So, the alternative is some sort of barter economy. I'm aware that barter did not really exist in the past, people used some sort of credit or gift economy instead. But, barter is first step back.
However, the big problem with barter is that it is not liquid.
How can we solve this problem?
I’m thinking that a willing second hand shop and a small grocery store could solve the problem. Items obtained in trade for labor, that are not wanted by the laborer, could be given to the store in exchange for "credit". Then, when an item is available and wanted, it could be taken against that credit. The store would be used as a sort of storage and clearing house.
What do you think of the idea? Any other ideas?
How about having a coooperative as a better alternative. Bit like the methodist Rochdale pioneers in the 1840s (https://en.wikipedia.org/wiki/Rochdale_Society_of_Equitable_Pioneers). You could pay locals to produce to sell to locals so things would be planned ahead pay them in credits to be spent in the shop etc etc . Maybe with a local money (eg http://bristolpound.org/)
The tax man would have a fit
Usually where these exist you "barter" your goods for some of the local currency, which you can use in the future to "barter" for other goods. It adds liquidity. Sometimes people try to make local currencies seem less like money by treating them as claims on labor -- the "unit" on the money is an hour of work, say.
Local currencies have some of the same problems as government money but not all of them, so they may not solve the problems you are trying to solve. But some of them have been rather popular and successful.
The business would still need to generate $ to pay expenses such as taxes and utilities, so possibly having two sets of prices on items, one $, the other "swap" might work...
Back in the 80's I participated in a handful of barter organizations (ITEX, BX & Tradex) that worked like a bank. If I came to your produce stand and paid you $10 in BX credits then they would transfer $10 from my account to yours when you deposited the "BX Check".
The hardest part for me was that I had high "hard costs" and low margins so barter was not nearly as practical. With self raised foods, skilled trades etc. it makes much more sense.
I did some checking and cannot find any trace of the groups that I worked with in the past. Perhaps it is time to consider "PermieExchange"
Seriously, one of the pitfalls we did encounter was a lack of density and diversity. I sold Joe a computer for $2500 (remember it was the 80's) now where can I spend that? Some of the things I wound up spending on were less than sensible. A mink coat, a pallet of (bad) wine. I did manage to buy a used car once and did find a BX mechanic to fix it.
That said, I'm not sure I explained the original idea well enough. The scenario is that there is a relatively small group of people (which is only theoretic at this point) trying to live cashless in a large urban area, where the other inhabitants go about their usual life. The stores in question would be mostly selling to the general public, and NOT run by the group. So, for instance:
A member does some yard work for a non-member. Instead of getting paid cash, he is given a bunch of tools, say. (He had advertised on Craigslist that he trades work for tools.) Then he drops the tools off at Charlie's Second Hand Tools (a real store in Denver, not run by the group.) Charlie's keeps a tally of how much he has dropped off. Meanwhile, Charlie's goes along its merry way selling tools for US dollars to the general public. A few months down the line, the yard working member want to buy some grass fed beef from a local farmer. The farm does not want yard work. But the farmer might want a tool . . . but not the particular tools the yard worker has been amassing. That's OK; a tool the farmer does want is picked up from Charlie's.
But maybe the farmer does not want tools. Maybe he wants a few gourmet meals. That's fine. Another member grows tomatoes and has been dropping them off at a local trendy restaurant in exchange for meal credits. Some meal credits are given to the farmer, beef is given to the yard worker, and tools are given to the tomato farmer.
Basically, by including otherwise standard shops in a barter system, the options are expanded exponentially. So the shop would not be flooded with carrots or anything else; the store would be carrying their usual inventory.
But some of your ideas might work better, and I will look into them.
Yes, that is kind of the problem. Lack of diversity. Everyone has tomatoes in August; everyone has old furniture they want to get rid off; very few people actually have things other people want.
PermieExchange sounds like a great idea! Too bad we are so geographically spread out.
I'm assuming my store idea would get around the diversity problem; assuming a store was amendable to the idea.
Giving the tax man a fit sounds wonderful!
You bring up a good point. Obviously we bartering permies would have to stay a relatively small part of the store's clientele, otherwise they would not be able to get the cash needed to stay alive. (Denver property tax, etc.) And we certainly couldn't run the store. But since we are a small part of the population, that should work out OK.
Gilbert Fritz wrote: And we certainly couldn't run the store.
Sorry, I missed the reason you can't run the store; can you elaborate? Seems like it could be a permie business.
