# Bartering or currency?



## Gryffin (Sep 27, 2011)

I am trying to decide if it is going to be more interesting in my world to stay away from currency and stick to a system where bartering is used instead. What do you think? I think it could lead to some interesting side stories but I want to get some other opinions before I decide to stick with it.


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## Hans (Sep 27, 2011)

In history currency came very early. The Sumerians already had currency when they developed writing. But bartering stayed very long and is still in use in unstable areas or for small and informal trades.
So you can easily have both at the same time. Just set your emphasis where you need it to be. Currency for the rich and very formal forms of trade. Bartering for everything else. Or whatever suits you.

Getting completely rid of currency is harder to do. Currency gives a "reference value" which is needed for larger scale trade. But it is relatively easy to have rural areas where no currency is established.


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## sashamerideth (Sep 27, 2011)

It doesn't have to be all one or the other.  Even in our currency driven economy, bartering still happens.  Anyhow currency overcomes the problems inherent in bartering, assigning a value to an item or service. 

Say you have grain that I want.  I have shoes.  You don't want shoes but I have nothing else to barter with.  No grain for me.  

Currency acts as a mediator between my shoes and your grain.  Sure if you wanted shoes then we could trade but otherwise I would need my currency to get your grain. May need to sell my shoes if I have no currency.

It could work in certain circumstances, I have a nomadic people that barters among themselves but have currency for dealing with those outside the community.


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## Kevlar (Sep 27, 2011)

Remeber that even in currency driven countries there is bartering. The lowest of the low don't have money to buy from eachother, so they would trade. One peasant has chickens, let's say, and the other has a little bakery going on. The farmer might walk in and offer the guy two eggs for a loaf of bread, to which the baker might scoff and say his bread is worth at least a dozen. They might end up settling aroung 6 or 8 if they're both willing to haggle, but they also might get mad at eachother and the farmer may leave, of his own accord or not. Does this mean there ISN'T currency? Hardly.

Barter systems have worked well in the past, and even in the modern world, but regional powerhouses almost always start minting. As long as the country your story takes place in isn't a huge trading kingdom don't I see a huge issue in leaving out the coinage. If it IS a trading nation you COULD pull off not having currency without much issue either, as back in the day a minted coin was worth only its weight in gold. The minting itself was, more than anything, a show of power, but the widely used system of medieval European coinage did provide easy trade, and allowed everything to have a set price. Even in barter systems, however, there are often set prices on many goods, based on that ancient principle of supply and demand. A good idea, if there will be many transactions going on, or you simply want to keep track of people's funds for personal reference, is to make a chart of goods and their worth. This isn't an adamant thing, but a guideline.

Personally I would (and might) Put a list of items along the top of a chart, and down the side, and then fill the boxes with exchange rates. So, as an example, where eggs and eggs meet you would put 1:1, obviously, but where eggs and bread meet you might put something like 6:1(loaf), and in the opposite box, bread:eggs, you would put 1:6.

While a system like this would help you keep track of worths, middle ground in haggling, and expenses, the exchange rate would change with time and locale. Also, this chart idea is off the top of my head, so I won't promise it's a good one. Especially since quality and size of items can change a huge amount.


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## Hans (Sep 27, 2011)

sashamerideth said:


> Say you have grain that I want.  I have shoes.  You don't want shoes but I have nothing else to barter with.  No grain for me.


I am not aware of any bartering societies where someone has only one product to barter with or bartering is a strict on on one trade. Often everyone does nearly everything he is able to do. A shoemaker will make much more than just shoes if no currency is involved. At least everyone will help at harvest time. As long as he does enough for the community within his abilities he will get back what he needs. There is no clear system to define what someone owes someone else.
How handicapped persons are threated highly differs in different societies. They can be kept in high regard or killed at birth. Both and everything in between have exemplaric societies on earth.

That sounds communistic, but if the community is small enough and most people well known to each other it works. Now think about, why excommunication or banishment was such a severe penalty.


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## Ophiucha (Sep 27, 2011)

I don't think a large kingdom could honestly exist without _some _form of currency, even if most of the common people never encounter it. Two lords wouldn't have wares to trade in the same way that two farmers might, they don't _produce_ anything. Merchants in most societies wouldn't barter, either. I mean, if you flash a gold medallion in their face they might, but if you just come up to them for a loaf of bread, they aren't going to take a batch of eggs as a trade. But bartering is fine, and still exists to some extent, in a society that also has currency. I mean, have you ever traded something with someone? When you were a kid, did you ever give another kid three Bulbasaurs, a Mewtwo, and a Dratini for their Charizard? Or trade your fruit-by-the-foot for a brownie bite?


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## Telcontar (Sep 27, 2011)

As has been remarked on above, barter tends to be local, and currency is more prevalent as numbers and distance grow.


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## Ravana (Sep 27, 2011)

What they said. Currency is first and foremost a convenience: it's small and light, so you can carry a lot of it easily; it tends to retain its value against anything else you can trade it for (assuming it isn't debased); it doesn't spoil or rot; and probably most importantly, it allows you to buy from someone who doesn't need whatever products you have to offer, and sell to people who don't have products you need. 

