If you like this story, consider signing up for our email newsletters.
SHOW ME HOW
You have successfully signed up for your selected newsletter(s) - please keep an eye on your mailbox, we're movin' in!
These days, things are a little more complicated than when we traded a cow for a patch of land, a dozen eggs for some kindling, or a handful of jewelry for Manhattan. As our needs and wants became more complex, our system of exchange moved from the literal into the symbolic: from metal rings (c. 2500 B.C.) to coins (c. 700 B.C.) to pieces of paper (c. A.D. 800) to plastic cards (A.D. 1960). Inedible and meaningless all, except for our faith in them and the unanimous consensus that these will be our tokens of value. Pretty weird when you stop and think about it, and, as a matter of fact, not the only way to get stuff. There is economic activity to be found outside of this abstracted system just like people still spin vinyl or ride bikes, there are those who trade and barter, and not out of a Luddite nostalgia, but because it has some advantages over cash and credit.
The majority of barterers are businesses, small ones, where cash flow can be tight and advertising budgets tighter (up to 12 percent). Barter can kill both of these birds with one stone: A barter exchange will hook you up with other businesses that might need your goods and services in exchange for theirs. These barter exchanges generally provide newsletters, membership directories listing items wanted and offered, and business mixers to expose members to each other. They use a sophisticated system in which "trade dollars" or credits allow members to buy and sell from each other. The exchange plays banker, keeping track of each members account. By adding your service or product to a barter list, youve immediately increased your visibility while getting services or products you need without spending any of your precious greenbacks.
Example: Allan Dordick is a muralist and portrait artist; he and his wife, Johanna, run Allan Dordick Studios. As with any business, they are sometimes flooded with projects, while at other times there is a lag, spare hours when theres no work and no income. Instead of letting this time go to waste, Dordick takes commissions from members of the barter association, ITEX, to which he and Johanna belong. Recently, he was contacted by a woman who wanted a portrait done of her husbands dog. She knew of Dordicks work through the association and paid him in barter credits. The Dordicks then used the credits to get some brochures and business cards designed and printed by a printer who is also a member of the association. The Dordicks thereby saved their "real money" in the office-supply purchase, and both Allan and the printer gained new clients while filling up time that normally would have been unproductive. The Dordicks have also used barter to take clients out to pricey restaurants, to buy a set of encyclopedias and they even plan to finance an upcoming vacation through ITEX. Johanna speaks glowingly of the arrangement, pointing out that through barter the studio has been exposed to people who otherwise never would have heard of them, and the extra income allows them to do things they otherwise would not be able to afford.
Paul Stein, senior trade broker with BXI, which boasts 25,000 members across America, says that barter at this level is based on excess. "Even a business that is doing well," he says, "will sell only about 75 percent of its inventory each month." If you cant get cold hard cash for your leftovers, be they in goods or in unused time, why not get rid of them through barter? Find another business, with the help of an exchange, that needs some extra doughnuts or consulting services, and everybody wins.
The one obvious difference between such a scenario and our friendly caveman exchanging a mammoth hide for a coupla spears is the middleman. And, in most cases, these good people are not facilitating these exchanges for free. A sign-up fee, an annual or quarterly fee, and/or a percentage of each trade usually goes to the exchange. What members get are all the advantages attendant on avoiding the expenditure of filthy lucre, scarce as it often is, and the "free" exposure to other members.
Some barter associations dont use cash alternatives. They simply put members in touch with each other, who then exchange their photocopy-machine repair skills for some ice-hockey gear without any intermediary. Truer to real barter, this kind of economy also carries with it the drawbacks that gave rise to the development of money in the first place: Not only do I have to find someone who has the repair skills Im looking for and who has some spare hours to expend, this same person must also be in desperate need of the hockey sticks I want to trade. If the repairman needs golf clubs instead, Im out of luck. Serendipity can and does occur, though, and if you stumble on someone who has exactly what you need and vice versa, it can be the purest of economic bliss.
As this goes to press, the first exchange based in L.A. to use the Internet as its primary medium makes its debut. The folks at lassopower.com are aiming at finding a middle ground between the huge international exchanges and the limitations of direct bartering. The concept here is that members themselves recruit their trading partners into the system and trade only with people or businesses they know, or people their contacts have brought in. Marketing director Seth Greenberg, who left behind a cushy job in commerce to initiate this venture, says that not only did he personally want to "flee the corporate world," he also sees the trend toward entrepreneurism as the wave of the future. "Were starting to move away from the huge, monopolizing corporations and in the direction of small business," Greenberg maintains. "And barter can be a way to help people become independent who would otherwise not be able to come up with the overhead necessary to starting a business." Lassos goal is to encourage localized, personalized communities of exchange, particularly for small or just-starting-out businesses and freelancers.
Some groups have latched on to barter as a political and economic tool to boost their communities and promote local autonomy. In this country, Ithaca Hours is one of the better-known systems. The citizens of Ithaca, New York, have actually printed up their own money, called Ithaca Hours, which can be used only in Ithaca with participating merchants. The Web site (www.lightlink.com/hours/ithacahours) lists other cities all over the country (and internationally) where alternative-cash systems are in place or are being created, as well as hawking a book on how to start your very own economy. L.A. Hours, anyone?
By the way, barter is not a (legal) tax loophole. The IRS requires you to report as income "the fair market value of property or services you receive in bartering." You are even supposed to report barter credit units sitting in your account that havent yet been exchanged for goods or services.
We all labor in order to acquire goods; for those of us who are terribly fortunate, our work is also our profession we do it because we love it. But no matter how passionate we may be about whatever fills our days, at the end of the month we do await a tangible reward. Barter skips the bank and sends you straight to the store (or the doctor or interior decorator). Perhaps in the age of the information economy, securities trading and whatnot, there is something quite valuable in that kind of immediacy.
Warning: Do some research before joining a barter exchange. You dont want to be stuck with a bunch of useless trade dollars if the group folds or if the services or products you need simply arent available.
Some barter exchanges with local offices:
BXI (Business Exchange International), 600 S. Curson Ave., No. 315, L.A.; (323) 935-2929.
ITEX (International Trade Exchange), 11666 Gateway Blvd., L.A.; (323) 662-2728.
Trade American Card, 1547 W. Struck Ave., Suite A, Orange; (714) 532-1610.
www.lassopower.com (255 S. Grand Ave., Suite 1505, downtown; 213-621-7645).