<p>In that case the trade might not occur at all if we would restrict people strictly to use barter. As BakerStreet answer points out this is classic problem with barter.</p>
<p>In pre-historic economies this was a bit of a less of an issue as everyone was more or less equally poor. The difference in value would of course still occur but pre-historic societies were composed of small tribes where everyone knew each other. In such setting barter trade would work in a way where a member of a tribe would not even get goods immediately in exchange for goods provided to the tribe but rather get favors from other members of the tribe back over extended period of time (in fact anthropologists consider this gift giving although economically its more of an barter with social component).</p>
<p>However, obviously this sort of socially enforced barter exchange can only work in small hunter-gatherer communities where everyone knows everyone. Virtually all advanced civilizations used some sort of money, to facilitate exchanges, precisely to get around problems such as the one you describe.</p>

CC BY-SA 4.0
2022-11-22T14:25:24.537Z
I think that the questions you refer to are very interesting questions of anthropology, and also of economic history.

In advanced societies  there could be situations in which barter can reappear , when institutional mechanisms, in particular markets, cease to work for some reason, for instance in war periods, because of lack of goods or high inflation.
BakerStreet
CC BY-SA 4.0
2022-11-22T14:45:40.333Z
@BakerStreet thats a good point although they usually appear just locally and often there will be some quasi currency emerging, e.g. cigarettes in WW2 POW camps, alcohol etc
1muflon1
CC BY-SA 4.0
2022-11-22T14:59:10.143Z
Yes, it could be local. I write from Italy, and I've heard  stories about  the black  market and the necessity to go to country from cities to find and exchange food during Second World War. 
And I think of the period of hyperinflation in Germany after the first World War,  the Weimar hyperinflation 1921-23.  I suppose that nobody wanted money.
BakerStreet
CC BY-SA 4.0
2022-11-22T14:10:01.927Z
2022-11-22T14:10:01.927Z
1muflon1
<p>The problem of a barter economy is exactly that.</p>
<p>It presupposes that an individual who wants to have a particular good, exchanging for this other goods he has in excess with respect to their needs, finds  another individual who, at the same time, has the opposite wish.</p>
<p>This  is the problem called <em>double coincidence of needs</em>.</p>
<p>With the arrival  of  monetary exchange, the convention arises to accept a particular good, money, in exchange of any good one wants to offer and vice versa.</p>
<p>Thanks to money,  the double coincidence of needs is ‘split’ , and there is no longer the necessity that pairs of individuals with  reciprocal intentions meet.</p>

CC BY-SA 4.0
2022-11-22T13:44:18.247Z
2022-11-22T13:44:18.247Z
BakerStreet
<p>It can be resolved through debt.</p>
<p>J. Wellington Wimpy tells Popeye, &quot;I will pay you Tuesday for a hamburger today.&quot; (Yeah, they didn't have hamburgers back then, but hey, you mentioned cars, so…) Popeye will remember that Wimpy owes him for one hamburger. Wimpy can pay off his debt when he acquires something worth a hamburger that Popeye wants, or perhaps Popeye will allow Wimpy's debt to grow until Wimpy can trade in something bigger.</p>
<p>Let's say though that Wimpy keeps racking up debt and Popeye gets tired of Wimpy not paying any of it. &quot;Wimpy,&quot; says Popeye, &quot;Ya gots ta do somethin'. I've given ya 15 hamburgers now and I gots nuthin' ta show for it.&quot;</p>
<p>&quot;Very well,&quot; says Wimpy, &quot;but I need to eat, and all I have right now is my car, and we both know my car is worth more than 15 hamburgers. It's worth more like 1000 hamburgers.&quot;</p>
<p>&quot;How's about ya gives me yer car and then I owes ya 985 hamburgers?&quot;</p>
<p>&quot;It's a deal!&quot;</p>
<p>So now the debt is flipped around and Popeye owes Wimpy.</p>
<p>What if instead Wimpy left town? Well, where would he go? Societies were small back then, and neighboring tribes were usually at least a little hostile. They probably wouldn't be too eager to welcome someone fleeing from a debt.</p>
<p>Over time, the town grows and Popeye's hamburger business is booming, and he's starting to have trouble keeping track of whom he owes and who owes him and how much. There are two solutions Popeye might find: he could start keeping a transaction journal, thus inventing proto-writing, or he could start issuing tokens for debt.</p>
<p>Let's say Popeye commissions some people to make little silver tokens for him. They can make as many tokens as they have metal for, and they can exchange them for one hamburger each. This goes on for some time until Popeye has accumulated a lot of tokens and distributed many of them to his patrons. Eventually, Popeye receives a token from someone he's sure he's never met before. &quot;Hey, what gives?&quot; Popeye asks. &quot;I don't owes ya a hamburger.&quot;</p>
<p>&quot;No,&quot; says the patron, &quot;but you owe Olive Oyl one, and she traded her token to me. So if you give me a hamburger, that settles your debt to Olive Oyl, and it settles her debt to me.&quot;</p>
<p>&quot;Well, blow me down!&quot; says Popeye. &quot;Makes sense ta me. Here's your hamburger.&quot; Soon people are trading the tokens among each other for other goods and services as well, and thus coinage was invented.</p>
<p>I realize I've digressed quite a bit here, but it flowed so naturally that I couldn't resist. My point is that barter systems will lead to debt systems, and debt systems will eventually lead to coinage, thus solving the problem. Of course, it might take a long time for that to happen, especially since coins are not trivial to make, and coins are a lot easier to circulate when you have a big government making them, but the principles are still the same.</p>

