Click to enlarge

Read this article in your browser and language

We tend to think of exchange as something that happens in only one way: one person provides something, another person pays for it, and money passes between them. This has become so familiar that it can seem as though exchange and money are inseparable.

They are not.

Throughout human history, people have used many different ways to exchange goods, services, skills, knowledge, assistance and resources. Some involved direct exchanges between two people. Others relied on keeping a record of what people had given and received. Some involved no expectation of anything in return at all. Others depended on sharing, reciprocity or an understanding that something given today could be reciprocated at another time.

These different ways of exchanging can be thought of as exchange modalities: different modes or methods through which value can move between people and communities.

Many of these modalities are commonly regarded as relics of the past. Barter, swapping, gifting and time exchange are often imagined as primitive arrangements that were made unnecessary by the invention of money. Yet this view overlooks an important possibility. Perhaps these methods did not disappear because they were inherently unsuitable. Perhaps many of them simply lacked the communications technology needed to operate effectively on a larger scale.

The internet changes that equation.

Exchange is bigger than money

Modern economic life tends to place money at the centre of almost every exchange. If something is not bought or sold for money, it is often regarded as being outside the economy altogether.

But this is a rather narrow definition of economic activity.

People give things away, exchange things directly, share resources, help one another, look after children, exchange skills, teach one another, lend equipment, provide accommodation and contribute their time to collective activities. All of these activities involve the transfer of value, even when no money changes hands.

The Community Exchange System (CES) takes a broader view. It provides tools that can accommodate a range of exchange modalities, rather than assuming that every exchange must take the form of a conventional monetary transaction.

Some exchanges are recorded on a shared ledger. Others take place directly between participants and are not recorded at all. A person might give something away, swap an item for something specific, negotiate a barter exchange, or participate in a shared activity. The CES platform can help people find one another even when the eventual exchange happens “off the books”.

This distinction is important. Exchange modality is not simply a question of how a transaction is recorded. It is also about what people are offering, what they are seeking, and how they choose to reciprocate.

Mutual exchange: keeping the score

One of the most important modalities is what CES calls Mutual Exchange, sometimes known elsewhere as mutual credit.

At its simplest, mutual exchange is a way of keeping a shared record of value given and received. When one participant provides something to another, the provider’s standing increases and the receiver’s standing decreases by the same amount. Nothing has to be physically transferred between their accounts because there is no currency being passed from one person to another.

The ledger is keeping the score.

This idea is much older than modern money. Ancient societies used clay tablets, tally sticks, knotted cords and other methods to record what had been received and provided. What modern digital technology makes possible is a shared, distributed ledger that can be accessed by all participants.

This changes the practical possibilities considerably. What was once difficult to administer with paper records and local knowledge can now be maintained online, potentially across large communities.

Mutual exchange therefore need not be understood as the creation of another kind of money. It can instead be understood as a method of accounting for exchanges without requiring a circulating medium of exchange.

Time trading and time banking

Another approach is to use time itself as the unit of account.

In Time Trading, two people maintain a private record of what each has provided to the other. If one person spends three hours helping another, the record can show three hours given. The other person can subsequently provide three hours in return. The balance can be maintained indefinitely or closed when the two sides have reciprocated.

The underlying principle is quite simple: instead of using money to settle the relationship, the participants keep a record of what they have contributed.

Time Banking extends this idea beyond two people. A shared ledger records the hours contributed by participants, allowing an hour provided to one person to be used, in effect, in relation to another participant.

Time banking is particularly suited to services because an hour of someone’s time can be the common unit. Childcare, gardening, companionship, tutoring, transport, repairs and many other activities can potentially be exchanged in this way.

The important point is not that an hour of every person’s time has exactly the same economic value. Rather, time banking deliberately creates a simple basis for reciprocity where equality of time is itself part of the arrangement.

Gifting

Not every exchange needs to involve a return.

Gifting is perhaps the oldest exchange modality of all. A person may have something they no longer need and simply give it to someone who does. The item might be a piece of furniture, clothing, books, garden equipment, building materials or something that would otherwise be discarded.

But gifts do not have to be physical objects.

People can offer advice, companionship, assistance, information, skills, volunteering, guidance or their time. Someone who enjoys hiking might invite others to join them and share their knowledge of local routes. A programmer might offer help to someone who needs a website. Someone with surplus plants might give them away to other gardeners.

