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Types of Exchange

Karl Polanyi an economic historian has identified three different modes of exchange- Reciprocity (barter), redistribution (ceremonial) and market exchange. In the absence of money as a store and measurement of value and medium of exchange, economic transactions were always on exchange. Barter is a direct form of exchange. Silent trade is another type of exchange. In some societies goods are placed for exchange without the individual concerned being personally present.

Jajmani system is another form of exchange where the exchange of service for goods may occur in a deferred manner. The word Jajmani has been derived from a Vedic term for a patron who employs a Brahmin to perform a sacrifice for the community.Jajmani system ensures the services of a specialist in exchange of annual gifts. Ceremonial exchange confers prestige on donors and receivers of goods.Often the purpose of exchanging goods are to maintain amicable relations between groups to minimise the possibilities of conflict.

In market economy the exchange of goods and services take place according to the law of supply and demand. The goods and services are bought and sold at a money price which is determined by the impersonal forces of supply and demand. It is purely economic model of exchange where social or political goals are less important than economic goals.