CC BY-SA 4.0
2022-11-24T12:02:43.723Z
In the second half of 1970’s in Italy took place the phenomenon of “mini-checks’, a creation of private money to get out from a kind of micro-barter that had arisen in retail trade. In that period there was a dramatic shortage of small change, so that people in commerce gave each other telephone tokens, candies, bandaids, bus tickets, and so on. So, banks issued checks of very little value, say 0,50 euro, and very small size. This mini-checks were used currently as money. It has been estimated that were issued about 200 billions of Liras in mini-checks.
BakerStreet
CC BY-SA 4.0
2022-11-23T05:21:42.923Z
2022-11-23T11:57:58.543Z
2022-11-23T11:57:58.543Z
Kef Schecter
<p>There are two types of barter economies in the world: textbook barter economies, and real barter economies.</p>
<p>In a textbook economy, if you have a car and want a loaf of bread, you're stuck.  You need to either accept a wildly unfavorable exchange or you need to put together some sort of convoluted scheme to make change for a car.</p>
<p>A real barter economy doesn't work that way.  Real barter-economy transactions almost always take place between people who have known each other for decades, and are more akin to a running exchange of favors than a single-transaction purchase.</p>
<p>In a real barter economy, you might make a deal with the village baker to get fresh bread for a week in exchange for a ride at some point in the future.  Since this is far from the first time you and the baker have interacted, the baker knows if you can be trusted to make good on your promise.  (And you could very well end up with the baker asking you to give someone else a ride instead, to settle some other favor owed.)</p>

CC BY-SA 4.0
2022-11-23T23:15:45.000Z
2022-11-23T23:34:26.950Z
2022-11-23T23:34:26.950Z
Mark
<p>Although economics textbooks sometimes claim that pre-modern economies were based on barter, my understanding is that there is actually very little evidence for this claim.</p>
<p>To quote from a <a href="https://www.jstor.org/stable/2802221?seq=1#page_scan_tab_contents" rel="nofollow noreferrer">1985 paper</a>, which in turn is quoted in a <a href="https://www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/" rel="nofollow noreferrer">very nice piece in the Atlantic</a>,</p>
<blockquote>
<p>No example of a barter economy, pure and simple, has ever been
described, let alone the emergence from it of money . . . All
available ethnography suggests that there never has been such a
thing.</p>
</blockquote>
<p><a href="https://www.socsci.uci.edu/%7Eduffy/papers/DuffyPuzzelloREE2014.pdf" rel="nofollow noreferrer">Duffy and Puzzello (2014)</a> make the same point using different language:</p>
<blockquote>
<p>. . . there is no evidence for quid-pro-quo barter exchange systems as
a predecessor to monetary exchange systems in the anthropological
record.</p>
</blockquote>
<p>As you will see in the Atlantic piece, there is good evidence of
societies based on a kind of ‘gift exchange’: you give me something
today on the implicit understanding that I will do something for you at a
later date. While this resembles the kind of barter described in economics textbooks, and perhaps even could be called 'barter', it is different for at least two reasons:</p>
<ol>
<li>In pre-modern economies, favours would not need to be done at the same time. So this is (at best) a form of 'inter-temporal barter'.</li>
<li>More importantly, my understanding is that people would not usually co-operate at a pre-determined rate of exchange (e.g. if you give me 1 apple, I will give you three bananas later). This also weakens the analogy with simple models of 'barter exchange'.</li>
</ol>

