Slum Economy: Barter

Question

In the slums of Big City, the state has long lost control. Who lives here has hit rock bottom, or was born into it; most are poor, many struggle to get (healthy) food, and barely get along by either working in one of the many factories around or trading illegal goods. One drug, Notcocaine, is especially abundant due to the colonial history of the place, back when it was used to subdue the oppressed population. It is regularly consumed by most of the population still¹. Factory workers may be paid in cash, or by supplying a warm meal and the likes².

^{1 _{Comparison to western Europe: not nicotine/ alcohol levels, but close to marihuana consumption}
2 _{Either one or both of the two payments, whatever fits best.}}

Additional info:

• There are no mass-produced transistors yet, and computers are big, expensive, and slow. Many inhabitants of the slums haven't ever heard of the concept "computer". Trading in tech gadgets is therefore nonexistent.
• While many poor workers live in horrible conditions, "true" slaves are rare. Human trafficking/ slave trade is not common enough here to play a central role in the economy.
• Working in the factory is dangerous; moving machine parts and lacking health & safety regulations make spontaneous amputation at the work place or chemical burns, broken bones and other injuries not uncommon. Stumps are a common sight on the bodies of factory workers. Workers crippled by injuries become permanently unemployed, without state support.
• To support their families, many start working at around the young age of 5.
• There are some properly built houses here but most people live in handmade shacks.
• Outside the slums, cash is used for trade. It's a protectionist economy.
• Consumption of NotCocaine is illegal, and will be punished with incarceration. Although it can be obtained fairly easy outside the slums too, its use is frowned upon because it's a "poor man's" drug. NotCocaine is therefore not used frequently outside the slums.
• Because the police only has negligible power in the slums, what's illegal and what's not by the police's standard does not matter too much there. Law enforcement can be bribed, avoided, or deterred by gang violence, so illegality of certain substances or actions is not really a problem.
• Population density, climate, and level of population diversity is similar to that of the Dharavi slums in Mumbai. The slums in Big City are larger though.

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I have a strong interest to have state money be of no or secondary value in the slums, and to make most trades barters; that is without a medium of exchange. While NotCocaine could make a good substitute, dealing in grams instead of coins, I want especially want to not have the economy be primarily based on such units.

Why do the inhabitants of the slums not just resort to using drugs as money, or actual cash in their transactions?

A good answer gives an answer to the above question with supporting reasoning.
A great answer does that too, while also giving examples of goods or categories of goods mainly used in barter.
My question is pretty much the inverse of "Introducing money to a barter based economy".
I am aware of this excellent answer to the question "What can I do to make a Bartering system stable?".

If completely abolishing money or a money substitute does not work at all, it would also be acceptable to just have barter be very commonplace.

Answer 1

Completely abolishing currency as a concept is probably not going to happen; it's just too convenient. However, you do have the benefit that there are some drawbacks to the two major contenders here.

The illegality-on-its-face is probably a big deterrent to your drug becoming a de facto currency. Non-users might think it's too much of a risk for a commodity they don't even want; even users might think it puts too much of their money reserve at risk, or might worry that having too much cash would bump up the charges if they're caught (e.g. from possession to possession with intent).

On the other hand, avoiding them all using cash would seem pretty simple: if not many people have legitimate, cash-paying jobs, compared to the number of people who (legally or illegally) buy outside goods with cash, there simply won't be enough of it for the economy to run smoothly.

One interesting direction you might go is towards social stratification (even in the slums - as Pratchett once wrote, the rungs on the ladder might be close together here, but people watch them very carefully). Having cash on hand is a sign that you have a good job, probably stable; spending cash on outside goods is a sign of luxury. Conversely, since the drug is looked down upon and isn't universally used, using it for trade is low-class and "vulgar". So you have two coexisting economies - one in cash, the other in drugs - and the proportion to which one belongs to one or the other is a major sign of social status.

Because of that, you have a lot of essentially artificial restrictions on who pays whom in what. Well-to-do (relatively speaking) people might not want to deal in drugs on principle, or because it would make them look low-class, and the lowest of the low might not deal in cash because they can't trade it easily or it would be seen as selling out. To make this work at the boundary, people barter things with a neutral connotation (e.g., if I'm a doctor, I prefer cash, but I'll take a chicken over being seen getting paid in drugs).

The trick for you, then, is setting the story in that border, where people sometimes deal in cash and sometimes deal in drugs, but often deal in barter - and have to navigate vendors, brokers, contacts, etc. who want to get paid in one or the other. Both money and drugs are stable(-ish) currencies, but they can be conveniently useless whenever the plot demands.

