Before the advent of the coin in any realm, there was barter. A return to this most ancient of transactional activity between people is one of the more interesting and profitable aspects of the finances of simpler living in the current era, in my opinion.
"What is so special about trading goods and services?", you ask. Well...for starters, you are likely to get more bang for you buck, particularly when you are talking services (after all, it costs you little more than time, sweat, and sore muscles to offer up some manual labor in exchange for some other needed product or service.) Looking at whole, 360-degree value versus one-dimensional monetary cost quickly brings the issue into focus.
Let me start with a recent personal experience involving a simple commodity-for-commodity exchange. On my part, I was selling for $6 a young cacao plant that caught the eye of another farmer's market vendor. That cacao plant was the result of me being gifted a cacao pod by a friend, sticking seeds from the free pod into some free dirt from my property that was contained in a free, plastic pot that we reused from a previous plant purchase. Left outside in the daily rains, in the tropical temperatures, the cacao sprouted with little effort and no cost on my part. The other vendor had chayote (including one that was sprouting), avocado, and a variety of citrus to offer. So...in exchange for my one cacao seedling (which cost me little-to-nothing in terms of money and labor), I was loaded up with arms full of fresh, organic produce, including one sprouting chayote that is now growing into a new food producing plant on my property. No currency exchanged, no transaction fees, no taxes, low carbon footprint on both sides. If I were to walk into a grocery store and purchase that same produce, the cost in terms of money would easily have exceeded $30. The real, total cost, in terms of carbon footprint or measurements of sustainability--while clearly and significantly greater--is more difficult to estimate. To drive the point home with an even more extreme example, more recently, a vendor offered me twenty pounds of citrus for a small packet of vegetable seeds that cost me, an authorized distributor, $1.50!
In another family example, my son recently performed some manual labor for aging neighbors--spreading mulch, planting trees, etc. In exchange, he was sent home with bags of shelled walnuts, which sell locally for upwards of $15 per pound (we love them, fully appreciate the nutritional value, and rarely eat them because we cannot afford them). In this case, if you look at pure monetary value alone, at the age of 14, he was making way beyond minimum wage. When you add in the nutritional content of his wages and the fact that the the little nut meats hold special culinary value for us, there is value that goes beyond the pecuniary.
Looking at this dynamic more broadly, let me pose another--albeit--theoretical example. Let's say that you provide one hour of labor to a neighbor--helping to mend fences, for instance--in exchange for one gallon of raw milk from a grass fed cow (a delicious, healthful, and nutrient-dense product that is rare in the typical grocery outlets of most parts of our nation). If you live in the price-fixed dairy world of Hawaii, where a gallon of pasteurized, hormone infused milk sells for $8 per gallon, the specialty milk described above would be completely unavailable to you in the store...it is, literally, invaluable in that context.
Sticking with an $8 per gallon figure for argument's sake, you might think to yourself, "My labor is worth more than $8 per hour." You would be correct, if you are calculating value and return purely in terms of currency and within certain economies. Why limit the value of labor only to the amount of money that changes hands, though? Are there not other elements of value? Is a dollar always worth, I mean really worth, a dollar in every economic paradigm and in every locale? I posit that the worth of anyone's labor can be more precisely defined when you consider the issue more broadly.
"What, on God's green earth, are you talking about?" Well...let me draw from personal experience and put it this way...
When I worked in the nation's capital, a two-decade veteran in federal service, my "work" (cubicles, reports, briefings, and such) commanded many times the $8 per hour noted above. That was largely due to the scale of economies (personal and regional) that I worked with and in. I required a home, car, clothes and other things to allow me to do a particular type of job in a high cost-of-living environment. When I left that world, owned my home and land outright (no mortgage payments), had a commute no longer than the walk to my front yard, and needed a wardrobe of simple shorts and t-shirts, I no longer had a real requirement for my labor to be so expensive. When you look at the new scale of the personal and regional economy I work in, $8 in pure currency for one hour of labor equates just fine with the higher salary required in other settings and under different circumstances. Don't forget that, in our raw-milk-for-fence-mending scenario above, the one-hour labor here was exchanged for an item that you cannot even buy in stores (it is priceless), the exchange is free of taxes, social security withholdings, etc. This all makes that "eight dollars" even more value laden than the numbers printed on the bills would suggest.
At the risk of sounding academic (or repetitive), let me offer one more theoretical scenario, because this concept can be exceptionally difficult to grasp when you are raised in a world where true value is often overlooked for simple currency equivalence, a world of consumerism, low-priced and low nutrition foods, cheap disposable products. Here we go...
Let's suppose you produce honey and can comfortably sell said confection at the fair market rate of one dollar per ounce at, say, the local farmer's market. A typical 16-ounce jar would bring in $16. Now, the cost of producing that jar was far less. For argument's sake, let's say it was $8 for a 100-percent profit margin. Across from you at the farmer's market is a vendor of free-range, organic, fertile, multi-color eggs laid by heritage breed birds that are pastured fed and offered natural supplements of omega-3, like flax seed. These are some premium eggs--unavailable in most conventional grocery outlets. (When I lived in northern California some four to six years ago, such a carton of eggs would go for $8 per dozen at the local Whole Foods.) Now...to use your product (the honey) to procure yourself a dozen of these exquisite eggs, you could sell $16 of honey, charge, report, and pay to Uncle Sam the required tax for said monetary transaction and use the $8 profit to secure your breakfast (1 dozen eggs). That $16 of honey cost you $8 to make, and the high-end eggs cost your fellow producer, say, $6 to produce, which essentially means that you secured a $6 product for $8. Now...what if you instead offered the jar of honey (which cost you $8 to produce) in exchange for two dozen of these eggs? You would essentially have paid $8 for $12 worth of a nutrient-dense breakfast, the other vendor can now sweeten her tea without concern of pesticides and with a nutritionally superior product, and no money was lost in the form of taxes or other withholdings, and there were no hidden costs (such as the environmental cost of shipping eggs from another state or sustaining high honey production through the use of miticides or antibiotics).
So when it comes to barter, think in terms of holistic value, not currency equivalencies, and you come out ahead in several ledgers of life, to include pocket book, bodily health, community contribution, and environment.
Click here to read Part 4 of this series.
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