The idea for a bartering community came about as a result of my increasing suspicion that the Capitalist Economy was no longer serving its purpose of bringing increasing wealth and prosperity to all its members. More and more I was seeing examples of perfectly capable human beings becoming homeless, hungry or otherwise impoverished because the economy didn’t value their skills. When going shopping, it seemed that I could spend more time searching for the right product on the market than it would take me to build the thing I wanted from scratch, or from bits and pieces of things I had lying about. The final clincher was my realization that money itself destroys the Stuff which humans thrive on — interdependence, intimacy, vulnerability and community. All of these problems simply vanish if we have as people a means to coordinate our activities that is independent of political jostling, deceptive marketing, and an increasingly tenuous network of anonymous actors, each one motivated only as far as his paycheck will stretch, who collectively form the labor force and supply us with all that we consume.

The Fundamentals of Bartering

Bartering was dismissed as an inferior form of coordinating market activities because of the necessity of a “coincidence of wants.” Economists proposed that a goat herder wanting some broccoli would have to find a broccoli farmer wanting some goats, and in the right quantities, or else a trade could not happen. Money, on the other hand, was fungible so the goat herder could simply find someone who wanted goats and had money, and then go trade the money with the broccoli farmer. To the extent that money is readily accessible to all members of a community, it is a good solution to the problem of coordinating wants. However when money starts to become scarce, for example because of an economic recession or because of a lack of appropriate competition amongst employers, we in actuality return to the exact problem that money is intended to solve. A goat herder and a broccoli farmer could very well want to trade with each other, but each one being down for money is incapable of garnering the price needed for his or her goods on the open market. The clever economist will point out that if both people are down on their luck, then the sale price AND the purchase price for their goods will go down and they could yet again afford to make their sales. Indeed that is what bartering is about. More than it is the act of making trades without money, bartering is about making trades directly between two individuals without going through the heavy overhead of a centralized market.

A good bartering system would be a microcosm of the greater economy. Ideally, all the wants that a person could have would be providable by other members of the community. With the myriad variations of products and services available on the open market, this is a tall order indeed, but a robust system can still be constructed even if it does not achieve the ideal. A system needs to provide the basic necessities to its community: food, water, shelter. Luckily these are easy to produce, and even easier to simply find in nature. So a key point in building a bartering based community is that it should be physically located in or close to lush fertile land. The lusher and cleaner the land, the less work will be involved in providing these basic necessities: less fertilizer for farming, no need for structurally intensive water purifying facilities, lumber and space to construct housing that suits the needs of its occupants. Like with any economic system, the less work involved to produce an item, the better off all participants will be. This is even more important in a bartering community because it will necessarily involve a smaller workforce than a centralized system.

The second key ingredient to a robust and sustainable bartering system is community monitoring. Pre-agricultural humans lived in bands that rarely exceeded 150 individuals. It is thought by anthropoligists that 150 is the largest group within which each member can be personally known to all other members. With more than 150 people, anonymity sets in where it is possible for some members to take actions that affect the whole group, but who remain safely anonymous to large sections of the population and thus are not held accountable for their actions. In our world where people are physically spread out and can interact with thousands of others in a single day just by riding a train, a 150 person community is simply infeasible. However, a close approximation can be made so long as their is a technology that can remember people’s histories where human interaction becomes sparse. Luckily social networking has the ability to log and track interactions in a way that enables people to have relationships with far more people than ever before. A similar type of technology when applied to market activities can enable a larger community to coordinate their activities and remain accountable for their contributions to the larger group without the need for each person to know each other as intiminately as in ancient societies.

Finally, a good bartering system requires a strong community in and of itself. Trust must be present for the system to run. Unlike money based trades even if there is a coincidence of wants it is unlikely that at any moment a trade will be perfectly fair to each party. One goat is worth a lot of broccoli and it’s hard to imagine that an individual would want that much of a single vegetable all at once. It is necessary that the participants in a local bartering community have a level of trust and interdependence sufficient to support imbalanced trades on the presumption that the balance will come full circle at some future point. A willingness to communicate and the flexibility to take a bad deal in exchange for future goodwill is necessary for a system to run smoothly. I believe that human beings are naturally cooperative and empathetic and that this last requirement will actually be easier to fulfill than most expect.

Recommendations for Successful Bartering

When making trades inside a bartering system, there are several things a person can do to ensure that they prosper and benefit and are not consumed by the needs of others. First, and most important of all is to know thyself.

