ARGENTINA: Economic Meltdown Fuels Barter System Boom

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Mar 13 2002 (IPS) - Argentina’s nearly four-year recession and soaring unemployment along with the restrictions on bank withdrawals have spawned a boom in bartering, which has already become an alternative means of survival for over three million people.

The unemployed, workers in the informal economy, retirees, the poor and even people from the middle-class and professionals are doing brisk trade bartering goods and services in some 4,000 Global Barter Network clubs scattered throughout the country.

The difference in the value between a product or service traded for another is paid with “credits”, a new “social currency” that may begin to be printed up in the government mint this month to avoid the production of counterfeit bills.

The movement first emerged in 1995, on the initiative of a group of environmentalists who wanted to return to a subsistence economy that would do without pesos, the local currency. The system has not stopped growing since then.

All kinds of things are bartered today, from real estate and cars to professional and tourist services. Local taxes and other kinds of transactions have even begun to be paid in bartering credits.

The new Pyme Barter club, which groups small and medium businesses that have gone bankrupt, even staged its first “rescue” operation this month. Using an “honour loan”, the group reopened Lourdes, a factory that produces regional products from the central-west province of Mendoza, which was forced out of business by the economic meltdown.

The loan granted by the Pyme Barter club enabled Lourdes – which at its peak employed 100 workers – to reopen, by paying the construction workers, electricians, plumbers and mechanics. The owner of the company promised to pay for the assistance through credits to employees and suppliers.

The barter system, which initially appeared to be a somewhat romantic alternative used by sectors of society that had been excluded from the traditional channels of consumption, has ballooned since December, when the government set limits on cash withdrawals to curb a run on banks, then-president Fernando de la Ruá was forced by looting and protests to resign, and the economy collapsed.

The number of members of the barter system has increased sixfold since last March. The coordinators of the network predict that if it continues to grow, over seven million people in this Southern Cone country of 38 million will be involved by year-end.

Television coverage of the barter clubs has become routine, explaining how they work and showing satisfied “prosumers”, as the barter club consumers, who sell what they produce, are known.

“My life has changed since I started to come here,” is a phrase that is often heard from the “prosumers.” Many spent years barely scraping by on tiny incomes until they got involved in the barter system.

Initially, most of the members of the clubs were homemakers, the jobless and pensioners. But as the crisis deepened, the middle- class began to participate, as well as employed workers and professionals.

“I receive a pension of just 300 pesos (worth around 150 dollars today), which made me very depressed. I didn’t even want to leave the house, until a friend convinced me to come here. I came just to make her feel good,” Margarita Fernández, a member of a club in Béccar, a Buenos Aires suburb, told IPS.

Fernández knits hand-made cotton and wool garments, which she sells in neighbourhood street fairs for 20 to 40 bartering credits, worth 80 cents of a peso each. (The Argentine peso, pegged at par with the dollar throughout the 1990s, has lost half of its value since the country’s currency board system was scrapped early this year).

The pensioner said her new income enables her to buy prepared meals and clothing, and to pay the plumber, electrician, hairdresser and pedicurist.

It is becoming more and more common to find architects, dentists, doctors, psychologists, teachers, and theatre, music or computer science instructors willing to accept half of the payment for their services in bartering credits.

The credits obtained in the barter system have also enabled people with small incomes to pay their taxes and utility bills, which means the alternative system helps contribute to the state coffers, Fernández also pointed out.

“The crisis caused a veritable boom, which forced us to organise and administer ourselves better,” Patricia Colombres, the head of the Journalists’ Barter club, told IPS.

Colombres is one of the 30 people hired to organise the network, answer phone calls and deal with referrals, oversee the emission of bartering credits, and organise publicity efforts.

Several years ago, it was easy to find and interview the heads of the barter clubs. But now anyone seeking information on the growing phenomenon must go through central desks and receptionists, who forward the calls to secretaries, who in turn contact people in charge of dealing with the press, to finally obtain the sought-after information.

The people hired by the network, who do not see themselves as “employed” in the traditional sense of the term, also receive their salaries in credits, which are collected from the entrance fees charged at La Berlinesa, the central club, located in Quilmes, a working-class neighbourhood on the southside of Buenos Aires.

La Berlinesa is visited by around 8,000 people a week. The club operates on Tuesdays, Saturdays and Sundays, and each “prosumer” brings their products or services to trade.

The first category traded is food, after which bartering begins at the stands offering clothes, school materials, books, knickknacks and other goods. Services are offered on a big notice board.

Each person who goes to La Berlinesa pays one peso and one bartering credit to enter – funds that go towards organising the network and paying the staff’s salaries and work-related expenses.

The Global Barter Club is now functioning in all of Argentina’s 23 provinces, each of which has hundreds of clubs.

Clubs have also been opened in schools, where students trade school materials, clothes, books, and even tickets to football games. Some clubs contact barter clubs in other parts of the country to offer hotel rooms and other tourist services.

But one of the most novel aspects is the decision by local authorities in a number of Buenos Aires municipalities, like Chacabuco, Quilmes and Avellaneda, to accept bartering credits in payment for taxes.

Small town mayors in other provinces have followed their example, and say the credits easily return to the tax-payers through meals in schools and hospitals, for example.

Many members of the barter clubs see the reaction of the local authorities as only logical. The liquidity squeeze plaguing Argentina, where unemployment has climbed to 23 percent after nearly four years of recession, has forced the provinces to issue their own bonds, which means there are nearly one dozen different kinds of bills circulating in Argentina today.

The bartering credits, which do not entail the further emission of debt and leave the “prosumers” satisfied, are beginning to look much more attractive than provincial bonds like patacones.