Double Coincidence of Wants
The double coincidence of wants is the condition barter requires: each party must have what the other wants, at the same time and in the right quantity. Money removes it by letting one side accept something it can spend later elsewhere.
Also called: coincidence of wants · double coincidence · barter problem
William Stanley Jevons named the problem in Money and the Mechanism of Exchange (1875). Barter, he argued, needs two people whose spare possessions happen to suit each other's wants, and such a match is rare. A baker who wants shoes must find a shoemaker who wants bread, today, in matching amounts. A medium of exchange breaks the single swap into two easy steps: sell to anyone who wants bread, then buy shoes from anyone who sells them.
The idea underpins the textbook story that money was invented to escape barter, and historians and anthropologists dispute that sequence. Early records from Mesopotamia point to accounting first: clay tokens and then written tablets recorded obligations and allocations, valued in units such as silver or barley, long before the first coins were struck in Lydia in the late seventh century BCE. On that reading money began as a unit of account and a record of credit, with goods delivered against the record.
The concept is still useful as analysis. Payment systems face versions of it in timing and currency: an exporter paid in euros who needs dollars, or a seller who wants funds now while the buyer pays later. Netting, correspondent banking and FX markets exist to solve coincidence problems that money alone does not.
In practice
The barter-first story is a model, not settled history. Use the term for the analytical problem, not as a claim about how money actually began.
Example
Firm A has wheat and wants tools, B has tools and wants fuel, C has fuel and wants wheat. No pair can trade directly. With money, each sells to the firm that wants its goods and buys from the firm that has what it needs.
Learn more on Money Wiki
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See also
- Medium of ExchangeA medium of exchange is anything widely accepted in payment for goods and services, held not for its own use but because it can be passed on to someone else. It is the function most people mean by money, and the one that ends the need for barter.
- Unit of AccountA unit of account is the measure in which prices, debts and accounts are expressed: the pound or the dollar today, a weight of silver or a measure of barley in the ancient world. It is one of the three classic functions of money.
- Store of ValueA store of value is an asset that keeps its purchasing power in a reasonably predictable way over time, so that wealth earned today can be spent later. It is one of the three classic functions of money, and many assets do it better than money.
- NettingNetting is offsetting mutual obligations so that only the difference actually moves. Two parties that have been paying each other all day settle one payment for the net amount, which cuts both the funds transferred and the liquidity each side must hold to support them.
- Tally StickA tally stick was a notched wooden stick, split lengthways into two matching halves, used by the English Exchequer from the twelfth century to 1826 to record payments and debts. Only the original halves fitted together, which made forgery difficult.