CC BY-SA 4.0
2022-11-22T18:21:22.687Z
Actually this is fallacy of equivocation. What anthropologist call gift giving is in economics defined as barter i.e. anthropologist consider even self-interested tit-for-tat exchanges gift giving as long as any social obligation is included. That is simply different terminology then one used in economics. That would be equivalent as saying there is no evidence for cosmic inflation (where in physics inflation means increase in volume of space) because in universe there is no price level (using econ definition of inflation). In fact the gift giving evidence in anthropology is evidence for barte
1muflon1
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2022-11-22T18:24:49.837Z
as defined in economics. In addition the definition of gift-giving used there is challenged in anthropology itself (eg see Testart 1998 for discussion). In economics barter covers all quid for pro exchanges and gift giving would be exchange where reciprocation is not explicitly expected.
1muflon1
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2022-11-22T19:29:08.773Z
I down-voted this answer because the article there is written by journalist not an economist, and it is just uncritical regurgitation of Mauss and Graeber who are widely criticized for being ideologues and their work is heavily criticized as well for being ideologically tainted, yet your answer presents their highly contentious arguments uncritically as if they were facts
csilvia
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2022-11-23T10:41:07.030Z
@csilvia You should downvote an answer just because it cites relevant work by a non-economist! Moreover, the view I am stating is actually a standard view amongst economists who work on this -- I'll add a representative quote in case you are interested. I would suggest you reverse the downvote.
afreelunch
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2022-11-23T10:49:29.163Z
@1muflon1 no, the term `gift exchange economy' is standard within economics (there is a large literature on gift exchange equilibria that you can look at if you are interested). While gift exchange resembles barter, it is not quite the same.
afreelunch
CC BY-SA 4.0
2022-11-23T11:03:09.143Z
The article you linked does not even mention the word gift when I search for it. Also you are plainly incorrect here. Palgrave dictionary of economics has excellent article on this. I quote: “A gift, according to the Concise Oxford Dictionary, is a ‘voluntary transference of property; thing given, present, donation’. For most economists, especially those familiar only with industrial capitalist economies, this is all that need be said on the matter”
1muflon1
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2022-11-23T11:03:52.397Z
“For the anthropologist, however, the phenomenon of exchange poses questions about the nature of gift exchange. These lie at the centre of the discipline and the topic has been the subject of much theoretical debate. Anthropologists stress that while gifts appear to be voluntary, disinterested and spontaneous, they are in fact obligatory and interested. It is this underlying obligation that anthropologists seek to understand: What is the principle whereby the gift received has to be repaid?”
1muflon1
CC BY-SA 4.0
2022-11-23T11:04:20.823Z
https://link.springer.com/referenceworkentry/10.1057/978-1-349-95121-5_782-1
1muflon1
CC BY-SA 4.0
2022-11-23T11:04:42.820Z
As a consequence most of what anthropologists claim to be gift would be considered barter in economics. Even if there would be some papers in interdisciplinary field of anthropological economics that does not change the regular textbook definition of barter which is reciprocal exchange (see for example Mankiw Principles of economics)
1muflon1
CC BY-SA 4.0
2022-11-23T22:00:24.190Z
@1muflon1 I think it's fine to consider this kind of thing 'barter' if you want to. My point is really that, even if we are going to call it 'barter', it is very different from the notion of barter you will find in an introductory economics textbook, i.e. person A gives person B X apples in return for Y bananas. Instead, I believe that the historical situation was more like: person A does a favour for person B, on the implicit understanding that person B may do an (unspecified) favour for person A at some point in the future (at some unspecified 'rate of exchange').
afreelunch
CC BY-SA 4.0
2022-11-24T07:30:02.083Z
But what you describe still lacks nuance. It wasn’t B **may** do unspecified favor. It was B **must** do a favor. Did you even read the sources you are quoting? I don’t mean that terrible Atlantic article I mean the actual books it’s based on? The gifts were literally mandatory. A tribe would expel you and leave you to die if you would not contribute back. If it would be **may** and there was no obligation - yes that would be gift giving economy - however anthologists have this completely unintuitive idea that even mandatory exchange under potential penalty of death is gift when social ties
1muflon1
CC BY-SA 4.0
2022-11-24T07:31:33.987Z
Are involved. Also in 101 textbooks barter might be immediate but in advanced textbooks you can have delayed barter. Clearly if the favor **must** be repaid or you are kicked out of tribe and left to live in woods to die it’s not gift as understood by most people and as understood in economics
