Thursday, December 27, 2012

Barter?! But I Just Met Her!

Bartering is a high-trust activity. My in-laws hail from a small Lithuanian farm. To this day, they still plow the fields with those stout little Baltic horses that look like 3/4 versions of proper draft animals. Things being as they are, it's not at all uncommon for them to round up a few folks from the village and get them to help out at harvest time in return for a heaping helping of delicious Lithuanian vodka. For skilled help, neighboring farmers rely on an informal intertemporal labor pool. You help me yank potatoes out of the ground this fall, I help you fertilize the rye field next spring.

Both of these types of transactions rely on trust. The point transactions are of the caveat emptor type: I'm getting decent labor (while it's still sober) and my hands are getting quality ethyl spirits. The longer-horizon arrangements are part personal trust, part trust in the informal institutions (and maybe some trust in regime continuity, but for bucolic kaimietiai, the goings-on in Vilnius are mostly irrelevant political theatrics). Because trust suffuses these exchanges, it's probably reasonable to expect them to be mostly euvoluntary.

Bartering is likely to be something that happens when both parties are similarly desperate and not especially disparate. That is, barter is an institution poor people of mostly equal station resort to when times are tough. Moral intuitions towards barter transactions are probably predicated on this, so I have a hunch that comfortably wealthy, pampered Westerners might cluck their tongues at the plight of barterers, but they are unlikely to cry exploitation. I can also claim that should such wealthy, pampered Westerners find themselves in a bargaining situation with these poor, benighted souls abroad, they will find themselves utterly fleeced [I cite personal experience here].

I do wonder how portable the moral intuitions are behind barter. How would folks in the West react if they found out oil firms were paying local derrick workers in goats rather than cash? Even if the goats were more valuable than their cash equivalent to the workers, do you suppose network news viewers would be filled with grand indignation? I'd bet even odds they would be.

Barter is unsophisticated trade: it's used by children and underdeveloped societies. Reverting to barter in a cash economy carries with it social and emotional freight. It's fine for close equals to barter, but that's probably the extent of it. Anything else smacks of condescension, rightly or wrongly, irrespective of the opinions of the nominally disadvantaged trading party.

I usually like to close posts like this with a meaningful conclusion or some follow-up questions, but I don't have anything for you today. I suppose that if you're interested, you might ask some people you know about their feelings towards barter. I think you might find that people have interesting and perhaps ill-examined attitudes towards cash transactions. This is one of the reasons I don't much care for monetary economics: I see economics as a holistic discipline and plumbing the public's attitude to media of exchange is probably more challenging than many economists suspect.

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Do you have suggestions on where we could find more examples of this phenomenon?