Trader Principle

The trader principle is the Objectivist standard for dealing with other people: one obtains values from them by offering value in return, never by force, fraud or an appeal to their duty. It is the application of justice to human relationships, and Rand described the trader as the moral symbol of respect between human beings.

“The symbol of all relationships among such men, the moral symbol of respect for human beings, is the trader.”
~ Ayn Rand, "The Objectivist Ethics", The Virtue of Selfishness

Why other people are worth dealing with at all

The list of things a human life requires is effectively endless — food, shelter, medicine, tools, transport, knowledge — and no one person can produce more than a fraction of it. Every hour spent growing food is an hour not spent making clothing.

The division of labour resolves this, and it is the reason other people are among the greatest values available to anyone. A man who trades with a thousand specialists commands the accumulated ability of all of them. See Productiveness and Capitalism.

The question is therefore not whether to deal with others but how. There are exactly two ways to obtain something someone else has produced: give him a reason to hand it over, or take it.

Why the alternative fails

Objectivism's case against force and fraud is not that they are forbidden but that they do not work as a policy for a life:

They reverse the focus. The producer's attention is on reality — on what a thing is and how it can be made. The predator's is on other men: on what they will believe, tolerate or fail to notice. He becomes an expert on people and an amateur at existence. See Independence.
They destroy the source. Production depends on the free exercise of reason, and force is precisely the negation of another man's judgment. The looter needs his victims to keep thinking while making it pointless for them to do so. Extended across a society, this is the mechanism Rand traced in Atlas Shrugged.
They corrode the other virtues. Taking violates honesty as soon as it must be concealed, independence as soon as one lives on others' output, and self-esteem as soon as one's gains cease to be evidence of one's own competence.

See Initiation of Force and Exploitation.

What the principle requires in practice

Earning what one receives. Material goods are traded for goods or money; see Money.
Earning spiritual values too. Rand extended the principle explicitly to love and friendship: one earns affection by being the kind of person the other values, not by claiming it as compensation for one's suffering or need.
Not seeking the unearned in matter or in spirit. The corollary is refusing to grant it — which is why the principle is the practical form of justice.
Voluntary exchange only. Every party to a trade judges for himself whether the terms are worth it, which is what makes the transaction mutually beneficial rather than zero-sum. This is the moral root of rights and of the case for a free market.

Common misunderstandings

That it makes friendship transactional. It says the opposite of what a ledger would say: the friendship exists because each person is a value to the other, not because favours are being tallied. What it rules out is a relationship maintained by obligation.
That it forbids gifts, charity or generosity. Giving something to someone one values, from surplus one can spare, is spending one's own resources on one's own values. See Sacrifice.
That it assumes everyone trades fairly. It is a policy for one's own conduct. Dealing with people who do not reciprocate is what justice governs.
That "value for value" means equal value. Both sides gain, or neither would agree. A trade in which each party wanted what he got more than what he gave is the normal case, not an exploitation of someone.

Discussion

References

Rand, Ayn. "The Objectivist Ethics", The Virtue of Selfishness. New American Library, 1964.
Rand, Ayn. "The 'Conflict' of Men's Interests", The Virtue of Selfishness.
Rand, Ayn. Atlas Shrugged — Francisco's speech on money, and Galt's on the trader.
Peikoff, Leonard. Objectivism: The Philosophy of Ayn Rand, chapter 8.

External links

Trader principle at the Ayn Rand Lexicon