Simultaneous Multilateral Barter

I want to help facilitate the formation of barter groups because I believe it can help people, especially in difficult economic times.

On Oct. 20, 2011, at a meeting of Transition Ottawa, a small group began to form for the purpose of arranging barter in the Ottawa area.

Most barter systems involve the use of points or local currency. However, often people are hesitant to spend in a local currency if they aren't sure how they'll be able to earn it back -- which is all the more difficult if others in the system are also hesitant to spend it.

With Simultaneous Multilateral Barter (or Multiswap), you know what you're giving at the same time that you're receiving something. Each trade is complete in itself and there is no debt.

For example, three people could agree that A will give home-grown organic vegetables to B, who will do babysitting for C, who will give music lessons to A. It can be as simple as finding loops of about 3 to 5 people who can do trades like that, and agreeing to do the trades.

If a group of people each offer at least one service or product, and if each one of them indicates at least one product that they're willing to receive from one of the others, then there will always be at least one closed loop forming a possible multi-person trade. Even more trades become possible when people find more services they're interested in within the group. I figure when there are at least about 30 to 50 people participating I expect multiple opportunities to trade.

Using software such as is being developed by Evgeni Pandurski, if enough people get involved, people can put in their offers and requests each day, and each night the computer can figure out what trades are possible. Each time, people give and receive equal value of goods or services, even though the people they give to can be different from the people they receive from.

Evgeni Pandurski has opened a SourceForge project at https://sourceforge.net/projects/cmb/ where people can collaborate on developing the software.

There is also a mailing list for those who want to help develop the software here: https://lists.sourceforge.net/lists/listinfo/cmb-devel and a more general discussion here: http://groups.google.com/group/multiswap.

Evgeni is running a copy of his software at multiswap.net. People are free to register and log in and try it. People can use it to communicate with others to arrange trades. There is no guarantee about whether the software will function as expected, and any misunderstandings or problems involving trades have to be worked out among the people doing the trades and are not the responsibility of me or Evgeni or of anyone running the multiswap.net site. (I'm not running the site.)

Barter has advantages that the use of money does not have. This is why barter continues to be used, thousands of years after money was invented. Barter is common in rural areas; between vendors at craft sales; within families and between friends; and among small businesses.

However, ordinary two-way barter is less flexible than money. "But I don't want ten dental checkups. I want my roof repaired."

Multilateral barter retains the advantages of barter, but adds an element of flexibility. Multilateral barter is barter among 3 or more people.

People can use their own time as a currency to buy the services they need. Trading things directly, rather than using money, is fun and satisfying. Knowing that one's services are valued by others boosts confidence. Friendships can form around barter exchanges. Barter is not subject to inflation or economic recessions, and is especially useful when unemployment is high, or in economically depressed regions.

David Parnas and others have also written articles about multilateral barter.

Hybrid systems

I believe Simultaneous Multilateral Barter, when used as part of a community currency barter system, can enhance the use of the community currency in a number of ways.

New people joining a system may be reluctant at first to trade in the community currency because they're not sure they'll be able to spend currency they earn, or not sure they'll be able to earn back currency they spend. Simultaneous Multilateral Barter gives them the opportunity to earn and spend at the same time, and once they've completed one transaction they may feel more comfortable using community currency within the system, since they've shown themself that the system works for them: that they can find both customers and suppliers.

While such hesitation may also be overcome by education and encouragement, I believe that by helping overcome hesitiations, Simultaneous Multilateral Barter can help maintain the fluidity and overall stability of a community currency system.

A system might have a limit on how far in the negative people are allowed to go. In any case, people may naturally want to avoid going too far into the negative, or too far into the positive, in a community currency. Simultaneous Multilateral Barter allows these people to continue trading nevertheless.

Two people might be providing equivalent products which are just as good as each other, but one may be better at getting the word out or better known within the community. Rather than having one person accumulate too much community currency while the other is left out, Simultaneous Multilateral Barter naturally and effortlessly tends to shift the trade towards whoever needs to be earning in order to close the loops that bring value back to the original person, and tends to distribute opportunities for employment.

Barter and taxes in Canada

Here are some links re barter and taxes. Individuals are responsible for figuring out whether they owe taxes. As I undertand it, income tax is owed if you barter the same stuff that you usually charge money for in a regular business or employment; and GST is owed if you are already registered as a business paying GST and you barter anything. There may also be other situations where taxes apply.