The Gift Economy and Social Capital

13 May 2013 · 9 comments

On Friday, Kim and I had dinner with Jason and Kyra Bussanich. Jason is a chiropractor in Lake Oswego and his wife Kyra owns a popular gluten-free bakery. (Kyra also won an episode of Food Network’s “Cupcake Wars”.)

Over dinner, we touched briefly on the notion of a gift economy. Wikipedia has a great definition of this concept:

A gift economy is a mode of exchange where valuables are given without an explicit agreement for immediate or future rewards. In contrast to a barter economy or a market economy, social norms and custom govern gift exchange, rather than an explicit exchange of goods or services for money or some other commodity. Gift exchange is frequently “embedded” in political, kin, or religious institutions.

The next day, Kim and I joined Kyra and her mother to see the Dalai Lama speak at an environmental summit here in Portland. At one point, the moderator posed this question to the panelists: “On some level, the human experience is all about consumption. Life lives by consuming life. But how do we moderate our consumption to reasonable levels?” All of the answers seemed very similar:

  • Oregon governor John Kitzhaber said the challenge is to build an economic system that is not built on the assumption of unlimited growth and unlimited consumption. He pointed out (as I often have) that beyond a certain level, increased income does not increase happiness. Kitzhaber also stressed the importance of social capital, the mutual goodwill we create when we interact with our friends and neighbors.
  • Environmental activist David Suzuki said that because of the effects of the Great Depression, “The engine of our economy runs on consumption, and we don’t focus on the things that truly make us happy. We think of prosperity in a weird way. It’s not our things that make us wealthy — it’s our family and it’s our friends.” [For the record, studies show that health and the quality of personal relationships are the best predictors of personal happiness.]
  • Andrea Durbin, executive director of the Oregon Environmental Council, joined the chorus. “We need to make better choices every day so that our economy isn’t driving by our consumption habits,” she said. “Consuming less will not only help our environment but improve our quality of life.”
  • And, of course, the Dalai Lama took a very buddhist approach to the question of happiness: “Inner wealth is most important,” he said, “and that comes from human relationships. The ultimate source of a happy life and a peaceful life is within ourselves, not money.”
The Dalai Lama
The Dalai Lama actually has a great sense of humor. I like him.

A supplemental economy

As I listened to the panelists respond to this question, I was again reminded of the gift economy. This is a concept I first discovered while reading Kim Stanley Robinson’s science-fiction trilogy about the colonization of Mars. In the second book, Green Mars, the colonists grapple with constructing a new economy, one that’s neither capitalist nor socialist, but something more sustainable. As part of that, a sort of background gift economy emerges where individual outposts share their surplus with others. It’s an important part of a larger economic model.

There are some obvious pragmatic problems to the gift economy. It’s a utopian ideal that operates best in the rarified air of argument and hypothesis, and is less likely to succeed (let alone be implemented) in the real world.

But while such a system might not be practical for an actual global (or national or municipal) economy, a culture of gift-giving can be an excellent supplemental economy, a voluntary means of building mutual goodwill among family, friends, and neighbors. A gift economy builds social capital, bringing communities closer together.

Some examples:

  • If I have things that I do not use (as is often the case), and I pass these things on to people who will use them, I’m increasing their wealth and happiness at no cost to myself. This isn’t necessarily an altruistic action, but it is an action that improves the overall wealth of the community.
  • When I give, whether time or material goods, to another person, I’m not just improving her physical life. I’m also creating, for lack of a better term, positive mental energy. I’m fostering mutual goodwill.
  • When a group of people give together — especially when they give time — the result is often greater than the sum of the parts. Just as a group mentality can feed negative emotions and lead to negative consequences, the same group mentality can have positive results. After the Boston Marathon bombing, media outlets trumpeted the actions of the folks who rushed toward danger in order to help the wounded. My colleagues Nate St. Pierre and J. Money founded a group called Love Drop, a “a micro-giving network of people who unite as a community to help one person or family a month”. Etcetera.

Though I haven’t used it myself, I hear that FreeCycle is a great example of the gift economy. Here’s the group’s mission statement: “Our mission is to build a worldwide gifting movement that reduces waste, saves precious resources & eases the burden on our landfills while enabling our members to benefit from the strength of a larger community.”

Note: Here’s a short essay on how gift culture builds reputation among computer programmers.)

The extraordinary power of compound kindness

We don’t need to sacrifice our own interests to participate in the gift culture or to generate social capital. It’s not a zero-sum game. Often, we can create win-win situations that allow everyone involved to profit.

The older I get, the more I’m convinced of the importance of social capital.