Of course, a bunch of permies could run a store, combining all their produce.
But, in this scenario, it would be better if the store was run by, and mostly for, outsiders. That way the store uses its cash sales to pay for utilities, taxes, overhead, etc. And it provides a better pool of materials that our things could be traded against. It would do away with the " everyone has tomatoes all at once" problem. The store would have a huge selection of things to choose from, especially if it was a second hand or thrift store. The key (to this idea) is to bring more diversity into the pool of tradable items, which would not be the case if the store only contained the items grown or made by the permies in question.
I would say about 25-33% of the sheep that I have "purchased" have involved a barter method of some sort, a lot of Forest Products, and just about every yard of gravel taken out of my gravel pit. But honestly, It depends on trust, and it is hard to get that from a list of names. I think ultimately that is why various barter systems failed.
I do have a question though. How do you skirt the tax laws on bartering? It specifically states in US Tax law that when bartering occurs you declare values on what is traded and report them on your Schedule F.
Travis: you're right, trust is important. (Thought that goes with buying things, too. )
Travis Johnson wrote:I do have a question though. How do you skirt the tax laws on bartering? It specifically states in US Tax law that when bartering occurs you declare values on what is traded and report them on your Schedule F.
Obviously nobody on a public forum is going to offer advice on skirting the tax laws.
However jack spirko in a recent podcast had comments on reporting barter transactions. What I took from his comments (possibly not what he was trying to convey) was that it's pretty hard for you or for the IRS to determine values of bartered goods when there's no money transaction to fix a formal price.
That means that any system like this that you want to build will stay small. And with small scale systems, it becomes hard to sustain it. The amount of work it takes is a friction that muggle merchants will struggle with. This has also been, I believe, one of the main problems of alternative or complementary currencies. How do they integrate the alternative into their accounting systems, for one thing. And why would someone use this alternative - what advantage does it have? What makes the people running the system keep doing it?
FYI, see http://www.complementarycurrency.org/ccDatabase/ for a list of these. There's a lot of them.
But money itself isn't the problem. It is the solution. The crux of the issue, IMHO, is that what we are using these days for money is a poor version of it.
Money is simply the one thing that is the most barterable. It is the thing that can be traded that everyone accepts.
The money we use today, in every country in the world, is based on debt. That makes it poor money. We all should understand why debt is bad, but I think Paul's admonition that obligation is poison should be proof enough. But when it is used for money it becomes even worse. Economic debt has interest and that must be paid. But where does the interest come from? If you borrow $100 (a book entry) to print $100 in cash but need to repay $105 - where does that extra $5 come from? If you are the monopoly money printer then the only way you can pay it off is to inflate. And inflation artificially stimulates the economy, leading to overinvestment in production - more factories, more consumption, all for the sake of "growing the economy". This artificial growth is unsustainable in the long run and one of the primary sources of our ecological degradation.
[As an aside, this is why politicians may pontificate that they want to pay off the national debt but never actually do. Even "balancing the budget" is potentially dangerous as it would stop the growth of the currency, endangering a new depression.]
But if instead we use more stable and sound money, based on wealth & production, then the problems caused by debt based money are restricted or just gone. In the past we used gold and silver, which are physically limited and require work (production) to produce. Now we have bitcoin as well, which is limited by math so it can't be changed at the whim of short-sighted politicians.
To put it in more Permies like terms, the Dollar is like industrial farming (pillaging the countryside | inflating wealth away from the people), complementary currencies are like organic farming (trying to do good, but not doing enough), and sound money is like permaculture (allowing the system to naturally balance itself).
I am currently working to upgrade my Shire Silver to make it hugely easier for merchants to integrate into their accounting and money handling systems, so that can be used now but in the (hopefully) near future it will be a piece of cake. And bitcoin can be somewhat easily integrated into merchants' systems now through third parties like BitPay and Coinbase. These are better and easier solutions that trying to start up another barter network.
Gilbert Fritz wrote:Tyler - We don't have to divorce ourselves completely from the $ economy. But without a larger inventory, we are back to square one; we can only barter what the group has.
Sorry, I think we're talking past each other or I'm completely misunderstanding what you're talking about. I don't understand why you can only barter what the group has - I thought the store would be open to the public. I thought a group of permies could open and run the store, inviting the public to participate with produce, stuff, or $. I don't see why this couldn't happen as early as tomorrow, if some permies wanted to try this business model.