History of Bartering and Exchange
Bartering has its roots in the ideal of offering things of equal value between traders. This old method of exchange has an obvious flaw in that many things can be difficult to appraise in terms of an individual value, but also you have to think about scarcity and changes in market demand. There is a merit of transparency with bartering in that you can see exactly what your item is worth in your exchange, and there are no chances of the check bouncing or a confusing extra mediation that currency creates.
The difficulty with an unregulated system of bartering is that the value can become subjective between parties. With money, there is a pre-agreed value, so haggling can often be kept to a minimum. In most cases, however, the provider still decides the cost on an independent basis unless there is a larger structure that mediates value on a societal scale. Consequently, in undeveloped areas, often bartering is the only option, especially in places where a currency is difficult to obtain.
Historically markets would bring forth unique items and trade as a way of blending cultures and bringing forth new techniques for production. This derives from the barter systems inherent advantage that the individual can decide the quality of what they are purchasing. Currency can be like a buffer between you and the actual product. For instance, artificial scarcity can be created to give items an inflated value that does not project the products real value. The most prevalent example of this is diamonds.
The actual supply of diamonds and the value applied have been manipulated away from the buyer. Diamonds are not a rare mineral and culture has simply given diamonds a place to be sold at higher prices because of their link to perceived wealth. A diamond is, after all, just a very squashed piece of coal.
Bartering in the Modern Day
In the modern context, it’s more challenging to ascertain the value of something that is not palpably valuable, like a tool or a vehicle. Thus, in some ways, it is up to individual companies and brands to decipher just how valuable their product is before it is widely distributed at an agreed-upon price.
This price will mostly be decided based on how much people are likely to pay for it. Therefore, bartering could be seen as a more honest form of trade. In fact, ancient civilisations managed just fine without clunky currency to complicate their commerce.
Ancient Egypt was so successful that the Pharaoh could not only maintain the balance of feeding his people and managing the farmland but also make effective use of the surplus. Creating papyrus, mining precious stones, selling jewellery and leveraging these luxury items for important materials like tin, wool and ivory.
In many cases, trades would become unfavourable because the caravan could be robed during the journey or the actual trade if the goods did not have sufficient protection. Authorities would mediate these disputes by offering some replacements for lost goods, but often these new items would not equal the value of the stolen ones.
How would they be able to accurately and precisely offer a good replacement now that the goods are gone? They could not confirm that the robbed parties were being entirely honest about the exact value of what they had lost.
To return to an earlier point, trade and bartering were also used to offer cultural ideas and new philosophy from distant lands. Bazaars and trade hubs in places like the ancient Greek city of Naucratis would elevate the cultures of participating nations by sharing knowledge and understanding through bartering. Imagine a cultural book fair with exotic art and fascinating means of production on display.
Today, we have a digital bazaar within the plethora of online platforms for interesting, unique items, but I digress. The ancient world developed many methods of trade to build links between countries and cultures without the aid of penny and pound. In much the same way as middle eastern traditions, European trade fairs would attract barterers from all over to sample textiles, art and brilliantly flavourful spices.
This created trusted partnerships that could give way to more reliable bartering in the future. The evidence of this lies just under the surface, some 100 axe-heads made from Italian jade have been found in ancient British mines.
It is evident that bartering was not without its merits. Our current system is built on this original exchanging method and, therefore, can be seen as a significant contributor to progress and innovation in the context of how we achieved a global community. Currency is the natural progression of exchange and, without a doubt, makes life easier for traders in a global market.
Our current system is built on this original exchanging method and, therefore, can be seen as a significant contributor to progress and innovation in the context of how we achieved a global community.
The bartering system helps to explain how monetary systems have developed over time, as other GIS authors have explored in posts here and here.
It also serves as an important contextual piece when exploring future developments with money and cash, as demonstrated here.