Disadvantages of Trade-by-barter

Disadvantages of Trade-by-barter

1. The Difficulty Of Double Coincidence Of Wants: That is, before exchange can take place, one has to look for somebody who wants his commodity and at the same time just have what he wants at that material time.

2. It Wastes Time And Energy: This is because, a person may use all his time going about in the market looking for someone who has what he wants and at the same time needs what he has.

3. Difficulty In Assessing The Value Of Commodities: For instance, it is difficult to determine how many tuber of yam will be equal to a basin of garri.

4. Exchange Becomes Uninteresting And Unexciting: When one considers the ordeal one has to undergo in order to exchange one’s goods and services with others, the interest and excitement one has for the exchange will disappear.

5. It Does Not Encourage Large Quantity And Variety Purchases: This is as a result of the problem of assessment and the fact that one finds it even difficult in establishing double coincidence of wants for a single commodity not to talk of many commodities.

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6. It Does Not Encourage Deferred Payment: Deferred payment is a system whereby one buys a commodity and pays in future. Under trade by barter, this is not possible because the goods used for exchange are not durable.

7. It Does Not Encourage Instalmental Payments: This is as a result of the difficulty in assessing the value and non durability of the commodities used for exchange.

8. It Does Not Encourage Division Of Labour: People were forced to become Jack of all trades and masters of none because, everybody tried to produce all his needs in order not to taste the bitter experience of trade by barter.

9. There Is No Lending And Borrowing: This is as a result of the fact that under the system of trade by barter, there is no generally accepted commodity for lending and borrowing.

10. It Discourages Large Scale Production: This was caused by the fact that people lost. interest in the system of exchange and therefore, resorted to producing goods and services for the satisfaction of their own wants and that of their families only.

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11. Miscellaneous Problems: These difficulties include: the non durability, portability, divisibility, homogeneity, cognizability etc; of the commodities that were used in exchange under trade by barter.

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Somtochukwu

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