Barter
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Basic Information

Barter is an economic system whereby goods and services are directly exchanged in trade - for example a mountain man trading cloth and tools to the natives in exchange for furs. Essentially a straight swap of one good for another. This is perhaps the most primitve form of commerce available and can even be performed without the two parties coming into direct contact, let alone sharing a language and seems to be comprehensible even to sub-human intellects such as higher animals and small children.

Of course, it has roughly the drawbacks you would expect. Firstly, in order to make a barter-trade you need to find someone who wants what you have and has what you want … or failing that, find a middle man whose goods are acceptable to both parties and who wants the goods that both have to offer. This has predictable costs in time and potentially in value as well1. Also, you limit the number of trades that can be supported in a community (since everyone must either produce the essentials of life or something the can be traded for those essentials and is in wide enough demand to ensure they have sufficient trade capital) and run the risk of market saturation (for example, where most people are subsistence farmers, anyone producing a good in high demand from them may accquire food faster than he can eat it before it spoils). There is also a "lost value" problem where trade goods lack the granularity to express subtle differences in value (the equivalent of losing 10p every trip to the vending machine, because you only have 50ps, the crisps cost 40p and the machine refuses to make change). In the sort of pre-modern environment in which barter tends to occur, there is also the issue of non-identical items differing in value so that (for example) three pigs does not necessarily equal three pigs.

Frequently barter based systems settle down to an agreed common standard of value (so, for example, your pig and someone's barrel of beer can both be expressed as a, possibly theoretical, number of chickens) - at which point you are very close to developing a currency. Indeed, if that measure of value happens to be something like salt or grain, you've just invented commodity based money.

Where barter (or barter like arrangements) occur in an economy with a functioning currency, it will normally be termed payment in kind. This is particularly common in the grey and black markets.

Sources

Bibliography
1. full source reference

Game and Story Use

  • For those interested in how you can barter without making contact, it works as follows:
    • Party A lays down their offered goods and retreats to a safe distance.
    • Party B examines the goods and lays down the goods they are prepared to exchange in return, before retiring to a safe distance.
    • Party A examines the counter-offer and, if satisfied, takes it and leaves - otherwise they either subtract some of their own goods to match it, or withdraw and await a better offer.
    • Party B then collects the offered goods (if their offer was accepted), or amends their offer to account for whatever A did.
    • Rinse and repeat until a deal is agreed, or until one party picks up their goods and leaves.
      • This technique seems to have worked in several historical contexts.
  • For Players used to modern commerce, this system is likely to be a pain in the butt. That would be entirely authentic.
  • Barter can also appear in circumstances where access to acceptable currency is suspended - such as prisons and the aftermath of disasters.
    • It's also likely to show up where currency isn't common, or where there are a lot of goods around.
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