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.


StillThinking said...

A return to bartering also lends itself to some basic problems in the American service based economy. Many of us are completely unequipped to return to an economy based on solid goods and survival services.

I hate to say it, but as a young architect amongst thousands of more experienced architects, I have nothing to offer people. I would be one of the beggars on the side of the street holding out my hand and asking for work, any work in exchange for food and shelter.

Also, people who work in esoteric fields such as writing and theoretical scientific research would be forced to leave their professions because their work has no real, day to day value in terms of bartering goods and services. You can't trade a poem or a mathematical theorem in exchange for shelter, energy and food. You would need some sort of sponsor or benefactor, and a society based entirely on subsistence living would have precious few of those. Also, how would adults be able to pursue higher education when their basic needs (food, water, shelter) depend on them producing an actual barter good?

People are also not naturally giving or fair minded. There will always be someone who wants more than they deserve and there will always be someone who doesn't have enough to survive.

I also have basic issues with utopian societies as I firmly believe that they ALWAYS FAIL and lead to totalitarianism with more than a twinge of racial puritanism.

Monkey Wrench said...

Is it really that we can't be fair or giving? Or has our society skewed our values to the point of glorifying greed so much that we, assaulted by the media and tradition from birth, just can't escape the egocentric cycle?

Something to think about.

Anok, another wonderful post. I had a similar one a while ago (simply called money or cash or something) where I too tried to understand why the almighty dollar had such reverence attached to it. More societal hogwash designed by Capitalists to keep us working? Well, that's what I think. If the Capitalists didn't give us wages, how would we be able to mimic them by collecting pointless rare objects?

I think the value of money, created by the Capitalists to keep us working in hopes of achieving their level of success, has been so psychologically rooted that a barter society would indeed scare people.

You hit the nail on the head!!



m(A)tt said...

Subversion of the mindset of the almighty dollar is certainly a fine thing to do. And pending the abolition of capitalism and private property, I think it has a some value. But I don't believe bartering has some fundamental similarities with capitalist economics. On an informal basis it's harmless. But it as an economic system, it still leaves the question of ownership, property and markets essentially untouched, albeit usually on a much smaller, localized scale.

So you still have labor being exploited, because the owner of a business can still determine the value of someone's labor, but will pay them in goods/services rather than currency. And exchange can also be manipulated by the stronger party: "If you don't give me 100 seeds in exchange for some food, you're going to starve because I own the only fertile land in town."

So, so long as natural resources and productive property are owned privately by individuals or corporations, this inequality in power will exist. Communal ownership of the things that are needed by the public, also known as communism in its original meaning (minus the state) is essentially the only way to escape unequal economic relations. Your boy Kropotkin can probably explain all this much better than I ;-)

This of course needn't necessitate a huge state bureaucracy or a crazy murderous bastard at the helm. Communal human societies have been around far longer than capitalism, indeed, for the vast majority of human history. Can we manage that in an industrial era? Various experiments such as during the Spanish revolution suggest that the answer is yes.

m(A)tt said...

correction: "But I don't believe bartering has some fundamental similarities with capitalist economics." should read "But I do..."

Yanky Country Boy said...

Yep, returning to bartering will only work with the households.

The business are not equipped to survive(nor do i believe its possible for them to) in a bartering system. You need a standard of currency to have a smooth system of paying out employees.

However, I have began seeing people reside to bartering to exchange each others goods. One of great examples I have is my mother and Gregslist. My parents breed boxers and put them up on Gregslist every year. Last November, they had two left over, so my mother added a clause reading "collect jewelry, very interested in exchange." I thought she was insane; however, within 5 hours she received a call from a lady who gave her a very nice diamond necklace for one of the boxers!

theBigStinkGuide said...

This post and the comments provoke much thinking. As to the mindset around idolizing wealth and determining the value of everything in material terms only, I think Bill Hicks said it best:

"The world is like a ride in an amusement park and when you choose to go on it you think it’s real because that’s how powerful our minds are. Some people who have been on the ride for a long time begin to question, is this real or is this just a ride? Other people have remembered and they say hey, don’t worry, don’t be afraid ever because this is just a ride, and we kill those people. Shut him up, we have a lot invested in this ride, shut him up. Look at my furrows of worry, look at my big bank account, look at my family, this has to be real."

