General Knowledge

What is a gift economy?

This holiday season, people around the world will give and receive presents. You might even get a knitted sweater from an aunt. But what if instead of saying “thanks” before consigning it to the closet, the polite response expected from you was to show up to her house in a week with a better gift? Or to vote for her in the town election? Or let her adopt your firstborn child? All of these things might not sound so strange if you are involved in a gift economy. This phrase might seem contradictory. After all, isn’t a gift given for free? But in a gift economy, gifts given without explicit conditions are used to foster a system of social ties and obligations.

While the market economies we know are formed by relationships between the things being traded, a gift economy consists of the relationships between the people doing the trading. Gift economies have existed throughout human history. The first studies of the concept came from anthropologists Bronislaw Malinowski and Marcel Mauss who describe the natives of the Trobriand islands making dangerous canoe journeys across miles of ocean to exchange shell necklaces and arm bands. The items traded through this process, known as the kula ring, have no practical use, but derive importance from their original owners and carry an obligation to continue the exchange.

Other gift economies may involve useful items, such as the potlatch feast of the Pacific Northwest, where chiefs compete for prestige by giving away livestock and blankets. We might say that instead of accumulating material wealth, participants in a gift economy use it to accumulate social wealth. Though some instances of gift economies may resemble barter, the difference is that the original gift is given without any preconditions or haggling. Instead, the social norm of reciprocity obligates recipients to voluntarily return the favor. But the rules for how and when to do so vary between cultures, and the return on a gift can take many forms.

A powerful chief giving livestock to a poor man may not expect goods in return, but gains social prestige at the debtor’s expense. And among the Toraja people of Indonesia, the status gained from gift ceremonies even determines land ownership. The key is to keep the gift cycle going, with someone always indebted to someone else. Repaying a gift immediately, or with something of exactly equal value, may be read as ending the social relationship. So, are gift economies exclusive to small-scale societies outside the industrialized world?

Not quite. For one thing, even in these cultures, gift economies function alongside a market system for other exchanges. And when we think about it, parts of our own societies work in similar ways. Communal spaces, such as Burning Man, operate as a mix of barter and a gift economy, where selling things for money is strictly taboo. In art and technology, gift economies are emerging as an alternative to intellectual property where artists, musicians, and open-source developers distribute their creative works, not for financial profit, but to raise their social profile or establish their community role.

And even potluck dinners and holiday gift traditions involve some degree of reciprocity and social norms. We might wonder if a gift is truly a gift if it comes with obligations or involves some social pay off. But this is missing the point. Our idea of a free gift without social obligations prevails only if we already think of everything in market terms. And in a commericalized world, the idea of strengthening bonds through giving and reciprocity may not be such a bad thing, wherever you may live.

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