Why do we exchange money instead of bartering for goods and services?
- musicimprovedmeLv 71 decade agoFavorite Answer
Currency is easier to carry around than IOUs for favors, or things like livestock or shells or gold...which measure wealth in some cultures.
It puts an objective and constant (or slower changing) value on goods and services that you can measure to get what YOU need from someone else.
If your skill is cake baking and you need a haircut, you can't always count on your barber needing a cake. And third and fourth party round robin transactions are hard to manage...such as you bake a cake for the horse shoe guy, who shoes a horse for the gardener, who pulls weeds for the barber, who gives you a haircut to complete the circle of give and take. After a while, especially when dealing with larger numbers of people, meeting everyone's needs is very very complicated. It can work when people place equal value, and agree to the terms of small arrangements. And there are bartering systems that are in place even in this country where people set up complicated exchanges like the one I just illustrated so that their skills can be utilized for trade...the question is though...if a skill is valuable enough to work in a barter system, it is valuable enough to be marketable as a job where a person can be paid for that skill. I guess a barter system allows people to benefit from things like hobbies.
In a currency economy, you sell a cake to the guy who needs a cake, and then take your money to the guy who cuts your hair...who uses the money for what he needs. The money isn't valuable in and of itself, it is just paper or metal. But it gives you buying power, saying you have done what needs doing to acquire something at a certain price.
- BruceNLv 71 decade ago
It was a little innovation that occurred in the middle east about 3000 BC. It is portable, fungible, storable and just more convenient than carrying all the possible things you might need to barter with the person who has what you want.
- tvLv 41 decade ago
Because money gives someone a universal unit of value. If we use barter, and i need say a toothrush and i have a pir of scissors, in order for me to get teh tooth brush, i need to find someone else who has a tooth bursh and wants scissors. As you can see, this isnt very practicle. But if I have money, I only have to find someone who has a tooth brush. It allows commerce to work more efficiently.
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- ChanakyaLv 41 decade ago
Now we are living in 21st century. We keep on making our life easier. In these days we have vast number of products. Its very difficult to price them. And its still more difficult to carry them. Now we cannot go back to barter system.
- 1 decade ago
Because in modern day times, using money is simply more convenient. If you wanted to buy a car, what would you trade for it? What if the other person has no use for what you offer? Since money can be used for anything, it takes the confusion out of buying,
- AZrunnerLv 41 decade ago
because not everyone one needs what you have to offer. Money is universal. Its like a baseline.....if something is for sale, you can buy it with money. If someone has what you need, but you dont have what they want...your SOL. That way you dont need to somehow get your hands on 12 chickens so you can fill up your tank for the week.
- poolplayerLv 61 decade ago
Not everyone would be interested in trading what I've got for what I want. And vice versa.
- wrathofkahn03Lv 51 decade ago
cuz lugging around a ton of bricks for a ton of bananas all the time is just not feasible......
- Anonymous1 decade ago
many ppl barter...i do