flanerie.org

The definition of a barter economy is "an economy that lacks a commonly accepted currency, so all exchanges must be made with goods and services because money does not exist in these economies."

Although not many countries have an economy that fits this definition, all countries have barter activity. Country-level barter economies are less rare than you might think - in times of economic turmoil, when the currency becomes untrusted, a significant number of transaction move onto a barter basis. Russia and Argentina are fairly recent examples.

Back to localised barter. This doesn't happen because of a lack of a commonly accepted currency, it happens either because of a lack of liquidity or because there are valuation difficulties.

Jack has £5 worth of apples. Danny has £5 worth of oranges. Neither has any cash, they lack liquidity. But that's cool, because they can just swap apples for oranges. While they didn't use currency directly, they used it for valuation and it is still fundamental to the transaction. A barter deal, but not in the purest sense.

Dorothy has the alternator from an 1978 Ford Cortina in her loft. She doesn't remember how she ended up with it, but she doesn't need it. Still, it would be a shame to throw it away. Meanwhile, Felicia needs an alternator for her 1978 Cortina. She doesn't have any money, but she does have a rug that Dorothy rather likes. They decide to trade.

Here the trade was 'something I have for something I want'. Currency was used neither for exchange nor valuation. Value was determined by worth to the individuals rather than an external market price. This is a classic barter exchange.

And the reason I mention any of this is that I bartered a DSL Router for some Viagra last week (I ended up with the router). Nifty!