What is Barter System and its Defects?

By Ritesh|Updated : July 27th, 2022

Barter System is defined as a system of exchanging goods and services without the involvement of money. In other words, it is a transaction of giving and receiving products. For example, if a farmer exchanges 5 kg of wheat for a pair of shoes with a shoemaker, this system of exchanging products without the use of money is called the Barter System of exchange. Learn more about it and the defects of the Barter system below.

What are the Drawbacks of the Barter System?

It is a traditional method of satisfying the consumer needs mutually. In the present time also, many people follow this system informally to acquire products they want. There are many defects of the barter system which are stated below.

  • Lack of double coincidence of wants
  • Lack of a common measure unit
  • Difficulty in storing wealth
  • Division of certain goods is not possible
  • Difficulty in making future payments
  • Lack of specialization

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FAQs for What is Barter System and its Defects?

  • Barter System is a traditional method of exchanging products and services with a mutual agreement without the use of money. It has many advantages and disadvantages as well. Some of the advantages are to make a simple economy, no over-exploitation of resources, no employment, etc. While some of the disadvantages are lack of double coincidence of wants, no common measure of value, etc.

  • Every system has its own advantages and disadvantages. There are many defects in the Barter system as well such as it is not always possible that the two people have the requirement of each other’s products, so establishing mutual consent would be difficult.

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