Barter can make a contribution to reciprocity in a local economy whose income flow has broken down, but it is limited.B1 With barter, you can make a direct exchange of goods and services without having to get hold of the cash first, and this copes well with simple trading relationships between nations (e.g., arms for oil), or between allotments (carrots for cucumbers), but in a market it is impracticable. Each exchange pair (such as haircuts-for-bread) is one “trading post”, but to make a barter market work, you need a lot more trading posts than you might think (in fact, G(G-1)/2 trading posts in a market in which G goods are traded), so that in a market of 100 goods you would need 4,950 trading posts (haircuts-for-bread, haircuts-for-apples, apples-for-bread . . .). Finding the trading post you need (if it exists at all) could take some time. Then there is the problem of quantity: for the haircut you supply, you would receive more bread than you really want; and then there is storage: the barber cannot store vegetables for his retirement.B2

In fact, barter is quite a limited means of exchange. The strict tit-for-tat exchange to which the label “barter” has been applied is the kind which exists between people who do not know each other, and who have to get both sides of the deal done and finished there and then because they may never meet again. It is therefore different from other forms of exchange such as the varieties of reciprocity in the local lean economies of the future. Barter deals can work out from time to time when two strangers need to exchange their respective surpluses of hogs and corn, or when two Boy Scouts want to swap sandwiches, but it is inflexible and inconvenient as a main form of exchange. It cannot be relied on to meet a large community’s needs for an exchange system and for a store of value. That is why we have money. But if the money has drained out of the locality, you need more appropriate means of exchange: reciprocity and local currencies, both in the context of lean economics.


Related entries:

Dollar-a-Day Fallacy.

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David Fleming
Dr David Fleming (2 January 1940 – 29 November 2010) was a cultural historian and economist, based in London, England. He was among the first to reveal the possibility of peak oil's approach and invented the influential TEQs scheme, designed to address this and climate change. He was also a pioneer of post-growth economics, and a significant figure in the development of the UK Green Party, the Transition Towns movement and the New Economics Foundation, as well as a Chairman of the Soil Association. His wide-ranging independent analysis culminated in two critically acclaimed books, 'Lean Logic' and 'Surviving the Future', published posthumously in 2016. These in turn inspired the 2020 launches of both BAFTA-winning director Peter Armstrong's feature film about Fleming's perspective and legacy - 'The Sequel: What Will Follow Our Troubled Civilisation?' - and Sterling College's unique 'Surviving the Future: Conversations for Our Time' online courses. For more information on all of the above, including Lean Logic, click the little globe below!

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