What If: Bartering?

[Lorelliad]

Not well-versed in economics myself, but I just randomly thought of this today.

I learned a long time ago that before money and currency and stuff like that, people used to barter for things they wanted.

For example, Person 1 is selling fish. Person 2 wants the fish, and will give Person 1 something of somewhat equal value in exchange for the fish.

That's how it worked, iirc.

And then time passed. Until China (I think) invented paper money.

But what if they didn't? How different would our economy be today? What if everyone continued on with bartering?

 

[Prince_Azmiran_Myrian]

At least wealth would be real and material, not fake numbers in the cyberverse.

 

[Ilikewaterkusa]

Not well-versed in economics myself, but I just randomly thought of this today.

I learned a long time ago that before money and currency and stuff like that, people used to barter for things they wanted.

For example, Person 1 is selling fish. Person 2 wants the fish, and will give Person 1 something of somewhat equal value in exchange for the fish.

That's how it worked, iirc.

And then time passed. Until China (I think) invented paper money.

But what if they didn't? How different would our economy be today? What if everyone continued on with bartering?

Trade would be largely impossible and inconvenient without money, so it would probably result in stronger and more self-sufficient economies as it prevents the rise of free enterprise and free trade.

Also it should be noted that money in some form or another existed even before paper money as people traded with precious metals (gold and silver), seashells and other precious commodities that could be easily traded.
The topic is covered in this video

 

[georgelee5786]

Life would be more annoying because of the lack of a common medium of exchange.

 

[melchi]

Not well-versed in economics myself, but I just randomly thought of this today.

I learned a long time ago that before money and currency and stuff like that, people used to barter for things they wanted.

For example, Person 1 is selling fish. Person 2 wants the fish, and will give Person 1 something of somewhat equal value in exchange for the fish.

That's how it worked, iirc.

And then time passed. Until China (I think) invented paper money.

But what if they didn't? How different would our economy be today? What if everyone continued on with bartering?

You are skipping a step. People traded coins for fish. However, having too many coins without securing them is a big risk. So people put their coins in the only place that had a vault to keep them safe.

To prove that they were their own coins they got a paper certificate. Eventually, instead of getting the coins from the coin smith and trading the actually coins people would just trade the paper that can get a coin.

 

[Deleted member 54065]

So people put their coins in the only place that had a vault to keep them safe.

Also, the precursor of banks. ^

 

[TotallyHuman]

Not well-versed in economics myself, but I just randomly thought of this today.

I learned a long time ago that before money and currency and stuff like that, people used to barter for things they wanted.

For example, Person 1 is selling fish. Person 2 wants the fish, and will give Person 1 something of somewhat equal value in exchange for the fish.

That's how it worked, iirc.

And then time passed. Until China (I think) invented paper money.

But what if they didn't? How different would our economy be today? What if everyone continued on with bartering?

actually, the USSR did have money but... well, I can't be bothered to explain

 

[Cipiteca396]

Technically it still is bartering. It's just that the things you're trading like valuable items are utterly useless. So it wouldn't change much. You'd just have to find different things to use as 'currency'.

It's not much of a question. The way to make it more interesting is to stop trading at all.

 

[Domoviye]

It would be messy.
Bartering does happen between countries, one of the better known agreements was between Nazi Germany and the USSR in the 1930's.
The USSR traded natural resources for manufactured goods, technology and machinery, that was the equivalent of 650 million Riechmarks each. Countries would just agree on a certain amount of something in return for something else that was the equivalent of it.

On an individual level we saw bartering during the 1930's during the Great Depression when cash money was hard to come by for many communities. It was also common in Russia during the early and mid-1990's, when companies would pay their employees in goods and alcohol, and trade things with other companies to keep production going.

The problem with bartering is it isn't very flexible.
With money you can trade your work or goods for cash and use it to pay for goods or services with no questions asked.
With bartering, you work for a day and get an egg laying chicken. Now you need get a new stove. You have this egg laying chicken, but the stove repairman doesn't want a chicken, he wants a slab of beef or his car fixed. You don't have a slab of beef and can't fix his car. So you don't have a stove to cook your eggs.

The same thing happens on the world market. You have timber to sell to another country, you can look at general world timber prices, and work out a deal either for cash or the equivalent amount in goods. You have some leeway making it higher or lower depending on demands in that country and how badly you need to sell it.
With bartering, Country A sells lumber to Country B for 1 pound of gold for every ton of lumber. Country C buys timber from Country D for an equivalent weight of fish. Country E sells a single large amount of lumber to Country F for five very expensive pieces of medical equipment.
How much should I sell my lumber for?
I have no idea.

 

[Arkus86]

It would make life much harder for the common man, and economy and development overall much slower.
Imagine that, instead of agreeing on a common currency you can use to exchange for goods and services, you have to negotiate what you will trade for something you want... for every single thing. Where you will be limited by whether you have or can get the specific thing the other party wants.

 

[Corty]

But what if they didn't? How different would our economy be today? What if everyone continued on with bartering?

Money comes from the earliest civilizations not from China. In Mesopotamia it was already used to trade for grain.

anyway the what if situation would be this:

One guy gets fed up with carrying around a fuckton of useless things to barter with when he just wants to buy water. But everyone wants different shit for their water. So he invents this New thing. A little, round object, called a bottleca- I mean coin. Then he says come I give you this 10 coins for a jug of water. Now, you can go to any of my merchant friends and exchange this 10 coins to their stuff as they are also willing to trade for it.

bam. You invented money. You can’t circumvent convinience my friend.

