Far too frequently I fantasise about winning Who Wants to be a Millionaire? (not the lottery, I understand basic probability). My current thoughts are that with the money I would invest about half of it (maybe pay off the mortgage, the rest probably in index funds). The other half of it, I’d be giving away.
Only about £100k (10% of the £1m) would be heading in a truly charitable direction, with the other £400k being split amongst my close family – siblings and parents. I enjoy giving, and feel that this would be the right thing for me to do.
This leads me to thinking about gift economy. From wikipedia:
I find this concept really easy to understand. The point is that you give things away. Giving things away gets you more status / karma / brownie points etc, and those are really important, more important than things. In a gift economy hoarding is bad. If you hoard things then you are disrupting the system, meaning that people in need will go without and you will lose your good name (in some sense).
The beauty of the gift economy is that everything that people give has to be received by someone. In this way, as long as everyone pretty much takes part, you don’t lose out.
I’m always struggling to explain gift economies to people because they fixate on how you know that you get back as much as you put in. This is frustrating to me, because part of the whole point is that you probably don’t. But the status/karma/brownie points that you do get are more important as a marker of success than cash.
Gift economies are kind of the opposite of capitalist economies. It seems reasonable that a gift economy works best on a small scale where all participants are connected to each other. It’s plausible that a gift economy only works on a small scale.
As with all types of economies, gift economies rarely exist in pure forms and for all products. The most notable real life examples are found in traditional Pacific Island cultures (dying out somewhat), but they exist in extremely modern cultures – open source software is essentially a gift economy, as is economy of blood donation in the UK. Recently (although it’s not described as such) Trent @ the simple dollar tried to describe the gift economy that exists within parts of his extended family and if you think about it, it’s normal for gift economies to exist inside nuclear families.
This has been my best attempt at explaining what a gift economy is. To a certain extent, there’s a gift economy within my own family (siblings and parents) although it operates partly as a market economy as well. What do you think?
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