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					The Impact of Money-Free
Computer Assisted Barter
        Systems

   Article By: David L. Parnas
 Presented By: John D. Donath
          March 26, 2004
What are Computer Assisted
 Barter Systems (CABS)?
Enable people to trade goods and
services without using money

Can help eliminate the ills of society
associated with a monetary economy
        What is Money?
Enables people to exchange goods and
services without a double coincidence
of needs.

A way to store wealth (not really)
     Problems with Money
A person’s valuation of goods and services is
subjective: (Buyer or Seller Surplus)

  I would like to sell my car for $100, and a buyer is
  willing buy it for $150, one of us will be cheated

  Exchanges that may take place with barter may
  not take place because of prices the market places
  on items.
     Leads to idleness of resources (unemployment)
    Problems with Money
Inflation (large money supply)
  Money loses its value over time


Tight money supply
  Prevents businesses from having the
  liquidity they need to manufacture and
  circulate goods
     Problems with Money
Trade imbalance
  People who produce more than they consume
  have the impression that they are getting richer

  People who consume more than they produce
  have the impression that they are getting poorer


Neither of these is true (the opposite is in fact
the case when measured in resources)
    Problems with Money
Uses a Scalar value to represent a
Vector
  A person’s gain or loss from a deal should
  be measured in all the resources involved,
  not just one value (doing so causes a loss
  of information).
    I worked for 5 hours and got paid $100.00
    I worked for 5 hours and got a turkey
    sandwich, soda, a night at the movies, and 10
    gallons of gas
           Using Barter
Eliminates the seller’s/buyer’s surplus
Eliminates inflation/tight money supply
Eliminates trade imbalance
A person knows exactly what (s)he is
getting in return for sacrificed resources
       Saving with Barter
Barter enables you to trade not just for
immediate goods and services, but for future
goods and services as well (similar to a
futures contract)
  No Inflation/loss of value
  Eliminates risk of lending/borrowing in order to
  produce a good
  People are forced to plan for savings by
  considering what they will need
  Insurance will help reduce any risks associated
  with the unknown future
         Foreign Trade
Eliminates the risk of trade deficits
between countries
Eliminates the problem of concluding
contracts between countries where
multiple, fluctuating currencies are
involved
       Technical Issues
In 1985, Parnas, 10 students built a
CABS system as part of a course.

Technology feasible to run on
centralized or personal computers

(Internet makes this even easier)
  Existing Barter Systems
Ebarter.ca
Recipco.com
Onecer.net
Barteryourservices.com
   Has Barter been used?
Heavy inflationary periods
  Germany early 1920’s
  Hungary 1946
Unstable times
  No trust in government certifying money
    People bought jewels and other stores of value
  Rationing
    Money not enough to meet demand for
    resource
   Has Barter been used?
Recession (tight money supply)
  People did not have liquidity necessary to
  pay for goods and services with money
    1935 Mosanto sold saccharine to China in
    return for Mackerel
    Barter Theater in Virginia, performances for
    food
   Has Barter been used?
International Trade
  Avoid Currency Fluctuations
  2000 Thailand sold Rice to South Africa in
  return for Cattle
  1972 Pepsi for Vodka
Children
  Baseball Cards
  Toys
  Turn theory into practice
All new technologies come with
problems that need to be solved
  Electrical theory
    Generation (Power Plant)
    Delivery (Power Grid)
    Application (Light Bulb)
  Turn theory into practice
Phase in CABS gradually
Enforcement of standards
Maintain pseudo-currencies to buy bags
of market goods
  Food certificates
  Stationary certificates
  Turn theory into practice
Insurance to reduce risk and enforce
quality
Taxation for shared needs
  People will view taxes not as a burden, but
  rather as their share of purchasing public
  goods and services
         Effect of CABS
Reduce unemployment
  Increase liquidity
  Decrease hoarding of resources
Allow people to better plan for future
Insure that goods that are needed will
be produced
Maintain relative values of goods
        Effect of CABS
Wealth measured in resources, not
money
Reduction of Poverty
                Analysis
Parnas not the first
to see illness of
society due to
wealth

Karl Marx advocated
elimination of
money through
Communism
         Marx vs. Parnas
Communist                Bartering systems
Manifesto                  Gradual and peaceful
                           development
  Violent overthrow of     Phased in due to people’s
  existing system          desire for efficiency in
  Government               business
  enforcement of           Rules of supply and
  moneyless system         demand set values of
                           goods
  Central planning of      Differences still exist
  consumption              between people
  All people have same     controlling more/less
                           resources
  wealth
             Conclusions
Like any revolutionary idea, sounds good in
theory
Human nature is to simplify matters to a
bottom line
  E-bay has been more successful than any of the
  online bartering systems
It is hard to eliminate a habit that has existed
and controlled people for thousands of years
           Conclusions
Article not technical, but like most of
Parnas’s articles, pioneering with new
ideas that have some impact on the
Computer Industry
People should be encouraged to barter
more
  Tax incentives
  Promotion through advertisements
                 References
Parnas, David L., Impact of Money-Free Computer Assisted
Barter Systems.
Shore, John. Introduction to Impact of Money-Free
Computer Assisted Barter Systems.
Marx, Karl and Engels, Friedrich. The Communist
Manifesto.
www.eBarter.com History of Barter.

				
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