Question

What were the reasons for the failure of the barter system?

Answer 1

Lack of Double Coincidence Wants:

There were very few cases in which people wanted to exchange something for the same thing being offered.

Division Issues;

There were things involved in the barter system which could not be divided.

The absence of a Common Measure of Value:

The most concerning issue in the barter system was the absence of a typical measure of significant worth i.e., there was no such product in lieu of which all wares could be purchased and sold.

The absence of Store of Value:

In a barter system, the store of significant worth should be possible just as wares. Notwithstanding, since products are perishable and they can't be kept for quite a while in the store

Answer 2

Barter system was a failure because of the following reasons:

*Mutual needs were not always met. For example, sometimes A had a product that B wanted. But, while B was expected to have what A wanted in return, it was not always so.

*There was no common measure of value. As a result, there were chances of one person getting less value of a product when he traded higher quantity of some other product.

*Most commodities exchanged were of perishable nature. They could not be stored for a long time and hence there was a lot of wastage.

*Division was a problem. For instance, a person who had a horse and wanted rice, vegetables and milk had to look for a single person who could give him all three items in exchange for the horse.