The farmer with one ox

Imagine you're a farmer in a barter world. You need new shoes, a sweater, and medicines for your grandmother. All you can spare is one ox.

First you must find someone who wants an ox. And swapping a whole ox for one pair of shoes isn't fair! So you might first trade the ox for many bags of wheat.

Then you carry the wheat around: some for shoes, some for the sweater, some for medicines, arguing each time over how much wheat is fair. You store the leftover bags safely, and next time you need something, you carry them all over again!

This shows five problems with barter:

1. Double coincidence of wants. You need someone who wants exactly what you have and has exactly what you want. Two coincidences at once, so it rarely happens! Try this: Raja has apples and wants rice. Rani has shoes and wants apples. Kaju has rice and wants shoes. Each has something another wants, yet no two of them can swap directly!

2. No common standard measure of value (an agreed worth for things). Even if two people want each other's goods, how much of one equals the other? Is 1 kg of apples worth 1 kg of wheat? (Today apples might cost ₹100 a kg and wheat ₹20!) If one side feels cheated, there's no deal.

3. Divisibility (can it be split into parts?). You can't give part of an ox for a sweater. Half an ox isn't half an ox; it's no ox at all!

4. Portability (can it be carried or moved easily?). Taking an ox everywhere is a big problem.

5. Durability (does it last when stored?). You swapped the ox for wheat, but wheat rots or gets eaten by rats. You can't save it for long.