To avoid confusion, it is helpful to clear away what money is not. Sharing, gifts and barter are not money systems – they are resource exchange systems.

Sharing and gifts

Giving one’s surplus to those in need is one way to distribute resources. The earliest societies functioned as sharing and gift economies, much like families do today; everyone participates in working and shares what they have. The difference between giving and sharing is that giving assumes ownership by one party to the transaction.

A gift is generally given without expectation of return. We have a sense of fairness about overall giving and sharing over time, but a gift is generally given without an expectation that something else will be given back directly. Giving and receiving creates bonds between people. Traditionally, giving is the norm within families and religious institutions. Giving means, by definition, no money is exchanged. If all we did was give and receive what we have produced with others, we wouldn’t need money.

However, no large scale, stranger-including, gift-sharing economy has ever existed. Certain events, like Burning Man, practice a gift culture, but this is not a sustainable economy that produces what it uses. The Soviet Union attempted a sort-of gift economy; it removed as much monetized exchange as possible and instituted centrally controlled production and distribution of goods. But this interesting experiment did not work.

Although giving and receiving is good, it is not an alternative to a money system for the broader community. We need a healthy amount of giving and receiving to build and strengthen community, and we need money because we exchange over great distance and time. The choice of monetary system has an impact on how robust the gift giving component is in a society (See 6.60, Monetizing everything).


Barter is also not a money system; it is a direct exchange between individuals. I grow apples, you sew clothes. I give you a bushel of apples in exchange for a new shirt. The parties involved decide the value of whatever they are trading. In a barter exchange, the participating parties determine the value of their goods or services in relation to the goods the other party is offering.

Today barter is used from Craigslist to big business barter exchanges to nations exchanging a commodity, such as oil they have in excess supply, for the bulk commodities of another nation. However, the value of the barter is nearly always measured by using money as the measure of value on both sides of the exchange. Sometimes this money as measure is the national currency, and sometimes it is a currency unique to the exchange. This is because money provides a broader, community-wide context of value. This is particularly true of larger scale barter exchanges. Although barter can be a useful way to make a trade, a barter-only society has never existed. Finding an exchange that is satisfying and desirable for both parties is often time consuming or impractical.

 PrevMoney Fundamentals 3.14