The Full Wiki

Barter: Wikis

Advertisements
  
  
  
  

Note: Many of our articles have direct quotes from sources you can cite, within the Wikipedia article! This article doesn't yet, but we're working on it! See more info or our list of citable articles.

Did you know ...


More interesting facts on Barter

Include this on your site/blog:

Encyclopedia

From Wikipedia, the free encyclopedia

A 19th-century example of barter: A sample labor for labor note for the Cincinnati Time Store. Scanned from Equitable Commerce by Josiah Warren (1846)

Bartering is a medium in which goods or services are directly exchanged for other goods and/or services without a medium of exchange, such as money.[1] It can be bilateral or multilateral, and usually exists parallel to monetary systems in most developed countries, though to a very limited extent. Barter usually replaces money as the method of exchange in times of monetary crisis, when the currency is unstable and devalued by hyperinflation.

Contents

History

An 1874 newspaper illustration from Harper's Weekly, showing a man engaging in barter: offering chickens in exchange for his yearly newspaper subscription.

Contrary to popular conception, there is no evidence of a society or economy that relied primarily on barter.[2] Instead, non-monetary societies operated largely along the principles of gift economics. When barter did in fact occur, it was usually between either complete strangers or would-be enemies.[3]

While one-to-one bartering is practised between individuals and businesses on an informal basis, organized barter exchanges have developed to conduct third party bartering. The barter exchange operates as a broker and bank and each participating member has an account which is debited when purchases are made, and credited when sales are made. With the removal of one-to-one bartering, concerns over unequal exchanges are reduced.[citation needed]

Modern trade and barter has developed into a sophisticated tool to help businesses increase their efficiencies by monetizing their unused capacities and excess inventories. The worldwide organized barter exchange and trade industry has grown to an $8 billion a year industry and is used by thousands of businesses and individuals. The advent of the Internet and sophisticated relational database software programs has further advanced the barter industry's growth. Organized barter has grown throughout the world to the point now where virtually every country has a formalized barter and trade network of some kind. Complex business models based on the concept of barter are today possible since the advent of Web 2.0 technologies.[citation needed]

Bartering benefits companies and countries that see a mutual benefit in exchanging goods and services rather than cash, and it also enables those who are lacking hard currency to obtain goods and services. To make up for a lack of hard currency, Thailand's township, Amphoe Kut Chum, once issued its own local scrip called Bia Kut Chum: Bia is Thai for cowry shell, was once 16400 Baht, and is still current in metaphorical expressions. Running afoul of national currency laws, the community changed to barter coupons called Boon Kut Chum that bear a fixed value in baht, which they swap for goods and services within the community.[4]

Trade exchanges

A trade or barter exchange is a commercial organization that provides a trading platform and bookkeeping system for its members or clients. The member companies buy and sell products and services to each other using an internal currency known as barter or trade dollars. Modern barter and trade has evolved considerably to become an effective method of increasing sales, conserving cash, moving inventory, and making use of excess production capacity for businesses around the world. Businesses in a barter earn trade credits (instead of cash) that are deposited into their account. They then have the ability to purchase goods and services from other members utilizing their trade credits – they are not obligated to purchase from who they sold to, and vice-versa. The exchange plays an important role because they provide the record-keeping, brokering expertise and monthly statements to each member. Commercial exchanges make money by charging a commission on each transaction either all on the buy side, all on the sell side, or a combination of both. Transaction fees typically run between 8 and 15%.[citation needed]

It is estimated that over 350,000 businesses in the United States are involved in barter exchange activities. There are approximately 400 commercial and corporate barter companies serving all parts of the world. There are many opportunities for entrepreneurs to start a barter exchange. Several major cities in the U.S. and Canada do not currently have a local barter exchange. There are two industry groups, the National Association of Trade Exchanges (NATE) and the International Reciprocal Trade Association (IRTA). Both offer training and promote high ethical standards among their members. Moreover, each has created it own currency through which its member barter companies can trade. NATE's currency is the known as the BANC and IRTA's currency is called Universal Currency (UC).

The first exchange system was the Swiss WIR Bank. It was founded in 1934 as a result of currency shortages after the stock market crash of 1929. "WIR" is both an abbreviation of Wirtschaftsring and the word for "we" in German, reminding participants that the economic circle is also a community. Only small and medium enterprises can join WIR. Its purpose is to encourage participating members to put their buying power at each others disposal and keep it circulating within their ranks, thereby providing members with additional sales volume.[citation needed]

Corporate barter

Corporate barter focuses on larger transactions, which is different from a traditional, retail oriented barter exchange. Corporate barter exchanges typically use media and advertising as leverage for their larger transactions. It entails the use of a currency unit called a "trade-credit". The trade-credit must not only be known and guaranteed, but also be valued in an amount the media and advertising could have been purchased for had the "client" bought it themselves. (contract to eliminate ambiguity and risk).[citation needed]

Swapping on the Internet

Swapping is the increasingly prevalent informal bartering system in which participants in Internet communities trade items of comparable value on a trust basis. The most notable disadvantage to electronic barter is inherent in Internet commerce, that of trust. How can consumers have confidence that they will receive what they bargained, or paid, for? Although the Internet based consumer market has by its continued existence and growth demonstrated that it works, there is never a guarantee of satisfaction in consumer to consumer transactions. There is no absolute defense against fraud. However, it can be argued that when a person barters there is less incentive to deliberately mislead. Neither party is paid; each party receives something that would only then have to be converted to cash.[citation needed]

