Working World

When there are things and services you need and too little cash at hand, perhaps you don’t always need money to get what you want. Cash-free deals can often be made that are win-wins for everyone involved. Such arrangements are common among friends and family: “I’ll bake you those cookies you like if you change the oil in my car.” And it has worked among strangers for millennia, as in “I’ll give you 24 beads for that Island of Manhattan over there.”

What Is It?

According to Economics: Principles in Action by Arthur O’Sullivan and Steven M. Sheffrin, “Bartering is a medium in which goods or services are directly exchanged for other goods and/or services without the use of money.” Bartering and trading have often run parallel to formal currency systems in most societies. They become more attractive and more widely used in times with great financial challenges, such as eras with very high inflation or during serious recessions when money and/or credit is very scarce. (Sound familiar?)

Bartering, trading and swapping goods and services has been on the rise in recent years, partly due to the ability of the Internet to match up partners more easily, and in the past year especially because of the recession. According to the Los Angeles Times, Craigslist’s barter postings in Los Angeles were up 72 percent between September 2007 and September 2008.

The most basic bartering involves two people who already know each other and agree to trade stuff or services with each other. For instance, in my community, my yoga teacher trades free classes for website maintenance, studio housekeeping and massages. The personal trainer around the corner swaps training sessions for haircuts on a regular basis. My own hairdresser, however, when asked her opinion of the concept, was apprehensive about how the parties would decide what would be a fair trade. 

In fact, many proponents of bartering claim that it is the very apples-to-oranges nature of the transactions that can foster a sense of community while creating a practical solution to problems. While not as efficient as a monetary system, it can provide goods or services to someone who needs them while relieving someone else of excess inventory or unused skills that can’t be sold in the conventional way at that time.
   
Person to Person

Because it can take some negotiating to determine a trade when you are dealing with dissimilar items, bartering and trading involve a certain amount of creativity and trust. But it still works well when people realize that what things are worth are in the eye of the beholder. As long as there is an advantage to all parties and everybody’s happy with what they get, it’s fair.

Among friends and neighbors and local merchants there are countless kinds of deals that can be made. Whether you trade tax preparation for taxidermy, or peaches for pedicures, the possibilities are endless. It’s even been utilized among healthcare professionals and their clients. American Medical News reported in their January 2009 issue that two family practice physicians opening a new office in Jenks, Okla., traded medical services for supplies, plumbing work and other goods and services while they were getting started in their business. 
   
On the Web

Among individuals, bartering can be done with people you know, but the Internet has greatly expanded the possibilities of finding potential trading partners. Of course, as with all interactions with strangers and on the Internet, caution must be exercised to avoid getting scammed. Sadly, there are always people who will neglect to hold up their end of a bargain through either malice or flakiness, so be aware of the pitfalls of this system and be careful who you deal with.

In addition to better-known sources like Craigslist’s bartering section, there are sites such as FavorPals, Trade a Favor and Favor Tree, a new national site with only a handful of listings. U-Exchange claims to be the largest barter site with 59,000 members and has been covered by major media outlets.

These forums are simply marketplaces where people can meet and trade. Certainly not as convenient as money (that’s why they invented money), and with bartering you do have to locate someone whose current needs align with what you’ve got to offer. On the other hand, if your services are offered on a more flexible basis, you’d be much more likely to make a deal.  

There are also sites dedicated to trading just goods, usually entertainment-related products such as books, music, movies and games. These include SwapTree, BookMooch, PaperBackSwap, SwapADVD and SwapaCD. New ones seem to be popping up all the time as people economize and reuse and recycle these recreational items.
   
Through a Third Party

Third-party arrangements are also a possibility, although these are more often utilized by businesses. Corporate entities, small businesses, professionals and freelancers might join a barter exchange that facilitates transactions between multiple parties through the use of credits and debits. These use some sort of barter currency that creates more flexibility for members of the exchange. One party does not have to find a match for their services; a service performed or item given accrues credits or points or barter dollars that can then be used within the system to buy from any other member of the exchange. Itex is an example of such a business barter exchange. 

This exchange model is sometimes, but more rarely, used in community groups among individuals to barter personal goods or services. The Echo Park Time Bank is one such local group that defines itself as “a collective whose purpose is to facilitate the cooperative exchange of goods and services among its members . . . a pay-it-forward system that connects unmet needs with untapped resources.” It uses Time Dollars as the medium of exchange, and all time spent by members is equal. The hour of a psychotherapist would be equal to that of someone digging a ditch. This particular collective is limited to just a few L.A. ZIP codes in order to keep it small and manageable. The website does have references and links to other resources for those who wish to explore the concept further and who might want to consider starting their own time bank collective.

One problem bartering will not generally solve is our obligation to the U.S. Treasury. If you exceed a certain dollar amount in exchanges, the IRS expects you to report what you get or give based on fair market value. Rules can be found on the IRS website. Look for “Topic 420” in the right-hand column.  

Suzanne Ridgway is a freelance writer and regular columnist/contributor for Working World and Working Nurse magazines. Suzanne also writes grant proposals for nonprofit organizations.

1 COMMENTS

• Iris Couver

  Sounds like my story! I've been bartering for a while successfully on http:// barterquest.com. I love to swap with them. You can find almost everything there: goods, services and real estate and the best: it's totally free. In my opinion bartering is the new currency in the economic recession.

  Sep 10, 2009