People Invented Money For A Reason: Bartering Is Inefficient

from the shocking-facts dept

The whole reason that money was invented was that bartering isn’t a particularly efficient means of paying for goods and services. This should be clear to plenty of people, but in the last decade, over and over and over again, we’ve seen companies keep trying to bring back the concept of bartering, as if it were something new and wonderful. In the early days of the web there were a bunch of online bartering sites, and they all died out pretty quickly. A couple years back, the new set showed up, and they seemed just as pointless. One of the higher profile ones was Peerflix, where it didn’t take long for people to realize that when you have to trade DVDs straight up, there are going to be a lot of crappy DVDs available, and not many good ones. It doesn’t take an advanced economics degree to figure out why — though, that hasn’t stopped others from copying their strategy, and claiming they’ve got something brand new. It looks like it only took about two years for Peerflix to at least admit this flaw in their business model, as they’re now changing their service so that all movies now have a monetary value, so that you can buy or sell movies for cash — rather than as part of an elaborate “trade.” In other words, the site is really no different than a specialized open marketplace for DVDs, where you can buy or sell DVDs only at the price the company sets. In that sense, it’s hard to see how it’s better than, say, eBay which also acts as a marketplace, but actually lets the market set the price.

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Comments on “People Invented Money For A Reason: Bartering Is Inefficient”

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UniBoy says:

bartering is beautiful...

It might not be something that really needs the benefit of modern Internet technology, but bartering is still a beautiful thing. Especially when the exchange is for services…like plumbing, electrical, car repair, etc.

Best part is that the government is cut out of the loop. I believe the IRS has rules to prevent use of this “loophole.” I’d like to see that go before the Supreme Court.

Telling folks they are not even free to exchange favors with one another is pretty much equivalent to telling people that they are property of the State (i.e. slaves). That would go over REAL WELL with the America public!

nuntukamen (user link) says:

Re: since when are we not slaves?

our children can be taken from their lives to fight wars for the ruling class, we pay over 50% of what we earn to the ruling class in one form of tax or another, and we keep happily voting in financial parastites to run what is absolutely the best system in the world being run by the most selfish and selfcentered citizens our nation could dredge up…every single member of Congress is a millionaire and none can identify with our day to day problems or that of the world…they earn our money by putting in 4-6 work weeks, so who is the slave and who is the master?

wolff000 says:

Re: Re: since when are we not slaves?

Sine we can leave the country if we like thats when. I agree with all your points other than the fact that we are slaves. Slaves have no say so in thier lives they do what they are told when they are told. We can choose to leave the country or adjust or life style to avoid all government. There are plenty of small communities all over the US that exist outside the government so to speak. They grow thier own food, they supply thier own services, ie water, electricity, police, etc., they do things for themsleves the way they please. Since we have the rights to do all this under own laws how are we slaves? I know the current class structure in the US is really screwed we are far from slaves.

Anonymous Coward says:

Re: Re: Re: since when are we not slaves?

We are slaves to the masters of complex if not impossible loans, compound interest and debt creators.
We are in debt from birth and we leave debt to others when we die. We are born into a life of constant need, which has a price tag.
We can grow our own garden if we own the land we intend to grow on. We own land when we finish payment on mortgage.
We finish mortgage payment in 30 years, which turns a 300,000 dollar loan into a 800,000 dollar loan. Combined with water bill’s, manipulative house insurance and ever increasing taxes.
When are we free from debt?

Anonymous Coward says:

Re: Re: since when are we not slaves?

The members of Congress are not “all millionaires”. Their salaries are high but not that outrageous, considering that they probably have to pay two mortgages (one in DC and one in their home state). says the salary for a member of Congress is on average about $185,000 per year – pretty sweet, but that’s not much more than an experienced doctor or lawyer’s annual paycheck.

Andy`` says:

Nobody said bartering doesn’t work 😛 just that it was inefficient. I think the problem is just the concept of bartering on a larger scale – which is what these sites are trying to – its too problematic with too many variables to consider, so it works poorly. With some personal bartering, it’s not as bad since you’re not trying to get loads of people to join in bartering for one item, but rather its on a person-by-person basis.

Sanguine Dream says:


I think the reason bartering site fail is because of distance. Back in the days when the economy (if you can call it that) was bartering the parties involved actually met face to face. In the Middle East caravans travelled for months to get to get locations that had goods those merchants couldn’t find locally, and then travel to another distant location to trade those items for others. By the time they returned home they would be loaded with goods that no ne else had.

