The Gift Economy

Not all economies are based on maximizing personal gain
- some are founded on giving

One of the articles in Business On A Small Planet (IC#41)
Originally published in Summer 1995 on page 49
Copyright (c)1995, 1997 by Context Institute

Part of the pathway to a sustainable society comes from government actions such as regulations, taxes, subsidies, and partnerships that bias the market towards serving the common good. Part of the pathway to sustainability comes from building organizations with the capacity to support employees, to serve customers and stockholders, and to deliver ecological benefits – all at the same time. But neither government regulations and incentives, nor breakthroughs in corporate ability to address multiple bottom lines can ever be enough unless the people in the system care about more than a selfish vision of success.

According to philosopher Lewis Mumford, fundamental change in civilizations comes when the culture changes its vision of what it is to be a human being. After a long period of seeing ourselves as conquerors of nature, we are due for such a change. We will begin facing the challenges caused by expanding technological power and growing population when we change what we are striving for. We need a new definition of success.

Systems thinker and psychologist Gregory Bateson calls our view of ourselves as isolated individuals, "the epistemological error of Occidental civilization." Arne Naess, the Norwegian philosopher of deep ecology, suggests that we are at last moving beyond this error to a larger sense of self, a self which includes the planet. As Joanna Macy, another deep ecologist, puts it:

"The obvious choice is to extend our notions of self interest. For example it would not occur to me to plead with you, ‘Oh, don’t saw off your leg. That would be an act of violence.’ It wouldn’t occur to me because your leg is part of your body. Well so are the trees in the Amazon rain basin. They are our external lungs. And we are beginning to realize that the world is our body."

If Joanna Macy and Arne Naess are right that a larger sense of self is spreading rapidly, then the growing health of our larger self will constitute a success more important than the triumph of our little self over our neighbors.

Taking Pride in Contribution

The first step toward a sustainable sense of success is taking pride in the value of our contributions to others rather than taking pride in the value of our possessions. By extension this means striving for quality in the use of whatever power we have rather than working to get more power over others as an end in itself. In this view, profit and wealth may help us to contribute, but they do not themselves constitute business success.

If we went to the grave with riches gained by gutting the pension fund, or selling pesticides we know cause more harm than the insects they control, would we count our business lives successful? On the other hand, what if we stewarded a small company that repeatedly introduced more ecological ways of doing things? Maybe other larger players who quickly copied the ecological innovations gained much of the material reward. If we barely made ends meet, but clearly made the world a better place, is that a success?

Defining success by what one gives rather than what one has is neither a new practice nor an overly idealistic view. It is rooted deep in history and human nature, and is more basic than wealth or money.

The Gift Economy

In the potlatches of the Chinook, Nootka, and other Pacific Northwest peoples, chiefs vied to give the most blankets and other valuables. More generally, in hunter-gatherer societies the hunter’s status was not determined by how much of the kill he ate, but rather by what he brought back for others.

In his brilliant book The Gift: The Erotic Life of Property, Lewis Hyde points to two types of economies. In a commodity (or exchange) economy, status is accorded to those who have the most. In a gift economy, status is accorded to those who give the most to others.

Lest we think that the principles of a gift economy will only work for simple, primitive or small enterprises, Hyde points out that the community of scientists follows the rules of a gift economy. The scientists with highest status are not those who possesses the most knowledge; they are the ones who have contributed the most to their fields. A scientist of great knowledge, but only minor contributions is almost pitied – his or her career is seen as a waste of talent.

At a symposium a scientist gives a paper. Selfish scientists do not hope others give better papers so they can come away with more knowledge than they had to offer in exchange. Quite the reverse. Each scientist hopes his or her paper will provide a large and lasting value. By the rules of an exchange economy, the scientist hopes to come away a "loser," because that is precisely how one wins in science.

Antelope meat called for a gift economy because it was perishable and there was too much for any one person to eat. Information also loses value over time and has the capacity to satisfy more than one. In many cases information gains rather than loses value through sharing. While the exchange economy may have been appropriate for the industrial age, the gift economy is coming back as we enter the information age.

Doing Business as a Gift to Society

The next step in the move toward sustainable business is to make the business itself a gift to society.