Barter markets

In Spain (particularly the Catalonia region) there is a growing number of exchange markets. These barter markets or swap meets work without money. Participants bring things they do not need and exchange them for the unwanted goods of another participant. Swapping among three parties often helps satisfy tastes when trying to get around the rule that money is not allowed. [5]

According to the International Reciprocal Trade Association, the industry trade body, more than 400,000 businesses transacted $10 billion globally in 2008 — and officials expect trade volume to grow by 15% in 2009.[6]

Environmental implications

Barter compliments the environmental movement that has gained traction in the late 20th and early 21st centuries. The expenditure of resources involved in the manufacture and distribution of new products is concomitantly reduced by trading existing products. A global market for barter mitigates waste and acts as a counterpoint to the disposable economy. Consumer and small business websites such as BarterQuest and SwapTreasures [7] promote bartering as a green alternative to buying and selling.[8][9]

Tax implications

In the United States, the sales a barter exchange makes are considered taxable revenue by the IRS and the gross amount of a barter exchange member's sales are reported to the IRS by the barter exchange via a 1099-B form. The requirement for barter exchanges to report members sales was enacted in the Tax Equity & Fair Responsibility Act of 1982. According to the IRS, "The fair market value of goods and services exchanged must be included in the income of both parties."[10] Other countries do not have the reporting requirement that the U.S. does concerning proceeds from barter transactions, but taxation is handled the same way as a cash transaction. If one barters for a profit, one pays the appropriate tax; if one generates a loss in the transaction, they have a loss. Bartering for business is also taxed accordingly as business income or business expense. Many barter exchanges require that one register as a business.

Limitations of barter economy

  • Presence of double coincidence of wants
  • Absence of common measure of value
  • Indivisibility of certain goods
  • Lack of standards for deferred payments
  • Difficulty in storing wealth

See also

References

  1. ^ O'Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in Action. Pearson Prentice Hall. p. 243. ISBN 0-13-063085-3. 
  2. ^ Mauss, Marcel. 'The Gift: The Form and Reason for Exchange in Archaic Societies.' pp. 36-37.
  3. ^ Graeber, David. 'Toward an Anthropological Theory of Value'. pp. 153-154.
  4. ^ A Boon to Kut Chum archive
  5. ^ Barcelona's barter markets (from faircompanies.com. Accessed 2009-06-29.)
  6. ^ TIMES, nov. 2009
  7. ^ http://www.youtube.com/watch?v=cP13vZ91P7k
  8. ^ [1]
  9. ^ [2]
  10. ^ Tax Topics - Topic 420 Bartering Income, United States Internal Revenue Service, http://www.irs.gov/taxtopics/tc420.html 
Advertisements

Source material

Up to date as of January 22, 2010

From Wikisource

Barter
by Sara Teasdale
From Love Songs Part I.

Life has loveliness to sell,
      All beautiful and splendid things,
Blue waves whitened on a cliff,
      Soaring fire that sways and sings,
And children's faces looking up
Holding wonder like a cup.

Life has loveliness to sell,
      Music like a curve of gold,
Scent of pine trees in the rain,
      Eyes that love you, arms that hold,
And for your spirit's still delight,
Holy thoughts that star the night.

Spend all you have for loveliness,
      Buy it and never count the cost;
For one white singing hour of peace
      Count many a year of strife well lost,
And for a breath of ecstasy
Give all you have been, or could be.

PD-icon.svg This work is in the public domain in the United States because it was published before January 1, 1923.

The author died in 1933, so this work is also in the public domain in countries and areas where the copyright term is the author's life plus 75 years or less. This work may also be in the public domain in countries and areas with longer native copyright terms that apply the rule of the shorter term to foreign works.


1911 encyclopedia

Up to date as of January 14, 2010

From LoveToKnow 1911

BARTER (from Fr. barater, to truck, to exchange), the exchange of commodities for commodities, in contra-distinction to the exchange of commodities for money. Barter was the simplest form of trading among primitive communities, but its inconveniences led, at an early stage of civilization, to the adoption of metals as mediums of exchange. Barter, however, is still very common in dealings with uncivilized peoples, and traders in many countries find that the most satisfactory method of effecting exchange is to furnish themselves with such commodities as weapons, tools and ornaments, which are more readily taken than money.

For the history of barter and the steps by which a system of currency was gradually evolved, see MONEY. Consult also W. S. Jevons, Money and the Mechanism of Exchange; A. Marshall, Economics; W. Ridgeway, Origin of Currency and Weight Standards.


<< Bartenstein

Jeanne Julia Bartet >>


Simple English

Barter is trading one thing for another without using money.[1] Usually the things that are traded are worth the same amount of money, but no money is used in the trade.

Barter is useful when two people each have something the other wants, so they agree on an amount of stuff and then swap it. This can also happen with services, for example a plumber can fix a tap in a winery and be given a crate of wine.

The problem with barter is one person may not want what the other person has. For instance, Bob needs a new pair of shoes and John has those shoes. But Bob has eggs and John needs milk. This is where money becomes useful because anything can be traded for a set amount of money. Bob could pay John for the shoes and John could go to the store and buy some milk.

References

  1. "Barter". Merriam-Webster Dictionary. http://mw1.merriam-webster.com/dictionary/barter. Retrieved 01-06-2007. 



Advertisements






Got something to say? Make a comment.
Your name
Your email address
Message