Barter System

1332 Words Sep 2nd, 2010 6 Pages
The Challenges of Barter System
And How It Affects the Socio-Economy of a Country

Remember back in school when kids would swap juice boxes for chips, or cookies for candy? Even children have an innate sense that the comparable value of cookies to candy is in the eye of the beholder. To the kid who gets cookies every day, the elusive cream-filled cake treat is worth more than a few, and he realizes his friend might feel differently. Trading goods and services without the use of money is called bartering. With the advent of money-based system, barter system has becoming more toward a necessity. However in time of need, this necessity has complicated procedure in order to perform it. Due to economic factor, barter system is impractical
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Exchange can take place between two persons only if each possesses the goods which the other wants such as if a weaver needs shoes and he has cloth to offer in exchange he should not only find a cobbler who makes shoes, but find such cobbler who needs cloth and is prepared to give shoes in exchange for it. In this case, it was difficult to find such a person. Not only that, barter system is also impractical because there is no equal trade or medium of exchange into which both seller and buyer could convert their tradable commodities. “It is like comparing apples to oranges, but even apples and oranges, with all their differences, are both fruit of relatively equal size and shape” (McGrath, 2008). When people barter, issues related with “equal trade” arise where it is difficult for people to estimate the true value of the goods. As a society advances, and a much greater volume and diversity of output is produced, bartering becomes more and more complicated and cumbersome. Calculating the value or cost of each item in terms of every other item becomes difficult. Making the trades becomes difficult. The economic system becomes costly and cumbersome. It does not require the existence of very many items before this happens. Bartering just doesn’t suit the needs of a modern, diversified economy, even though some bartering still goes on in the world today.
Besides that, barter system is a leading cause to economic downpour. The
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