer op's question, there is no situation where one would be better than the other although the illusion of exactly that would be hard to dismiss. Changing from a monetary economy to a barter economy, the shortcomings just get more intimate and that is it.

Yes, understandable that fiat might have not been the perfect currency, making us rethink our options but that option is certainly not barter system. Barter system by far has been awarded the most biggest failure of transactions but the one system used for years and years. As people evolved and used more of their stupid brain, they realized how lame barter is. going back to barter would be dumb downing of our society, especially when we are on a forum which compliments digital transactions.

Lets take a step back. 

I want some of your apples.  You don't want to just give a few to me.  So, I look around through my bag for something to trade.  I find some old shells, you agree to a trade.

Is this barter?   

Now, assume that I call these shells "money".  Is this barter? 

Isn't money just a commonly bartered commodity? 

It is. And it can be traced in history. On Iceland, for example, a standardized (for trade) homespun cloth was money for a period of time. (For their own use, they used better quality, more diversified types of homespun).

On the confusion introduced by Graeber, who basically says that debt, not money, came first: Yes, probably, but in a static economy of gifts and contra gifts (defined as debt), limited to small groups that did not trade outside the group. Money, in the form of the easiest tradable, most liquid, commodity is necessary for trade over a larger area or world trade. It ended up with gold, and may progress to bitcoin. Fiat can be regarded as somewhat money, somewhat debt (the debtor being the state), it looks tempting in the beginning, more effective than gold in trade, until the users discover that there is a manager, who scams everyone.

Technically it is. The most basic difference is that with a barter system you're exchanging items that are ends-in-themselves (immediately usable and valuable) directly. Money by itself doesn't have a lot of uses, its value comes from being able to exchange it for items that are ends-in-themselves.

Thanks for your replies, they are helpful. 

I see that what we have here is a literary construction similar to how the word "animal" is used.  That is, sometimes the word is used to the exclusion of human beings.  Not that anyone for one second imagines that homo sapiens are actually plants or funguses, but rather - that is just a shorthand of speech, that "animal" can mean "non-human animal".   

Similarly, we have established that trade or barter for exchange commodities, i.e. monies, is in fact barter, however that the term "barter" itself can often mean "non-exchange-commodity barter". 

Consider: an animal which wears clothes and plays Bach is not an animal.  Barter for an exchange commodity is not barter.

So now lets consider the question of the "barter economy".  What could this mean?   I'm not sure it is a meaningful distinction in the OP subject.  In fact, I dislike the literary short of hand I have just described.  Lets avoid it. 

 

Let me try: A barter economy is where usable goods are traded for usable goods, and where no commodity is preferred in trade due to its liquidity.

Sounded good at first, however, how can no commodity be preferred?  Suppose, you have a lot of rice and that is your preferred commodity.  Now, ditch the rice.  Something else is now preferred, maybe wheat or rice basket or cigarettes.  Whatever you have the most of, and are most willing to part with, is the money.  That's Gresham's law.  If the warden cracks down on cigarettes, what will be the preferred commodity for trade now?  Handjobs?  There will always be a most-liquid asset for any individual. 

The distinction between barter and trade is a qualitative one, in that the former implies smaller scale, and more haggling.  Otherwise, no difference. 

If one good is preferred due to its liquidity, meaning it is easy to sell because everyone want it(because it is easy to sell...), then that is the money, and it is no longer a barter economy. That was the point.

kk, thanks Erdogan et al. and my apologies for inane posts.  It helped me solidify definitions, so not entirely useless :) 

It is well known that the barter economy there exist before the monetary economy. Normally the new things are improvements of current one. It would be enough this to understand soon that the monetary economy is better a barter economy. But there can be told to many examples that prove this conclusion. I will one here. In the barter economy if an cattleman which have as richness only its sheeps need bread to eat must take one of its sheeps and with it go at the bakery to do the change. One sheep for ten bread (suppose). In the monetary economy it was enough to have the cash or the credit card and you can go everywhere and buy everything in the most easiest way.