Barter

An 1874 newspaper illustration from Harper's Weekly showing a man engaging in barter by offering various farm produce in exchange for his yearly newspaper subscription.

In trade, barter (derived from baretor[1]) is a system of exchange in which participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money.[2] Economists distinguish barter from gift economies in many ways; barter, for example, features immediate reciprocal exchange, not one delayed in time. Barter usually takes place on a bilateral basis, but may be multilateral (if it is mediated through a trade exchange). In most developed countries, barter usually exists parallel to monetary systems only to a very limited extent. Market actors use barter as a replacement for money as the method of exchange in times of monetary crisis, such as when currency becomes unstable (such as hyperinflation or a deflationary spiral) or simply unavailable for conducting commerce.

No ethnographic studies have shown that any present or past society has used barter without any other medium of exchange or measurement, and anthropologists have found no evidence that money emerged from barter. They instead found that gift-giving (credit extended on a personal basis with an inter-personal balance maintained over the long term) was the most usual means of exchange of goods and services. Nevertheless, economists since the times of Adam Smith (1723–1790) often inaccurately imagined pre-modern societies as examples to use the inefficiency of barter to explain the emergence of money, of "the" economy, and hence of the discipline of economics itself.[3] [4][5]

  1. ^ Wedgwood, Hensleigh (1855). "English Etymologies". Transactions of the Philological Society (8): 109–111.
  2. ^ O'Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in Action. Pearson Prentice Hall. p. 243. ISBN 0-13-063085-3.
  3. ^ David Graeber (2011). Debt: the first 5,000 years. New York: Melville House. pp. 21–41.
  4. ^ Modern barter occisy through barter exchanges that have hundreds or thousands of businesses as members who agree to barter their products and services on a third-party basis. Barter exchanges in the U.S. were legalized by the passage of the 1982 Tax Equity and Fiscal Responsibility Act (TEFRA) which categorized barter exchanges as third party record keepers and mandated that they report the annual sales of their barter exchange members to the IRS via a 1099B From, "Proceeds From Barter Exchange and Brokerage Transactions." See: www.IRS.gov/Form1099B. Estimated annual retail barter exchange transactions worldwide are between three and four billion dollars, per the International Reciprocal Trade Association, the barter industry's global trade association, see www.irta.com Caroline Humphrey (1985). "Barter and Economic Disintegration". Man. 20 (1): 49. doi:10.2307/2802221. JSTOR 2802221.
  5. ^ Strauss, Ilana E. (2016-02-26). "The Myth of the Barter Economy". The Atlantic. Retrieved 2019-12-20.