# Barter and Exchange

## Definition

The voluntary trade of goods or services between parties without the use of money, where each participant gives up something they possess in return for something they desire, forming the fundamental basis of economic interaction and the division of labour.

## Source Chapter

Book I, Chapter 2

## Context

The chapter's central thesis, arguing that this propensity is the original principle that gives occasion to the division of labour. Smith demonstrates how the certainty of being able to exchange surplus produce encourages individuals to specialise in particular occupations.

## Economic Domain

Exchange

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