 

[ACertainPassingUser]

Writing realistic barter economy dynamics is as hard as writing currency exchange rate of each kingdom.

Just writing how price change and goes up and down with situation is hard.

Most writer just give up and put gold or just one currency like spirit stone for their stories and be done with it.

 

[Tsuru]

Trade would be largely impossible and inconvenient without money, so it would probably result in stronger and more self-sufficient economies as it prevents the rise of free enterprise and free trade.

Also it should be noted that money in some form or another existed even before paper money as people traded with precious metals (gold and silver), seashells and other precious commodities that could be easily traded.
The topic is covered in this video

If i am not wrong, i think i saw a documentary long ago, that even the Incas, created a semblance of money-system.
It was just some wood things or bones things put on ropes. But again, it's just a theory from the archeologist(s).

1) @Leficios OP kinda wrong about "paper money". Because lot of "time travel in tang dynasty" chinese novels, mention about bronze coins and silver things for currency and mc inventing paper money to solve the situation of loss/lack of bronze and silver, who btw deteriorate with rust (even worse as ancients liked to hide them in the ground/digging). So it's more likely that coins were early compared to paper-money, without speaking that if it was invented first, the counterfeiting of it would be too easy this early.
Also even if it was not china, did you never seen before medieval movies or robin hood era stuff ? I don't think the kings there learned to learned their coins making from chineses NOR had paper money.

2) Also battering got lot of problems itself and "currency" is something too useful to not be invented by a smart man. Most inventions were done with the goal to be more lazy (car is the most easy to tell). There was once years ago, a joke-but-not-really that a certain irl CEO told that he would prefer hiring a lazy person compared to a normal one because this person would invent ways to make his job done efficiently/fast so he can be lazy.

3) Btw, diamonds were in fact worthless and stockpiled and their value exploded mostly thx to "diamond rings" idea. Gold's only utility is it's prettiness too. Returning to diamond, recent technology is able to create more durable material than it, or even able to create diamonds.

 

[Domoviye]

If i am not wrong, i think i saw a documentary long ago, that even the Incas, created a semblance of money-system.
It was just some wood things or bones things put on ropes. But again, it's just a theory from the archeologist(s).

Quite a few groups did this.

Among the Native tribes on the North American West Coast they would trade using a certain type of seashell. They'd carry them in loops like necklaces and use them as a general bartering good, measuring out a certain amount for something they wanted.
This was also used by some Polynesian groups.

On the East Coast of North America, some tribes used beadwork as a trade good. It wasn't as advanced as the West Coast, but for 'expensive' things strips of beads would be exchanged. The higher the quality the more valuable it was.

 

[RavenRunes]

you need a decent group of people for it to flow. I grew up in the hippy capital of the UK and there was a small group that did try this in the late 80s, it was short-lived. Petered out before it got going.

 

[Lloyd]

Trade would be largely impossible and inconvenient without money, so it would probably result in stronger and more self-sufficient economies as it prevents the rise of free enterprise and free trade.

Also it should be noted that money in some form or another existed even before paper money as people traded with precious metals (gold and silver), seashells and other precious commodities that could be easily traded.
The topic is covered in this video

The economies wouldn't be stronger though lol. In fact, they'd be incredibly weak and prone to massive fluctuations. A single famine or shortage would decimate everyone.

 

[owotrucked]

Not well-versed in economics myself, but I just randomly thought of this today.

I learned a long time ago that before money and currency and stuff like that, people used to barter for things they wanted.

For example, Person 1 is selling fish. Person 2 wants the fish, and will give Person 1 something of somewhat equal value in exchange for the fish.

That's how it worked, iirc.

And then time passed. Until China (I think) invented paper money.

But what if they didn't? How different would our economy be today? What if everyone continued on with bartering?

There's a theory (proposed by Gruber) suggesting that ancient economies actually used different forms than currencies and paper money. I don't remember exactly stuffs, so sorry if I spout mistakes.

Trade could be done through:
-commodities (like gold and indirectly paper money based on gold, food/grains, seashells). They are sort of vulnerable to sudden inflation though and variability of availability.
-debt system, like modern paper money (which value is no longer tied to gold but to the countries). It is suggested that debt was very common and actually the main system of economy in close knit communities (like small towns). There are also sticks used as tools to keep track of debt between merchants.
-public ledger, the entire community keeps track of who owes who. (In simple old econ, it could be a giant stone wheel that the village moves between people. Cryptocurrencies are a modern form of public ledgers)
-currencies/tokens like material coins specifically minted by the State. It is suggested that coins were created to integrate armies in local economies by demanding taxes paid in currencies, thus forcing villagers to trade with mercenaries and soldiers who could not integrate in trust-based economies like old public ledger or debt systems.

Considering this, token economies independent from personal trust are bound to emerge in worlds where war exists and massive kingdoms start to rise and needs to employ armies and mercenaries (because it'll wipe out all those who don't use it).

On another note, modern paper money is still a debt based system. The revolution is that the State enforces a global trust in the impersonal market, freeing the citizens from forming relationships of trust personally.

In conclusion, if there's a world where there isn't paper money invented yet, it must be a peaceful world where States and business don't crush their competitors with overwhelming money diff gained through debts. That means small scale family-like communities.

Debts and integrating armies into local economies are too OP to pass up if you rule your country.

 

[BearlyAlive]

Bartering would be fun. Think it like an Influenza: you want people to want bat shit so you can get more goid shiet. Rice and rapeit, you suddenly hazz all teh goid shiet and everyone'z the bat shiet but is happy with, true damage story, bro.