The Virtuous Cycles of the Gift Economy

Gift Economy Cycles
Our society puts a value on human activities only when they can be monetized ñ when a transaction involving an exchange of money occurs. We tend to equate our time with money: If the ëmarket valueí of an hour of our time exceeds the cost of hiring someone else to mow our lawn or make a present for a loved one or look after our children or our home, we conclude that it makes sense to buy those services and to work longer hours to pay for them. 

This false economy leads us to buy what we donít need, which requires us to work harder to pay for those unnecessary goods and services, leaving us even less time to look after ourselves and our own needs and forcing us, in a vicious cycle (cycle 1 in red on the chart above) to ëoutsourceí even more of the things we might be doing for ourselves. All this phony economic activity is added to the GDP and employment data. Do-it-yourself and other ëunpaidí work, and things we make for ourselves, are not considered ëeconomicí activities and hence not included in the statistics that drive our societyís political and economic decisions. No surprise then that the government encourages us to buy what we donít need and what we could provide for ourselves.

By contrast, the Gift Economy does not value monetized activity more highly than un-monetized activity. It suggests, on the contrary, that our time is invaluable and that therefore we should ëspendí it, as much as possible, doing things we love and things that are our personal responsibility, and only buy goods and services we cannot possibly provide for ourselves. In doing these things ourselves, we learn to do them better, more efficiently, more effectively and more economically, saving the cost of outsourcing them to a third party.

Thanks to this cost saving, we then need to work less, which gives us more time to do the things we love, creating a virtuous cycle (cycle 2 in green on the chart above) instead of a vicious one.

The economists donít like us doing this, since this DIY work doesnít involve the exchange of money or the employment of others to do our own work, and so is not included in GDP or employment data. This is why published trends in GDP and unemployment are meaningless, and why these data provide no useful measure of a societyís well-being.

The outcome of this virtuous cycle ñ more time ñ has another benefit as well: Some of that ëextraí time can be invested in Gift Economy activities that yield even greater, self-reinforcing and sustainable ëgoodsí:

  • Mentoring, parenting and coaching: enabling others to cope with major life challenges and problems
  • Showing and teaching: enabling others to develop new capacities and skills
  • Gifting, sharing and peer production: exchanging, and collaboratively designing and making stuff for mutual benefit

So under the Gift Economy, the joyful investment of this additional ëleisureí time spawns three more virtuous cycles (shown in blue on the chart above):

  1. Mentoring, parenting and coaching others (cycle 3 on the chart) produces healthier, happier, more competent and more responsible citizens with fewer social problems and needs. This reduces the costs of health care, crime, wars etc. and also makes us better at doing things for ourselves, saving both our society and us as individuals money, so we need to work less to pay taxes and personal expenses.
  2. Showing and teaching (cycle 4 on the chart) produces a more self-sufficient citizenry with more capacities and skills, who therefore need to work even less since they need buy fewer goods and services from others.
  3. Gifting, sharing and peer production (cycle 5 on the chart) produces goods and services tailored for our individual needs and wants at no cost beyond that for materials that must be purchased from the ëmarketí economy. Open source, free libraries and file sharing, scientific exchange, cooperatives, social exchanges such as work bees and vacation home swaps, the Internet (and particularly blogs) and philanthropy are all examples of gifting, sharing and peer production Gift Economy activities. Umair Haque has outlined a peer production model that could take us even further, to the point ëproducersí and ëcustomersí become indistinguishable, where they collectively invest time, ideas and energy in a trust relationship with others to co-produce goods and services precisely tailored to their mutual needs, which can then be gifted to others.

These cycles are, of course, subversive. They threaten to undermine and starve the ‘market’ economy by freeing us, the end-customers of that economy, from the need to pay money into it. They also threaten to undermine and render irrelevant political structures and institutions that exist to defend economic rights and powers, to wage wars and to mete out scarce economic resources ñ the Gift Economy voluntarily gives us these rights and powers, has no need of wars to defend them, and operates under a principle of generosity and abundance, not competitiveness and scarcity.

It is not surprising, therefore, that the brokers, agents, controllers of resources, marketers, politicians and other parasites who rely on the ëmarketí economy and its corporatist supporting political structures have already demonstrated a willingness to go to great lengths ñ alternately suing and bribing customers, ridiculing and slandering Gift Economy initiatives, and bribing and coercing lawmakers to disrupt the decentralization of power that the Gift Economy brings about and to protect ëtheirí property from being shared or given away generously.

The Gift Economy in fact represents a ëre-naturalizationí of the economy. The ëmarketí economy is unsustainable and has shown itself to be morally bankrupt, unable to innovate, fragile and lacking in capacity to cope with rapid change. The shift to the Gift Economy has already begun, and is entirely consistent with the critical political and economic demands and needs of our time, and with way nature and ëuncivilizedí creatures thrive in a world of abundance and a spirit of generosity (in the true ëgiving and sharing freely and trustfullyí sense of the word, not the narrow sense of charity).

All we need to do, starting within our own physical and virtual communities, is acknowledge that our time is precious and that making time to re-learn to do things for ourselves and become more self-sufficient just makes sense. Once we realize that, it will become clear to these communities that the Gift Economy offers us a better, easier, more equitable, resilient and joyful way to live, and to make a living. And, best of all, it justkeeps on giving.

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6 Responses to The Virtuous Cycles of the Gift Economy

  1. David Parkinson says:

    Thank you. Lovely post.

  2. Very inspiring diagram and text Dave.I was intuitively knowing this without fully realising it. Thanks to open my eyes on my own conscience.Peter-Anthony Glick

  3. John Barrett says:

    This is your second post that made me think about a book I had read in the early 90’s as I was trying to decide whether to leave the corporate world (I did). It is titled “Your Money or Your Life” and was originally published in 1993.

  4. Kevin Carson says:

    Dave,I confess I usually don’t get much out of your diagrams because my head isn’t wired that way. But this one was brilliant in its clarity. Well done!

  5. speedbird says:

    Excellent post.I’ve worked in a number of companies where the ‘internal’ value placed on an hour of my time was about ten times what I was being paid for it… the aim seemingly to force all ‘make/buy’ decisions into ‘buy’. If everything is bought, who, then, does the work?

  6. John Banfill says:

    Thanks for an excellent article that lays out the heart of the reasons for the gift economy and much of what we value as humans and not little business entities. I hope you continue talking about this topic since it is vital and people have been so brainwashed about the “economic” system.

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