Companies that use sulfuric acid end up with a hazardous waste. DuPont, instead of distancing itself from the hazardous waste generated by its customers, saw this problem as an opportunity to differentiate its offering in one of the most basic of commodities. The company took back the spent sulfuric acid, purified it, and resold it. This was good business because once DuPont got good at it, recycling turned out to be cheaper than creating from scratch. It also gained the company market share and margins in what had become to others a low-profit, uninteresting commodity. In this case, DuPont does well by doing good, thus winning both the exchange and gift paradigms.

The sign of excellence in a new world of the larger self is not vast profit or possessions, but sufficient material success to allow large and thoughtful contributions to society. For some strategies of societal service, huge profits may be needed, for example to build up the capital to purchase forestry land and convert it to sustainable forestry, or to extend a chain of tutoring schools that serve those who otherwise might not read, including the poor. Other strategies for making a contribution might require only a modest income that could be used for marshalling forces for change by example or through volunteers. In a world dominated by a larger sense of self these two strategies could do equal good and would be considered equally successful.

One feature of our society works directly against implementing a larger vision of success: institutional ownership of companies. In an earlier era of owner-operated businesses, an owner who thought solely of profit without regard for the effect of decisions on employees or the welfare of the community was thought to be a monster, and rightly so.

In contrast, the law today forbids pension fund managers from full humanity; they are precluded by law from allowing concerns for the environment or the good of employees to interfere with maximizing return. Institutional investment laws need to be changed.

A Shift from Capital to Talent

The critical factor controlling success in business is shifting from capital to talent. Employees are no longer interchangeable parts. This is not good for everyone, the undereducated and those whose talents are not now in demand are losing ground. But there is a bright side. Employers must curry the favor of their talented employees who increasingly have an ethical agenda. Employees who can easily find work elsewhere are refusing to work on projects or for companies that offend their values, even if they would be well paid to do so. As this trend increases, as people take a stand for sustainability in choosing their work, even public corporations seeking the favor of bloodless institutional investors will find that sustainable companies have the best future because they have the best talent. In fields where creativity counts, sustainability is a competitive weapon.

This strategy will not work if we are so pure that no realistic level of improvement would meet our standards. It will not work if we sell out for greenwashing instead of instituting real environmentally conscious practices. Biasing the system for sustainability requires some of us to be in the game demanding change.

Frugality and Choice

Our ability to make our talent count for change will often require us to take less for our services than if we were selling to the highest bidder.

One consulting firm I know virtually requires new consultants to use their fine salaries to buy expensive cars and houses. They want them up to their eyeballs in debt so the company can have complete control over them. They want their consultants living in fear of losing their jobs so they don’t ever put ethics ahead of their sales and profits.

Voluntary simplicity is not just polluting less, it is having more to "spend" on integrity at work. If we can live on less, we can turn down unsustainable projects at work just as we do in our choices at home.

Talented people have been making sustainable career choices in increasing numbers. This gives businesses that can provide good work towards good ends a great advantage, and this advantage will grow as the highly environmentally and socially conscious generation in school now becomes important talent to business.

The real game in the business world of the ecological age is running a business or a career so as to make a contribution to the community, the nation, and even to the planet as a whole. True business competence in the ecological age is demonstrated by producing a better product or service for customers and at the same time setting new standards for reducing pollution, for creating habitat, for helping the less fortunate. We cannot play this new game until we move beyond the fear of insolvency and learn to live frugally regardless of financial success.

The old status system is hard on the heart. Living for the larger self through a strategy of frugality and service opens up the heart to the glory of creation all around us. The gift is repaid manyfold.

Gifford Pinchot and his wife Elizabeth are principals of Pinchot and Company, a consulting firm that helps large workplaces escape from bureaucracy and hierarchy to release the intelligence, creativity, and integrity of the members.

Gifford is author of Intrapreneuring: Why you don’t have to leave the corporation to become an entrepreneur (published by Harper & Row) and he and Elizabeth co-authored The End of Bureaucracy & the Rise of the Intelligent Organization (published by Berrett-Koehler). You can reach him at 206/780-2800.

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