Making money without money
November 21st 2010 00:44
An 1874 newspaper illustration from 'Harper's Weekly', showing a man engaging in barter, offering chickens in exchange for his yearly newspaper subscription.
The global meltdown saw, in much of the developed world, unemployment soar, spending stop, credit dry up, markets shrink and business opportunities take up residence in a galaxy far away. It was is no time to be an entrepreneur, right?
Wrong. You can't keep a good entrepreneur down. They will find opportunity at the bleakest of times in the dimmest of corners.
But, you may say, what business could possibly flourish in the severely depressed environment experienced by the US pretty much constantly through 2009 and 2010. What kind of business can look healthy when no-one has any money?
It's logical really — a business which doesn't need money.
They called it online swapping and the GFC had barely begun to bite before it was springing up all over the internet as a major and vibrant reaction to the credit crunch. Call it what you like, however — wrap it in a URL and beam it by broadband — you can't hide the fact that, like many a great entrepreneurial idea, it is an old idea in a new guise.
It is the age-old barter system.
Barter is trade where goods or services are directly exchanged for other goods or services, without the use of money. Barter preceded money, it has never really gone away, and it may well survive money. It exists, if in a limited way, parallel to monetary systems in most developed countries today, but surges in use in times of crisis, for example when currency becomes unstable and devalued by hyperinflation.
Zimbabwe couldn't exist without it today.
There is even a global group, the International Reciprocal Trade Association, based in Virginia, US. A spokesman, Ron Whitney, estimated in March 2009 that US$12 billion worth of global business-to-business bartering took place in 2008, with more than 250,000 businesses involved in the US alone.
Come the crisis and bartering boomed. And where there is a boom, there is entrepreneurial opportunity.
The Washington Post recognised the boom in early 2009 and carried a report stating that the list of web sites and organisations promoting cash free transactions was growing quickly around the world. The online classified site, Craigslist, doubled in size in the 12 months to March 2009, and was seeing many more swap proposals, including accounting services in return for food, and a week’s vacation in a holiday home in return for dental services.
British project manager Kevin Quinn took his plumber and family sailing on his boat in return for plumbing services on his home.
Simon Roberts, 42, of Nottingham, England, recommended everyone start bartering online, and said they should sell their home to do so. Roberts first transaction was an old Ford van, which he estimated to be worth about US$400. Someone needed a van and offered him an SUV worth about $3,000. About one year, and 39 swaps later, Roberts says he is about $30,000 in front.
In New York, according to a Reuters report, a funeral director offered a funeral in exchange for a US$8,000 construction job at his Manhattan home.
A International Herald Tribune report said barter transactions in Russia were also on the increase.
The new age of bartering will involve a lot more than swapping eggs for bread with your neighbour, or homegrown tomatoes for salt at the corner store. It will — it already does — involve the internet. And the entrepreneurs are already there.
Some bartering and trading sites which are well-established and making a splash are:
U-exchange.com: Lists people looking for barters and swaps in more than 80 countries.
homeexchange.com: Offering vacation home swaps
swapaskill.com: Based in Britain. "It's a great way to get things done without using cash," they say.
bartercard.com.au: Based in Australia, has 55,000 registered users in 10 countries, offers a system where, "Purchases can be made immediately using interest-free credit and paid for later with your goods and services."
swapz.co.uk: The site where Simon Roberts, of the home-selling advice mentioned earlier, completed his first transaction.
When economies turn down, bartering turns up, giving mainstream business a headache and causing governments to scream bloody murder because they can't tax it. It hardly helps stimulate economies that need consumers buying things and not bartering for them, but when it works well, it's a beautiful system. Who needs banks and brokerages and middlemen? Who needs VAT and myriad other taxes and duties? Business and government loses out. Only the entrepreneur flourishes.
But not forever. Two of the flourishing barter web sites 18 months ago, America's swapthing.com and Britain's whatsmineisyours.com, have disappeared. The global economy is recovering. Time to put barter back in its box until it's needed again.
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