When times are tough, you trade with your neighbors. This basic rule of human society has been in place for millennia, and the lingering recession cum depression in Greece has led to a renaissance of the barter economy across the beleaguered nation.
Unlike in many European countries, bartering had not completely disappeared in Greece before the crippling recession began eight years ago, so it is not so surprising that both rural and urban areas have seen the rapid development of a bartering economy.
More on Greek barter economy
Economists note that while the bartering activity remains relatively modest to date, and will certainly not offer a lasting solution to Greece’s economic woes. But bartering does represent a chance for Greeks to move forward with their own lives, as they still have to deal with capital controls and a weak, barely functional banking system.
Greek PM Alexis Tsipras and his Syriza party managed to pull off a surprisingly strong performance in the election in Greece over the weekend, racking up just over 35% of the total vote. That gives them the mandate to form a new government and stay in power.
That said, Tsipras and Syriza now have to implement the reforms called for in the bailout, which means more austerity measures.
“The economy continues to deteriorate,” comments Yiannis Deligiannis, the founder of Tradenow. “The capital controls were the last bullet to the head. People have to find other ways to make things work. We are offering them one alternative.”
As the New York Times states:
Thodoris Roussos stood in his butcher’s shop and pointed to a large white delivery truck at the curb. For months, he had put off replacing the tires, because Greece’s financial crisis had cut into business. But recently, he upgraded the van with a set of good wheels at a price that could not be beat.
“Normally, the tires cost 340 euros, but no money changed hands,” Mr. Roussos said, beaming. “I paid the guy in meat.”
Some deal offers were not up to snuff. “One person wanted me to trade a Madonna CD for a chicken,” he said. “But I said no. The Madonna CD was definitely not worth a chicken.”
Mr. Roussos approached the tire vendor, whom he had met on the platform, and worked out the deal to renovate his van. He paid with a month’s supply of meat and tradepoints, which the vendor used to get an iPad.
Some advocates are pushing to make the so-called alternative economy more widespread, not only to combat the liquidity squeeze, but also to have some kind of system should Greece ever come crashing out of the euro. While the new government has pledged to keep Greece inside the single currency, analysts said new instability could reappear if Greece cannot carry out structural reforms demanded by its lenders.
Of interest, much of the new Greek bartering economy is conducted using online networks that match barter offers and needs.
Tradenow is one of the most popular online bartering platforms in Greece. When capital controls kicked in this summer, more than 6,000 users signed up for Tradenow in just a few weeks, making for a total of over 30,000 registered members. Deligiannis notes that small businesses that had previously avoided barter networks are starting to warm up to the idea.
The system values one “tradepoint” as one euro, and users barter directly with other members or buy and use the digital currency to purchase goods and services from others in the community. The system even allows for deals in a mix of euros and points.
The modern online systems make bartering more efficient. The activity can also have a multiplier effect in the economy, generating new work and business.
Details on Syriza victory in Greece elections
The latest tallies from the Greek elections according to research from Deutsche Bank suggest that Syriza will win 145 seats in the 300-seat national parliament, just 4 seats less than they had in January. New Democracy placed second with 75 seats, followed by right wing Golden Dawn 18 seats. The newly created Popular Unity party launched by dissident Syriza led by former energy minister Panagiotis Lafazanis does not appear to have met the 3% threshold for a representative in parliament. Voter turnout was around 60%..
Although it did not win an absolute majority, it can be argued that Syriza got mandate from the Greek people despite its U-turn on the onerous EU bailout. This means that Syriza has a mandate to implement the third bailout. In speeches immediately after the election results, Tsipras and Panos Kammenos (Independent Greeks) said that they will continue to work together in the new government. Moreover, with Syriza’s dissident leftist fringe having failed to reach representation in parliament, Tsipras should have somewhat easier political sledding in moving forward with the reforms required by the bailout.