Monday, January 7, 2013


In the past few weeks, my fledgling writing business has engaged in bartering twice.  Bartering is the term we are using more these days.  It is a practice in which people exchange goods and services with no money actually being passed.  It is what newer, cash poor, businesses are doing these days.

I have a new friend Rose.  She is an excellent graphic designer.  She has been very helpful in developing the logo for the writing side of my business.  Rose also designed a pretty sharp looking 2.5"x2.5" business card that is about to go to press.  Rose is doing this work in exchange for my re-writing and revising the content of her website.

I have another new acquaintance, Krishnan, that by early indications should also become a good friend.  He has a web design business that provides high quality websites at very reasonable pricing.  Krishnan focuses on small local businesses with local markets such as restaurants, home services, auto repairs, and more.  His point of difference is that he does two things.  First, his designs are optimized for all devices:  phones, pads, and PCs.  Second, he focuses on local Search Engine Optimization.   I am going to write the content for Krishnan's website.  In return, he will develop the website for my writing business. 

I believed I was taping into the oldest form of commerce.  I have to believe that in the crudest oldest societies people that were better at one thing, like arrow making, provided those services while others, who were better at hunting, provided the food.  Maybe this example is more communal than bartering. Maybe it was just the natural way their societies operated.  Perhaps a better example is a more agrarian society where heck, just one hundred or so years ago, fathers bartered their sons and daughters into marriage in exchange for livestock.

According to Wikipedia, there is no evidence of any society that existed only on bartering.  This does not mean bartering did not exist.  Investopedia tells us: 

Money, in some form, has been part of human history for at least the last 3,000 years. Before that time, it is assumed that a system of bartering was likely used.

It seems that there is not much history or evidence of bartering.  If we think of cavemen (highly unscientific as it may be), Caveman A is a better hunter than Caveman B who happens to be a gifted cave painter.  They agree that Caveman A will feed Caveman B for as long as it takes Caveman B to paint Caveman A's.  Sounds like a good way to live.   We can trade goods and services back and forth and live happily.

The problem with any exchange of goods and services is the same problem with a money based system.  Some people are simply better negotiators than others.  If these same folks have operational or managerial skills to boot, they will deal their way into an empire.  Warren Buffet is a great deal maker with operational skills. While he definitely uses money, he has the spirit of a trader. 

At least with money, the market sets the price for commodities and staples.  Imagine if we had to barter every time we wanted some food or to have have our lawns mowed.  Money is the medium through which supply and demand balance.  Money is the medium through which our individual labor is valued relative to each other and relative to the myriad goods and services available in an economy.  Based on our skills, experience, training, expertise, and the market supply and demand for such our pay is established.  We exchange our labor for pay whether we work for a company, provide a service, or make and sell goods ourselves.  We take that pay and use the money to buy the goods and services we need and desire to sustain and enhance our lives.  It is no wonder that some form of money has been around for 3,000 years.  It is the lubricant that makes market equilibrium work.  Prices are set by the market and we do not have to barter each and every time we need or want something.  All that bartering would be very tedious very quickly. 

So, I am bartering.  I am bartering for the first time since I was a kid and used to trade toys, gadgets, and other things with my buddies.  Now, early in this New Year, I am exchanging services.  I am using an age old method that is more popular in the new normal of today's America.  I am enjoying it and exchanging value for value.  Why am I and others bartering instead of just paying each other for the services each of us want?  The answer is simple in this new America... we do not always have the cash available to pay.  Therefore bartering makes sense. 

As stated earlier, my recent foray in bartering involved one friend who agreed to do my logo and in the next month or so, I will work on her website.  I agreed to write content for my other friends website, and he will at some later date work on my website.  We all trust each other to do what we agreed to do.   Trust is the key in bartering especially if the goods and services are not exchanged simultaneously.  Where there is no trust, paying with money is definitely preferable.  I pay for your services now and if and when you want my services, you can pay me.

While bartering is on the increase, there is no chance the US will ever become the first society ever to be based exclusively on bartering.

While I am enjoying this bartering, I do want and need more clients that will simply pay me.  Cash is important or as they say in many parts of the global economy:  Cash is King.  Having said this I am willing to barter with the Apple Store, grocery stores and car dealerships if any are reading this and willing to barter.

1 comment:

  1. From Norig B Karakashian Interesting perspective. Your post encompasses a developed market's two cornerstones: information and contracts. The price system is like a picture -- it represents a thousand words, thus saving the consumer/supplier the trouble of finding out every detail about the status and forecast of each input's sources. As for trust; well, an arms-length deal rarely reaches realization without the two consenting parties placing their confidence in a system that acts as a neutral, objective defense cushion.

    I would add that money as we currently know it also reached ubiquity because of the historical role of my profession (accounting). I posit that although money spontaneously found its order as a medium of exchange long ago, it did not change in form because it became a unit of record for commercial data. In today's world of efficient information conveyance, a new concept might become a worthy successor to currency in a quasi-monetary role.