ARGENTINA: The Rise and Fall of the Great Bartering Network

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Nov 6 2002 (IPS) - Argentina’s economic collapse and the deterioration of its social fabric fuelled, in little over a year, an unprecedented boom of a new bartering system, which shrank just as quickly due to inflation, speculation, scarcities, counterfeit bartering credits, and a plunge in membership.

The Barter Club began to function in Argentina in 1995 on the initiative of a group of environmentalists and professionals. Just 30 ”prosumers” (producer-consumers) were involved in the informal trading network at the start.

But in 1998, when recession set in and unemployment began to soar from an already high level, the barter system started to grow exponentially.

The organisers of the new network issued ”credits”, a pseudo- currency used to make up the difference when goods or services of disparate values are swapped. More and more ”prosumers” began to join in, from bricklayers to mechanics, electricians and computer technicians, who offered a broad range of services in exchange for food or clothing.

The network soon began to gain prestige, attracting doctors, psychologists, dentists, architects and translators.

Members even began to barter cars, real estate like homes and land, tourist services, and even loans for small businesses.

At its peak, nearly three million prosumers were involved in the system, which meant it benefited around 10 million people, counting the families of each member.

Some 8,000 bartering clubs were operating around the country when the system began to send out alarm signals.

”In October 2001, there was a flood of people who had been driven into poverty by the crisis and found no state social safety net, so the clubs decided to open their doors to the massive inflow of new members,” Rubén Ravena, one of the founders of the Barter Club, commented to IPS in an interview.

In the past four years of recession, the poverty rate has ballooned from 31 to 53 percent of the population of 37 million, and unemployment has climbed from 14 to 21.4 percent, according to official figures.

Although taking a course on ”bartering based on the concept of solidarity” and having a product or service to offer were the initial requisites for joining, the requirements began to be relaxed due to the desperate situation created by the economic crisis, which gave rise to asymmetries in the system.

Many new members were given a loan of 50 credits to get started, but they failed to produce anything or offer any service.

”This problem continued for around six months, until March, when the government began to provide new assistance in the form of a stipend for unemployed heads of households, and a lot of the new members left, leaving excess credits circulating in a parasitic manner,” said Ravena.

But that would not have had such major repercussions if other problems had not cropped up as well.

The coordinators of what was by now an enormous network began to detect counterfeit credits – a problem that took on such magnitude that nearly 90 percent of the credits circulating were forgeries.

They were forced to begin issuing a new pseudo-currency, under strict security measures to prevent falsifications. But the damage to the credibility of the system was irreversible.

The credits declined in value and inflation set in. ”It was as if we had been inoculated with a virus,” said Ravena.

Another calamity was a robbery in the central headquarters, in the Buenos Aires suburb of Quilmes, on the south side of the capital. ”In the robbery we lost much of our monetary backing,” he explained.

Between the forgeries and the excess credits circulating, prices shot up to as much as 40 times the initial value of a product. ”Credits began to be sold by the kilo,” said Ravena.

At the same time, large producers participating in the clubs began to sell merchandise on a large-scale outside of the system, triggering shortages.

The network’s organisers also uncovered speculative maneuvres on the part of unscrupulous members, who hoarded credits or sold them near the clubs.

”I was selling my cakes, and was doing well with the credits,” Cecilia Vázquez, a former prosumer, told IPS. ”But at one point I realized that I couldn’t use them to buy any of the ingredients I needed to continue baking cakes, because there was nothing to buy, and I had to start using up my pesos.”

That sharp turnabout, which began to be seen in the middle of this year, reduced the number of habitual prosumers to 250,000, the total number of those participating in the system to one million, and the number of clubs to around 3,000, said Ravena.

”There was a point at which the clubs were mushrooming like laundromats and other fads. Every neighbourhood was setting up its own, and there were often several within the space of just a few blocks,” he said.

”At that time, the members were supporting millions of people who had nowhere else to go,” people who have since left and now depend on the meager aid provided by the state.

Despite all that has happened, Ravena sees the crisis that has swept through the bartering system as part of a growing process.

The key to recovery, he said, is to return to the system’s origins, when the network had a limited number of prosumers who were concerned about creating an alternative economy based on the concept of solidarity that encouraged people to work and helped shore up the damaged self-esteem of the unemployed.

The rules for membership are once again strict. Every prosumer must produce a good or offer a service, and no one receives loans enabling them to join.

All members must defend the value of the credit, at one credit=one peso, to prevent inflation and speculation, and any sales of credits must be reported.

”We never got the parliament to pass a bill on bartering that has been shelved in Congress for some time. But at least we registered the design of our new currency as intellectual property, which means that if the police find anyone selling our credits, they can be arrested,” said Ravena.

The new controls should thus give humanity’s oldest system of trade a new lease on life in Latin America’s third-largest economy.

ARGENTINA: The Rise and Fall of the Great Bartering Network

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Nov 6 2002 (IPS) - Argentina’s economic collapse and the deterioration of its social fabric fuelled, in little over a year, an unprecedented boom of a new bartering system, which shrank just as quickly due to inflation, speculation, scarcities, counterfeit bartering credits, and a plunge in membership.
(more…)