Non-monetary Trade

AlpinLuke

Ad Honoris
Oct 2011
25,209
Lago Maggiore, Italy
#61
From an economic perspective debt is not an intrinsic aspect of monetary economies. Overall commercial debt. Theoretically our owner of cows, who wants to barter his cows for 5 wooden boats, can say to the producer of the boats [a fisher] that he will bring him big hooks to fish in a week ... If the fisher trusts him ... the transaction will happen and the fisher will have a credit [and the owner of the cows a debt].

The debt as conception is related to how we pay. Immediately? No debt ... in a week? For a week we will have a dept, regardless if we pay using money or exchanging goods.

Obviously, monetary debt is intrinsic of monetary economies. It's not about when I pay, but about borrowing money to pay something having to give that money back [paying an interest or a cost of the service]. I need a good fantasy to imagine something similar in an economy based on barter.

[Our owner of cows finds a guy with a lot of big hooks who is ready to lend them. He borrows the hooks giving them to the producer of wooden boats. Now he has to find other big hooks to bring them back to the guy who lent him the hooks ... with may be a cow as interest! But where can he find those hooks? I don't think this happened: in reality, the owner of cows would have bartered the cows for the big hooks and then the big hooks for the wooden boats.]

This said, why all that debt?

Because debt is an engine of market economy. Public debt generates money [someone say "creates"], but it also generates business, because of deficit spending, and this usually help the GDP to grow [if public money is well spent]. From the link above we can note that the not advanced economies are using debt more and more. I'm afraid it's a populist and easy attempt to reach an acceptable level of life for the population. The situation is different in the emergent economies which, after increasing the debt, they are beginning to manage the debt [let's think to China] to use it as a functional gear of the system.
 

sparky

Ad Honorem
Jan 2017
3,804
Sydney
#62
" Obviously, monetary debt is intrinsic of monetary economies ....I need a good fantasy to imagine something similar in an economy based on barter."

in one of my post I mentioned that in a farming society helping someone get the harvest in
is him incurring a debt of gratitude which WILL have to be repaid ,by him or his inheritors in some form when requested
it has to be proportional
it's the same principle as a mafia don doing someone a favor , the favor is supposed to be returned in one form or an other
it create a network of mutual obligations by which a family good name is measured and underline the very fabric of their society
 
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AlpinLuke

Ad Honoris
Oct 2011
25,209
Lago Maggiore, Italy
#63
" Obviously, monetary debt is intrinsic of monetary economies ....I need a good fantasy to imagine something similar in an economy based on barter."

in one of my post I mentioned that in a farming society helping someone get the harvest in
is him incurring a debt of gratitude which WILL have to be repaid ,by him or his inheritors in some form when requested
it has to be proportional
it's the same principle as a mafia don doing someone a favor , the favor is supposed to be returned in one form or an other
it create a network of mutual obligations by which a family good name is measured and underline the very fabric of their society
It's not a monetary debt, but the basic conception is the same. A moral debt is a debt as well. As for entity the "debt" exists also at psychological level: probably you could have heard that human mind is economic [in the sense of how it manages emotions and energy].

The difference is that the "contract" works differently. And in not a few cases the "contract" can be not accepted, overall in the field of emotions.

A loves B, but B doesn't love A and B doesn't feel any moral debt since A loves her ... anyway A has given her more than a lot ... [obviously we can inverte the genders].
 

Ichon

Ad Honorem
Mar 2013
3,507
#64
Debt is only one aspect of the larger issue of uncertainty and transaction/information costs left untouched, but this is a can of worms I didn't want to open because it isn't necessary to make my point. Suffice it to say that if the future figures prominently in the transaction process, or if the number of variables (i.e. the aspects related to transaction/information costs) is large, the price becomes even more bound to a specific transaction. And this is my point: price formation and thus the value of money is determined within the context of transactions and is not independent of them.
Sure I think I can agree that most simple transactions an individual consumer will be involved are conducted in a certain time and place after all regardless of all other considerations. Transactions in markets can work that way but more often are much more complicated.
 

Ichon

Ad Honorem
Mar 2013
3,507
#65
, but it also generates business, because of deficit spending, and this usually help the GDP to grow [if public money is well spent].
I am not sure moral debt is the right term for a barter trade which encompasses future obligation of payment. In such communities where barter could operate it would be a community debt- the family or clan/tribe of the borrower assumes the liability and similarly to how trust/reputation factors into the price of money in modern economies future borrowing and repayment in the future and the reputation in the community depends upon that debt being repaid. It is a web of mutual obligations that allows barter within and between communities to function.

In modern market economies, this web of obligation is simply more diffuse and less based on personal knowledge because the communities of individuals are so large and mobile and the goods being traded are worldwide. The earliest writing known revolves around recording payments probably because communities were becoming large enough that personal and community memory was not reliable anymore to keep track of the many transactions involved as well certain individuals were becoming empowered separately from their communities- the responsibilities and claims of single individuals surpassed the local community of family, clan, tribe that had formerly dominated human history.
 

sparky

Ad Honorem
Jan 2017
3,804
Sydney
#66
" this web of obligation is simply more diffuse and less based on personal knowledge because the communities of individuals are so large and mobile and the goods being traded are worldwide "

does it apply to credit rating ? this is the "reputation" of a borrower , it apply to government , private companies and individual borrowers