May 6, 2001 New York Times

To Weather Recession, Argentines Revert to Barter


Horacio Paone for The New York Times
Maria Roldan, left, who lost her job as a secretary, with some of her knitting and crochet work at a barter.

Horacio Paone for The New York Times
People at a bartering club in Bernal exchanging money for scrip, which they then use for goods and services available through the club.

BUENOS AIRES, May 5 — By the standards of most Latin American countries, Pedro Pérez hardly looks like a charity case. He wears a handsome sports watch and a thick gold wedding ring. His hair is neatly parted, he has all his teeth and his meticulous handwriting is the product of a decent public school education.

But Mr. Pérez is just scraping by, struggling like many other Argentines to hold on to a middle-class life three years into a deep recession. At 43, he cannot count on a regular salary from his sales job at a shoe factory anymore, so he has been forced to sell his town house and Ford sedan, and his wife has gone back to work.

And every Friday night Mr. Pérez carries bags of shoes, sneakers and shoe polish his factory gives him when it is too short of cash to meet its payroll to one of the many barter clubs that have sprouted up in this city, where he exchanges his wares indirectly for fruits, vegetables and handmade clothes.

Bartering, that precapitalist form of commerce popular in Indian villages in Latin America even long after the Spanish conquest, is making a far-reaching comeback in Argentina as an improbable safety net for a forlorn middle class not accustomed to the hardships that are a way of life elsewhere in the region.

The trueque clubs (the word means exchange or barter in Spanish) emerged in 1995, the brainchild of three young professionals looking for a way to help the lower-middle- class Buenos Aires suburb of Bernal overcome the brief recession that followed the Mexican currency crisis, whose effects had rippled throughout Latin America.

That first barter club started with just 30 members. Today, as Argentina muddles through a recession with no end in sight, more than 450 clubs have been founded in 20 of the country's 24 provinces. They are nurtured first by word of mouth and then by ample news coverage and by the Internet, which is used to advertise their locations and schedules.

An estimated 500,000 Argentines now barter regularly, and up to one million — or almost 5 percent of the economically active population — do so occasionally, according to sociologists who have studied the trend. About 10,000 people shopped at a May Day "trueque mega-fair" this week in a Buenos Aires suburb.

At the clubs, people set up tables and stalls to peddle goods or the promise of services in exchange for scrip, barter money known as "créditos." They can then use this to obtain other goods or services through the clubs, which have established an informal network.

The goods range from food and produce to clothing and homemade skin-care products. The services include everything from dental work and plumbing to psychological counseling and tarot card readings, often proffered by underemployed or unemployed professionals.

The traders set their prices by supply and demand, making the barter clubs a combination of competition and neighborly solidarity.

Today the clubs have more than $7 million worth of scrip in circulation, bar-coded to guard against counterfeiting. An estimated $400 million in goods and services were traded last year. Organizers say they expect an 80 percent increase in the value of the transactions this year because of the deepening recession.

The recession has been brought on and sustained by plunging commodity prices, rising interest rates, mounting public debt and an overvalued currency that has depressed exports.

The new economy minister, Domingo Cavallo, says the economy should improve later this year, but independent economists say the slide is continuing. Should the government default on its debts, the recession could easily deepen and increase the prospects of a currency devaluation, which could cause still more companies with heavy dollar debts to fold.

"This is not a living, but it keeps me and my family above water," said Mr. Pérez, the shoe factory salesman. "Ever since Brazil devalued two years ago, my factory has not been able to compete. They pay us in shoes to keep the business from collapsing until the economy picks up again — if it ever does."

The trueque clubs have become a vital stitch in the social fabric of scores of towns and neighborhoods. People who might be moping at home depressed by the near 15 percent unemployment rate and daily speculation of a government default or currency devaluation have instead revved up at home production of knitted sweaters, mate tea gourds and oven-baked pizzas to trade.

"It's an incubator for new businesses," said Carlos Alberto Fazio, an Economy Ministry official who is studying ways to support the clubs. "The people have chosen the clubs first to survive and then to reintegrate into the formal economy."

The trueque clubs expanded in popularity without government support. But as it continues struggling to find a way out of the economic malaise, the government has itself recognized the value of the clubs as a safety valve that provides not only economic benefits but also a social and psychological boost for people who can take problems into their own hands in a communal setting.

The trend is beginning to spread to neighboring Bolivia, Paraguay and Chile and even Spain.

In Argentina, word has gotten around that down-and-out singles are finding mates at the clubs to share their problems, making barter clubs an increasingly popular weekend hangout for the young.

And one Indian village in northern Jujuy Province has done away with money altogether in a self-proclaimed return to its indigenous roots.

"Its producing not only a parallel economy but a subculture," said Graciela Romer, a sociologist and political consultant.

In the last few months Argentine public officials themselves have begun to use the barter system to improve local economies and to serve their own needs. Five impoverished municipalities have decided to accept services from barter club members to fix leaking school roofs or street lights in lieu of taxes.

The Economy Ministry has begun a program to teach basic marketing and bookkeeping skills to 1,000 trueque traders who have begun producing their own detergents, candles, breads and graphic designs. It is also preparing to start a program with the national doormen's union in which the government will pay union members to teach barter club members basic electrical and plumbing skills.

On Friday night, the trueque club where Mr. Pérez and others go in the Floresta neighborhood looks and feels more like an indoor flea market than a place where the down-and-out eke out a subsistence. Women giggle to each other as they have their hair done by underemployed coiffeurs, and the men sip their mate tea and talk soccer while waiting for customers.

"We use the trueque as a kind of therapy," said Susanna Ríos, a 46- year-old housewife who brought a bag of toys to trade. "It's a chance to leave the house, make friends, and supplement the family income."

María Roldán, 35, lost her job as a secretary in a law firm three months ago and spends three days a week looking for work. The rest of the time she knits and crochets sweaters and baby booties to trade at trueque clubs. Business has become so brisk, she said she is thinking of opening her own business rather than find another job. "Bad luck has turned into an opportunity and I am developing my creativity," she said.

Osvaldo González, 71, was a photographer for President Juan Domingo Perón in the 1950's, but has not worked for the last five years and has heart disease. He started trading photographic portraits at trueque clubs two years ago, but there was little customer interest.

Over the last year, however, Mr. González has found a new way to supplement his pension: he goes from neighborhood to neighborhood buying kitchen utensils from failing stores and trades them at trueque clubs.

"With this I get all the food I need," he said. "This is a perfect way for people to get through this crisis and it's perfect for the government to keep the social lid on."

copyright New York Times.