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explicit_vs_implicit_trade

Explicit vs. implicit trade

Throughout this site, we will often refer to trade as either explicit or implicit. Here's what we mean:

Explicit trade

Explicit trade can be defined as our most common form of trading, that is: like-for-like value exchange in an exclusive one-to-one arrangement. For example, Peter swaps a bag of tomatoes for a violin lesson from Jeremy. In other words, they agree an equivalent value exchange and no-one else is involved.

While there's nothing wrong with this in theory, in practice it is not always easy for both parties to have something of commensurate value to complete a transaction – whether goods, services or money.

Therefore explicit trade most often results in:

  • an exchange not taking place, or
  • one party to the transaction having to engage in some activity to meet the value requirement that they might otherwise not engage in. (eg. working long hours in an unfulfilling job to pay off a debt)

An open access economy does not preclude the notion of explicit trade taking place. In fact, it is a perfectly satisfactory way for two people to obtain things that they need. However, when it comes to basic living necessities like food, water, a home, clothing etc, no-one should be denied access due to inability to meet some value requirement.

Implicit trade

Implicit trade can be defined as a debt implied through an act of generosity of no agreed value or terms. For example, if someone comes to help you fix your car in the middle of the night, you might feel an implied indebtedness towards that person, their family or community, but of no agreed value. It's perhaps best informally described as the feeling of 'I owe you one'.

All things being equal, most people will try and settle an implied debt despite the fact that there is no obligation to do so. The OAE theory holds that communities can successfully operate through a circular, implicit debt program, where the implicit urge to pay back in to the community at least equals favours received.1)

1)
An extended explanation about reciprocity can be found here.
explicit_vs_implicit_trade.txt · Last modified: 2019/04/23 03:56 by rcastano