Psychological Economics

The topic of bartering has come back up as of late, it would seem that with the economy looming over people's heads the notion of getting what you need or want in alternative ways has become a bit fashionable.

Or has it?

A while ago, I addressed the bartering topic with two posts, Capitalism vs Fair Trade, and it's follow up post, Fair Trade, For Real. At the time, the topic of bartering wasn't the most common topic on people's lips, and the idea received some lukewarm receptions. I would like to take a closer look at what I was proposing then, and what people are proposing now, with a focus on the resistance to bartering as an economic system.

It occurred to me, after having read many threads and discussions about bartering, economics, and money, that people could witness the use of bartering, see how it works, and still reject it. Why? I couldn't figure it out. I read many arguments about economic structures, historical accounts of economics, and currency's ease of use as reasons why bartering was bad, save for a few rare instances. Some of the arguments had some merit, but truth be told I wasn't convinced that the arguments were the actual reason for the rejection - there had to be more to the story.

And then I found it. Aha!

It hit me like a ton of bricks. After reading a very short, concise comment about bartering, I finally realized that people have attached so much importance on the dollar value of goods and services that if you remove it, they are lost. It is something so simple I can't believe I missed it. But they are not just lost, there is a deeper psychology involved with the attachment of money, value, material goods, and self worth at play here. While I have always understood that modern citizens have a particular obsession with the relation of material goods and social standing, I hadn't realized just how pervasive the obsession really is.

Until I saw the explanation laid out so plainly. If we use bartering, then we remove money. If we remove money then there is no dollar amount attached to goods and services, and thus, our goods lose their attached value.

My first reaction was, of course, to argue that things have an intrinsic value - things of import such as water, food, shelter, and protection. That taking away a price tag will not devalue items that are essential to our very survival. I stand by this, however before arguing, I took a moment to understand and evaluate the underlying message. Things of actual import do not help define a person in this modern world. If you remove the financial value of objects from the system, you force people to reprioritize the actual value of objects and, they may look at their inventory and realize that they have nothing of value at all.

That is a difficult realization to come to terms with.

Particularly in a society that measures a person's success by their bank accounts and material possessions. The concept of success being defined by one's salary, financial wealth, and material things is constantly being echoed through the halls of politics as we speak. The murmurings and arguments against taxation policies and salaries is another fine example of how ingrained the psychology is. "If we tax people who make $250k or more, then no one will want to make more money than $249k per year, it will ruin progress and competition! No one will want to be successful!"

Ah, there it is again - success and money. I've asked this many times over, but who says that making only $200k per year isn't successful? Or just a lowly $100k per year? Or no money at all? I've asked why we need to encourage a drive to continuously make more and more money? What is the point of it?

The point, is self worth. The point, is that we have been trained for centuries to worship and covet items which are rare but generally useless. We have been taught to associate our own worth to society by means of hoarding useless material possessions.

When you remove the ability to create an image of importance and value for the individual by removing the value of their "things" you are holding up a stark, cold mirror which reflects the actual accomplishments and success of a person. And no one wants that. After centuries of the wealthy condemning the poor and working class as being a burden to society, and otherwise useless - having the tables turned isn't exactly desirable.

That said, things will still hold a value when you barter. But it will be an intrinsic value, a worth that is closely related to usefulness rather than the arbitrarily ascertained appraisals based on rarity, and perceived value. The value of an object will be weighed and measured not on availability, not on preconceived notions, but on the desire and need of individuals.

It stands to reason that there are a great number of obstacles in the way of changing over completely to a barter economy, namely centuries of social conditioning would have to be undone. Defending a barter economy is not the subject of this post, but rather addressing the psychological barriers and reason for rejection of such an economy, starting with the individual.

We place an a great deal of importance to the things we possess. Be it sentimental attachment, or an overinflated sense of value real or perceived, we consider our things to be very valuable indeed. Removing the financial measure of value threatens our sense of self worth, because if your precious items can't retain their value without an economic system to say it's valuable, then it wasn't valuable to begin with.

And that is a scary idea for anyone who defines their worth to society by means of material possessions.