But it was all done face to face. It’s alot more difficult to cheat someone (which is one of the reasons bartering online fails) when you actually meet.

haywood says:

Craigslist works, sort of

It solves the local thing, it lets people actually offer what they would barter for what is offered. That said; The number of flakes out there make it pretty much unworkable. There are plenty of folks who will make an offer, blessed few who actually keep an appointment.
I’ve done successful bartering with local business men, trading goods for services, vice versa, and multiple variations within those. It is a lot of bother, and one must toe the line to avoid hurt feelings or any sense of being taken advantage of. On the plus side I’ve gotten things and jobs done I couldn’t afford, and gotten rid of things that, while valuable, I had no good way to market.
In summation; bartering works for me, assuming the proper trading partner.

Lucas McDonnell (user link) says:

Re: Craigslist works, sort of

I think this is where bartering really works — when you have a local market that just wants a quick way to find something they need/unload something they don’t. This is also the reason that bartering worked quite well before money existed.

It is when you try to scale that bartering up into an infinitely more complex global system. The next logical step is to create some external indicator as to the universal value of goods — and then we’re just back to money. While bartering is a good one-off, it’s pretty tough to create any complex bartering system that’s actually going to work.

PhysicsGuy says:

the finer details of bartering

this is what you do. you constantly trade goods for slightly more than they’re worth. this increases your mercantile skill. once you have a fairly high merc skill, you go to balmora into the mage’s guild and find the female wood elf mage and open trade. as long as your mercantile skill is sufficiently high, you can buy things from her for less than they’re worth and then trade back the same items for more than they’re worth. since the items regen after 24 hours you have, essentially, an unlimited supply of gold coins.

weirddude says:

The suck

My lawn needs mowing and I don’t have a mower. My friend has a mower and he needs his sink fixed. I know how to fix sinks.

Bartering = Greatness

I want a neckless with a blue stone.
John has a neckless with a blue stone and wants a bracelet with a green stone.
I don’t have a bracelet with a green stone.
Eric has a bracelet with a green stone and he wants a new shirt.
I don’t have a new shirt.
Fred has a new shirt and wants a bottle of rum.
I have rum.
I give rum to Fred, shirt to Eric, bracelet to John.

Bartering = The Suck.

Richard O. Langley says:


Bartering has been around since recorded time.The only reason it doe’s not work,is because humankind are not honest or fair to their fellow man.Bartering cannot work as a business,because you need to make money and bartering is founded on trade not money.
The monetary system was developed in hopes it would solve dishonesty,when in fact it made it worse.Not only is there dishonesty,there is greed.Therefore is a monetary system better?Look at it this way.A person has to work in order to get money.What has the person done? This person bartered himself for that money,now the persons day belongs to someone else.Our monetary system was set up to keep the average person in lower and mid classes,working to support the goverment.Bartering doe’s the goverment nor big business any good,that is why it doe’s not work!

Beefcake says:

Re: Bartering

It doesn’t work because it’s a pain in the ass. Look a 13 above. Isn’t it more efficient to just hand the first guy currency and let him figure out where to find the green stone? Dishonesty exists in both models, so is a wash. But if every time I wanted to procure a gallon of milk I had to engage a complex network of people and their needs, it would take all day.

It can work for small, localized transactions when all parties are familiar with one anothers’ inventory and skills, but on a society scale it’s a huge pain in the aforementioned ass which would prevent the economy from developing.

Jean Camp (user link) says:

better than eBay

It is better than eBay because eBay has constrcuted a reputation system to be so positive as to be useless. Merchants always rate after customers; so even in cases of (obvious after the fact) misrepresentation and abusive shippin charges merchants are still rated as good.

eBay is a hotbed of rip-off artists useful only for the rare find or unusual good and the legitimate company selling over-stocks.

Solo says:

Specialized bartering works. For low price items that have little used value, bartering is great, especially when the items tends to be consumed quickly and in great quantity. For example,, where you guessed it, paper back books get swapped. List the books you want to get rid of, send one, get one credit, use one credit to get one listed book. Easy peasy.

That one is free. (and no, I don’t know how they make money) and they are listing close to a million books, so there’s a fair choice (especially in chick lit, the main drivers of the sites are women)

This case of bartering is efficient, because every item available for trade is listed in one place, and the kind of item is very limited (paper backs) but is available in huge quantities.

The infamous Joe says:

Tax man cometh to take 6% of your pig!

Oh ho! But you are supposed to pay taxes on things you barter– a quick google search will send you zooming towards several sites that explain this, in psudo-depth.

