Countless Exchanges in the Gift Economy:
Toward a New Understanding of Transactions

Over the last two decades, the resurgence in non-competitive moneysystems (barter exchange networks and interest-free currencies likeIthaca HOURS, Time Dollars, and LETS) has demonstrated that money neednot store value (in the form of accrued interest), and in fact worksbetter when its sole function is to facilitate exchanges.

This definition of money - as Bernard Lietaer puts it, "an agreementwithin a community to use something as a medium of exchange" - allowsus to envision a new type of "gift economy" in which money need neverbe hoarded and members of a community are therefore free to exchangeall their gifts and services.

The "gift economy" model might be extended if each individual exchangeor transaction were likewise redefined. As it stands now, even ininterest-free money systems, each exchange must be quantified inhours, Green Dollars, or some other form of unit. But if weunderstood "transactions" to include unilateral goodwill gifts from anindividual to an entire community, we might encourage communitymembers to focus not on counting hours or Green Dollars or otherunits, but instead on weaving together a network of reciprocalgift-giving.

Of course, some isolated exchanges are best carried out with preciseunits of exchange. But to bring artwork, for example, and othergrand-scale gifts that an individual might offer in large or evenunlimited amounts to a community, into the gift economy, we need tolook beyond traditional units of account like hours and dollars, andcultivate the greater "forest" in which individuals who give unlimitedor immense quantities of their particular gifts and services would becompensated not with exact amounts of money but with sufficientreciprocal gifts from other community members.

Though our economic terminology and theories have lagged far behind the practice of nonquantified gift-giving, some celebrated examples of innovation and collaboration fit this definition--notably, good old-fashioned parties and potlatches, exchanges among family members and close friends, and the Open Source/Free Software business model.

In the social arena, envision a neighborhood potluck, where each person attending offers an unmeasured gift to everyone else at the party. Some people bring a store-bought beverage; others become famous for their home-made desserts; but as in the folk tale about the stone soup, everyone contributes to, and benefits from, the success of the party. Gifts of information or social space online - like Craig's List, San FranZiskGo!, Green Witch Internet Radio et al. - help create a virtual "potluck" where people exchange ideas, art, music, news, housing, employment, and social invitations. Likewise, within a family or intentional community, gifts of time, nourishment, shelter, expertise, and materials are rarely quantified and usually reciprocated in some fashion to everyone's edification.

These unquantified exchanges need not be limited to small communities whose members already know and trust each other, nor to "gifts" of small value. The Open Source/Free Software model has accelerated the development of the Linux OS and the Apache server, among others, drawing on the aggregate intelligence and vigilance of a "bazaar" of users for its bug-fixes and new features. Users submit "gifts" of expertise to the community, and receive no direct quantifiable payment--but the "rising tide" of innovation benefits everyone, immediately and over the longer term, as trust and good will are established and social/economic bonds are cultivated.

Imagine if innovations in medicine - e.g. research and development of chemotherapy for cancer, anti-retrovirals for HIV/AIDS, and other pharmaceuticals - could be fueled by peer review and feedback from _all_ experts in the field rather than just those hired by a single company; if, rather than restricting access to drug recipes as intellectual property, pharmaceutical companies could build their brand identity and business success in another unique niche.

These kinds of profitable niches have sprung up around open-source software: on, for example, the software products are offered at no cost, while the company offers other value-added packages of products and services - manuals, technical support, and advance notice of upgrades and patches. The software itself need not be simply a "loss leader" gimmick as used in traditional businesses; while a "loss leader" serves solely to lure customers away from competitors and toward revenue-generating products, nonproprietary software may fit one of a number of non-predatory "win-win" business models.

We are only beginning to discover the potential of these models, and to rediscover the beauty and symmetry of gift economies. As new definitions of money (as any agreed-upon medium of exchange) and community (of any scope or scale across the globe) promise a richer, more sustainable economic landscape, so can a new understanding of transactions (to include any gift to the economy, quantified or not) embolden individuals and businesses to participate to the fullest in their communities and economies.


Further reading:

Setting Up Shop--Open Source Business Models

the Business Case for Open Source

Open Source FAQ

The Hallowe'en Document: Microsoft on the Open-Source Threat

An Open Source Case Study

New Media Says "Set Your Code Free"


The Free Software Solution

Intentional Communities

Making Money off your GPL-ed code

"No-cost software can bring unexpected dividends."

Eric Raymond's home page

Open Source Links and News by Eiffel Liberty

Open-Source Timeline

Business Issues in Free Software Licensing

Focus on Freeware: Enterprise Roundup

Release 1.0 - the Open-Source Revolution

Let My Software Go!


San FranZiskGo! Weekly Events Listings
Transaction Net -
Enabling Markets Online

Online Payment Methods
The Coalition for the Future of Music

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Create Your Own Currency

The Future of Money - Beyond Greed & Scarcity
with Bernard Lietaer

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