Barter system characteristics page 1

1No Measure of Value:

Under barter there was no standard unit to measure value of different units or to measure value of different goods. So there was difficulties in valuation of goods. For instance, the man who has sugar may assign the value to his Ikg sugar as equivalent to
2 jackets. But the man who has got jackets may value his jacket as equivalent to 5 kg sugar. This lack of common measure of value made trade difficult.
3. No Subdivision:
In barter, there is always a problem of lack of subdivision. As mostly goods and animals were traded for goods so it was nearly impossible to subdivide them (e.g., horses and catties) into smaller units for small transaction. For example a person has a horse and he needs a piece of cloth. Now the question arises that how many horses will be equal to how much yards of cloth? This problem hinders the flow of transaction in barter system.
4. No Store of Value:
Under barter, wealth can't be stored for a longer period of time. Though people were in the habit of holding precious metals but other goods which were perishable couldn't be stored for any longer time period.
5. Standard of Deferred Payments:
Under barter, there was no standard of deferred payments. There was no mechanism to state debts and payment in future with reasonable certainty and security.
6. No Investment / Savings:
Under barter, neither there was any investment nor any saving. People were in the habit of self-sufficiency and they were not able to save for rainy days or to invest what they have got in surplus to earn healthy returns.
7. Economic Measurements:
Under barter it was impossible to measure any economic variable both micro and macro. There was no system to measure personal income on micro level and GDP on macro level.
8. Comparison of Living Standard:
As under barter, wealth can't be stated in common units, so it was impossible to compare living standards of different classes of society. Further, it was also impossible to determine true worth of any stock or merchandise. There were no common units to compare wealth distribution among people.
9. Tax Collection: V
Under barter it is extremely difficult if not impossible to impose any type of duties and taxes and then to collect them. It was impossible to collect goods from different people as tax because they were of various forms and mostly perishable.