Introduction

Much of the work reported in this volume reflects interest in the growing phenomenon of trading in barter, often multilateral barter, in Russia in the 1990s. To monetary theorists, the timing is more than a little ironic. In the same decade, we have seen an explosion of theoretical research on the emergence of money as a medium of exchange. Among other pre- dictions, this theory suggests that a transition from barter to money is likely to be self-fulfilling, because a medium of exchange is all the more desirable if many others accept it; the process can be hastened by making money legal tender; its universal acceptability is then common knowledge among all participants in economic activity. Money is more efficient in exchange than barter, because it mediates possible failures of the double coincidence of wants; it follows, from this, that monetisation is an important component of the transition to a modern capitalist system. It is likely to happen of itself; the legalisation of money helps smooth the transition.

All of this makes perfect sense: it is unfortunate, then, that facts contradict such a reasonable theory. Russia, since 1989, has often been viewed as part of a great economic experiment of transition to modern capitalism.