The increasing role of barter in the global economy

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Description:

To barter is to 'trade goods or services without the exchange of money.'
To put it simpler: "One man's trash is another man's treasure"

Barter is as old as human kind. Barter existed before money, and will allways find a place in the market. Although money takes an important place in trade, barter still exists and is used a lot in business. Furthermore, barter is used often in situations were using money is a risky business, especially in trade with countries whose currency is not stable.

For centuries, barter has been an effective way for businesses to work together. It used to be “direct trade” when people swapped one thing for another. However, since not all direct trades are done of equal value (not to mention the challenge of finding someone who has what you need and wants what you have), modern day barter has evolved considerably to become a proven method of increasing sales, conserving cash, moving inventory, and making use of excess production capacity for businesses around the world. (http://www.irta.com/Page.asp?Script=2)

Here is a short list of some things commonly bartered for; hotels and resort accomodations, advertising of all kinds, website hosting, computer hardware and software, origional and printed art, real estate, home improvement, household items, house cleaning, hand made crafts, jewelry, books, CDs, movies, day care, yard work, printing services for business cards and brochures, etc. etc (http://www.barterexchange.info/)

In traditional barter, two parties came together to swap goods. In contemporary barter, a business lists a product or service for trade, and when it's taken the exchange gives the business a trade credit of the dollar value of the item. The business can use the credit to purchase goods or services offered by other exchange members.

The World Trade Organization estimates that 15% or $8.43 billion of the $5.62 trillion in international trade is conducted on a non-cash basis.

In August 2004, the world's economic leaders met for an annual policy conference in Jackson Hole, Wyoming. Alan Greenspan was there, as were the heads of the central banks of Britain, Japan, and 26 other countries. One of the attendees, Mervyn King, Deputy Governor of the Bank of England, reflected on the impact of electronic commerce and the future of money:

"There is no reason products and services could not be swapped directly by consumers and producers through a system of direct exchange--essentially a massive barter economy. All it requires is some commonly used unit of account and adequate computing power to make sure all transactions could be settled immediately. People would pay each other electronically, without the payment being routed through anything that we would currently recognize as a bank. Central banks in their present form would no longer exist--nor would money."

Enablers:

  • [S. Demircioglu]Internet creating a continuous and global marketplace
  • The increasing use of Internet can provide the challenge to find somebody who is willing to barter.
  • The increasing unstability of the US dollar according to Euro and Yen.
  • Increasing globalization of the markets The increasing globalization of markets
  • Technology to find the barter trade like Internet, and eBay like sites.
  • [S. Demircioglu]Slowing economy helping the barter exchange to grow
  • [S. Demircioglu]Markets getting nervous not only about the dollar but about paper currencies in general
  • [S. Demircioglu]Banks and financial institutions losing trust in the business context
  • [S. Demircioglu]Enormous and ever-growing computing power to facilitate direct exchanges

Inhibitors:

  • The use of less currencies, for example forming of the Euro, countries use USD instead of own currency
  • New laws which sets rules to barter
  • Stability of the financial marketes.
  • [S. Demircioglu]Regulations inhibiting the growth of the global barter economy to police the system: E.g. Taxes can not be collectedwhen no money is exchanged

Paradigms:

The value and use of money diminishes.

Revolution in the monetary systems and use of money.

[S. Demircioglu]What makes barter unique is that besides goods and commodities, it facilitates bartering and giveaways of services and even concepts

Experts:

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Timing:

The role of Barter is increasing, and will increase in the next years. The trend will continue the next decades.


Web Resources:

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