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(en) Argentina, Media, The illusion of reforming the capitalist system from within - Rise & Fall of Argentina's Bartering Network

From Dan Clore <clore@columbia-center.org>
Date Sat, 16 Nov 2002 05:22:25 -0500 (EST)

      A - I N F O S  N E W S  S E R V I C E

> The rise and fall of the great bartering network in Argentina By Marcela Valente 
Buenos Aires, Argentina, Nov. 6 (IPS)- Argentina?s economic
collapse and the deterioration of its social fabric fuelled,
in little over a year, an unprecedented boom of a new
bartering system, which shrank just as quickly due to
inflation, speculation, scarcities, counterfeit bartering
credits, and a plunge in membership. 

The Barter Club began to function in Argentina in 1995 on
the initiative of a group of environmentalists and
professionals. Just 30 "prosumers" (producer-consumers) were
involved in the informal trading network at the start. 

But in 1998, when recession set in and unemployment began to
soar from an already high level, the barter system started
to grow exponentially. 

The organizers of the new network issued "credits," a
pseudo-currency used to make up the difference when goods or
services of disparate values are swapped. More and more
"prosumers" began to join in, from bricklayers to mechanics,
electricians and computer technicians, who offered a broad
range of services in exchange for food or clothing. 

The network soon began to gain prestige, attracting doctors,
psychologists, dentists, architects, and translators. 

Members even began to barter cars, real estate like homes
and land, tourist services, and even loans for small

At its peak, nearly three million prosumers were involved in
the system, which meant it benefited around 10 million
people, counting the families of each member.

Some 8,000 bartering clubs were operating around the country
when the system began to send out alarm signals. 

"In October 2001, there was a flood of people who had been
driven into poverty by the crisis and found no state social
safety net, so the clubs decided to open their doors to the
massive inflow of new members," said Rubén Ravena, one of
the founders of the Barter Club. 

In the past four years of recession, the poverty rate has
ballooned from 31 to 53 percent of the population of 37
million, and unemployment has climbed from 14 to 21.4
percent, according to official figures. 

Although taking a course on "bartering based on the concept
of solidarity" and having a product or service to offer were
the initial requisites for joining, the requirements began
to be relaxed due to the desperate situation created by the
economic crisis, which gave rise to asymmetries in the

Many new members were given a loan of 50 credits to get
started, but they failed to produce anything or offer any

"This problem continued for around six months, until March,
when the government began to provide new assistance in the
form of a stipend for unemployed heads of households, and a
lot of the new members left, leaving excess credits
circulating in a parasitic manner," said Ravena. 

But that would not have had such major repercussions if
other problems had not cropped up as well. 

The coordinators of what was by now an enormous network
began to detect counterfeit credits - a problem that took on
such magnitude that nearly 90 percent of the credits
circulating were forgeries. 

They were forced to begin issuing a new pseudo-currency,
under strict security measures to prevent falsifications.
But the damage to the credibility of the system was

The credits declined in value and inflation set in. "It was
as if we had been inoculated with a virus," said Ravena. 

Another calamity was a robbery in the central headquarters,
in the Buenos Aires suburb of Quilmes, on the south side of
the capital. "In the robbery we lost much of our monetary
backing," he explained. 

Between the forgeries and the excess credits circulating,
prices shot up to as much as 40 times the initial value of a
product. "Credits began to be sold by the kilo," said

At the same time, large producers participating in the clubs
began to sell merchandise on a large-scale outside of the
system, triggering shortages. 

The network?s organizers also uncovered speculative
maneuvers on the part of unscrupulous members, who hoarded
credits or sold them near the clubs. 

"I was selling my cakes, and was doing well with the
credits," said Cecilia Vázquez, a former prosumer. "But at
one point I realized that I couldn?t use them to buy any of
the ingredients I needed to continue baking cakes, because
there was nothing to buy, and I had to start using up my

That sharp turnabout, which began to be seen in the middle
of this year, reduced the number of habitual prosumers to
250,000, the total number of those participating in the
system to one million, and the number of clubs to around
3,000, said Ravena. 

"There was a point at which the clubs were mushrooming like
laundromats and other fads. Every neighborhood was setting
up its own, and there were often several within the space of
just a few blocks," he said. 

"At that time, the members were supporting millions of
people who had nowhere else to go," people who have since
left and now depend on the meager aid provided by the state. 

Despite all that has happened, Ravena sees the crisis that
has swept through the bartering system as part of a growing

The key to recovery, he said, is to return to the system?s
origins, when the network had a limited number of prosumers
who were concerned about creating an alternative economy
based on the concept of solidarity that encouraged people to
work and helped shore up the damaged self-esteem of the

The rules for membership are once again strict. Every
prosumer must produce a good or offer a service, and no one
receives loans enabling them to join. 

All members must defend the value of the credit, at one
credit=one peso, to prevent inflation and speculation, and
any sales of credits must be reported. 

"We never got the parliament to pass a bill on bartering
that has been shelved in Congress for some time. But at
least we registered the design of our new currency as
intellectual property, which means that if the police find
anyone selling our credits, they can be arrested," said

The new controls should thus give humanity?s oldest system
of trade a new lease on life in Latin America?s
third-largest economy.

Dan Clore

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