Barter
Barter is the exchange of material goods or services for other objects or services. It differs from the usual sale in that money does not mediate as a representative of the value in the transaction. The contract by which two people agree to a barter is called an exchange.
According to the liberal current of economics founded by Adam Smith, barter, as a free exchange between individuals, is a natural practice of the human being for which the surplus must previously exist (excess of goods that do not need to be consumed) and the division of labor (need for a good that one does not produce oneself), which leads to the concept of private property.
However, according to various anthropologists, no community has been described in which barter existed as the main means of access to goods, which refutes the widespread conception that barter was a phase prior to the appearance of money. Barter has only been documented as a practice carried out between rival communities (because the distribution of goods within the community itself was carried out in common) or in periods after the falls of the great empires and economic systems that were previously based on currency and exchange.
Economic theory of exchange
The subjective theory of value explains both the exchange that occurs in barter and that of a monetary economy.
The exchange only occurs if both parties subjectively value what the other has more than what they expect to give in exchange. Thus, suppose that Rodrigo has A, and Martín has B. Only if Rodrigo values B more than A, and Martín values A more than B, will the exchange take place (or this is, at least, a necessary condition for it to take place).).
Technically, it could be synthesized as follows: the marginal utility that good B represents to Juan within his scale of valuations must be greater than the marginal utility that good A represents for him. In the same way, the marginal utility that good A represents to Marcos within his scale of valuations must be greater than the marginal utility that good B represents for him. In short, the inequality of subjective valuations is an important necessary condition for it to occur. the exchange.
The price, as the exchange ratio, is determined at the time of the exchange. The price at which both parties will arrive to carry out the exchange depends on their subjective evaluations. In effect, the maximum price at which the buyer is willing to pay must be greater than the minimum price at which the seller is willing to sell. The price, in this simplified model with only one supplier and one applicant, will be established within the range determined by these margins, with the theoretical impossibility of knowing exactly what the price will be, only by determining the margins between which a price will effectively be agreed. price. If the buyer's maximum price is less than the seller's minimum price, the trade will not take place.
Thus, this exchange model is followed by the unilateral competition models (where there is a demander and several bidders; or one bidder and several bidders) and the bilateral competition model; all models explained and developed in the first instance by the Austrian economist Eugen von Böhm-Bawerk.
Exchange according to Karl Marx
For Karl Marx, exchange only takes place when two goods have an equivalent value and that can be determined objectively, that is, any third party not involved can determine it according to objective criteria. Thus, making an abstraction of the use value of the merchandise, Marx arrives at the conclusion that the value is determined exclusively by the amount of abstract work socially necessary to produce a certain merchandise. This is, in short, the labor theory of value defended by many of the classical economists, although in different versions, such as Adam Smith and David Ricardo.
This theory later derives in the theory of exploitation, [citation needed] because if the value of a good or service is determined by the work necessary for its production, the phenomenon of interest can only be explained within this theoretical framework as plunder, robbery, carried out by capitalists on workers, appropriating their work, and specifically, making them work more hours than they end up being paid.
Historical background
Bartering is a practice that has existed since the Neolithic period, from approximately 10,000 years before Christ, during the Neolithic Revolution, with the appearance of the agricultural-livestock society when humanity abandoned its traditional nomadic lifestyle and settled in different regions to cultivate the land.
In the Neolithic, the economy, which had been predatory in the Paleolithic, in hunter-gatherer societies (90 percent of the time of the existence of the human species), became productive, due to the appearance of agriculture and livestock, and this gave rise to the surplus, an excess of goods that do not need to be consumed. With the surplus, a group of people do not need to work in agriculture and livestock, and can dedicate themselves to producing other products, such as ceramics, and exchange them with the farmer or rancher for the surplus. With this, barter appeared for the first time[citation required] and, as a consequence, private property and the concept of wealth.[citation required ] The amount of surplus production is the beginning of wealth: the more surplus, the more wealth. But the surplus only has consequences when it is consolidated thanks to the application of the risk or the subscriber, and allows the social division of labor.[citation required]
Division of labor
When the consolidated surplus appears, not all are dedicated to agriculture or livestock; it seeks to produce goods that neither of these two productive jobs produce.
It was in the small markets where the first exchanges between a great variety of articles originated, for example: flint tools, spears, shoes, necklaces and even agricultural products. Today, in some markets this type of transaction is still used.
Later, money appeared, with which goods and services were obtained in exchange for money in coins.
Advantages and disadvantages.
Advantages
The advantages of barter or exchange for companies are many, such as
- purchase products or services without monetary movements.
- keep the company liquidity.
- optimize the financial results of the business.
- improve productivity.
- offset the variation of production by seasons, i.e. obtaining more customers even in low season.
- reduce the accumulation of inventory stocks, and find them an alternative profitable output.
- expand business relations with companies from other sectors.
- get new commercial channels for the business without changing the customer agenda.
Disadvantages
Bartering has several disadvantages:
- quantitative: difficulty in exchanging goods of very different value;
- temporary: difficulty selling today and buying tomorrow;
- space: difficulty finding the ideal person to exchange.
The most important disadvantage of bartering is that you may not find someone willing to exchange what you want for what you can offer. This is what is known as the double coincidence of needs problem. This problem prevents the expansion of the division of labor, which would later be facilitated by the introduction of money as a common means of indirect exchange.
Another drawback in the barter process is the complexity of calculating the exact value between the things to be exchanged (lack of unity of value). In any case, products or services are usually priced according to their market value, although in the absence of a common objective unit of account, large-scale economic calculation is impossible without money.
Sometimes, barter has a more symbolic value, depending on the need than a capital value. That is, if someone has a house that is not being used and urgently needs a car, he will not give a capital value to the house, but a necessity value.
Current bartering
Since ancient times, it is common for barter to regain importance in times of economic crisis, and mainly in cases of hyperinflation, since money loses its value to a great extent.
Some forms of barter are the time bank or barter markets, such as those that have proliferated in Argentina after the fall of the peso. This system is experiencing a boom in countries around the world.
Sometimes barter is used in large numbers by companies, in exchange markets. For the company that provides the product or service, which it has produced itself, the same payment is cheaper than if it were with money. In addition, it assumes that one more customer has tried and learned about your product or service. In addition, you have sold a product that, at times, you would not have sold otherwise. What does it mean to run out of stocks or wholesale purchases in larger quantities that usually entail greater discounts. For the company receiving the service or product, it means having obtained it cheaper than if it had had to pay for it with money. In addition, this company obtains products or services without having to make treasury movements. As an additional advantage, the recipient can test a service or product more cheaply.
In the digital age: active barter
The emergence of the Internet or social networks facilitated the search and location of the best candidates to barter; stakeholders meet at a common point, such as public squares. In the network there are platforms that facilitate free contact between those who wish to exchange their products or services. The evolution of this type of page has led to something known as active bartering, that is, not simply limiting itself to announcing an article, but allowing interaction with other users on the same network. In short, it is the creation of communities of users who wish to exchange things.
Bartering in Mexico
In Mexico, it can still be seen in the town of Zacualpan de Amilpas, in the state of Morelos, which has become an important commercial and cultural meeting point through its Sunday market, and it is the only system of pre-Hispanic trade that survives to date and maintains all its organizational characteristics and symbolism of the local population.[citation required].
Another form of barter in Mexico is that carried out by multidirectional exchange systems that work through a reciprocal currency that allows transactions and in which the companies that operate these systems act as third parties that record the operations and mediate between buyers and sellers. This modality offers participants access to new markets or clients, protects the liquidity of the company and uses the idle capacities of each participant.