Anything that meets the above descriptions can be used as currency, though, and such transactions may end up resembling "barter" in the sense that something being used as currency might also see end uses. (I've said elsewhere that the requirements for something to make a "good" currency are all the above, plus one more item: the thing has to be useless for any other purpose.  Also helps if it's shiny.) Grain would make an outstanding currency, if it weren't so bulky: everybody wants it. Salt has often been used as currency. Nails are good (as is any other small object made of iron, or whatever the highest level of metallurgy is in your world.) Shoes would probably work quite well if everybody's feet were the same size, but that puts a bit of a damper on their utility.

If you can somehow get around the items mentioned in the first paragraph, widescale barter becomes more feasible. Say you have a magic box that can hold any amount of anything, yet still weigh the same: at that point, it might be more economical for you to load your box with grain, take it to whatever faraway port needs it the most, and trade it there for whatever they produce… rather than going through the multiple transactions from producer to local buyer to shipper to foreign retailer to consumer–with everyone in the chain taking a cut, and that's ignoring the possibility of having to go through one or more moneychangers to convert from one land's currency to another, with them taking _their_ cuts. Or warehousers. Or transshippers. Et cetera. (Okay, the individual farmer isn't going to be hopping on that boat, but all the other steps could potentially be cut out if middleman #1 doesn't mind traveling.) That, however, is likely the sort of thing it would require to have a large, widespread barter economy absent _some_ form of currency.


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## Chilari (Sep 28, 2011)

I think it depends on the culture you're using. As some of the above posters have pointed out, nomadic groups, in general, might prefer to barter. But there are a number of pre-coinage societies, like, for example, early iron age Britain, which used bartering. Wealth was largely determined by the number of cattle you owned and the land you could graze them on. Bronze and iron objects had value, as well as furs, all for their practical value, while aesthetically pleasing things like gold, jet beads, and so on, also had value because if you could trade a useful item for a useless but pretty one it demonstrated your wealth. But with something like that, you would need settlements to be small and society to be very carefully structured to enable those without cattle to still eat by, say, working for someone with cattle, hunting, farming wheat or other crops, creating bronze tools, etc.


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## Dragonie (Sep 30, 2011)

I agree with what the others have said about bartering being more "small town" and currency more "city." I think it could be really interesting if you have both and switch between them depending on the location!


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## Gryffin (Sep 30, 2011)

Thanks to everybody who offered opinions, I appreciate all your comments. It gave me a lot to consider and has been very helpful. I do agree with some that said bartering might be neat to work with on a smaller level, whereas currency would be on a larger scale. I might experiment with that and see what happens.


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## Fnord (Oct 1, 2011)

Keep in mind that the more bartering makes up of the total economic exchange, the poorer the society in question will be.  As someone mentioned earlier, currency is convenient but that convenience cannot be overstated.  Systems that are largely barter means there are huge wants left unmet (because if I want Good A, I will have to find out what the person who has Good A wants, and then trade my Goods C & D to someone for that good, and so on and so forth) due to the sheer losses in transaction costs and the losses in overall consumption of certain baskets of goods.  Especially large-scale trading transactions (such as hiring a cadre of workers to build me a ship for instance) will be nigh to impossible without someone losing out (which is why it was just easier to have slaves).  There will also be less instance of specialization in trades and goods production because specialized goods are much harder to barter.

There was another thread here about using "alternative" currencies where there can be interesting spins on those that had some cool suggestions.  If you want to see how a bartering system operates in the modern era, Zimbabwe is currently mired in such a system, especially the rural areas.


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## Gryffin (Oct 3, 2011)

Fnord said:


> Keep in mind that the more bartering makes up of the total economic exchange, the poorer the society in question will be.



Good point and thanks for your insight. I will definitely check out the thread about alternative currencies. That could definitely help me out. I might choose to go that route, maybe use an alternative method somewhere in between the two.


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## quenchy (Dec 10, 2011)

I can argue about how bartering creates poverty in the economy of a given country. I will surely create stagnation and reduce the incentive for mobility of people and ideas, but it won't necessarily create poverty.As the experts from the World Bank state:

"Poverty is pronounced deprivation in well-being, and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity."

So, if we have a society that relies on barter it will probably consist of large family units tied to the land or cattle they work. Bad resource management will result in hunger for the entire family and eventually will decimate its numbers. Earning goods will be a matter of survival. Barter will come second, only if the crops gave a good harvest or the cattle multiplied this year/season. The economy of this society will be based upon the ability to access, transport and use the goods you obtain (produce or gain through barter) in the most effective way.

So, a person that is poor in such a society will most probably be sentenced to a hungry death. Being 'poor' would mean that you don't possess ways to generate goods on your own - you either lack the property o the physical ability (you are crippled, old, sick). You could also be viewed by the rest of the society, especially your own family group, as a burden. In this case, such societies usually develop the concepts of senicide - for example, the Serbian have the tradition of lapot - killing one of the elderly parents when he or she is a burden to the family. It was not viewed as a sin as it was a matter of survival to the family.

