The Mystery of the Uncomfortable Barter

One of the truly wonderful things about The Value Crisis discussion groups and speaking engagements is that my perspective gets challenged by intelligent people struggling to apply the concepts to everyday life.  One such magical moment arose this week, when a participant in our chapter-by-chapter exploration of the book gave us a perplexing anecdote to puzzle out.  Let me first set up the context...

We were discussing Chapter 3 (Money - The Number Culture), which includes a brief history of money, from the days of barter through to today's banking databases.  One of the propositions of that chapter is that the barter of goods or services between two willing participants is always a win-win transaction.  Both sides are getting something they want, and either employing a skill that they already have or giving something that they want less - hence the net value of both sides goes up.  Such an exchange feels quite different when you instead look at two separate transactions that use money to quantify the value.

Barter actually capitalizes on the concept of marginal value.  This economics term is used to convey the idea that the 'value' of a particular thing (to us) depends on the quantity of that thing that we already have.  If I have hundreds of arrowheads, their marginal value to me is low, but if I have no baskets, the marginal value to me of a needed basket would be quite high.  I would be very willing to trade a few arrowheads for a basket.  Barter works when I find someone with many baskets (each therefore having a low marginal value for them), who needs an arrowhead or two.

So back to our story.  The reader who shared the anecdote is an organic hobby farmer of sorts.  She keeps a variety of livestock and is an enthusiastic promoter of permaculture practices.  As she relates it, she had an experience where the long hours of back-breaking farm work had taken its toll and she wanted to get a massage.  She had met a masseuse who was open to providing such a service in barter for some of the meat that the farmer raised on her land.  Learning that the typical price for the service was $80, she gathered up $80 worth of organic beef and went in for the relaxing treatment.

Alas, afterwards, she was disappointed by how she felt about the transaction.  Perhaps while in the midst of having the knots removed from her back, she was thinking about all the hours of work that had put them there: looking after her stock day after day, mucking out stalls, and hauling buckets of food for the grain-fed beef.  And, in exchange for a significant portion of the end gains, she was getting perhaps less than an hour on a massage table.  It didn't feel right.

This struck a chord with me.  In a later chapter (Ch. 5 - The Value of Time), I talk about how difficult it was for me, as a newly self-employed person, to set a billable value for my time.  I might do a day's work with community not-for-profits for $100, and then do the same work for a large corporation and bill more than ten times that amount.  So what was the true value of my time?  What should I bill clients who fell in between those extremes?  Was it right that the client's budget always determine my fee?  How could I determine if a particular project remuneration was "worth my time"?

My ultimate solution was how I felt about my contribution and corresponding compensation.  If I felt I was being taken advantage of (or was taking advantage of someone else) I felt bad.  Otherwise, I would consider the project a fair transaction.  The numbers played no direct role.  Now here was this woman voicing a familiar reaction:  the massage-for-beef transaction didn't feel right.  But this was barter!  So what went wrong?

Most people initially see the disconnect in terms of the time differences.  Farmers work long hard hours to grow, maintain, harvest, and prepare their produce for consumption.  And here was my friend, trading a chunk of that for a service that was provided in a tiny fraction of that time.  I agree that this would certainly be an influence.  However, quantifying time and worth is full of all kinds of pitfalls.  There are so many added variables.  A dentist charges not just for the half-hour of teeth work, but also the training, capital costs of the office, etc.  Part of a masseuse's fee has to take into account that they don't usually work full 8-hour days.  Nor can they leverage economies-of-scale to massage more than one client at a time, the way a farmer might be able to double their herd with minimal additional effort and overhead.

No, upon reflection, I think something much more interesting happened to this transaction.  The clue is the $80 value.  The reader had looked up the posted value of the massage and then tried to put together a package of food that had the same monetary value.  To me, that is not really barter.  That is simply a transaction, using prices on both sides, that happens to use meat as a currency.  Marginal value was no longer a key component of the feelings of value and worth.  Instead, both players reverted to the quantified market value, which completely alters the quality of the relationship.  As soon as the numbers come in, the barter doesn't even have to take place for the farmer to feel disappointed.  She could simply contemplate how she had just paid $80 for a massage and then later think about how much work had gone into a totally separate sale of $80 worth of beef.

That's the thing about numbers and number-based values.  They allow us to do things like instantly compare our salary to that of our spouse or a co-worker or a professional baseball player.  Or compare a season of livestock management to a spa treatment.  Such pursuits often to lead to bad feelings, no?

The Stray Coin

Early in the writing of The Value Crisis, I was trying to wrap my head around different behaviours that I was observing in myself and others.  It seemed to be that some people used number-based value thinking more than others, and I tried to find a simple way to illustrate this and perhaps even test for whether or not they were "Quantifiers" or not.

