On paper, this sounds a bit like delayed barter, but it bears some significant differences. For one thing, it’s much more efficient than Smith’s idea of a barter system, since it doesn’t depend on each person simultaneously having what the other wants. It’s also not tit for tat: No one ever assigns a specific value to the meat or cake or house-building labor, meaning debts can’t be transferred.
No, said Mises, for if taken back far enough, there comes a point at which money first emerges as a medium of exchange out of a pure barter economy Prior to this, it is valued only for its non-monetary uses as a commodity The demand for money is therefore pushed back to the last day of barter, where goods are traded only in direct exchange, and where the temporal element of the regression theorem ends It is in this way that all charges of circularity are obviated.
As Orlove noted, barter may occur in commercial economies, usually during periods of monetary crisis. During such a crisis, currency may be in short supply, or highly devalued through hyperinflation. In such cases, money ceases to be the universal medium of exchange or standard of value. Money may be in such short supply that it becomes an item of barter itself rather than the means of exchange. Barter may also occur when people cannot afford to keep money (as when hyperinflation quickly devalues it).
Then again, it’s one thing to keep a community alive and well when everyone’s camping in a forest and they’ve all opted in to that vision. It’s quite another to imagine a gift economy enabling humans to build skyscrapers, invent iPhones, put air conditioners in every house, and explore space. (The same goes for collecting taxes and running large businesses.) Not that it’s an all-or-nothing situation: We already have gift economies among friends and family. Perhaps expanding that within small communities is possible; it’s certainly desirable.
Whether or not one agrees with such broad claims, it’s worth noting that monetary debt, a byproduct of currency, has regularly been used to by some groups to manipulate others. Thomas Jefferson, for instance, suggested that the government encourage Native Americans to purchase goods on credit so they’d fall into debt and be forced to sell their lands. Today, black neighborhoods are disproportionately plagued by debt-collection lawsuits. Even after taking income into account, debt collection suits are twice as common in black neighborhoods as in white ones. $34 million was seized from residents of St. Louis’ mostly black neighborhoods in suits filed between 2008 and 2012, much of which was seized from debtors’ paychecks. In Jennings, a St. Louis suburb, there was one suit for every four residents during those years.
Adam Smith, the father of modern economics, sought to demonstrate that markets (and economies) pre-existed the state, and hence should be free of government regulation. He argued (against conventional wisdom) that money was not the creation of governments. Markets emerged, in his view, out of the division of labour, by which individuals began to specialize in specific crafts and hence had to depend on others for subsistence goods. These goods were first exchanged by barter. Specialization depended on trade, but was hindered by the "double coincidence of wants" which barter requires, i.e., for the exchange to occur, each participant must want what the other has. To complete this hypothetical history, craftsmen would stockpile one particular good, be it salt or metal, that they thought no one would refuse. This is the origin of money according to Smith. Money, as a universally desired medium of exchange, allows each half of the transaction to be separated.
Anthropologists have argued, in contrast, "that when something resembling barter does occur in stateless societies it is almost always between strangers, people who would otherwise be enemies." Barter occurred between strangers, not fellow villagers, and hence cannot be used to naturalisticly explain the origin of money without the state. Since most people engaged in trade knew each other, exchange was fostered through the extension of credit. Marcel Mauss, author of 'The Gift', argued that the first economic contracts were to not act in one's economic self-interest, and that before money, exchange was fostered through the processes of reciprocity and redistribution, not barter. Everyday exchange relations in such societies are characterized by generalized reciprocity, or a non-calculative familial "communism" where each takes according to their needs, and gives as they have.
Companies may want to barter their products for other products because they do not have the credit or cash to buy those goods. It is an efficient way to trade because the risks of foreign exchange are eliminated. The most common contemporary example of business-to-business barter transactions is an exchange of advertising time or space; it is typical for smaller firms to trade the rights to advertise on each others' business spaces. Bartering also occurs among companies and individuals. For example, an accounting firm can provide an accounting report for an electrician in exchange for having its offices rewired by the electrician.
Corporate barter focuses on larger transactions, which is different from a traditional, retail oriented barter exchange. Corporate barter exchanges typically use media and advertising as leverage for their larger transactions. It entails the use of a currency unit called a "trade-credit". The trade-credit must not only be known and guaranteed, but also be valued in an amount the media and advertising could have been purchased for had the "client" bought it themselves (contract to eliminate ambiguity and risk).
Economists since the times of Adam Smith (1723-1790), looking at non-specific pre-modern societies as examples, have used the inefficiency of barter to explain the emergence of money, of "the" economy, and hence of the discipline of economics itself. However, ethnographic studies have shown that no present or past society has used barter without any other medium of exchange or measurement, nor have anthropologists found evidence that money emerged from barter, instead finding that gift-giving (credit extended on a personal basis with an inter-personal balance maintained over the long term) was the most usual means of exchange of goods and services.
In his analysis of barter between coastal and inland villages in the Trobriand Islands, Keith Hart highlighted the difference between highly ceremonial gift exchange between community leaders, and the barter that occurs between individual households. The haggling that takes place between strangers is possible because of the larger temporary political order established by the gift exchanges of leaders. From this he concludes that barter is "an atomized interaction predicated upon the presence of society" (i.e. that social order established by gift exchange), and not typical between complete strangers.
It’s hard to answer that without actually seeing a modern gift economy in action. Luckily, modern gift economies actually do exist. On a small scale, they exist among friends, who might lend each other a vacuum or a cup of flour. There’s even an example of a gift economy on a much larger scale, albeit one that’s not always in operation: The Rainbow Gathering, an annual festival in which about 10,000 people gather for a month in the woods (it rotates among various national forests around the country each year) and agree not to bring any money. Groups of attendees set up “kitchens,” in which they prepare and serve food for thousands of people every day, all for free. Classical economists might guess that people would take advantage of such a system, but, sure enough, everyone is fed, and the people who don’t cook play music, set up trails, teach classes, gather firewood, and perform in plays, among other things.