I assume this isn’t really enforced until you do it large scale, if such a thing exists anymore.

The reason bartering was (is being??) phased out is because it doesn’t work in our society today– for example: I build robots– that is the service I provide, but my company doesn’t pay me in robots (and can’t) because the going rate of my labor would still take years to add up to a robot– so I’m working free for years until I get my own robots, which, I might add, I don’t really need. (I play with them all day as it is)

So, instead, they give me money, allegedly backed by real gold by our country. Huzzah!

Paul says:

video game swappers

Reminds me of a little store chain called video game swappers.
They had a list with about 1,000 nes snes and sega games and their value for both cash and store credit (store credit was higher than cash of couse)
A youngster would go in, trade one or a few of his video games and walk out with some used (but new to him) video games from other young lads.

It was a great idea at the time because kids everywhere had games they didn’t want to play anymore. I’m sure it helped a lot of kids grasp the idea of rarity and value as certain games were worth way more despite being an old nes game, simply because it was more rare than a crappy snes game.

ahh a great many a games were swapped there.

misanthropic humanist says:

What is money?

“So, instead, they give me money, allegedly backed by real gold by our country.”

This topic may be the most relevant one on the board today without us all knowing why. Not to be alarmist but the dollar is looking like going tits up (the Chinese are about to unload) and the only thing stopping it right now is a very bullish “la la I can’t hear you!” and “don’t worry it will be alright” attitude going around.

Sure, we are kind of enslaved by currency, but it makes a modern way of life possible. It is a good thing if we can diversify and spread the risk away from the monopolies of the international banking cartels. If you think about it Paypal is not a dollar currency – and the reason they have struggled so hard is because of the financial regulation that treats them as a bank, when in fact they are not a bank. Currency is nothing more than confidence, and confidence starts at a local level (where you deal face to face with people who are neighbors) and diminishes with distance and time.

I think we are about to enter a new era, not so much where “barter” in the old fashioned sense of “swap you three camels for a bag of magic lamps”, but one in which there are multiple currencies and a very dynamic field of exchangable commodities again.

This is already happening in so many ways – people get paid in airmiles, in cashback credits, in all kinds of alternative currencies dressed up as “benefits” to their job.

sylph says:

Bartering can make us free again!

Ask yourself who benefits from the money system?
The banks!!!
Not you or I. They own us!!!!
You are not free. Every day you become more and more of a slave to the Illuminati (Don’t know who they are? – the bank owners and royalty – the top of the money chain)
You think you are not a slave? Have you got debts, a credit card, a mortgage? – then you are a SLAVE!!!!!
Want to be free? Then get rid of the money system.
We were all given talents by God for a reason – mine is Art – what would you give me for a painting?
This is how it was meant to be – not a nation of money lenders – but a nation of givers!!!

Moneyhungry says:


Money is only a means of control. It is very easy to control a society if you can control the money. With no disrespect to anyone when the whiteman tried to control the native americans it was next to impossible because the native americans didnt use money. And so the only way they could get control was to control the food supply and that was the demise of the buffalo. You have to starve people of something they are use to having in order to control them. The liberals have that figured out. And so goes the money. A depression is so they can get control it is all manmade.

felician909 (profile) says:

Barter system didn’t fail, but evolved to a next stage.

Meaning? The heavy goods were NOT easy to be moved to far places, to exchange with barter system. So the coins came into existence substituting goods.

For e.g.., 1 cow for 10 coins.

To avoid thefts, riches used vaults to store coins, and a receipt was given as a token for the storage of coins. That receipt is now paper money, and the vaults are now Banks.

Just my two cents 🙂

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Christopher says:

Cash is just a methods for control. It is extremely simple to control a general public in the event that you can control the cash. With no lack of regard to anybody when the whiteman attempted to control the local americans it was by outlandish on the grounds that the local americans didnt use cash at . Thus the main way they could gain power was to control the nourishment supply and that was the downfall of the wild ox. You need to keep individuals from something they are use to having so as to control them. The dissidents have that made sense of. Thus goes the cash. A downturn is so they can gain power it is all synthetic.

Zreeshah (profile) says:


Cash is just a way of control. It’s really simple to manage a society in case you are able to control the money. With no disrespect to anybody whenever the whiteman attempted to manage the native americans it had been next to impossible as the native americans didnt make use of money. And hence the sole manner they might obtain command was to manage the food source which was the demise of the buffalo. You’ve to starve individuals of something they’re use to having to be able to control them. The liberals have that determined. And so goes the cash. A depression is so they are able to obtain control it’s all manmade.



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