Greece Returns to Antiquity: The Barter Economy

Yikes! I wonder if Brussels' bigwigs figured this into the bargain. In development theory, one of the signs of advancement is moving more economic activity from the informal to the formal sector. Not only is activity in the latter more readily quantified, but it also facilitates both regulation and taxation to, theoretically at least, set standards for commercial conduct and generate state revenue. With regular currency (euros) at a premium for obvious reasons, it appears barter--trading goods and services for each other without the intermediary of regular currency--is back in fashion in Greece. The irony of it all, of course, is that barter was a common mode of exchange during the heyday of Ancient Greece. And so as it was during Greece's golden age, so it is again during its current nadir. From the New York Times:

Mr. Mavridis is a co-founder of a growing network here in Volos that uses a so-called Local Alternative Unit, or TEM in Greek, to exchange goods and services — language classes, baby-sitting, computer support, home-cooked meals — and to receive discounts at some local businesses.

Part alternative currency, part barter system, part open-air market, the Volos network has grown exponentially in the past year, from 50 to 400 members. It is one of several such groups cropping up around the country, as Greeks squeezed by large wage cuts, tax increases and growing fears about whether they will continue to use the euro have looked for creative ways to cope with a radically changing economic landscape.

“Ever since the crisis there’s been a boom in such networks all over Greece,” said George Stathakis, a professor of political economy and vice chancellor of the University of Crete.

Interestingly, the Greek government is now sanctioning these networks. In theory, their existence does undermine efforts to generate both economic activity and its accompanying (formal) revenue. In practice, politicians do know the harshness of conditionalities being imposed on the country by the EU/ECB/IMF troika. There may thus be few better ways to curry favour with the populace other than by condoning the informal economy:

Even the government is taking notice. Last week, Parliament passed a law sponsored by the Labor Ministry to encourage the creation of “alternative forms of entrepreneurship and local development,” including networks based on an exchange of goods and services. The law for the first time fills in a regulatory gray area, giving such groups nonprofit status.

Here in Volos, the group’s founders are adamant that they work in parallel to the regular economy, inspired more by a need for solidarity in rough times than a political push for Greece to leave the euro zone and return to the drachma. “We’re not revolutionaries or tax evaders,” said Maria Houpis, a retired teacher at a technical high school and one of the group’s six co-founders. “We accept things as they are...”

In an e-mail, the mayor of Volos, Panos Skotiniotis, said the city was following the alternative currency network with interest and was generally supportive of local development initiatives. He added that the city was looking at other ways of navigating the economic situation, including by setting aside public land for a municipal urban farm where citizens could grow produce for their own use or to sell.

I know, I know: these things sound very much like the proto-hippie communes anti-globalization types keep talking about. Still, desperate times call for desperate measures. While you do wish these folks well, you do have to wonder what effects popularizing such modes of trade will have on efforts to bring Greece out of its current situation.

Lastly, the BBC also has a video feature on this phenomenon.