Before there was money, there was the barter system. I’m not sure how systematic it actually was. From my understanding, it basically worked like this… If you needed something, you had to trade for it. It was up to the individuals involved to decide the values of things.
Here’s how some bartering might go down…
Some guy: I’ll give you this wheel of cheese for your ipod.
Me: Umm. No.
Some guy: Why not? This is great cheese, man. I made it myself. Someone once offered me a 1992 Dodge Dynasty for this cheese. I turned him down.
Me: That’s a fine automobile. You probably should’ve taken it. But I can just get cheese at the grocery store for a few bucks. My ipod is worth way more than that.
Some guy: Fine. I’ll take my cheese elsewhere. You know, in parts of Pennsylvania this cheese could buy me a house.
Me: Good luck with that.
*(Disclaimer: This conversation may not have happened, and may not be based on any facts or even realistic assumptions. Of course I would’ve taken the cheese if I thought I could flip it for a ’92 Dodge Dynasty)
More realistically, bartering in the old days might have involved people trading services in which they specialize. One family would help another harvest their crops, and in return the latter family would repair the roof of the former family’s home. Similarly, a painter might offer to paint a dentist’s office in exchange for some dental work. Sound ridiculous? This is a real-life example. I know a painter who has made that deal.
Bartering can be traced back to 6000 BC, and has been prevalent throughout history. The drawback of this system was that there were no standard criteria for determining the value of goods and services, causing disputes. These problems were solved with the invention of currency. Since then bartering has become less common in America, but people still use it to this day. It becomes even more common in down economies, like the one we’re in currently. Just look at my friend the painter and his dentist. They already had a relationship, so their deal was more amicable. However, you can try bartering with anyone. They might say no, but you can try.
In the old days, the value of any given good or service was more subjective. It might have depended on how badly one person needed something. A tooth cleaning might have been worth one painted room to one painter, while a painter with a toothache would’ve painted the whole office for some help. Nowadays, we can just do the math and figure out how much paint it would take to buy a filling by dollar values. It’s an odd example, but this is just some food for thought.
What I’m talking about here is bartering for goods and services… no money being exchanged. But if bartering is a source of income for you, then there are tax implications. Let’s say you buy something for $50, then trade it for something else, the sell that item for $100. That’s $50 of profit that you need to pay taxes on. I’m not going to get into how to file that income but, if that’s your goal, then you should definitely look into it.
Maybe you’re interested in learning the history of the barter system. If so, don’t take my word for it. Do some actual research. My interpretation is loose at best. If you’re thinking about bartering yourself, you can try it locally or try these online resources:
Craigslist.org (There is a “Barter” category under the “For Sale” section. You can also peruse the “Services” section if you’re looking to fulfill a specific need or offer a particular service)