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Barter
From Wikipedia, the free encyclopedia
- For other uses, see Barter (disambiguation).
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Barter is a type of trade that doesn't use any medium of exchange, in which goods or services are exchanged for other goods and/or services. It can be bilateral or multilateral as trade.
Barter and money are different means of balancing an economic exchange. Barter is recognised as trade in societies without monetary systems. Although it can be argued that barter exists in most societies parallel to monetary systems. Barter crosses over to the spheres of trade with money when economies are suffering from a very unstable currency (as when hyperinflation hits). Barter is also used as a concept in regard of intercultural exchange between craftsmen or artists of different countries, especially when the exchange is passing the gap between "the rich world" and "the poor world".
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Why is it done?
- A transaction is possible when coincidence of wants of economic actors enables an exchange cycle between their bids: each party must be able to supply something another party desires.
- Some entities develop a system of intermediaries who can store, trade, and warehouse commodities, but who may suffer economic risk.
- Others develop a system with a virtual value unit ("barter dollars," or "trade credits," for example) to measure and balance exchanges, very similar to a monetary system.
- Multilateral barter is more complex to settle but allows trades that would not be possible with bilateral barter. However with the use of a singular platform - like a barter exchange, bartering amongst businesses is easily facilitated, even if the barter trade is done across borders.
- On the west coast of the United States the Beyond Barter organization extends the concept further, to free sharing of services. Although there's no attempt to balance contributions in individual transactions, controls ensure that members are not overburdened.
- Barter is done when there is a mutual interest or desire between two or more groups, or parties, of different economic cultures, to trade/exchange goods, knowledges or events that are reciprocally understood as valuable. Barter is the agreement thus arrived at when any possible intermediary system's currency are not useful or fixable in the trade/exchange situation. To exchange events, goods, skills, intercultural valuable knowledge & competence of any kind, whether in regard of craftsmanship, mutual entertainnment or spiritual endeavour may be called barter.
In the past long ago years the goods are to be exchanged in the goods of another with out considering of its money value.To organize production and to distribute goods and services among their populations, many pre-capitalist or pre-market economies relied on tradition, top-down command, or community democracy instead of market exchange organised using barter. Relations of reciprocity and/or redistribution substituted for market exchange. Trade and barter were primarily reserved for trade between communities or countries. It is also used when the monetary system failed to measure the economic value of goods.
Barter becomes more and more difficult as people become dispossessed of the means of production of widely-needed goods. For example, if money were to be severely devalued in the United States, most people would have little of value to trade for food (since the farmer can only use so many cars, etc.)
It is used on important transactions between firms or countries to exchange commodities, when monetary constraints are too expensive for the economic actors.
A well-known example of multilateral trade is the triangular trade.
Money used to be considered as simpler for small trades; but use of the Web has changed that perception, especially for Swapping.
In finance, the word "barter" is used when corporations trade with each other using non-money or "near-money" financial assets, such as U.S. Treasury bills.
Corporate Barter
Corporate Barter entails the use of a currency unit called a "trade-credit". That which the trade-credit represents, must be known and guaranteed (contractually) as a deliverable in order to eliminate ambiguity and risk. Trade-credits are redeemed with cash much as a consumer might use a coupon toward desired goods in a supermarket.
Corporate Barter can be a powerful financial implement used to provide full recovery of value for asset(s) with an impairment in value (book value vs. market value). In a well constructed barter transaction, Company A sells an impaired asset to the barter company for greater than the impaired value. The barter company pays full book value, with trade credits, for the asset.
The deliverables represented by the trade credits are usually expenditure items which the barter takes capacity positions in. These are usually areas where Company A intends to make substantial purchases. Examples are print, shipping, packaging, travel, etc.
Many companies successfully use barter as a strategic financial implement. Practices such as requesting references help to significantly reduce risk.
Barter is often rendered a less sophisticated form of market than the moneymarkets, but must be understood as a highly sophisticated way of trading/cultural exchange of knowledge, skills, craftsmanship and so on between parties of uneaven economic strength, within a globalised market economy. Barter is used as a concept among non-institutional artist groups or collectives. The concept was used by the Denmarkbased reknown theatre group Odin teatret and has been used by others in that sense. Odin teatret/Eugenio Barba used the concept of barter in their early period, while touring and exchanging theory-practices in a variety of countries mostly in so-called third world and rural traditional societies/Communities. It can be argued that Barter is a more nomadic form of trade, and is less sophisticated because it is generally less developed form of trade. That may be because the nomadic has generally been subordinated to the governance of the settler, at least in societies of more imperial governance. For the nomadic the economical intermediary (e.g. money ) is blocking the flow of the barter situations since the currency/current value will not easily be fixed. The Barter tour-journeys of Odin theatre was crucial for the International School of Theatre Anthropology (ISTA)
Barter. Its essence is reciprocal presentation. Through barter, Odin Teatret enters into direct dialogue with a group or a local community by means of an exchange of song, dance, sketches, improvisations and other cultural activities. It can take place in a village, a neighbourhood, a school, a prison or a refugee camp.
(from the home pages of Odin Theatre)
Swapping is the increasingly prevalent informal bartering system in which participants in Internet communities trade items of comparable value on a trust basis.
While swapping is an excellent way to find and obtain items that are inexpensive, it relies upon honesty. A dishonest participant might arrange a swap, and then never complete their end of the transaction, thus getting something for nothing. This practice is called swaplifting,[citation needed] a pun on shoplifting. The victim's recourse is often limited to shunning the swaplifter, or taking him to small claims court.
Complex business models based on the concept of barter is today possible since the advent of Web 2.0 technologies.
In the other word Barter means: The act of trading goods and services between two or more parties without the use of money. Bartering benefits companies and countries that see a mutual benefit in exchanging goods and services rather than cash, and it also enables those who are lacking "hard currency" to obtain goods and services.