Bartering is still used today as an effective way of exchanging goods and services.
Bartering is a method of exchanging goods and services between individuals or groups of people. It works well when each person or group has something that the other would like. For example, a farmer with a surplus of wheat might trade some with another farmer with a surplus of corn.
Early Bartering and Currency
Humans have used the barter system since the dawn of civilization as a way of exchanging goods they had for goods someone else had. Currency did not come into use until around 1200 B.C., and up until that time the exchange of goods was facilitated through bartering.
The Shift to Modern Currency
As agriculture and more sophisticated societies developed, a greater diversity of goods could be produced and traded. By 1200 B.C. an early form of money was used in China: cowrie shells. The difference between using cowrie shells---or any kind of money---and bartering is that bartering involves a direct exchange of goods. The cowrie shells, on the other hand, represented a particular value. The shells themselves may not have been particularly useful, but the value they represented was. So now, instead of our farmers directly exchanging wheat and corn with each other, the first farmer might give a few cowrie shells to the second farmer. Now the first farmer has the corn he wanted, and the second farmer has cowrie shells that he can use to buy some rice from a third farmer, or cloth from a weaver, or a chair from a furniture make.
Bartering Diminishes
Reliance on the barter system didn't end all at once. Metal coins began to be used in China by around 1000 B.C., and over the next few centuries other civilizations developed their own versions of coins and currency. Still, bartering continued to be useful among those who had goods but no money. Bartering has not gone away. Even today, it is sometimes an effective choice for the exchange of goods and services.
Bartering's Modern Comeback
Bartering often increases during times of economic hardship, such as during the Great Depression, but it is always an option even in the best of times. Sometimes people trade services, such as piano lessons for computer help. Individuals or companies can exchange goods at wholesale values, saving them money over the traditional buy-sell method. Even countries enter into bartering agreements with each other. In one such arrangement, China plans to sell goods and services to Iran in exchange for oil as of the date of publication of this article. The agreement would bypass economic conditions that make the same arrangement difficult to execute with an exchange of money.
Tags: cowrie shells, exchange goods, goods services, exchanging goods, barter system, each other