Social capital comes from building a broad network of relationships, a network that you can draw upon to help yourself and help others. This isn’t networking in the smarmy, slimy sense, but in the authentic “I’m your neighbor and your friend” sense. A complex network of people will have thousands (millions!) of connections, creating a powerful web of support. (You can see great examples of this in Ben Franklin’s autobiography and in Keith Ferrazzi’s Never Eat Alone.)

These networks are usually built through everyday kindnesses. These actions compound (just like compound interest) to yield larger returns in the future.

The broader your circle of friends, the bigger your family, the better you know your neighbors, and the more involved you are in your community, the more social capital you have. (And the more social capital you contribute to others — it’s a reciprocal thing!)

“Building community is the adhesiveness that holds us together as a society. Without community, we break down into individual consumers.” — John Kitzhaber

1 retirebyforty May 13, 2013 at 09:02

People in other part of the world depends on social capital and networking. It’s much easier here in the US to be super independent because we are doing so well financially. It’s harder to make friends and generate long lasting friendship too.
My mom visited her childhood home and one of her friend still lives in the same house. That would never happen here in the US.
FreeCycle sounds great. I should join especially because we have a young child.

2 Crystal May 13, 2013 at 15:59

My husband and I finally started making close friends in late 2009…this means that for the last 4 years of our 20’s, we had to sort of teach ourselves how to be great friends based on how our friends and family behaved. Luckily in our group, generosity and humor are key, so they really have made us better people. They still blow my mind sometimes with super sweet gestures or items they bring us just because, but then my husband and I have fun trying to reciprocate (especially in non-monetary ways that require some real thought). Yay for gift giving economies!

3 Meghan May 13, 2013 at 19:47

Thanks for a well-timed post!

4 Sarah May 14, 2013 at 05:35

While reading this article I thought of the yearly heavy garbage collection that happens in Nova Scotia and New Brunswick Canada (perhaps other places?) . Once the snow melts in April all of us without access to trucks for hauling large garbage to the dump put bbq’s, sofas, chairs, and other random heavy items we have no use for on our curbs and sanitation comes to pick them up.

The few days before the truck comes is when the scavengers come out. It’s not uncommon for your pile to be 1/2 or 1/4 of what it was prior to the truck coming along. You see many trucks circulating neighborhoods full to the brim with other people’s discarded items. My boyfriend always does a spin and finds bbq’s that just required a new burner, patio furniture only in need of a paint job and air hockey tables still on 100% working condition. These items are dolled out to his brother, me, his mom or anyone else who could use a lightly used item.

I read comments from friends on facebook grumbling about people going through their trash, personally I am happy when people come and take my unnecessary suitcase, my old wood scraps or shingles etc. It’s is a great way for people to reduce the items in the landfill, declutter their homes and increase their wealth by recycling and reusing items that other people have no use for.

It’s also the first real sign of spring after our chilly winter and almost a celebration for many folks who look forward to the heavy garbage city-wide yard sale ;)

5 Nate St. Pierre May 14, 2013 at 06:44

One of the best examples I saw of this was when a friend of mine here in Milwaukee was in a bad spot and needed help. She had spent years feeding into the local and national “gift economy,” simply because she believed in helping others, with no thought of return.

The moment she needed help, though, it was so inspiring to see everyone in town leap to her aid and take care of her needs in a matter of days.

I certainly don’t think it can ever be a sustainable primary economical model, but as a supplement . . . yeah, it’s awesome. :)

6 Karen May 14, 2013 at 18:11

This is very interesting JD. I never heard of the gift economy. I love the term compound kindness. Thanks for sharing this. : )

7 Leanne Regalla May 16, 2013 at 08:04

How funny it was for me to read this post and find a fellow reader of the “Mars” trilogy! When I was in grad school, my advisor was an economist and he loved all these ideas about different ways to structure societies. He encouraged us to read several “hard” sci-fi writers – great stuff. I re-read the series again a couple of years ago.

Your point about social capital is so right on. And life is definitely NOT a zero-sum game.

“Networking” has always had those kind of sleazy undertones. Many years ago, someone I forget about now proposed using the term “netweaving” instead – which I like better but never really caught on. It’s definitely all about the relationships, though, and (as often as we can) finding win-win-win situations for everyone.

8 Bev May 16, 2013 at 13:11

The book Debt: The First 5,000 Years by David Graeber is a fantastic read (okay, it’s really long, but it’s great) that looks at all the different kinds of economies humans have used ever (or as far as the records go back). According to the book, debt was originally a part of the ‘gift economy,’ and money was really a symbol that moved from person to person, never in permanent possession of anyone. It really blew my mind about the economic systems we operate under now and how they worked (or didn’t work) in the past. I highly recommend it for anyone interested in how a gift economy real works (and worked very well for a very long time).

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