Digital networks make these forms of giving much easier to organise. Instead of waiting for someone nearby to happen to know that a particular item is available, the offering can be advertised to a whole community.

Gifting also provides a practical way of extending the useful life of things. Items that have become unwanted by one person may still be valuable to another. Reuse and redistribution can therefore become part of the exchange network itself.

Swapping

Swapping is another direct form of exchange. Unlike a general barter offer, a swap identifies what is wanted in return.

“I have A and would like B” is a simple swap.

The possibilities are almost limitless. Books can be exchanged for books, plants for plants, equipment for equipment, or a service for another service. Accommodation can be exchanged between people in different places. One person might provide computer assistance in return for help with bookkeeping.

Swapping can also be temporary rather than permanent. A person may lend an item in return for access to something else, or two people may agree to share resources or activities.

Again, the internet changes the possibilities. The difficulty with direct exchange has traditionally been finding the right person. A person may have exactly what someone else wants, but the two may never meet. An online network can make these potential connections visible.

Barter

Barter is closely related to swapping but is less specific about what will be received in return.

A person can advertise something they have and invite others to make offers. Instead of specifying “I will exchange this for that”, the offering might say, in effect, “What can you offer?”

This creates a much more open form of negotiation.

Barter is sometimes portrayed as an inefficient primitive form of trade that money was invented to overcome. Whatever the historical accuracy of that story, modern experience demonstrates that barter did not disappear. Commercial barter exchanges continue to operate today, particularly among businesses.

Indeed, organised barter has become a substantial modern industry. Online platforms, professional barter exchanges, brokers and accounting systems have made it possible for businesses to exchange goods and services without every transaction requiring a conventional cash payment. Barter and other forms of countertrade have also been used in international commerce, including arrangements between countries.

This is significant because it demonstrates that non-monetary exchange is not merely an historical curiosity. Modern communications and accounting technologies can make it practical at considerable scale.

Shared offerings

There is another modality that sits somewhat outside the conventional idea of a transaction: sharing.

A shared offering invites people to participate in a resource, activity or undertaking rather than simply receiving something from an individual provider.

A group might create a community garden, establish a seed bank, organise a lift club, share tools, form a childcare network or work together on an environmental project. People contribute what they can and benefit from what others contribute.

Here, the exchange is not necessarily between A and B. It can circulate through a whole group.

This is particularly interesting in a networked environment because digital technology can help people organise activities that would previously have depended on informal local knowledge and personal relationships.

A new exchange ecosystem

These modalities should not necessarily be regarded as competitors.

A person could participate in mutual exchange while also giving things away, swapping items, taking part in a time bank and joining shared activities. A single offering might even combine several modalities.

This suggests a different way of thinking about exchange.

Instead of asking, “What is the one best alternative to money?”, we can ask a more useful question:

What different ways can people exchange value, and how can they complement one another?

The internet provides an important part of the answer. Digital networks can connect people who would otherwise never find one another. They can provide searchable listings, shared records, reputation mechanisms, messaging, notifications and increasingly sophisticated ways of matching offerings with requests.

What was once limited by geography, memory and the difficulty of maintaining records can now be coordinated electronically.

The result could be an exchange ecosystem in which different modalities coexist. A person might give away surplus goods, swap something they need, barter a service, participate in a time exchange, contribute to a shared project and use a mutual exchange ledger when a more flexible form of reciprocity is appropriate.

None of these methods has to replace the others.

Looking forward rather than backward

It is tempting to describe these modalities as “ancient” or “primitive”, but perhaps that is the wrong way to look at them.

Some may indeed come from earlier eras. Yet an old idea can acquire new possibilities when the technology surrounding it changes.

The significant development is not the invention of barter, gifting or mutual accounting. These are old human practices. The significant development is that people can now connect, communicate and keep records across distances and in real time.

This gives us an opportunity to reconsider the assumption that there must be only one dominant way of organising exchange.

Money is one exchange modality. It has become enormously important, and nothing in the idea of exchange modalities requires denying its usefulness. But it is not the only way human beings can coordinate the giving and receiving of value.

The possibility opened by digital networks is therefore not a return to the past. It is something potentially more interesting: the reintroduction and combination of older forms of exchange using modern technology.

CES is part of this exploration. By providing a digital environment in which people can advertise offerings and requests and, where appropriate, record exchanges, it creates a space where different forms of reciprocity can coexist.

The future of exchange may not belong to one modality.

It may belong to many.