• Know Thyself

The world we live in today is saturated with messages about who we should be and what we should want. These messages are delivered by marketing professionals who have spent their lives dedicated to the art of manipulating people into parting with their money for the sake of corporate profit. Modern marketing is sly and based on sound psychological principles so it is not a case of the weak minded being gullible so much as it is a case of people knowing more about how your brain works than you do, and using it against you. A large part of marketing is selling people on an image and then claiming that in order to embody that image you need to have a certain product. With the image and the products being constructed by the same people, the game is rigged and you are always meant to feel just a little disastified so that you are always willing to part with just a little more of your money to achieve that elusive ideal.

Whether you operate in a central money-based economy or a bartering community, it is important to be able to tell the difference between your own true identity and desires and those things that people tell you to want. Particularly in the case of a bartering community, if you do not know what you want then you won’t know how to find it. Without sophisticated marketing it falls on the members directly to match up their desires with the available resources. Often trades will involve customized products or services and in order to get the most benefit you should know what it is that you are looking for. Not only will it help you in your search, but it will also help you to know when you have successful completed your search. No one in a bartering system benefits from the chronic dissatisfaction built into our current economy.

When you know what you want, then next thing is to be able to communicate clearly what you want and what you are willing to consider in exchange. Bartering requires two parties at least in order to be successful.

• Communicate clearly your desires

Many trades in a bartering community are going to be approximations of ultimate desires. You might want a new dining room set and there might be a wood worker in the area. Perhaps the woodworker can build the set for you if you gave him a design, but without one would only be able to make a rougher version of what you ask for. Being able to communicate what you need: a design and a finished table, and to understand what you are being offered: a finished table according to a rough draft unless a design is provided, will help to avoid regret, disassatisfaction and a breakdown of the trust necessary to keep the system going.

Because bartering directly with people is a foregin concept to so many of us, I also recommend you start slowly in easily manageable steps. If you have ever found yourself chanting the mantra, “don’t mix business with pleasure,” then you might find bartering particularly difficult to adjust to. It is necessarily intimate and personal. In order to accustom yourself to having your life depend on other people who know you directly, start with small trades that involve little time and little effort at first.

• Take things slowly

A bartering relationship is a business relationship made personal. Like any relationship between people, each person will change over time. Children are born, children leave home, jobs change, people get sick, get new hobbies, people fall in love… a good bartering relationship needs to be able to flex with these changes. If your first trade is for something big, say you offer day care services in exchange for free rent, then what happens when all of a sudden your landlord decides to have another child? Suddenly what might have been a great deal for you just added a whole lot more work. Do you move out? Are you allowed to say that no, another child is not part of the deal? How do you gracefully renegotiate the boundaries of your agreement? These are hard questions to answer and require both self knowledge and good communication.

When transitioning into a bartering community it is best to avoid trades that affect such a large part of your life until you are confident that you can handle the uncertainties that will come with it. Until such time as you are reasonable certain that you could gracefully renegotiate or extricate yourself from a deal gone sour, it is best to keep things simple and contained. Avoid open ended deals that require one or both parties to take action to end them (like rent, child care, or “food”). Instead, negotiate a definitive end into each deal. You might trade for a week’s worth of vegetables (deal ends in one week) or a month of discounted rent (deal ends in one month), one table, or a fixed number of music lessons. Make sure that until you are comfortable you always give yourself a path back to the way things were before the deal. If you barter for something like rent, you might want to ensure you can pay the full price in cash regardless just in case you are not able to renegotiate.

• Build a default “exit plan” into each deal

Because a bartering community is interdependent on each of its members, it is of utmost importance that renegotiation of trades is built into the system so that you never feel trapped or obligated to carry on a deal that is no longer beneficial. If both parties to a deal do not feel like they are benefitting from a fair arrangement, resentment will brew and the community could break down. It is important, then, that larger ongoing trades, the kind that are more likely to require renegotiation have an exit plan built into them. Somewhat like a prenup, the exit plan is a default option that both parties would find acceptable should the deal become impossible to complete. If at all possible, the exit plan should not be viewed as a failure of either party to keep their end of the bargain, but more as a face saving option that allows the parties to maintain their relationship as members of the community even when the trade doesn’t go through.

• Maintain a sense of gratitude

Last of all, and most importantly, culture and maintain a sense of gratitude for the other members of your community. Bartering is a way to empower people to use their skills to directly benefit themselves and the people around them. We all have a choice of how to go about our lives. We could sell our time to a company in exchange for money which we then give to other companies in exchange for stuff, or we could give our time to benefit someone we know personally in the hopes that our generosity will be reciprocated. If you find it frightening to trust your livelihood to another person, then they certainly feel the same way. That any agreements are made at all is the result of a great leap of faith of both people, and much likely a great many more. So rather than expecting perfection, expect respect and be grateful for what you are given. Give respect and be honest in your offerings to others. You will find you are much happier with the trades you make and with your life in general as a result. This is a promise.