1muflon1
CC BY-SA 4.0
2022-11-24T07:32:40.307Z
I recommend you read the [myth of the myth of barter](https://www.cato.org/blog/myth-myth-barter)
WilliamT
CC BY-SA 4.0
2022-11-24T10:23:46.277Z
@1muflon1 Sure, maybe the word 'gift' is also misleading -- but that's not my main point. My point is that there is little historical evidence for the kind of barter described by OP. I think we agree about this?
afreelunch
CC BY-SA 4.0
2022-11-24T10:31:25.597Z
@afreelunch yes I agree there is little historical evidence for barter where someone would try to trade bread for car. But equally there isnt really solid historical evidence for situation described by that Atlantic article where it says " If you were a baker who needed meat, you didn’t offer your bagels for the butcher’s steaks. Instead, you got your wife to hint to the butcher’s wife that you two were low on iron, and she’d say something like “Oh really? Have a hamburger, we’ve got plenty!”
1muflon1
CC BY-SA 4.0
2022-11-24T10:34:55.627Z
@1muflon1 Out of interest, why do you find that kind of scenario implausible? (Ignoring all the irrelevant details, e.g. hamburgers etc.) [I don't myself have a strong view on this: my answer simply points out that OP's question rests on an inaccurate premise -- somehow this has led to lots of downvotes...]
afreelunch
CC BY-SA 4.0
2022-11-24T10:42:33.273Z
@afreelunch because that example is heavily romanticized. First, these 'gift giving' economies did only occurred in primitive economies. There would be no professional butchers etc. Main division of labor would hunter gatherer. There might be some toolmaking and religious profession but that was about it. Second, its almost certain that the way how these things worked were not wives of hunters giving hints to each other. Rather these societies have their own unwritten laws. e.g. you only eat if you work and provide visible effort etc. Someone needs something you give it to them but only if
1muflon1
CC BY-SA 4.0
2022-11-24T10:43:58.067Z
they in the past provided themselves for the tribe and will in the future. Also, people would gather resources in groups and then split them and there would be very little actual trading going on in the first place (since division of labor would be primarily between men and women as hunter gatherers). Moreover, people would use debts, we have evidence for use of tally sticks even in ancient hunter gatherer societies. People would actually record how much people are taking from the tribe and require that what is taken is given back in one form or another
1muflon1
CC BY-SA 4.0
2022-11-24T10:47:52.757Z
once tribe would grow beyond point where everyone can have meaningful social connection to everyone (or almost everyone), this sort of system cannot work (so its not optional like said in the Atlantic article), and reason why it cannot work is double coincidence of wants, and this is why in virtually any larger group of people (e.g. ancient cities) we find people using some sort of commodity money or money based on debt (by trading tally sticks).
1muflon1
CC BY-SA 4.0
2022-11-24T10:51:15.957Z
So while of course we can always go into higher degrees of nuance it is more correct say that money developed from a complex barter system with social component that breaks down in large groups since humans can have meaningful social relationship with just about 50-100 people max and even thats perhaps stretching it a bit, than saying that double coincidence of wants and barter was pure myth and people just gave gifts to each other and then opted for money because - 'reasons' - it was fully optional choice
1muflon1
CC BY-SA 4.0
2022-11-24T12:52:30.790Z
Maybe the issue of distinction between gift and barter is subtler. For economists a certain definition of barter can be sufficient for their purposes, gift is voluntary, barter is when there is an obligation. But there could be other dimensions that should be considered. Think of Christmas gifts. What are they? You receive gifts from your relatives, and you must make gifts to them, it is a social obligation, your aunt maybe will not cut your head if you don’t’ make her a gift, but shecan have a bad judgement on you or cut you out of her will: in short, there are social sanctions. What is this?
BakerStreet
CC BY-SA 4.0
2022-11-24T12:52:59.490Z
An economist would say ‘barter’, at Christmas we all are involved in a big barter. Gift is only appearance. Is it acceptable? I think no. As there are other dimensions, other coordinates to be considered if we want to speak of gift or barter from an anthropological point of view.  In particular, cultural dimensions, that in economics can be neglected. Therefore, anthropologists are right in defining gift and barter in a different way. And if there has been barter or not from a historical perspective must take into consideration also these dimensions.
BakerStreet
CC BY-SA 4.0
2022-11-24T12:53:11.330Z
And maybe, barter economy as defined by economists should be considered a model, abstract as any model, that cannot be found as such in real historical situations.
BakerStreet
CC BY-SA 4.0
2022-11-22T14:46:28.593Z
2022-11-24T14:48:30.343Z
2022-11-24T14:48:30.343Z
afreelunch
<p>For an analogy, if I just want a loaf of bread and all I have to trade is my car or any other valuable thing.</p>

