News Barter System
The direct central of i commodity or service for about other without purpose of money is called barter system. So a barter organisation is that inwards which no money exists. It is money less economy.
Definition:
According to G. Nomas,
“Barter organisation is a marking of trading inwards which goods are exchanged direct for other goods without the purpose of money equally an intermediary”.
In words of R.H.Parker,
"Barter organisation is a direct central of goods as well as services without the purpose of money equally either a agency of payment or a unit of measurement of account."
Inconvenience or Difficulties of Barter System
1. Double Co-incident of Wants
The barter organisation needs the matching of wants. The central of goods is possible if the wants of ii parties coincide. For instance a mortal having a tabular array wants to central it alongside the chair. He has to detect about other mortal who wants to central his chair alongside table. It is the biggest employment of the barter system. Due to this employment merchandise nether barter organisation was real limited.
2. Economic Measurements
Under barter organisation it was non possible to stair out economical variables both at macro & micro level. There was no organisation to stair out personal income or micro flat as well as gross domestic product on macro level.
3. Future Payments
Under barter organisation it is real hard to lend goods to other people. With the passage of fourth dimension the value of goods may fall. So it becomes hard to brand payments inwards future.
4. Estimation as well as Budgeting Problem
Under barter organisation it is real hard to jurist expenses as well as income. The people & the regime cannot brand whatever jurist of their income & revenue because it is non possible to forecast the value of goods alongside whatever reasonable certainty.
5. Comparison of Living Standards
Living criterion of people is a mensuration rod of the economical growth of nay country. It is non possible to compare the living standards of people nether barter organisation because at that spot is no unit of measurement to limited the wealth of people.
6. Common Measure of Value
The barter organisation has no mutual stair out of value. There is no medium to stair out the value of goods. For instance a human being has a moo-cow as well as the other has goats as well as both are willing to trade. The possessor of moo-cow estimates the value of i moo-cow equal to the 5 goats. But the possessor of goats estimates the value of i moo-cow equals to 4 goats. The central cannot accept house unless both of them jurist the same value.
7. Tax Collection
The taxes are collected for the economical development. The sum collected is spent on education, hospitals, roads etc. when taxation is collected inwards the marking of goods it is real hard for the regime to pass such goods for evolution projects. Another employment is that the sum of storage as well as collection charges may endure to a greater extent than than the sum of the taxation collected.
8. Transfer of Wealth
The barter organisation does non assistance to transfer wealth from i house to another. The movable as well as immoveable wealth cannot endure shifted from i house to about other because sometimes the railroad vehicle toll is much higher than the actual toll of wealth. The motility of dry ground as well as edifice is non possible at all.
9. Storing of Wealth
The barter organisation does non render the facilities of storage of wealth for longer fourth dimension period. Some commodities are perishable inwards nature similar vegetable, fruits etc. these goods lose their whole value if stored for longer fourth dimension period. While other goods similar wheat lose their quantity as well as lineament if stored for longer fourth dimension period. Another employment is that the storing of goods likewise increases the storing cost.
10. Sub Division
Many goods are non divisible. Sometimes this fact becomes a real large employment inwards exchange. For instance if a mortal has a Equus caballus as well as wants to larn a pen. The value of the Equus caballus is much to a greater extent than than a pen. In this instance the central is non possible because the Equus caballus tin non endure divided into smaller pieces.
11. Specialization Problem
Under barter organisation each mortal is jack of all trades as well as main of none. H5N1 high flat of specialization cannot endure achieved nether barter organisation because every i tries to arrive at self sufficiency.
How the Use of Money has Reduced the Problem of Barter System
1. Revenue Collection
The purpose of money removed the employment of taxation collection. When taxation is collected inwards the marking of money alone as well as therefore the regime tin purpose it for the evolution projects.
2. Ease of Borrowing as well as Lending
The money has removed the inconvenience of time to come payments. Now the loans tin endure taken from banks as well as fiscal institutions. The time to come payments tin endure stated inwards price of money.
3. Medium of Exchange
The purpose of money eliminated the problems of double coincidence of wants. Now anyone tin purchase anything as well as sell anything for money. There is no demand to detect a mortal who is demand of a matter which yous guide maintain inwards surplus. In modern economic scheme people sell their goods as well as services for money as well as purpose that money for purchase of other people.
4. Measurement of Efficiency
Under barter organisation at that spot was no criterion of mensuration efficiency. The purpose of money has made it possible to stair out output, costs as well as efficiency inwards term of definite units of money.
5. Investment as well as Saving
Money has made it possible as well as extremely piece of cake to invest as well as save. Now nosotros tin salve our wealth yesteryear investing it inwards dissimilar saving schemes. Further nosotros tin salve our wealth inwards marking of unusual exchange, gold, silverish etc which tin easily endure converted into cash when required.
6. Development Process
In a barter economic scheme the procedure of evolution I slow. With the purpose of money technology scientific discipline has developed, enquiry function has increased: merchandise has expanded which results inwards overall economical development.
7. Increase inwards Foreign Investment
Money has made possible the huge investment inwards today’s world. Under barter organisation the unusual investment was impossible only the purpose of money made it possible because inwards money economic scheme wealth tin easily endure transferred from i house to another.
8. Ease of Specialization
In barter organisation specialization is non possible because everyone tries for self sufficiency. Specialization non alone helps inwards reducing toll of production only likewise results inwards higher production. The increment inwards production as well as therefore tin endure traded to purchase other goods.
9. Storing of Wealth
The employment of storing wealth has been removed yesteryear the purpose of money because wealth tin easily endure stored inwards the marking of money.