Are we crazy? Why would we promote barter when we all know that barter was tried before, long ago before the invention of money, and it failed. It failed for the reasons given in nearly every economics textbook which tells a story of why money was created, and they say it was created because of the failure of barter. Barter failed because it was too difficult to find someone who had what I wanted, who also wanted what I had.
In actual fact, we aren’t talking about that kind of barter. We aren’t proposing to gather a group of business owners in a room just to see if we can find a few people who have what the other wants. It doesn’t make much sense to us either, unless the group of businesses we are talking about is very large.
Secondly, this isn’t the problem that gave rise to money. I mean, the story about barter failing and being redesigned as money is false history, as described in the book “Debt: The First 5,000 Years” by David Graeber. What came before what we know as money were actually circulating receipts, invoices, IOUs and other forms of credit backed by a promise to pay, in addition to barter where needed. These kinds of financial instruments are often used by businesses in place of money.
Barter is just a convenient term we use to differentiate trading between businesses, B2B or business-to-business transactions and B2C or business-to-consumer transactions.
Instead of using money issued into an economy by a Central Bank, we use money created by businesses extending credit to each other. Although they function in similar ways, this difference in design is much better for businesses who need to trade with each other, than with consumers. We can say then that regular money is consumer-facing, and our network’s Trade Euro is business-facing.
So why then would we propose a parallel currency for trade between businesses?
We do it to achieve three advantages compared to using cash:
- To reduce our cash expenses. If we don’t have to use cash to buy what we need, we save cash. Saving cash means increasing profit.
- To reduce the cost of goods sold. When we can acquire what we need more cheaply using barter than we can with cash, the cost of goods sold decreases, which means an increase in profit.
- To reduce inventory or increase occupancy. By cooperating together with other business owners, we can reduce inventory or increase occupancy without this trade affecting the value of our services on the retail market. This means an increase in profit.
We barter because it means an increase in profit for our business. There is nothing at all that is crazy about that.
Contact us to discuss how we can help make barter work for your business, and the businesses in your network, community or area.
On Bartercard Australia, you’ll see hundreds of testimonials from real live business owners telling their stories of how barter has been of benefit to them. Visit their website now at: https://bartercard.com.au/reviews/