Gift Transactions vs. Commercial Transactions

21 Feb 2011 in Gifts, New Economy, Open Currency

A lot of people seem to struggle with the concept of gift economies. Over the recent few hundred years, we have gotten so acculturated to market economies that we tend to project tit-for-tat exchange onto every interaction and into every motivation. However, I believe this is erroneous. My goal in this blog entry is to remind us of our deep familiarity with gift economies and to provide a clear contrast between them and market economies.
 

Gift Economies are Alive and Well

When I use the phrase “gift economy,” many people assume I must be hearkening back to some ancient outdated matriarchal culture, a utopian scheme, or a science fiction story; because clearly, that’s not how the real world works. The “real world” is a dog-eat-dog competition for survival where there’s no such thing as a free lunch!

Clearly, such a person has a rather limited grasp on the world we actually live in -- because in THIS WORLD gift economies are alive and well, and we are utterly dependent on them for our survival. In fact, our mighty commercial economy is actually a very small layer which could not function without the gift economies it is built on top of.

Let’s illustrate this through a few examples. What does the sun charge for sunlight? What does nature charge for bringing rainfall to crops, or delivering drinking water through rivers, or for growing our food? What do bees charge for their pollination services? What do parents charge for potty-training their children, or teaching them to speak a language, to read or write, or be moral and social beings?

How well would our commercial economy function without employees who are potty-trained language-users? How far would our markets expand without the hillsides of lumber, oceans of fish, deposits of coal and oil, fertile soil for crops, and forests producing oxygen for us to breathe? Nature gives all of this free of charge -- a gift.

However, gift economies are not limited to nature. For as long as humans have existed on this planet, so have human gift economies. Now, we think of them as families and tribes and forget that they have their own kind of economies. Yet we would not survive to our second day on this planet without these gift economies. What does a mother charge for her milk? What interest rate do parents charge for the food, housing and clothes that they provide to their children? What do our friends charge for companionship and assistance?

If someone believes the only realistic view of the world is one where nothing is free, then they are clearly ungrateful for all they freely receive.

However, gift economies do not function without expectations placed on their participants. In the next post in this series, I’ll explore two very different kinds of gift economies and the contracts or covenants they function within. But in this post, I want to explore the differences in the transactions.

Commercial Transactions vs. Gift Transactions

We give and trade all the time, yet we’re not used to thinking about how giving and trading actually work and all of the actual details of what makes them different.

Suppose I’m building more raised-bed frames for my garden and I realize I need another handful of nails to finish the project. I’ve got some options. I can get in my car and drive the Mega-Hardware-Depot chain to buy them, or I can walk across the street and ask my neighbor Bryan for nails.

First let’s look at the normal market transaction. Anyone with a few bucks in their pocket can walk into any old hardware store and buy a box of nails. You don’t have to know the owner, the cashier or anyone in particular. Once you’ve bought the nails, you still probably aren’t friends with the owner, cashier or anyone in particular (if you are, it was because of other freely-given social interactions, not the simple act of making a purchase). You selected a box of nails for which you were willing to pay the price marked on the box. You paid the marked price (or got them to agree to a new one via coupons or other negotiation). And when you left, the transaction was complete with no particular reason to interact with the people at the hardware store again.

Now let’s look at the gift transaction. If I’m not a good neighbor Bryan is not likely to do much to help me. However, because I am a good neighbor, he will go out of his way to find nails for me. We don’t need to agree on a price. In fact he’d be offended if I tried to hand him a few bucks, or brought him a handful of nails to repay him the following week. The transaction is purposely imbalanced -- something given for nothing in return. Yet it’s also a bit open-ended. It’s an investment in our ongoing relationship, in our neighborhood, and in a community where people do these kinds of things for each other.

So what do these examples show us?

Commercial Transactions / Trades:

  1. Require no previous relationship
  2. Create no substantive relationship
  3. Require agreement about the value of what is being traded
  4. Require a balanced exchange of approximately equal value
  5. Are complete or closed when the equal value has been exchanged

Gift Transactions:

  1. Emerge from relatedness, kinship or a shared sense of community
  2. Strengthen the relationship, kinship or shared community context
  3. Establish no agreement about the value of what is given
  4. Are imbalanced
  5. Are open-ended – they leave something hanging

Consider the differences in these ways of transacting or interacting with each other and the cultural effects they have over time on a community.

In my last blog post, I pointed out how money (or commercial transactions) doesn’t build relationship. The beauty of gift transactions is that they do build relationship.

So think about the cumulative effect of these interactions with the people around you -- a few interactions a day, every day, every week, every month, and every year. In just a few hundred years of more commercial transactions, we’ve almost convinced ourselves that the gift economies of the previous millions of years are a fiction. Even though we still depend on them every day!

And think about what kind of difference it would make to tip the scale back toward more gift transactions. How much more connected would we feel? How much stronger would our communities be? How much time and money would we save?

In the next post in this series, I want to go deeper into the background fabric of these two types of economies. Specifically, what are the contracts, agreements, covenants by with they operate.