My point was that societies based on barter will probably possess the ability to get rid of 'poor' members - hunger, suicide, exile or killing will be very cruel, very primitive, but perfectly applicable ways. A society operating in a barter economy will have an effective mechanism of self-cleansing.

On the other hand, having currency doesn't always mean that you have money. Truly, the basics of 'money' are their functions of store of value and medium of exchange. But the real value and idea of money is the ability to generate interest. The concept of interest is usually  impossible in violent times and settings that resemble the ancient and medieval times. If your setting has no great authorities - such as independent church, wizard guild, Gods etc., then the existence of banking will be a matter of fantasy fiction (meaning that they will exist if you 'force' them to exist). Often skirmishes, slow travel and communications and lack of legislative system that allows the burghers to keep their earnings in cases of war, hunger and plague will also destroy the motivation of rich people to pursue the concept of investing money to generate interest, and based on this - economic growth. You won't have any banks that will lend credits with stable (more or less) interest - the banks will be a method of the rich, landless people to take the land from poor landowners, such as free citizens or peasants. Currency will only be lend to rich or noble people by rich or noble people. Examples may go on.

So, having currency may still allow you to leave your societies in the clutch of barter, but with unified bater goods.

As I was writing this post, a concept begins to tantalize me. But I guess it will be posted in a thread on its own.


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## Terra Arkay (Dec 10, 2011)

I say with great civilizations come great systems; currency is a definite.


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## Leif GS Notae (Dec 10, 2011)

The other thing to keep in mind is exchange rates from other societies. I know this might not get up to that level for what you are working on, but it can help dictate what the value really is based on cross borders commerce. If desert spice is rare and the taxes are high on the item, then the value will be more to accommodate this rarity. 

The flip side of that is the darker side of crime. What value does something start to become more valuable to risk your life sneaking it in and selling it than going the traditional route. These can help determine a faux barter system for the illegal activities.

All up to you, of course. These were just some things that popped into my head. Hope you can hammer out the system to your satisfaction.


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## Wormtongue (Dec 12, 2011)

My world has old civilizations, and established trade networks.  A currency system was not optional.

I chose to have a currency for the common people and a currency for the wealthy.  There is an exchange rate between the two, but the nobles would never bother with the "valueless" copper and bronze coins of the commoners, and the commoners are very unlikely to ever possess even a single silver coin, much less gold or platinum.  A few people (such as traders) are what would be considered "middle-class" and would be likely to have a mixture.


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## sashamerideth (Dec 13, 2011)

Wormtongue said:
			
		

> My world has old civilizations, and established trade networks.  A currency system was not optional.
> 
> I chose to have a currency for the common people and a currency for the wealthy.  There is an exchange rate between the two, but the nobles would never bother with the "valueless" copper and bronze coins of the commoners, and the commoners are very unlikely to ever possess even a single silver coin, much less gold or platinum.  A few people (such as traders) are what would be considered "middle-class" and would be likely to have a mixture.



Makes the traders prime targets for daylight robbery.

Sent from my Blade using Forum Runner


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## ShortHair (Dec 13, 2011)

Another way of looking at barter is as a system of obligations. If I give you a cow, you owe me something. Until you give me something, I have that much less incentive to attack you, and I have more incentive to produce more cows and more obligations. The more obligations are due you, the more important you are--think of _The Godfather._

So this type of barter is more about your status in relation to the other party than about the goods exchanged. It's more of a cultural transaction than an economic one. I do have a reference: _DEBT: The First 5000 Years,_ by David Graeber. Only in the modern era is debt seen as something linked to currency and thus worth accumulating for its own sake.

In my WIP, the society is resource poor but not primitive. They have developed a system such as I describe to incentivize innovation, which is almost the only way to grow the economy. They have currency, but there is so little to buy with it that it rarely changes hands.


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## Wormtongue (Dec 13, 2011)

sashamerideth said:


> Makes the traders prime targets for daylight robbery.
> 
> Sent from my Blade using Forum Runner



Which is why trader caravans go well guarded.


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## danr62 (Dec 13, 2011)

Speaking of alternative currencies, maybe magical ability can be used as a currency.

"I'll give you 20 mana points for that loaf of bread".


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## quenchy (Dec 14, 2011)

Hah, true that! Another alternative currency - the WH40K Orks use their teeth as currency. The bigger the Ork from which the tooth has been taken - the bigger the tooth and the greater its value. Ork teeth regrow limitlessly during their lifetimes, but an individual has only limited amount of them at a time - around 30. In a society like theirs where a good fight is highly appreciated, regular squabbles between orks are common.
Example prices:
* big shoota - 40 teeth
* truk - 200 teeth
* mega-armor - 400+ teeth
So an Ork is stimulated to either hoard teeth or to obtain them from another unlucky, squishier individual.


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