Understanding The Gift Economy: An Overview

Understanding The Gift Economy: An Overview

Understanding The Gift Economy: An Overview

When one thinks of the gift economy, the tendency is to think of it as a marginal practice. But  if we broaden our perspective, we will see how actually the gift economy is gathering steam, and is a truly interesting possibility in terms of alternative economics. At a deeper level, the gift economy proposes a whole new way to relate to money and to the economy, which is better in tune with the values of the 21st century and the future to come. However, it is useful to understand what is meant by the term gift economy because this term can be confusing and difficult to comprehend. It is also difficult to perceive how such an economy can operate within the inherited market economy which is driven around money first and foremost.

What is the Gift Economy

Ultimately, the gift economy is part of a whole new series of practices that are part of the new economics trends. New economics is not about a single alternative, but about many possible alternatives united by a common set of values. These values, models and practices are: the democratization of wealth and ownership, localism, protecting the commons, community sustainability and resilience.

Uniting these,  with advances in technology, we could set the world to a new chapter in its history… How does it work today, in a world still based in a traditional market economy?

The Harvard Business Review provides a very helpful example of what the gift economy is.

The example given is of a person moving house. As most people are aware moving house costs money. It can be really expensive to hire a professional moving company to pack and transport your stuff from the old house to the new one. Instead, you might decide to get a group of friends to help. You might buy them takeaway and some beers when you are all done. This is the gift economy – the exchange of a gift for help. Whereas, the moving company operates in the market economy, as the professional movers will not move your stuff in exchange for beer. They will want to be paid.

The gift economy and the reinvention of what money is

The gift economy does not require money to operate, but the market economy does rely on the exchange of money for goods and services rendered. It is difficult to imagine a world in which money does not play a part. In most cultures worldwide, money is an essential component to allow interaction with others and to gain goods and services. However, some cultures do operate without money. But these societies do tend to be very sheltered from the rest of the world and its market economy. This makes them somewhat abstract in terms of understanding the gift economy.

On the other hand, digital platforms have contributed for the expansion of the gift economy. Platforms like freecycle, couchsurfing or local facebook groups gifting/giving away unwanted things for free, are all part of the gift economy movement even if we don’t understand those activities as such. These digital groups are also considered to be part of the sharing economy, which in its initial values, had to do with sharing and gifting each other by focusing on community building and ecological values.

Gift Economy, mind map

Gift Economy, mind map

Gift economy and relationships

The important point is that in the gift economy, “currency” is social rather than financial. The social currency in the examples provided above are the meal or small gift in the case of the elderly person, and the beer and pizza in the case of the person moving house, or the sofa in couchsurfing. The gift, then, enables a deeper relationship between people, an emotional bond.

Thus, in the gift economy, the role of relationships, when compared to the market economy is important. The gift economy is focused primarily on the development of relationships. This is not to do with market price, and value is also not driven by price. The difference is radical, as there is no supply and demand in the same way. Instead, there is a giver and a receiver and a relationship is built between the two during the process of the gift economy interaction. The value comes out of the relationship. This is a different concept than a transactional relationship where money is simply exchanged for goods.

Capital cannot be purchase in The Gift Economy

Fundamental to the gift economy, capital cannot be purchased. Rather, a person’s status is earned. There is no price that can be put on this. Examples can be found in some areas of the world of indigenous communities that operate like this. In such cases, those who have the highest status are those who offer and contribute the most to the community, rather than those who have simply managed to gather a lot of money.

This is a critical and important difference, in a world where investment is still engineered in such a way, that it produces inequality. Taking again the example of Sharing economy platforms, regardless of the fact that those platforms are profitable or not (most aren’t) its CEO, always becomes the next billionaire, purely to satisfy the needs of the seed investors putting money in the project.

In summary, then, the differences between the market economy and the gift economy are therefore striking. There is no monetary transaction in the latter, and value is based around relationships rather than money. Status is based on what is given rather than an ability to accrue wealth. It would be encouraging to see more gift economy activities in action in society, and in particular a move away from wealth as denoting status.

Even if it seems that we live in a world which is very far from the gift economy, if we look carefully we will find innumerable examples of exactly the opposite. New generations are more interested in experiences than in accumulating stuff, in emotional bonds and social experiences then in owning a house and having a car. This shift in society was actually anticipated in 1998 by PInmore II and Gilmore, in a famous article, describing how in the future, people would more interested in exchanging money for experiences than stuff. Later on, in 1996, Danish researcher Rolf Jensen of the Copenhagen Institute for Futures Studies wrote the article The Dream Society for The Futurist that American society, about a society focused on dreams, adventure, spirituality, and feelings. In the article, Jensen mentioned how the story and its implicit feelings would become a large part of what people buy when they buy something. Jensen coined this trend as the commercialization of emotions: “In 25 years, what people buy will be mostly stories, legends, emotion, and lifestyle.

What these futurists previewed 20 years ago is coming to reality now, with the ever expanding (and perverse) commodification of everything including feelings, spirituality and relationships.. Take the example of a workshop about “authentically relating” where you pay to have the feeling of intimacy with someone else… But what is my point here, is that if we look close enough, we will see that a large chunk of the “payments” happening in all kinds of new trends, particularly the ones connected with feeling, well being and spirituality, imply the gift, or swap. Why? Because over the past years we have also seen the emergence of more and more people opening their own small businesses or becoming self employed, particularly in the experience economy. Self employed people tend to swap their services, operating many times in the gift economy style, even if they don’t call it so.

Anyway, a lot still needs to be done. Parallel to this, we have never seen, as before, such a wuick move to hiper neoliberalism, with major tech companies amassing gigantic quantities of capital in a few years. Inequality is growing, as a result of that.

“The future is not for sale” says Orland Bishop, a teacher, and advocate of the gift economy. And even if this seems like a utopian trend far from reality, citing again Orland Bishop, “futures do not depend upon money, but upon active imagination”.

Money is energy, so how do we reinvent it is important. It is then, up to us to imagine that reality and fix the broken system in which we live, tbat does not serve us anymore.

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