CC BY-SA 4.0
2022-11-23T12:32:23.153Z
@user253751 I am just using an analogy :) that's why even expressed "or any other valuable thing".
Brandon Cunnigham
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2022-11-23T22:02:46.073Z
When was 'the time of the barter economy'? I think some historical details would be useful here.
afreelunch
CC BY-SA 4.0
2022-11-23T22:47:17.060Z
When thinking about this, you need to remember there is a major difference between real barter economies and textbook barter economies: real barter economies rarely involved single-point-in-time transactions between strangers.  Instead, a real barter economy is an ongoing *process* between you and the other members of your community.
Mark
<exchange>
During the time of barter economy, how were less valuable and more valuable goods exchanged?
Brandon Cunnigham
# During the time of barter economy, how were less valuable and more valuable goods exchanged?

(Asked by: username_0 on 2022-11-22)

For an analogy, if I just want a loaf of bread and all I have to trade is my car or any other valuable thing.

**Tags:** exchange
> **Comments:**
> **username_0**: @user253751 I am just using an analogy :) that's why even expressed "or any other valuable thing".  
> **username_1**: When was 'the time of the barter economy'? I think some historical details would be useful here.  
> **username_2**: When thinking about this, you need to remember there is a major difference between real barter economies and textbook barter economies: real barter economies rarely involved single-point-in-time transactions between strangers.  Instead, a real barter economy is an ongoing *process* between you and the other members of your community.  

---

## 5 answers

### Answer by username_4 on 2022-11-22. Score: 5

The problem of a barter economy is exactly that.

It presupposes that an individual who wants to have a particular good, exchanging for this other goods he has in excess with respect to their needs, finds another individual who, at the same time, has the opposite wish.

This is the problem called *double coincidence of needs*.

With the arrival of monetary exchange, the convention arises to accept a particular good, money, in exchange of any good one wants to offer and vice versa.

Thanks to money, the double coincidence of needs is ‘split’ , and there is no longer the necessity that pairs of individuals with reciprocal intentions meet.


---

### Answer by username_3 on 2022-11-22. Score: 4

In that case the trade might not occur at all if we would restrict people strictly to use barter. As BakerStreet answer points out this is classic problem with barter.

In pre-historic economies this was a bit of a less of an issue as everyone was more or less equally poor. The difference in value would of course still occur but pre-historic societies were composed of small tribes where everyone knew each other. In such setting barter trade would work in a way where a member of a tribe would not even get goods immediately in exchange for goods provided to the tribe but rather get favors from other members of the tribe back over extended period of time (in fact anthropologists consider this gift giving although economically its more of an barter with social component).

However, obviously this sort of socially enforced barter exchange can only work in small hunter-gatherer communities where everyone knows everyone. Virtually all advanced civilizations used some sort of money, to facilitate exchanges, precisely to get around problems such as the one you describe.

> **Comments:**
> **username_4**: I think that the questions you refer to are very interesting questions of anthropology, and also of economic history.  In advanced societies  there could be situations in which barter can reappear , when institutional mechanisms, in particular markets, cease to work for some reason, for instance in war periods, because of lack of goods or high inflation.  
> **username_3**: @BakerStreet thats a good point although they usually appear just locally and often there will be some quasi currency emerging, e.g. cigarettes in WW2 POW camps, alcohol etc  
> **username_4**: Yes, it could be local. I write from Italy, and I've heard  stories about  the black  market and the necessity to go to country from cities to find and exchange food during Second World War.  And I think of the period of hyperinflation in Germany after the first World War,  the Weimar hyperinflation 1921-23.  I suppose that nobody wanted money.  

