A while ago, I had a conversation with Zach Bell that sparked my interest in the economics of separation vs. participation. He recommended that I read The Gift, written in the early 80s by Lewis Hyde.
What I love most about this book is that it embodies the very thing it tries to analyze. There is a peculiar delight in realizing that this liberal arts professor really had no idea his ramblings on cash-strapped poets would inspire new strands of economic thought, let alone kindle movements like Burning Man.
“It is the cardinal difference between gift and commodity exchange that a gift establishes a feeling-bond between two people, while the sale of a commodity leaves no necessary connection.”
Hyde’s central thesis is that if commodities create boundaries, then gifts abolish them. Furthermore, gifts and gift relationships are self-multiplying in a way that conventional economics fails to explain.
This essay is my attempt to pass the gift along to you.
The spirit of commodification
The biggest lie you’ll ever hear as an economics student is that markets are efficient. In the most basic terms, the price of an asset supposedly arises at the equilibrium of quantity demanded and quantity supplied. To reach this equilibrium, both sides of the trade need to know what the other is doing. If an efficient market is a machine, then information is the oil that lubricates it.
Big Data is certainly taking care of the information part, but we still face a massive problem in the kind of information we find relevant. Does the price of an iPhone adequately reflect the cost of production? Is it too high or too low? And if it’s just right, is the distribution of that cost going to the right places? We also have to keep in mind that most markets are able to externalize harms, meaning that damage to the environment, poor labour conditions, and all the other skeletons lurking in the production closet are not reflected in the price paid by the consumer. In fact, the consumer is often wholly unaware of what it takes to source and build their latest gadget.
Herein lies the triumph of commodification: it separates us from the things we evaluate. ”If a thing is to have a market value,” writes Hyde, “it must be detachable or alienable so that it can be put on the scale and compared.” Karl Marx similarly argued in Das Kapital, “I cannot express the value of linen in terms of linen”. This is why money has become our linguistic and economic proxy for worth when it is really just a measure of comparative value.
Artificial Neural Networks map complex information to reduced forms so those forms can be learnt and recompiled in order to make decisions about unknown, incoming data. If you’re willing to nerd out with me for a bit: don’t you think money is like the one-dimensional output of a rather poor performing neural network? The output is so far removed from the source, yet we still use it to inform our dreams, decisions and deepest desires.
To extend this, think about how we commodify the environmental commons. When we alienate ourselves from the ecosystems that sustain us, it becomes easier to destroy them in good conscience.
This isn’t to say money isn’t useful. It helps to be able to standardize the exchange value of things as opposed to bartering and constantly negotiating the equivalence of goods and services. In this way, money is a relational tool, an incredibly powerful piece of communication that tells you how much one thing is valued within a certain context. After Zimbabwe’s coup in 2017, the price of Bitcoin on local exchanges shot up more than 60%, reaching a high of just over $13,000 when the cryptocurrency was trading at around $7,500 on most global exchanges. People were scrambling to protect their wealth amidst a backdrop of political and economic chaos – and they were willing to pay the price for it.
Quantitative evaluation, in the appropriate context, tells us a lot about the sentiment and value people have for something. But I’d argue that this evaluation is more often than not grossly misleading. So how do we address the inevitable separation that arises out of reinforced market dynamics?
The answer lies somewhere in re-introducing gifting into the economy. Does that sound like a mad paradox? It is. Too “woo-hoo” for you? Bear with me.
“A commodity has value and a gift does not. A gift has worth.”
Worth is intrinsic, in the same way the gift of a mother’s love cannot be priced. Value, on the other hand, is only derived from the comparison of one thing to another.
The catch is that it’s incredibly difficult to assign comparative value to those things to which we are emotionally connected. What monetary value would you assign to your closest friend? The question feels absurd because you cannot put a value on something you are unwilling to part with. The things we are unwilling to part with are often those with which we have the strongest emotional and spiritual bonds.
Gifting establishes those bonds.
Indigenous tribes have known this, and so do the world’s religions.* When someone gives you a gift – whether it be an object, the spring harvest, the death of Christ, or life itself, you become part of that gift.
What is the idea behind this? Is it to appease some far-off entity who demands gifts in order to continue being benevolent? No, I think this is a rather simplistic view of the gift-giving that underlies religion and the animistic view of the natural world. Rather, gifting carries with it a collective intelligence that knows our participation in the gift is what sustains us. We don’t just benefit via increased social bonds and that warm fuzzy feeling of “doing good” – when we’re kind to each other and the world round us, we are literally increasing our chances of survival.
For example, Hyde comments that many animistic ceremonies establish “a gift relationship with nature, a formal give-and-take that acknowledges our participation in, and dependence upon, natural increase. And where we have established such a relationship we tend to respond to nature as a part of ourselves, not as a stranger or alien available for exploitation. Gift exchange brings with it, therefore, a built-in check upon the destruction of its objects; with it we will not destroy nature’s renewable wealth except where we also consciously destroy ourselves.”
The keyword here is consciously. Perhaps the real purpose of gift relationships is that they bring to consciousness the realization of interdependence. The human mind is often too egoistic and too distracted to bear the complexity of our mutual intermingledness.
I don’t know about you, but I often feel a deep exasperation when I examine just how much my life contributes to the destruction of the earth. I travel by airplane every few months. I buy things that come in plastic packaging. Most of my clothes were produced with synthetic dyes. To try and understand how my individual actions might affect the melting of the ice caps requires a level of mental agility I simply don’t have in my day-to-day life.
Perhaps I should meditate more.