The World is Your Swap Meet

It’s not very often that I give a Republican — let alone a self-described “libertarian” Republican, which I consider a contradiction in terms — credit for a great idea, but Eric Dondero nails it with his recommendation that the best way to move back toward a real market in health care is to revert to “cash and carry” and even more so to barter. Not just versus “ObamaCare” and other overtly state-powered programs, but also versus the existing hodge-podge of “managed care” schemes which primarily serve to funnel health care dollars into the bank accounts of state-privileged middle men. And for that matter, not just in the health care arena, but for virtually any good or service imaginable.

Shattering the state’s monopoly on money is a big part of the anarchist project. A lot of schemes for competing currencies — mutual currencies, commodity-backed currencies, you name it — are already in play in both theory and practice. But there’s a lot to be said, at this particular point in time, for plain old barter. Here’s why:

Almost every currency/money idea requires some sort of centralized system, making it vulnerable, to one degree or another, to a jealous government. If the currency is digital, then offshore servers and encryption can provide some degree of security, but that security is usually not total and the schemes can quickly get more complicated than most people are willing to put up with.

Even a straight commodity currency — coins minted from precious metal and valued according to the quality/quantity of that metal — will generally need to be minted by a widely trusted organization before they can themselves become widely trusted instruments of commerce.

As we’ve seen with e-gold and Liberty Dollars, the state moves quickly to crush such efforts, and it can do so effectively because of the centralization they require.

Barter, on the other hand, is a one-on-one of goods in which any two parties who trust each other can get the job done. A state bust of one barter transaction, or even of one exchange for such transactions, isn’t going to impact the overall viability of doing things that way. And in this day and age, it’s more efficient than it used to be, in two important ways.

First, it’s more efficient relative to “government money” than it used to be. At the time of the American Revolution, the real tax rate appears to have been in the low single digits. These days, between up-front taxation, inflation and costs of regulatory compliance, it’s somewhere in the neighborhood of 50%. In other words, using money instead of making a direct (and presumably unmonitored, unreported and untaxed) exchange of good/service for good service means accepting a 50% discount on value. In order to purchase $500 “worth” of something, one must first earn $1,000 and give the state its baksheesh. But one can trade $500 “worth” of something for $500 “worth” of something else at full value.

Secondly, the main inherent inefficiency in barter — the problem of finding someone who wants what you have and has what you want — has been greatly reduced by the information revolution. In 1709, someone who wanted to trade two goats and a sack of turnips for a ground lens to build a telescope with was going to have to do a lot of walking around to find an optics guy who needed two goats and a sack of turnips, if he was there to be found at all. It was easier to take his goats and turnip to market, sell them for shillings, and use the shillings to buy the lens.

In 2009, the equivalent of that trade — a few cases of homebrew ale for a used PC, for example — can be posted on Craigslist, and the parties will likely find find each other, or at least find other people to barter with until they get “where they want to go” through a series of such exchanges.

Presumably there’s a point at which the effect of the rising real tax rate and the effect of the falling inconvenience of finding barter partners cross each other on a graph of “exchange efficiency.”

“Building the new society in the shell of the old” may very well involve re-inserting some of the old society’s ways into the new.