Sure it may be difficult now to imagine a bartering based society or for that matter, any alternative to the tried systems of capitalism or communism. But what if it were forced upon us? If the world as we know it were to self destruct from natural forces, would survivors give up, lay down and die or would they find a new way of living?

Anok said...

Wow! This has generated far more conversation than I expected, thanks! I'll address each reply as best I can:

Still, Yes there are some kinks in a barter system, as mentioned down the comments a bit, but that wasn't the point of this post. I wanted to address the psychological, emotional aspect of economics rather than the stark numbers of it. And I see it even in your response, for example:

I hate to say it, but as a young architect amongst thousands of more experienced architects, I have nothing to offer people.

Still, you are more than your degree, you are more than an entry level architect. You have much to offer people, just not in a traditional, formal, career sense. You are an intelligent, articulate woman with a great deal of wonderful innovative ideas in you head.

Just because you're new at it doesn't mean you're no good, not valuable, or not desirable. In this system, "new" "entry level" people are put through their paces because they are a risk to investors. Not because they aren't good, but because they are a financial risk. Bartering removes that risk, and your time becomes far more valuable than you are able to imagine now.

I would be one of the beggars on the side of the street holding out my hand and asking for work, any work in exchange for food and shelter.

"Any work"? Begging? I'm an artist by trade, in this system I can't make ends meet - so I have to work multiple different fields, use bartering, and if you remember last month, even beg to get by. The concept of needing multiple skills to make ends meet is actually exaggerated in capitalism - because you can't survive on one pay check alone, because your time isn't worth squat to companies who are trying to make a profit.

Also, people who work in esoteric fields such as writing and theoretical scientific research would be forced to leave their professions because their work has no real, day to day value in terms of bartering goods and services. You can't trade a poem or a mathematical theorem in exchange for shelter, energy and food.

There are other ways of working a barter system where the arts and sciences won't be lost. But that's not the point of this post ;)

Anok said...

Hey Wrench, thanks, I was struggling with this post a bit so I'm glad it has been so well received.

Is it really that we can't be fair or giving? Or has our society skewed our values to the point of glorifying greed so much that we, assaulted by the media and tradition from birth, just can't escape the egocentric cycle?

I think that's another great look at the psychological aspect of economic systems. Although I will argue that we are ego-centric to a degree, based on our genetic predisposition to survival. What we have become, however, is far more exaggerated than natural law would normally allow. You certainly don't see this type of hoarding and withholding by use of finances in nature.

Anok said...

Yankee Country Boy - there is a way to make it work for businesses too. I see that in your comment you are still trying to apply a capitalist ideology on a non capitalist system.

This is the conditioning I'm speaking of here, in my post. I'm not poking fun of you for it, it's a hard, hard concept to understand because we have literally known nothing else. It's taken me years to understand what, why, and how.

Remove the dollar, and the attachment of the dollar to items and services - all of them. Now think outside the box, and see what you come up with.

Anok said...

m(A)tt - I agree that there are a lot of questions regarding private properties and what have you. However if you use a "mixed economy" of barter and gift, you can remove the exploitation aspect of it.

Anok said...

The Big Stink - I love the ride analogy - it's spot on.

To answer your question - I believe some would lay down and die, but the rest of us would work, hopefully, for a more sustainable economic system than what we have now.

One that excludes hoarding, greed, and classwar by the withholding of essential products.

Dave Dubya said...

I really love good beer. I don't drink every day, but when I do I like to enjoy a good brew without having to feed mega-corporate profits. Plus there's less unpleasant morning-after effects with the more organic micro brew. My limited income and budget will not allow me to keep enough of this beer on hand.

An old buddy asked if I would give him some lessons on bass guitar. I was uncomfortable taking money from him, so I asked him if he would bring me some of my favorite beer in exchange for lessons.

Now I have my luxury beer brought to my house and there is no need to make a beer run.

That's my environmentally friendly way to barter arts for recreation.

Now if I can just find a kid who will mow my lawn in exchange for lessons...

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