What exactly is a gift economy and how does it create abundance?
It doesn’t make sense, does it? How could it be that there is an economy that doesn’t require money? Everyone is just expected to give what they want and gets what they want from the giving? Who’s giving? When people talk about gift economies, they throw around the word, “abundance” a lot. From where or who is this abundance coming from? What are people’s incentives to give and how would anything get done? This article is meant to get to the bottom of what gifting is, what a gift economy is, why someone might choose to gift and how it works to help you live in sustainable abundance.
To answer these questions, it is a bit of a mind flip outside the realm of profit, competition, and scarcity that we are used to. Today, the way we receive is mostly achieved through direct exchange, meaning I give you something of value and you give me something of value in return. In actuality, however, a large portion of what we receive today is through gifting.
Think of everything you received for free in your life that you could have otherwise paid for. At small scales this occurs within friend or family networks exchanging favors; in fact, the family life cycle has gifting built-in such that the parents take care of the children when they are young and the children take care of the parents when they are old. This also exists on much larger and more organized scales like open source technology where developers upload their code and use other people’s code when they build stuff.
Let us go back a step and start at the basics. An economy, in general, is a system that describes how goods and services are produced and distributed in a society. A gift economy is any economic system where people create or source things via gift giving, or “gifting”, rather than exchange.
Gifting vs. Exchange
Gifting as a behavior is distinguished from exchange by the fact that the transfer of value occurs without defining what the giver gets in return. The giver may expect something in return, but there is no contract enforcing it and the returning favor may not even come from the recipient of the gift themselves.
A great example is, when you are on a forum or online group and someone asks for advice in an area you happen to have some experience in and you choose to give them your advice. You wouldn’t then expect money in return. Nor would you expect them then to return advice to you promptly or even ever. This advice is considered a “gift” and the act of giving it was “gifting”. While you don’t expect something direct in return, you do, however, reasonably expect that if you needed advice that you could ask in the group and probably someone else could gift their advice to you. This group functions as part of the gift economy for advice because it is a system for sourcing advice through giving.
In the past, gift economies were mostly confined by the the amount of people you personally knew and trusted and they both depended on and built social ties within communities. Social technology has enabled a wide expansion of the concept of communities and created vast networks of people throughout the globe. This increase of scope created a paradigm shift of possibilities. There is a specific mechanism working in most successful online gift economies. That is, individuals contribute what they are willing to the community and then everyone has access to all the contributions. This mechanism is how abundance is established by creating a communal depository of contributed resources.
The more we share the more we have
At scale, there would be extreme benefits of being part of a gifting community because if you needed something, you could probably source it from the communal contributions. Imagine if all your friends made their books available for everyone to read in an organized online library. Think of a specific book you might want to read. What do you believe the odds would be that you could find and access that book within your friend group? What if instead of just your friends, it was a giant online community? What if it wasn’t only for books, but it included any physical good, service, or digital resource that someone might contribute?
Wikipedia is a great example of the abundance that occurs when this mechanism is done right. Compare the gifting mechanism that Wikipedia uses, being each person contributes information if they want and everyone can access it, to the capitalist method of a some number of firms competing to make the best encyclopedias for the cheapest price. Clearly what Wikipedia is able to do by harnessing the resources of the community is far more effective than what any firm could do.
Gift Economy vs. Market Economy
Once we cross a tipping point in the number of people participating in a gift economy, we start to see that the society it creates is based on quite different principles than those of market economies and produces quite different behavior. In a gifting society, action is motivated by the need for something to be done, rather than profit. This is important because rather than in the money system that has scarcity built into it and creates and encourages competition, in the gift economy cooperation is the means by which we produce and distribute resources and this tool that promotes abundance.
Businesses in capitalist societies must work according to a budget so as to make a profit. They must only hire a certain amount and produce a certain amount that is to be sold at a price chosen to maximize profit. All internal practices must be kept a secret so they can maintain or grow their share of a finite market. This creates a framework of scarcity.
If we take a gift economy approach, you can hire as many people as you want, so long as the need for what you do is great enough that people are motivated to do the work. You have no reason not to partner with any other organization or to share all your secrets because you aren’t trying to win the “make-the-most-money” for shareholders game, you are trying to solve a need for society. The status benefits of doing so might be worth more than money in terms of the goods and services you’d have access to if the gift economy is large enough. Can you imagine what a roll-out of the COVID-19 vaccine may have looked like if pharmaceutical companies could hire anyone willing to contribute and firms cooperated giving each other the recipe to produce their vaccines?
Less production. More consumption
Not only are these changes in societal principles impactful to how we produce but also how we consume. The gift economy creates the framework for a circular economy of consumption, meaning that goods are passed on from one consumer to the next, or even loaned to each other, so that one person’s possession, for example a guitar, could be used by many people before it’s end of life. This reduces the amount we must produce while allowing us to consume at the same or a greater rate which is what makes the gift economy more sustainable and can reduce our carbon footprints immensely.
Why would someone give something of value for free?
Firstly, it’s not truly free because you expect that you will get something in return some time somehow. Still, this has two different answers depending on how mature the gift economy is. At early stages, people would mostly give from their overflowing cup, meaning they have something extra or the gift itself provides the giver its own own value just by giving it. If you’d otherwise throw away something, might as well give it away and earn a reputation as a contributor. If you have a skill you’d like to develop or just enjoy, the gift economy is a perfect place to offer it to the world.
As people acquire more of their needs from the gift economy rather than the market economy, then gifting creates status that begets tangible wealth as you’d be more likely to get the gifts that you want when you need something if your reputation as a contributor improves. At some point it would make sense not only to give what is extra, but to work voluntarily as you’d expect to get paid by matching more of your requests because of the increase in status attributed to you, which should get you more stuff.
Lastly, everyone wants to contribute to the world. No one wants to be useless, especially when it’s so easy to give. If so much has been given to you, offering a hand where you can would seem obvious.
This is why we are building Lokali Community. To give the gift economy the infrastructure that it needs so that we can scale it to a level never before imagined. The more of us there are the more we all have so join us and access the abundance of the community.