---

### Answer by username_5 on 2022-11-23. Score: 3

It can be resolved through debt.

J. Wellington Wimpy tells Popeye, "I will pay you Tuesday for a hamburger today." (Yeah, they didn't have hamburgers back then, but hey, you mentioned cars, so…) Popeye will remember that Wimpy owes him for one hamburger. Wimpy can pay off his debt when he acquires something worth a hamburger that Popeye wants, or perhaps Popeye will allow Wimpy's debt to grow until Wimpy can trade in something bigger.

Let's say though that Wimpy keeps racking up debt and Popeye gets tired of Wimpy not paying any of it. "Wimpy," says Popeye, "Ya gots ta do somethin'. I've given ya 15 hamburgers now and I gots nuthin' ta show for it."

"Very well," says Wimpy, "but I need to eat, and all I have right now is my car, and we both know my car is worth more than 15 hamburgers. It's worth more like 1000 hamburgers."

"How's about ya gives me yer car and then I owes ya 985 hamburgers?"

"It's a deal!"

So now the debt is flipped around and Popeye owes Wimpy.

What if instead Wimpy left town? Well, where would he go? Societies were small back then, and neighboring tribes were usually at least a little hostile. They probably wouldn't be too eager to welcome someone fleeing from a debt.

Over time, the town grows and Popeye's hamburger business is booming, and he's starting to have trouble keeping track of whom he owes and who owes him and how much. There are two solutions Popeye might find: he could start keeping a transaction journal, thus inventing proto-writing, or he could start issuing tokens for debt.

Let's say Popeye commissions some people to make little silver tokens for him. They can make as many tokens as they have metal for, and they can exchange them for one hamburger each. This goes on for some time until Popeye has accumulated a lot of tokens and distributed many of them to his patrons. Eventually, Popeye receives a token from someone he's sure he's never met before. "Hey, what gives?" Popeye asks. "I don't owes ya a hamburger."

"No," says the patron, "but you owe Olive Oyl one, and she traded her token to me. So if you give me a hamburger, that settles your debt to Olive Oyl, and it settles her debt to me."

"Well, blow me down!" says Popeye. "Makes sense ta me. Here's your hamburger." Soon people are trading the tokens among each other for other goods and services as well, and thus coinage was invented.

I realize I've digressed quite a bit here, but it flowed so naturally that I couldn't resist. My point is that barter systems will lead to debt systems, and debt systems will eventually lead to coinage, thus solving the problem. Of course, it might take a long time for that to happen, especially since coins are not trivial to make, and coins are a lot easier to circulate when you have a big government making them, but the principles are still the same.

> **Comments:**
> **username_4**: In the second half of 1970’s in Italy took place the phenomenon of “mini-checks’, a creation of private money to get out from a kind of micro-barter that had arisen in retail trade. In that period there was a dramatic shortage of small change, so that people in commerce gave each other telephone tokens, candies, bandaids, bus tickets, and so on. So, banks issued checks of very little value, say 0,50 euro, and very small size. This mini-checks were used currently as money. It has been estimated that were issued about 200 billions of Liras in mini-checks.  

---

### Answer by username_2 on 2022-11-23. Score: 2

There are two types of barter economies in the world: textbook barter economies, and real barter economies.

In a textbook economy, if you have a car and want a loaf of bread, you're stuck. You need to either accept a wildly unfavorable exchange or you need to put together some sort of convoluted scheme to make change for a car.

A real barter economy doesn't work that way. Real barter-economy transactions almost always take place between people who have known each other for decades, and are more akin to a running exchange of favors than a single-transaction purchase.

In a real barter economy, you might make a deal with the village baker to get fresh bread for a week in exchange for a ride at some point in the future. Since this is far from the first time you and the baker have interacted, the baker knows if you can be trusted to make good on your promise. (And you could very well end up with the baker asking you to give someone else a ride instead, to settle some other favor owed.)


---

### Answer by username_1 on 2022-11-22. Score: -3

Although economics textbooks sometimes claim that pre-modern economies were based on barter, my understanding is that there is actually very little evidence for this claim.

