Short on Money, Greece Brings Back the Barter System

Greeks are getting around what is delicately described as a “liquidity problem”—i.e. no money—by bringing back the barter system. It even has an Information Age twist: a bartering website with its own virtual currency system, and thousands of users.

That is a bit like putting a laser targeting system on a catapult, but bartering seems to be working for many Greeks at the moment.

The New York Times writes of a butcher who paid for new tires with meat, graphic artists exchanging their work for olive oil, and accountants who “swap advice for office supplies.” An electrician said that twenty percent of his work is now paid through bartering. In areas where informal bartering arrangements were already commonplace, the practice has intensified.

“The economy continues to deteriorate. The capital controls were the last bullet to the head. People have to find other ways to make things work. We are offering them one alternative,” said Yiannis Deligiannis, founder of the bartering website Tradenow.

Tradenow’s virtual system of “tradepoints” gets around the biggest practical problems with bartering, including the physical difficulty of exchanging bulky goods (“Thanks for fixing my air conditioner! Here, take this chicken!”), the difficulty of working out lopsided exchanges, and handling excess value. Of course, this sort of thing veers dangerously close to violating every government’s jealous monopoly on coining money, and such advanced bartering exchanges can become a black-market economy that skirts around taxes and regulations.

In this case, the jilted government is the European Union, the “tradepoints” correspond to one euro apiece, and the laws getting bypassed include the EU’s capital controls. The butcher who paid for his tires with meat boasted of selling chicken and beef through the Tradenow system and building up an impressive balance of tradepoints to spend on whatever he needed later, which sounds less like “bartering” than the creation of an alternative economy and currency.

That sort of thing usually drives governments nuts, especially big intercontinental governments worried about troubled states dropping out of their monetary unions.

In Greece, the barter system is seen as peripheral activity for the moment, and lauded as a way to keep commerce flowing while the country works through its liquidity crisis. The NYT piece cites some Greeks who speak openly of developing the barter system into a true alternative currency that could make an eventual exit from the euro less painful.

The port city of Volos pretty much has its own currency at this point, while other communities have developed “time bank” record-keeping systems that store accumulated value in personal accounts, much the way Tradenow’s online currency does. These less sophisticated systems generally have trouble handling unequal transactions and making sure everyone involved in a transaction keeps the deal—which is why stable currency was developed in the first place. The elegant web-based Greek barter systems described in the New York Times article are like fast-forward efforts to replicate the entire history of money using computer power and reproduce the level of trust necessary for commerce.

It is fascinating to watch from a sociological and economic standpoint, but if the Greek barter system gets much more popular, it will give European Union regulators heartburn. The likelihood of Greece finding ways to evade its side of the bailout plan has always been a major source of anxiety for the Eurozone. They will not be enchanted by the spectacle of Greece agreeing to complex bargains to remain in the euro, and then quietly abandoning the euro in favor of half-baked home-brewed currencies that take a sizable portion of their economy off the books.