Thursday, March 20, 2014

Barter Best For Living Simply

In the 1800s, the barter, pledge and sharing networks formed the backbone of the economy of many small communities in North America. These networks often were based on family connections, but also found strong support in community development. Today, particularly in the USA, such cooperatives are viewed, at best, as socialistic, and at worst, communistic. It is unfortunate that we allow the label to define the concept, and, in turn, allow great ideas to be discarded because we chose to pigeonhole them.

Barter networks have regained some of their former popularity in restricted circles, and cooperatives, in general, have found niche appeal. Their implementation, though, could have been employed effectively to mitigate the impact of the 2008 economic downturn. Sharing networks have become the domain of eco-freaks and urban environmentalists, who focus on community-owned bicycles and other transportation assets. Unfortunately, our evolved innate distrust of those that we do not know, and our fear of losing material assets have led us to reject the concept of sharing and pledging as too Utopian to work.

Barter systems, today, most commonly rely upon the business members to provide most of the goods and services that are traded or banked to keep the network functioning. While many programs have city, country or world-wide membership, an effective local barter network can be developed with ease. Think of the old country doctor, as an example. Often, the fee for his work was paid in livestock or food. Travelling repair handymen could count on room and board in exchange for a day's work. Neither of these would be considered retailers or manufacturing businesses.

I belonged, for several years, to a local barter network with international reach, through its affiliate program. I could trade off services that I provided for restaurant meals, business services, auto repairs and even travel. While it proved to be quite valuable for me, it had limitations. Only those with a marketable asset could participate. Yet, I often bought goods privately, and found that there was no capacity for one-on-one, personal trading and banking. There was no structural reason for this; merely a philosophical one.

While working as a rural business development specialist, I structured a community-driven barter system that enabled every member of that community to participate. When I concluded my work with the community, however, no one was willing to take on the task of maintaining interaction lists between members. Yet, as the network would grow, it would be capable of providing an income stream for whoever chose to operate the system.

Barter networks require one essential ingredient, aside from the capacity to input something of value to the group that can be traded or banked. Each member must be willing to input a reasonable value of goods or services, to be banked, thus eliminating the "trust me, I'm good for it" factor. That good faith gesture often hampers the growth of barter networks, yet should be viewed as its strength, because the input of something when joining means that there is a liquid asset to the operation, creating value. In the alternative, barter networks require small cash inputs and contractual indebtedness to ensure viability.

Many look at barter systems skeptically, assuming that they must be somehow illegal. In fact, they are not only legal, but are recognized by the tax systems of all major democratic countries. That, sadly, means that the value of goods traded is taxable. There are some minor concessions allowed, though, that enable the free trade of goods and services in a non-business environment.

Sharing programs, like barter systems, require an element of trust, but also require the charitable (or in-faith) inputs of key members. Sharing programs generally have been limited to urban bicycle-sharing groups, or even automobile pooling, but may be designed to share almost anything, including technology, apartments, equipment and even vacations (think "timeshare"). These programs generally operate as true cooperatives, but offer very viable ways to reduce individual costs while maintaining lifestyles.

Pledge systems are similar to barter network, with the major difference being that items or services are pledged at a future date, while gaining the benefit that you desire today. Some of the community-built or Habitat-style housing projects operate on that premise.

Should you desire more information as to how to set up and operate any of these systems, contact the writer.

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