Introduction – Barter… a term associated with ancient times and societies, which almost faded into oblivion with changing times. However, this system is back in trend today and is getting popular quite speedily. We delve into this age-old system and trace its importance in the modern world we live in today.

Meaning of barter

Simply put, ‘barter’ is a kind of trade where two parties exchange goods or services for some other goods or services. However, it is not the same as ‘gift exchange’ as in barter, there’s an agreement of sorts on what goods or services would be traded between the two parties.

History

This system of trade is said to have originated when humans started developing and progressing. It is commonly assumed that Mesopotamian tribes (6,000 BC) were the starting point of barter practice. The earliest exchange that took place consisted of cattle such as camels, cows, sheep and then other things as well such as food, spices and even weapons. It seemed like everything that could be bartered was traded. In fact, Roman soldiers traded their services in exchange for salt, which had immense value. The system of barter was quite prominent back in the Middle ages and it exists even today.

Advantages

Barter, though prevalent in some places today, is not the norm. However, if there is paucity of funds (such as many are undergoing in these pandemic times), or a monetary crisis, a barter system is helpful. It does come with some definite advantage.

· Barter is simple and straight unlike the complexities that a financial system throws up at times.

· People can get what they need in exchange for goods or services they already have.

· There’s no wastage as personal as well as natural resources are used perfectly and prudently.

· Over or under-production is completely non-existent as goods are produced to meet only the needs of people.

· Since one cannot store products in a barter system, economic power is not concentrated in the hands of a few rich people.

· In a monetary system there can be issues with international trade such as unfavourable balance of payments or even a crisis in foreign exchange. A barter system has none of these.

Barter in modern times

Today, though monetary and trade is the preferred for most products and even services, barter does exist. Only, the scope and reach of this ancient system has undergone a change with changing times. For instance, in the 1970s, the concept of ‘time banking’ started in Japan and later in 1992, it started in the USA. Here, members of this ‘time bank’ helped another member for one hour and would receive an hour’s help in exchange. Learning a language, painting services, teaching piano, etc., are all a part of this ‘time banking’.

Most recent example is of time banks in UK during these Corona times. Members of Fair Shares in Gloucester collect prescriptions go shopping and organise food parcels for those who are badly hit by the calamity.

Even businesses practice this system and those that participate endeavour to increase their annual business by 10-15 percent by exchanging their services for some others of another business.

So, to conclude, though modern techniques and lifestyle has given prominence to ‘money’ in the form of coins and hard cash, the barter system is and can be effectively used even today.