(Admittedly, this does rely on their being a social stigma for the drug, probably in favor of something else - e.g. "only low-class people smoke, we drink beer instead". If that doesn't work for your story, you might need another reason for it to be seen as disreputable as a currency.)

Answer 2

The first Sumerian currency was silver, the shekel. But a single coin had a disproportionate purchasing power so people used bartering with barley (in fact, a shekel represented a claim on a bushel of barley held in the city warehouse). Essentially it worked because everybody accepted barley and the correspondances in prices were stablished by the value in silver.

Your slums could work the same, they use Notcocaine as the basis of their bartering system, exchanging some goods for others because they know their value in Notcocaine. They don't have to possess the drug, it can be stored in a safe place in the slums (for example, in hads of a druglord).

Answer 3

NotCocaine Containers

(I hope this fullfills your requirements dispoye tecnically still being based on drugs) So the citizens of the slums don't use grams or coins, they use containers, containers of the ingredients of notcocaine to be exact. This also allows for a more complex system of exchange like pennies, dimes, nickles, etc... But instead its, ingredient one, ingredient two, etc... And all the containers will have the same volume so you wont measure it in grams but number of containers.

Some reasons to do it like this rather than just giving it all in one piece would be...

• As a method of loaning, I give you half the ingrediants now and when you finish the job you get the rest.

• A method of avoiding arrest, the police can't arrest us for having the drug if we don't got the full drug.

• A method of storing notcocaine, the drug only lasts a day or two together, but can last decades if it is apart.

Answer 4

Unfortunately Human Nature is not always Economically Deterministic

An analysis of slums in present-day low-socioecomonic countries may present you multiple ways how people exist and how they exchange goods and services. Some, such as many African, Central American or even Indian, use US dollars (basically a non-official currency, but one which people have more confidence in) at face value, however on closer analysis human nature does not unfortunately wholly align with a flexible free economic system.

You may find, especially if there is an element of criminal / lawlessness in the society, that debt obligations cause most people to work and produce goods, rather than currency. It isn't pleasant but there may be the possibility of the following non-capitalist ways of society functioning:

• Gang Structures : All you need is a powerful group who can kill/inflict damage on people, and they are forever in fear. People will produce goods or supply services for this group for the reward of simply being safe. If drugs are involved expect this to be common.
• Poor have no capability : If you are poor, you are in subsistence living. You are simply working to survive, nothing more. If you don't have any purchasing ability, currency will be of no use, as you simply want water, bread, some shelter - the essentials. These will be enough for you to work for someone in 'exchange' of these mediocre items.
• Slavery : Servitude with no option of release. Producing goods and services because there is no other option for a person. There is an undercurrent of slavery even in today's world, people are born into it and it is a defacto class - this is prevalent in India, China, South America, South East Asia. Essentially the production of goods and services for no reward at all, other than existing.

It would be possible for a society to 'operate' with absolutely no currency at all. Economic freedom and using a currency of exchange is not necessary for goods to be produced or work to be done, and if you don't mind an anti-egalitarian society this is likely actually to be the case.

Answer 5

Why do the inhabitants of the slums not just resort to using drugs as money, or actual cash in their transactions?

Tracking

Cash has value because the government gives it value. So what if the government recalls all the cash? Instead of pieces of paper or metal, the government only gives value to online versions of money, like credit cards.

From the government perspective, credit cards are far superior to cash. They are fully trackable. The issuers have to keep track of who paid whom to process the transactions. So the government can go back and see the transactions to collect taxes or to prosecute someone.

So, no true cash.

Taxes

Since there is no cash, formal transactions require taxes. But due to the way that the tax system works, low wages are actually worse than no wages. People lose their welfare benefits without getting enough money in return. So they work under the table rather than accepting money. Since there's no cash, working under the table has to get other kinds of benefits than money.

Minimum wage

The minimum wage is actually greater than the value of a slum person's labor. So no company will pay it for slum labor. The only way that people can get jobs is under the table. But then the company can't pay with online money. Instead, they pay with goods. That way the government can't see the transactions. Companies are incredibly vertically integrated as a result. A company that produces banana yogurt has to grow its own bananas and manage its own dairy farms. Because of course if it bought from other companies, it could be tracked.

Counterfeiting

It is easy to adulterate or counterfeit notcocaine and dangerous to use it that way. Not necessarily fatal, but enough to make you miserably sick. So it's really important to trust your dealer. You can't trade notcocaine with someone you don't fully trust.

One of the reasons why notcocaine could be easy to counterfeit is that it might be made to duplicate something common so the police can't be sure without lab testing. It could be like cinnamon or powdered sugar or talcum powder. But since the police can't tell, neither can the potential users.