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 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.”

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!)