Bartering for Individuals and Businesses: Stimulating the Economy Without Exchanging Money

"The economy's in the tank," says every news source around. Yet life must go on, and life does require some amount of goods and services. How will the world keep turning with less money?

In previous posts, we've explored the question of whether or not spending IS the only way to keep the world turning. Maybe what's being tilted off its axis is not life but our conception of what drives it. Volunteering is an important part of what keeps society going A quote from that post:

Burton Allen Weisbrod’s book The Nonprofit Economy estimates that “volunteers constitute a major resource to the economy as a whole and that they are enormously important in health, education, and social services,” and that the unpaid labor devoted to the nonprofit sector is almost as large as the paid labor.

The President has often mentioned community responsibility as a hidden resource that can act as a lever for change.

We've also mentioned moving unneeded goods around through donations to the many charities working to get donations-in-kind to the swelling ranks of the disadvantaged. Giving stuff you don't need can translate into extra space and extra peace of mind, and often costs no cash.

These charities are usually set up for broad categories of valuable items: recent-model computers, stuffed animals, eyeglasses. What about all the household junk that doesn't fit into those categories, but still might be valuable to a collector or just someone with unusual tastes?

Bartering is an age-old method for exchanging stuff, but in the old days someone with an old toaster had to find another person who wanted that toaster AND had something they wanted in return.

  • Dibspace is one of several sites with a new model for bartering: participants trade in credits "dibits" that allow them to choose future transactions with other sellers, freeing up the users to "buy" and "sell" just like a mini-economy, without money ever changing hands.

  • Tradeaway is another barter site. They charge buyers a 4% cash fee upon purchase.

  • Barter Switch requires a membership fee to access listing details and another fee for each item listing.

Bartering isn't only for individuals. Some companies have gotten on the bandwagon: businesses engage in barter netowrks as well. In the case of two farmers exchanging hay for seed, the transaction seems pretty straightforward, but business bartering has some special dimensions. For tax purposes, the IRS says that "Income from bartering is taxable in the year in which you receive the goods or services. Generally, you report this income on Schedule C, Profit or Loss from Business Form 1040."

Bartering exchange groups also exist on the business level, expanding the web of relationships possible for each company offering a good or service. The stakes can be a lot higher than a site offering private individuals a chance to trade a television for a camera, so it's especially important to have some safeguards for businesses. The International Reciprocal Trade Association is a non-profit promoting equitable bartering practices among businesses. They charge a membership fee in exchange for access to their network and resources. From their "Modern Trade and Barter and the Economy" page:

The reality is that most modern economies lack fully elastic currency that is capable of expanding with the growth of production and providing the liquidity needed to clear product and service markets...Balancing between these in advanced economies often leads to monetary restriction thus restraining the flow of spending in the cash economy, limiting demand for output and creating excess capacity. By increasing demand for goods and services through reciprocal trade, it generates additional employment, production, and purchasing power.

Hat tip: The Crunchy Chicken

Tags: Barter, Business, Economic measure, Gdp, Tips, Trade, Volunteer

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