I have since abandoned the idea of trying to divide people into "Quantifiers" and "Qualifiers" in preference for the Value Personae theory that I based on the work of Robert Reich.  In Supercapitalism, Reich described different mindsets that we operate under: the consumer/investor and the citizen.  In Chapter Ten, I consider these as three distinct versions of what I call our value personae, and explore how they operate in an individual and collectively at the societal level.

Still, one scenario (that didn't make it into the book) remained as a useful way to consider these different behaviours.  It went something like this: 

You’re walking down the street on a sunny day with no one else around, when you glance down at the clean sidewalk and see a shiny dime.  Do you pick it up?  If your answer would be “Yes”, would you also pick up a nickel or a penny?  If you said “No” to the dime, for what coin denomination would you stop and pick it up?  If your original find were two nickels, would that change your answer?

I posed this series of questions to a number of people, and two distinct styles of decision-making emerged.

Sometimes, their decision to stop and pick up the money depended on how much money was there.  If they said “No” to the dime, then we would move on to increasingly larger values of cash until they said “Yes”.  In such instances, each one of these people had a tipping point – a numeric value at which their answer changed from “No” to “Yes”.  Of course, there are other factors, such as multiple coins versus a single coin, for example, that might affect their tipping point.  (Someone who would pick up a dime might not bend down to retrieve ten pennies.)  Their choice might also change if they were the ones that dropped the money in the first place.  However, the key point is that these people were always making a number-based decision.  A lower face value lowered the beneficial value of the act itself, resulting in a decision to leave the cash where it was and keep walking.  If they came across a sufficiently higher face value, the value of the money and the act of picking it up both increased in direct proportion, and a different choice was made: to stop and pick it up.

While this relationship between monetary value and likelihood of picking up a coin seems simple enough, a near-equal number of friends gave very different responses – saying they would pick up any coin, regardless of the amount.  They explained that for them this was not a number-based decision at all, but was related to a personal value:  sometimes the joy of finding something for nothing, or a belief in the luck acquired by picking it up, or an aversion to waste, or an attraction to money of any amount.  The act of picking up the money had real value to them, which was not necessarily determined by the quantifiable value of the money itself.

This inquiry is not so much about dividing people as dividing behaviours in a specific situation.  Of course, if we switch the question from a coin to a bill, then it probably becomes a number-based decision every time for everyone.  However, for the original coin example, there is no question that two types of decision-making were used:  Some said they based their decision on coin value, some said they didn’t.

The first type provides an example of how a strictly numeric value scale can be incorporated into a personal value system used to make everyday choices.  There is a direct, mathematical relationship between the face value of the money lying on the sidewalk and the decision of to the passer-by to pick it up or not:  “Is it worth my effort to stop, bend over, and retrieve the coin?  Hmmm.  What is the coin worth?”  Almost unconsciously, they are placing a monetary value on the interruption to their walking, doing a quantifiable comparison, and making a math-based decision.

Being an example of those who used the second type of decision-making, my reasoning is quite different.  In fact, I also pick up screws, lock washers, anything I see which might be useful.  I hate to see perfectly good objects just tossed aside, and I enjoy being able to later head to my collection of nuts and bolts and find just what I need at that moment.  My retrieving a coin is less about adding to the value of my pocket contents and more about satisfying a need to file the coin where it belongs – with other coins!  I have also met a few people who choose not to pick up coins – not because the money is not worth it, but because they believe the money should be left for those who might need it more.  This is a different, non-numeric value being expressed.

I started my little stray coin inquiry because I was curious about the prioritization of number-based value scales in individuals.  I had already theorized that society was demonstrating an increased tendency to look at the numbers first and apply mathematical judgements to arrive at value choices, so I wondered if certain people had similar tendencies.  It seemed to me that certain acquaintances were not just better with numbers - they seemed to more readily use number-based values when thinking about things like cars, real estate, whatever.

I don't think anyone exhibits pure number-based thinking.  Picking up a quarter and picking up twenty-five pennies are never exactly the same thing; other factors come into play.  On the other hand, most businesses will accept a twenty-five cent payment in either form.  (Not that we have pennies in Canada anymore...)  This particular trait of pure number-based values being found in business entities - especially publicly-traded corporations - is thoroughly examined in Chapter 7 of The Value Crisis.

And thus, my stray coin experiment is now relegated to this blog, but it has not been abandoned entirely.  I still think it is a useful way to illustrate different styles of decision-making, and it is still a wonderful way to open up the conversation about number-based values.

So, what coins would you pick up?  And more importantly, why?