At first it was the barter system. Then came money. Today, we are transitioning slowly into a cashless society. But could the barter system be making it’s way back in to the global economy?
Despite websites in the UAE and globally offering the option to people to swap skills, it does not have the potential to become a major economic practice, according to Professor Ismail H. Genc, head of the economics department at American University of Sharjah.
He spoke about the many challenges of getting involved in a barter.
“One has to search for the suitable party to do the exchange, which takes time. It also requires that the goods to be exchanged needs to be properly stored until such a party is identified. Additionally, even if and when one finds that party, how do they determine the comparative value of each other’s goods? These and similar reasons make the barter system a less than ideal candidate to dethrone money,” he said.
He also felt that it was easier to barter soft skills at a global level through the internet.
“If, especially, these products can be exchanged with the help of technology, such as education. Individuals with these soft skills can relatively easily barter them across the internet and similar platforms,” he said.
However, he does understand the merit of having affordable options keeping in mind the standard of living in many countries.
“It is only natural that people will continue to try to find alternative means of payment. These are economically useful to the extent that they bring unused potential in terms of goods and services to the market. That is why they should be encouraged. But we should not have any illusion that the so-called cashless society is around the corner,” he said.
Most of the industry leaders in the sharing economy, like Uber and Airbnb, have started from the US. A Pew research that was released last week showed that while many adults used such services quite regularly, a small portion of the adult community was not even aware of their existence.
For instance, 15 per cent of Americans had used taxi services like Uber or Lyft, but twice as many had never heard of these apps before. Similarly, 11 per cent of Americans had used home-sharing platforms like Airbnb or VRBO, but roughly half had never heard of such sites.
So, while the trend might be picking up in the UAE and across the world there is still a long way to go for it to become a popular practice within societies.