Description of the Gift Economy
The “gift economy”, the “compact economy” or “non-market socialism” (Nelson & Timmerman, 2011a) is a third alternative for modernity – not capitalism and not a centralized state based socialism. It is really a package of ideas for organizing production and consumption.
How it works is this (Leahy, 2011). People organize production through collectives of producers. In each collective, the workers democratically organize their own production and decide how to allocate what they produce. They allocate what they produce to members of their own community or distribute it as gifts to other collectives or communities. At all points in the chain of production this operates. For example a group of people who are making train carriages depend on gifts of steel and aluminium from the groups producing those products. In turn they give their carriages to the groups that are running the train system. Those who are running the train system offer their train services to the public at large, also as a gift. This is the basic economic format.
The gift economy also depends on various cultural norms to function as intended. People are motivated by a hegemonic cultural package connected to the gift economy. The model of ethical behaviour which is to become normalized in the gift economy is for people to look after the well being of others and to ensure an equality of outcomes. The population at large has also decided that they want the gift economy system to continue to be popular and effective. They know that this can only happen if it continues to provide well for people’s needs. They choose work that they are keen to do and seems interesting. But they also do work which they think is necessary to make the system function, and work which looks after the interests of particular recipients for their gifts.
How would such a system allow the kinds of coordination and efficient allocation of work and resources that the market now achieves? Clearly the attack on non-market coordination is most often couched in terms of the possibilities of an ex ante coordination of production carried out by an elected socialist government (see e.g. Sayer, 1995). The history of the Soviet economies gives many examples of how ex-ante centralized coordination can go wrong. But the gift economy does not operate like this.
Some of the coordination of the gift economy is through information being provided by media and scientific collectives that tell the community what is needed and where shortages are taking place. In addition, there is prestige in being part of a chain of production which is making a real difference and giving specific people what they want most. This is the key mechanism which replaces the hidden hand of markets. What markets do is to allocate to those who are prepared to express their desires by putting money on the table. Instead, in the gift economy what consumers put on the table is their appreciation, their praise and their thanks. It is an understanding of this and a desire to receive this acclamation which helps producers to allocate time and resources to what people need. Just like in the market economy, there is no attempt to oversee and control all of these transactions of information and goods from some central point.
What stabilizes this system? How can people be sure about what they are going to get and that what they need for their own projects will become available? This is done through what Anitra Nelson and Frans Timmerman describe as “compacts” (Nelson & Timmerman, 2011b). These are promises between groups about what will be supplied and when. They are formally enacted in front of third parties and enforceable in the court of public opinion.
The Gift Economy and The Problems of Capitalism Today
How would a gift economy avoid the problems that modern economies now experience?
A key issue is the problem of over consumption which plagues market economies. The daily experience of work in a gift economy is engaging and meaningful. At the end of the day you also have control of the distribution of what you produce. Working harder does not produce an increase in your own personal consumption and working is not necessary to survive. Your standard of living and your survival comes from multiple gifts from a variety of producers. They do not and indeed could not require specific compensations in return, proportional to your work. There are fewer motives to consume because the pleasures of social connection and self expression are also a strong feature of work. You do not just rely on consumer goods and leisure to fulfil these needs. Secondly, there are fewer motives to produce because you are not required to produce in order to consume and you cannot consume more by producing more. These mechanisms solve the problem of over consumption.
Then there is the problem of the production of environmental damage in current economies. In a gift economy there is no government so there is no possibility for environmental regulation by government. But there is no need for environmental regulation to prevent damage. Producers control the methods of production that are being used where they work. They are concerned about their own health and the environmental well being of their own community. They know that their prestige is based on the production of gifts that do not harm the environment, so they are also concerned about the global commons. Unlike workers and companies in capitalism today, they are not motivated to produce despite environmental damage, because they do not depend on their production to survive.
Finally there is the issue of fairness and just distribution – a problem that market economies also fail to solve adequately. In a gift economy, producers create equality as a by-product as they strive to gain the appreciation of those who need goods and service the most. They work on this as well as producing for the people who are their own friends and relatives. There is no ultimate danger of insularity because they depend on people outside of their immediate community for new and stimulating entertainment, ideas, media and the arts, as well as for more prosaic goods and services.