Question

Why can't we use oranges today as money? Give at least 5 reasons.

Answer 1

Using oranges as a money is a part of barter system of the earlier times . Bartering is generally conducted directly between two parties; however, it may be done multilaterally through a trade exchange. Developed countries generally don’t engage in barters unless they’re done in conjunction with the standard monetary system of the country, and even then, it is only used in rare instance.

We cannot use barter system or many difficulties that one need to face -

Lack of Double Coincidence of Wants:
Barter transactions can be possible only when two persons desiring exchange of commodities should have such commodities which are mutually needed by each other. For example, if A wants cloth, which B has, then A should have such commodity which B wants. In the absence of such coincidence of wants, there will be no exchange. However, it is very difficult to find such persons where there is coincidence of wants.
2. Division Issues:
The second difficulty of barter exchange relates to the exchange of such commodities which cannot be divided. For example, a person has a cow and he wants cloth, food grains and other items of consumption. Under such a condition, exchange can be possible only when he discovers a person, who is in need of a cow and has all such commodities, but it is very cumbersome to get such a person.
Similarly the second problem relates to the exchange of such commodities which cannot be divided into pieces, because in this kind of situation, a big commodity like cow cannot be divided into small pieces for making payment of the goods of smaller value.
3. Lack of a Common Measure of Value:
The biggest problem in the barter exchange was the lack of common measure of value i.e., there was no such commodity in lieu of which all commodities could be bought and sold. In such a situation, while facilitating the exchange of a commodity its value was to be expressed in all commodities, such as one yard cloth is equal to ½ kilogram of potato etc. It was a very difficult proposition and made exchange virtually impossible. Now, with the discovery of money, this difficulty has been totally eliminated.
4. Lack of Store of Value:
In a barter economy, the store of value could be done only in the form of commodities. However, since commodities are perishable and they cannot be kept for a long time in the store. Because of this difficulty, the accumulation of capital or store of value was very difficult and without the accumulation of capital, economic progress could not be made. It is because of this reason that as long as barter system continued, significant progress was not made in the world anywhere.

5) Perishability of the product - Just like in our example , oranges are considered to be a perishable products . We cannot exchange them for a long . They can be damaged . Hence perishibility of the product is also an problem .