To quote from a [1985 paper](https://www.jstor.org/stable/2802221?seq=1#page_scan_tab_contents), which in turn is quoted in a [very nice piece in the Atlantic](https://www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/),

> No example of a barter economy, pure and simple, has ever been
> described, let alone the emergence from it of money . . . All
> available ethnography suggests that there never has been such a
> thing.

[Duffy and Puzzello (2014)](https://www.socsci.uci.edu/%7Eduffy/papers/DuffyPuzzelloREE2014.pdf) make the same point using different language:

> . . . there is no evidence for quid-pro-quo barter exchange systems as
> a predecessor to monetary exchange systems in the anthropological
> record.

As you will see in the Atlantic piece, there is good evidence of
societies based on a kind of ‘gift exchange’: you give me something
today on the implicit understanding that I will do something for you at a
later date. While this resembles the kind of barter described in economics textbooks, and perhaps even could be called 'barter', it is different for at least two reasons:

1. In pre-modern economies, favours would not need to be done at the same time. So this is (at best) a form of 'inter-temporal barter'.
2. More importantly, my understanding is that people would not usually co-operate at a pre-determined rate of exchange (e.g. if you give me 1 apple, I will give you three bananas later). This also weakens the analogy with simple models of 'barter exchange'.

> **Comments:**
> **username_3**: Actually this is fallacy of equivocation. What anthropologist call gift giving is in economics defined as barter i.e. anthropologist consider even self-interested tit-for-tat exchanges gift giving as long as any social obligation is included. That is simply different terminology then one used in economics. That would be equivalent as saying there is no evidence for cosmic inflation (where in physics inflation means increase in volume of space) because in universe there is no price level (using econ definition of inflation). In fact the gift giving evidence in anthropology is evidence for barte  
> **username_3**: as defined in economics. In addition the definition of gift-giving used there is challenged in anthropology itself (eg see Testart 1998 for discussion). In economics barter covers all quid for pro exchanges and gift giving would be exchange where reciprocation is not explicitly expected.  
> **username_6**: I down-voted this answer because the article there is written by journalist not an economist, and it is just uncritical regurgitation of Mauss and Graeber who are widely criticized for being ideologues and their work is heavily criticized as well for being ideologically tainted, yet your answer presents their highly contentious arguments uncritically as if they were facts  
> **username_1**: @csilvia You should downvote an answer just because it cites relevant work by a non-economist! Moreover, the view I am stating is actually a standard view amongst economists who work on this -- I'll add a representative quote in case you are interested. I would suggest you reverse the downvote.  
> **username_1**: @1muflon1 no, the term `gift exchange economy' is standard within economics (there is a large literature on gift exchange equilibria that you can look at if you are interested). While gift exchange resembles barter, it is not quite the same.  
> **username_3**: The article you linked does not even mention the word gift when I search for it. Also you are plainly incorrect here. Palgrave dictionary of economics has excellent article on this. I quote: “A gift, according to the Concise Oxford Dictionary, is a ‘voluntary transference of property; thing given, present, donation’. For most economists, especially those familiar only with industrial capitalist economies, this is all that need be said on the matter”  
> **username_3**: “For the anthropologist, however, the phenomenon of exchange poses questions about the nature of gift exchange. These lie at the centre of the discipline and the topic has been the subject of much theoretical debate. Anthropologists stress that while gifts appear to be voluntary, disinterested and spontaneous, they are in fact obligatory and interested. It is this underlying obligation that anthropologists seek to understand: What is the principle whereby the gift received has to be repaid?”  
> **username_3**: https://link.springer.com/referenceworkentry/10.1057/978-1-349-95121-5_782-1  
> **username_3**: As a consequence most of what anthropologists claim to be gift would be considered barter in economics. Even if there would be some papers in interdisciplinary field of anthropological economics that does not change the regular textbook definition of barter which is reciprocal exchange (see for example Mankiw Principles of economics)  
> **username_1**: @1muflon1 I think it's fine to consider this kind of thing 'barter' if you want to. My point is really that, even if we are going to call it 'barter', it is very different from the notion of barter you will find in an introductory economics textbook, i.e. person A gives person B X apples in return for Y bananas. Instead, I believe that the historical situation was more like: person A does a favour for person B, on the implicit understanding that person B may do an (unspecified) favour for person A at some point in the future (at some unspecified 'rate of exchange').  
