Follow-up queries on systemic barter as an alternative to money

(Alan Ecob article in May-June issue)

John Hermann: I have a question Alan. Is it realistically possible to operate a large society (embracing both large population and large spatial areas) and a modern economy, using exclusively some form of barter — for trading and payment purposes? For example, how could the public sector be made to operate effectively under a barter system?

Alan Ecob: Good question. I like good questions. I see three key words in it:

Realistically ?

That telephone call I received from the no-name ATO Inspector was in 1978. It responded to a letter I had submitted. This had been inspired by my having become aware that seven companies, all significant manufacturers, had begun to act as a Group to facilitate weekend work by employees, including by managers and owners personally. The initiator had been a metalwork supplier to the building industry. An air conditioning contractor and at least one furniture manufacturer were involved. Most had installation teams available to fix their products. What they could ‘knock up’ as a Group was

quite amazing. Furnished holiday homes would have been no problem. It was a major expansion of what as a boy I had seen at Kurnell.

What this demonstrated to me was the demand for such arrangements. In my letter, I advised that a tradesman associate and I, over a couple of weekends, had each swapped 4 hours of work to mutual satisfaction. No money had passed. Would it be OK if I began to offer a market service to tradesmen to do similarly? Two months later I received that call. End of my initiative. A year or so later, I heard through the grapevine that the Group had been ‘blown’ to the ATO and had been forced to pay big $ as fines and penalties.

I suggest however that, particularly with the general availability of computers, systemic barter can be realistic.

Exclusively?

No, I don’t see this becoming the case – at least for several generations. But properly structured and managed national Barterbanks, under federal government aegis, could I believe capitalise on the incipient demand and provide credible competition to the present money system. There could even be a supervised exchange rate between the unit of barter currency (the Ausbuy ?) and the $A. The real social advantages would be long-term:

1. Lower costs for consumer needs.
2. Real purchasing power of (Ausbuy) savings increasing over time, not diminishing.
3. Improved cultural attitudes.

The Public Sector?

A very interesting one. Correctly managed, the prospect by say generation three would become one of people deciding nationally what scales and levels of government they wanted and were prepared to pay for! What a radical idea!

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John Hermann: OK, thanks Alan. My next question is, could the entries (computer or otherwise) in barter banks be regarded as a form of money? I realise that the tax office requires payment of tax obligations – in regard to income – using a very specific form of money. But this does not alter the meaning or import of my question.

Alan Ecob: Another good question. I will adopt the same strategy as last, yet also anticipate a couple more questions.

Ausbuys as Money?

Yes, of course. If they are to do the job, they will constitute currency – in the original meaning of the term as being a current and convenient means to purchase things, particularly in the market place. Once the national barter system has grown to a suitable scale, this would include buying and selling $A. With, as I have indicated, a supervised exchange rate, and, for an introductory

period, perhaps limited to domestic transactions only. Currency exchange with other national Barterbanks would, certainly after a time, be encouraged and facilitated.

We may note that the Australian Barterbank would maintain a catalogue of product for sale at Ausbuy prices plus minimum $A (initially, to cover ‘external’ material costs). As the system grew, and the range of its products increased, the amount of necessary $A would continually diminish. Ultimately, as the barter system proved to be superior, money currency would become unnecessary.

Tax to meet Authority Costs?

A level of authority will always be necessary, and need to be paid for. Some generations ‘up the track’, it would become possible in a substantial barter- sectored national economy for the citizens as a body to decide (as I have indicated) what levels, structure and policies of government they wanted, and at what cost. Decision could be made annually by a process of political proposals and national referenda, founded on a principle of National Income (for government purposes) distribution (entitlement) such perhaps as constant $ per citizen, as resident within a hierarchical structure of governmental areas. I have described such a solution in my 1997 Master’s Thesis. This approach would supersede most present taxes.

One way to get the system going in Australia could be, in lieu of payment of taxes, for the Barterbank organization to undertake responsibility for much of the welfare system. It could handle unemployment, job training, handicapped and aged employment, and offer assistance/support (including free product) to many needing it.

The Essential Difference between the two Systems?

The primary objective is for level playing-field competition between the two systems to enable user preference to become the ultimate determinant of winner. This raises the question – what is the essential difference?

OK, we know the present money system is, in the last analysis, privately owned. To some, this is a ‘turn-off’. But this is not necessarily a rational objection. I believe it was Pareto who enunciated the basis for maximum societal efficiency – that price be proportional to marginal social cost. For the world as a whole, the only actual social cost is human labour. Materials need to be conserved, etc. But our Creator doesn’t charge us for them – they cost us nothing. And the only other category of cost is expense, which in principle is simply a convenience conglomeration of materials and labour. So in consolidated global accounts, we are left with labour alone, (being the cost of capital as well as consumer product) which may be distributed through the market place by such as Ausbuys as they become reflective of weighted person-time worked.

If the foregoing become the basis of the global economy, and human ingenuity yields ever-improving productivity, then ultimately the final product will become virtually free, and work (which used to require labour) will become a highly sought-after privilege. Then, persons may become truly human.