What Is a Fair Trade?

By James Harvey Stout (deceased). This material is now in the public domain. The complete collection of Mr. Stout's writing is at http://www.james-harvey-stout.com .

Jump to the following topics:

  1. We can consider many perspectives in setting our values in bartering.
  2. Get an appraisal of the other person's goods and services.
  3. Cover your costs.    

We can consider many perspectives in setting our values in bartering.  

  1. We can transfer our regular dollar-salary into a barter situation. For example, if we earn $40 per hour for our computer repairs, we exchange a two-hour repair for our barter partner's $80 bicycle.
  2. We can decide that "all labor is equal; your hour equals mine in trade." That attitude comes from people who are idealistic -- and are usually unskilled. The difference between a minimum-wage laborer and a $100-per-hour professional can be too obvious when they are trying to do a direct trade -- at a ratio of one hour for about 16 hours. Some barter organizations insist on a strict hour-for-hour trade between members. But at one barter club where a similar rule was enforced, few professionals were willing to participate; eventually the club's director discarded the rule and instead he allowed the members to make their own agreements.
  3. We create our own subjective values. Those values are based on various factors:

Get an appraisal of the other person's goods and services. Especially when we are trading expensive merchandise, we should check with experts: store owners, directories, catalogs, magazines, books, price guides, and consumer-oriented web sites. Ask professionals to verify that the camera is fully functioning, that the painting is authentic, that the motorcycle really is worth that much. Show the power saw to a carpenter who owns a similar model. Go to appropriate stores to compare prices on furniture, equipment, plants, clothing, and other goods. Ask a jeweler to appraise the jewelry. At one barter club, a car mechanic has offered to inspect vehicles before we buy them; the mechanic can be paid via the club's units.

Cover your costs. Consider the costs of supplies and depreciation. For instance, if I am rototilling your big garden, are you paying for the gasoline, or am I? If you wire up my lights, am I purchasing the materials, or am I expecting you to bring some materials from your shop? (Usually, the person who is receiving the service pays cash for the materials.) If you are a businessperson, consider your overhead, the money which you have paid to your suppliers, etc. More ideas on this subject of "covering your costs" are presented in the chapter regarding cash flow.