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barter economy

A barter economy is a cashless economic system in which services and goods are traded at negotiated rates. 

Barter-based economies are one of the earliest, predating monetary systems and even recorded history. People can successfully use barter in many almost any field. Informally, people often participate in barter and other reciprocal systems without really ever thinking about it as such -- for example, providing web design or tech support for a farmer or baker and receiving vegetables or baked goods in return. Strictly Internet-based exchanges are common as well, for example exchanging content creation for research.

Because barter is based on reciprocity, it requires a mutual coincidence of wants between traders. This requirement complicates barter, but in a sufficiently large system traders can be found to supply most wants. According to proponents, the mutuality fosters a sense of connectedness and community among traders.

In recent years, barter has enjoyed a resurgence as a means of countering economic insecurity, unemployment and worker exploitation. The nature of modern-day work, the pervasiveness of the Internet and the rise of social networking have all contributed to its spread. Other examples of alternative economic systems include gift economies, sharing economies and time banks.

These alternative systems are not mutually exclusive, and all can operate within a predominantly capitalist system. However, because these systems operate in terms of reciprocity rather than profit and growth, there are concerns (or hopes) that they could undermine the current economic system.

This was last updated in January 2014

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