> **username_3**: But what you describe still lacks nuance. It wasn’t B **may** do unspecified favor. It was B **must** do a favor. Did you even read the sources you are quoting? I don’t mean that terrible Atlantic article I mean the actual books it’s based on? The gifts were literally mandatory. A tribe would expel you and leave you to die if you would not contribute back. If it would be **may** and there was no obligation - yes that would be gift giving economy - however anthologists have this completely unintuitive idea that even mandatory exchange under potential penalty of death is gift when social ties  
> **username_3**: Are involved. Also in 101 textbooks barter might be immediate but in advanced textbooks you can have delayed barter. Clearly if the favor **must** be repaid or you are kicked out of tribe and left to live in woods to die it’s not gift as understood by most people and as understood in economics  
> **username_7**: I recommend you read the [myth of the myth of barter](https://www.cato.org/blog/myth-myth-barter)  
> **username_1**: @1muflon1 Sure, maybe the word 'gift' is also misleading -- but that's not my main point. My point is that there is little historical evidence for the kind of barter described by OP. I think we agree about this?  
> **username_3**: @afreelunch yes I agree there is little historical evidence for barter where someone would try to trade bread for car. But equally there isnt really solid historical evidence for situation described by that Atlantic article where it says " If you were a baker who needed meat, you didn’t offer your bagels for the butcher’s steaks. Instead, you got your wife to hint to the butcher’s wife that you two were low on iron, and she’d say something like “Oh really? Have a hamburger, we’ve got plenty!”  
> **username_1**: @1muflon1 Out of interest, why do you find that kind of scenario implausible? (Ignoring all the irrelevant details, e.g. hamburgers etc.) [I don't myself have a strong view on this: my answer simply points out that OP's question rests on an inaccurate premise -- somehow this has led to lots of downvotes...]  
> **username_3**: @afreelunch because that example is heavily romanticized. First, these 'gift giving' economies did only occurred in primitive economies. There would be no professional butchers etc. Main division of labor would hunter gatherer. There might be some toolmaking and religious profession but that was about it. Second, its almost certain that the way how these things worked were not wives of hunters giving hints to each other. Rather these societies have their own unwritten laws. e.g. you only eat if you work and provide visible effort etc. Someone needs something you give it to them but only if  
> **username_3**: they in the past provided themselves for the tribe and will in the future. Also, people would gather resources in groups and then split them and there would be very little actual trading going on in the first place (since division of labor would be primarily between men and women as hunter gatherers). Moreover, people would use debts, we have evidence for use of tally sticks even in ancient hunter gatherer societies. People would actually record how much people are taking from the tribe and require that what is taken is given back in one form or another  
> **username_3**: once tribe would grow beyond point where everyone can have meaningful social connection to everyone (or almost everyone), this sort of system cannot work (so its not optional like said in the Atlantic article), and reason why it cannot work is double coincidence of wants, and this is why in virtually any larger group of people (e.g. ancient cities) we find people using some sort of commodity money or money based on debt (by trading tally sticks).  
> **username_3**: So while of course we can always go into higher degrees of nuance it is more correct say that money developed from a complex barter system with social component that breaks down in large groups since humans can have meaningful social relationship with just about 50-100 people max and even thats perhaps stretching it a bit, than saying that double coincidence of wants and barter was pure myth and people just gave gifts to each other and then opted for money because - 'reasons' - it was fully optional choice  
> **username_4**: Maybe the issue of distinction between gift and barter is subtler. For economists a certain definition of barter can be sufficient for their purposes, gift is voluntary, barter is when there is an obligation. But there could be other dimensions that should be considered. Think of Christmas gifts. What are they? You receive gifts from your relatives, and you must make gifts to them, it is a social obligation, your aunt maybe will not cut your head if you don’t’ make her a gift, but shecan have a bad judgement on you or cut you out of her will: in short, there are social sanctions. What is this?  
> **username_4**: An economist would say ‘barter’, at Christmas we all are involved in a big barter. Gift is only appearance. Is it acceptable? I think no. As there are other dimensions, other coordinates to be considered if we want to speak of gift or barter from an anthropological point of view.  In particular, cultural dimensions, that in economics can be neglected. Therefore, anthropologists are right in defining gift and barter in a different way. And if there has been barter or not from a historical perspective must take into consideration also these dimensions.  
> **username_4**: And maybe, barter economy as defined by economists should be considered a model, abstract as any model, that cannot be found as such in real historical situations.  

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