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5
Informal Barter
The next level up the scale is informal bilateral barter. By definition, barter is swapping one
thing for another. Mutual barter is a bilateral exchange, such as the swapping of gifts
between two people. The total sum of the transaction is zero and the ‘money’ exists for
only a fraction of time. At the end of the transaction, neither party owes the other anything.
In rural New Zealand towns where a large proportion of the population is dependent on
benefits, gib­stopping may be exchanged for painting vans and reputtying windows, food
and a bed may be swapped for work (as in the case of Wwoofers, or ‘willing workers on
organic farms’), and cars are frequently traded.
Barter does have one obvious weakness, however, as economist John Stuart Mill
stated: ‘A tailor who has nothing but coats might starve before he could find any person
having bread to sell who wanted a coat; besides he would not want as much bread at a
time as would be worth a coat, and the coats could not be divided.’ 4
At the next level of formalisation above informal bilateral barter the deals can become
illegal, because the taxman watches them. This is the black economy, the world of ‘cash
jobs’ where people work for cash but don’t enter it into their books in order to avoid
paying tax. Black economies tend to be common in small towns where there is a lack of
sufficient national currency in circulation and an income tax regime is in place. Annabelle
Young, list MP for National, raised the topic in Parliament in 2001, and claimed that New
Zealand’s black economy comprises as much as 8.8 per cent of the national economy. 5
Formal Economies
The gift economy will work only in small populations, and barter is awkward, so money is
the ideal medium for overcoming these limitations.