Title: The Impact of Money-Free Computer Assisted Barter Systems
1The Impact of Money-Free Computer Assisted Barter
Systems
- Article By David L. Parnas
- Presented By John D. Donath
- March 26, 2004
2What 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
3What is Money?
- Enables people to exchange goods and services
without a double coincidence of needs. - A way to store wealth (not really)
4Problems with Money
- A persons 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)
5Problems 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
6Problems 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)
7Problems with Money
- Uses a Scalar value to represent a Vector
- A persons 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
8Using Barter
- Eliminates the sellers/buyers surplus
- Eliminates inflation/tight money supply
- Eliminates trade imbalance
- A person knows exactly what (s)he is getting in
return for sacrificed resources
9Saving 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
10Foreign Trade
- Eliminates the risk of trade deficits between
countries - Eliminates the problem of concluding contracts
between countries where multiple, fluctuating
currencies are involved
11Technical 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)
12Existing Barter Systems
- Ebarter.ca
- Recipco.com
- Onecer.net
- Barteryourservices.com
13Has Barter been used?
- Heavy inflationary periods
- Germany early 1920s
- 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
14Has 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
15Has 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
16Turn 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)
17Turn theory into practice
- Phase in CABS gradually
- Enforcement of standards
- Maintain pseudo-currencies to buy bags of market
goods - Food certificates
- Stationary certificates
18Turn 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
19Effect 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
20Effect of CABS
- Wealth measured in resources, not money
- Reduction of Poverty
21Analysis
- Parnas not the first to see illness of society
due to wealth - Karl Marx advocated elimination of money through
Communism
22Marx vs. Parnas
- Communist Manifesto
- Violent overthrow of existing system
- Government enforcement of moneyless system
- Central planning of consumption
- All people have same wealth
- Bartering systems
- Gradual and peaceful development
- Phased in due to peoples desire for efficiency
in business - Rules of supply and demand set values of goods
- Differences still exist between people
controlling more/less resources
23Conclusions
- 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
24Conclusions
- Article not technical, but like most of Parnass
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
25References
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.c
om History of Barter.