Tonight's homework is to reflect a little bit on the concepts around Barter Day, and to think about the earliest communities who started trading about 10,000 years ago. You can read more specifically about those first farm towns in previous Blog posts.
In understanding the marketplace and trade, it is important to know some basic economic terms:
Trading happens when one person, town, or village has a surplus of one product that another person, town or village needs. In exchange, the other town trades a different item or product to get what it needs. Trading only happens if a surplus exists. In early farm towns, the development of agriculture allowed villages to grow more food than the people needed to eat, leaving the extra to either save or trade for other needed supplies. Trade started quite locally, but over time happens over great distances, usually up and down rivers.
The value of a certain product depends on how much there is, and how much people want it. The amount of a product is called the supply, and how badly people want it is called the demand. The more people want something, the more they would be willing to trade for it. If there's way too much of a product, then people would not be willing to give very much for it.
Competition happens when two or more people or villages want the same product. By offering more and more for the product, the value increases and people have to trade more for it.
Here's an example from Neolithic times: The early settlement at Catal Huyuk had a great deal of obsidian it either found nearby or traded for with other villages. Obsidian is a type of black volcanic glass that can be sharpened to make knife blades.
Once the people of Catal Huyuk made the blades they needed to butcher meat and build axes, they still possessed a surplus of the obsidian. Catal Huyuk became a very important trading center because so many surrounding villages needed the obsidian. In return, Catal Huyuk received many important products it needed such as food products, wood, and other natural resources.
Here's an example from the present day: The kingdom of Saudi Arabia has a tremendous amount of oil under its territory. Even after giving free or cheap gas to its population, the Saudi government has a huge surplus of leftover oil which it sells on the world market.
The United States and China both have huge factories, industrial machines, cars and trucks, planes, buses, all leading to a huge demand for the energy provided by burning gasoline. With both the U.S. and China competing to buy the oil, the price increases.
The more the two countries demand the oil, the higher the price goes. In return, the royal family of Saudi Arabia are fantastically wealthy, with several members being billionaires. All of this money can then be traded for palaces, expensive cars, fancy trips, private jets, and nice clothes.