BARTER VS. MONEY

(and wage labor vs. non-wage labor)

Barter and money are both ways of exchanging things on the basis of "equal value for equal value." In contrast to both barter exchange and money exchange, the basis for exchanging things in an egalitarian sharing economy is NOT "equal value for equal value" but something very different: "From each according to reasonable ability, to each according to need or reasonable desire with scarce things equitably rationed according to need."

In an egalitarian society, however, membership in the sharing economy (click here to read about what that is) is voluntary. If a person or family or group of people (henceforth referred to, for simplicity, as a "person") wishes not to be in the sharing economy then that person is free to opt out of it. In this case the person is also allowed to own as much, but only as much, of the means of production (land, equipment, etc.) as he/she is able to productively use by his/herself without any hired, i.e., wage, labor (or slave labor!), taking into account the availability of such means of production in the local community and the reasonableness of their intended use as determined by the Local Assembly of Egalitarians.

Such a person is also free to barter the fruits of their labor (a material product or a service that is not wage labor**) with other individuals or economic enterprises that may be either in or not in the sharing economy. But there is no money in an egalitarian society.

Can Barter Lead to Excessive Concentration of Wealth?

Egalitarians do not want an excessive concentration of wealth in the hands of a small number of people to develop because this leads to inequality--both economic and political--and oppression. Therefore, egalitarians need to prohibit excessive concentrations of wealth from developing. If a person works very hard and very smart and then barters the fruits of their labor they may end up owning more wealth than others, but not THAT much more (i.e., not an excessive amount of) wealth because there is a limit to how productive individuals can be using only their own labor*.

There is a sort of "loop hole," however, that could, if allowed, enable a person to end up owning a truly excessive amount of wealth by (seemingly) bartering the fruits of his/her labor. Imagine, for example, that a musician performs a song and records it and then makes a huge number of material (tape, MP3, CD, streaming, whatever) copies of the recording and barters each of them in exchange for things like a piece of jewelry or a fancy wrist watch or whatever. This could result in a very popular musician becoming excessively wealthy. Which leads to the question of why the word "seemingly" was inserted in the first sentence of this paragraph.

What is described above may look at first glance to be bartering, but it actually is not. Here's why. The musician is essentially trading the same song performance over and over and over again with different people. This is not bartering. Bartering is trading a given something (the fruits of a person's labor*) for a given something (the fruits of a different person's labor); it is one single trade, a "this for that" only one time. It is not actually bartering to trade a given song performance for something from one person and then to trade the same song performance for something from yet another person and again for something from yet another person, etc

If a person labors to produce blank tapes or MP3s or CDs, etc.) then he/she could barter each of them and that would be truly bartering. But in the case of the musician described in the above paragraph, he/she is not really exchanging tapes or MP3s or CDs, etc., each the product of his/her additional labor. No. The musician is exchanging the same song performance over and over and over again with lots of different people, and that is not actually bartering. Whatever it is called, egalitarians would likely make it illegal.

 

Note that if the musician gave a live performance and tried to barter it with lots of people (his/her audience), that would not be bartering either; it would be exchanging his/her labor (the live performance) for something with more than one person (e.g., by requiring each person in a large audience to provide the performer an IOU in exchange for a ticket of admission), as discussed in the above paragraph.

Note also that if a musician wanted to earn a living by doing live and/or recorded performances, the way to do that would be to be a member in good standing of a sharing economy on the basis of contributing a reasonable amount and quality of such performances that would be free (though perhaps rationed if necessary) to other members of the sharing economy.

Everything said above about a musician also applies, of course, to any other kind of creative person.

WOULDN'T MONEY INEVITABLY ARISE IF THERE IS BARTER?

It is true that when barter is being used to exchange things then IOUs could easily start to be used to barter, say, a future crop for an already-existing product or service. Mary might give Jose an IOU, for example, that said, "Mary promises to give Jose 10 bushels of corn next year in exchange for Jose's having given Mary a winter jacket this year." But this IOU is not money; it is what is called a "barter IOU." To be money it would have to say something like, "Mary owes the bearer of this IOU X," in which X is some specified material object or service. If the IOU says that something is owed "to the bearer of this IOU" then it is NOT a "barter IOU."

 

To be money an IOU must be transferable to a third person ("the new bearer of this IOU") rather than being of value only to a specific person, such as Jose; such an IOU (i.e,, one that is transferable to a third person) can thus be handed from one person to another and thereby transfer wealth from one person to another.

 

The transferability of an IOU debt from person to person (owed to whomever is the bearer of the IOU at any given time) is what enables an IOU to be a form of money and to play the terrible role in society that is discussed here. Bank notes--i.e., money--today, as you can read here, are essentially IOUs payable to the bearer on demand.

 

IOUs payable to the bearer, when accumulated in large quantities by a single individual, enable that individual to be excessively rich and powerful because he/she can use those IOUs to pay other people for things or services; the person paid with such an IOU receives wealth by being the new bearer of the IOU. In contrast to such "payable to the bearer" IOUs, an IOU that is payable ONLY to a specifically identified person--a "barter IOU"--has value ONLY for that specifically identified person; it cannot be used to pay another person for things or services and hence is not a form of money.

 

Money is what enables a single person to acquire a virtually unlimited amount of wealth and hence power. Money, unlike mere barter IOUs, can be concentrated without limit in the hands of a single person.

An egalitarian society would make the issuance of money (including any IOU that had the special features of money as described above) illegal.

It may very well be the case that some people would want to issue money-IOUs, just as it may very well be the case that some people would want to hire employees for a wage payment (which would of course require the use of money). But just because some people want to do something doesn't mean that egalitarians are required to let them do it. Hiring wage workers and creating money are simply not allowed in an egalitarian society. Were these things allowed it would be only a matter of time before class inequality would re-emerge as terrible as what we have today.

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* Or more precisely, the material fruits of one's (or the group's) labor as well as of the labor of those who created the means of production that were used to produce that which is to be bartered.

** There is a distinction between a person bartering a service in exchange for something, which is legal in an egalitarian society, versus a person performing wage labor, which is illegal in an egalitarian society. Here is the distinction.

 

Wage labor is labor performed by a person (an employee) using means of production owned by another person (the employer) who, as the owner of the means of production, claims ownership of what was produced (or accomplished) by the labor of the employee. Wage labor is not legal in an egalitarian society (and it is not legal for a person to own more means of production than that person can, on their own, productively use.)

If labor does not meet the above criteria for being wage labor then it may be legally bartered in an egalitarian society. For example, if a woman gives a man a haircut in exchange for four dozen eggs the man would not own something that the woman produced with his means of production, and hence the labor was not wage labor.

In contrast, if a man performs the service of caring for a woman's hens and harvesting their eggs and getting them packaged in egg cartons, in exchange for, say, a dozen eggs per hour, then this is illegal wage labor: the man is performing labor with the woman's means of production (her hens) and the fruits of his labor (the packaged eggs) belong only to the owner of the hens (the woman).

 

If, however, the man and the woman in the above example are equally owners of the hens and share equitably--from each according to reasonable ability, to each according to need or reasonable desire--in the benefits of this ownership and have equal status in regard to decision-making about their economic enterprise, then the man's labor is not wage labor and it is legal in an egalitarian society.

The key distinction between wage labor and bartered non-wage labor is this: wage labor is exploitative of the employee (the employer gains unfairly from the employee's labor), whereas bartered non-wage labor is not exploitative of the laborer. In an egalitarian society, the Local Assembly of Egalitarians will use this key distinction as the basis for judging whether a particular instance of labor is wage labor or not.