David Friedman on the Gift Economy

by on October 2, 2006 · 8 comments

On his aptly named blog Ideas David Friedman discusses the gift economies (two kinds). It reminds me of Tim Lee’s post a couple months ago, Markets Don’t Need Money.

According to Friedman, when someone gives things away, what he gets, “in addition to his own enjoyment and the feeling of a useful job done, is status. . . . You pour your gifts out to the world and the world, if you are lucky, repays you in a variety of indirect ways.”

This is true, but I think it can be a little more direct and a little more than luck. People who are smart or skillful, who work hard, and who give away high quality intellectual property may get grants, may win jobs, command speaking or other performance fees, and have many meals and hotel stays purchased for them, to name a few ways that they are fairly directly rewarded.

On Tim’s post, TLF friend Luis Villa commented correctly on the need for money, but the two economies aren’t sealed from one another in any significant sense. There is a lot of crossover between the money economy and the gift economy. One just uses a standard metric of value and the other doesn’t.

Especially in the intellectual property area, people would do better to think of value rather than focusing solely on money. Pretty much all human action is economic behavior. (I didn’t come up with that idea just now by myself.)

  • http://tieguy.org/ Luis Villa

    Just blogged a bit about this; admittedly not my finest writing- my brain is a bit fried.

    The most relevant comment in there to this discussion, Jim, is that the two economies- money and reputation- aren’t on par. Sure, I can indirectly turn my blog into money, but that is indirect. If I blog today, does that help feed me tonight? Almost definitely not. That means that blogging is unstable and subject to vagaries that the other economy is not. Is that a killer? No, especially not for people who have other reasons to feel secure financially. (Professors, students, etc.) But it does on the whole mean that more people are likely to see it as an occupation on the same level as whatever gives them their cash.

  • http://weblog.ipcentral.info/ Noel Le

    Its one thing to observe non-monetary forms of value exchange, but to equate the capital structure enabled by IPRs with a pat on the back is another.

    What could otherwise be seen as dry cost under-cutting, peripheral/complement based business strategies, having to give away goods for free, or simply ditching dead-end technology products but giving the code to posterity, have somehow gained religious significance to those who want to turn the gift economy into an assertive agenda.

    ***pretty much all human action is economic behavior***

    Thats a truism Jim. Still, here, I disagree with that statement in the context of IPRs and innovation because it becomes an ambiguous one; implying that capital and gifts are on the same level.

  • http://tieguy.org/ Luis Villa

    Just blogged a bit about this; admittedly not my finest writing- my brain is a bit fried.

    The most relevant comment in there to this discussion, Jim, is that the two economies- money and reputation- aren’t on par. Sure, I can indirectly turn my blog into money, but that is indirect. If I blog today, does that help feed me tonight? Almost definitely not. That means that blogging is unstable and subject to vagaries that the other economy is not. Is that a killer? No, especially not for people who have other reasons to feel secure financially. (Professors, students, etc.) But it does on the whole mean that more people are likely to see it as an occupation on the same level as whatever gives them their cash.

  • http://weblog.ipcentral.info/ Noel Le

    Its one thing to observe non-monetary forms of value exchange, but to equate the capital structure enabled by IPRs with a pat on the back is another.

    What could otherwise be seen as dry cost under-cutting, peripheral/complement based business strategies, having to give away goods for free, or simply ditching dead-end technology products but giving the code to posterity, have somehow gained religious significance to those who want to turn the gift economy into an assertive agenda.

    ***pretty much all human action is economic behavior***

    Thats a truism Jim. Still, here, I disagree with that statement in the context of IPRs and innovation because it becomes an ambiguous one; implying that capital and gifts are on the same level.

  • http://www.cato.org/people/harper.html Jim Harper

    I gave away ideas and expression for four or five years (and still do), gaining a reputation for good ideas that got me a good job. In my spare time, I produce, copy, and give away information and expression, and I pay so that other people can give away information and expression. I make some money back in advertising.

    I’m not sure whether these two examples are direct or indirect, and suspect that the distinction isn’t important, but there is a clear relationship between giving away information goods and getting money back. My point was that it’s not a matter of luck, but hard work and skill. (There’s a pat on the back – to myself!)

    I’m every bit the capitalist that traditional exploiters of IP rights are – perhaps more a capitalist because I rely strictly on my intellectual and physical capital, not on intellectual property regulation, to make money.

    Noel, in your comment you seem to be arguing against people rather than ideas. (“people who want to turn the gift economy into an assertive agenda”) This has brought you to disagree with something you identify as a truism. I don’t have that agenda and I doubt David Friedman does. I encourage you to focus on the ideas so you don’t have to strategically contradict yourself any more!

  • http://www.cato.org/people/harper.html Jim Harper

    I gave away ideas and expression for four or five years (and still do), gaining a reputation for good ideas that got me a good job. In my spare time, I produce, copy, and give away information and expression, and I pay so that other people can give away information and expression. I make some money back in advertising.

    I’m not sure whether these two examples are direct or indirect, and suspect that the distinction isn’t important, but there is a clear relationship between giving away information goods and getting money back. My point was that it’s not a matter of luck, but hard work and skill. (There’s a pat on the back – to myself!)

    I’m every bit the capitalist that traditional exploiters of IP rights are – perhaps more a capitalist because I rely strictly on my intellectual and physical capital, not on intellectual property regulation, to make money.

    Noel, in your comment you seem to be arguing against people rather than ideas. (“people who want to turn the gift economy into an assertive agenda”) This has brought you to disagree with something you identify as a truism. I don’t have that agenda and I doubt David Friedman does. I encourage you to focus on the ideas so you don’t have to strategically contradict yourself any more!

  • http://weblog.ipcentral.info/ Noel Le

    Jim, I’m not arguing against a truism, I’m arguing against your mis-representation of it.

  • http://weblog.ipcentral.info/ Noel Le

    Jim, I’m not arguing against a truism, I’m arguing against your mis-representation of it.

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