GIFT ECONOMY
In his book Talking to My Daughter About the Economy, Yanis Varoufakis quotes Richard Radford, the British economist who spent time in a prisoner of war camp as a captured British soldier during the Second World War.
Using Radford’s experience, Varoufakis explains basic economic terms such as arbitrage, deflation, inflation, exchange value, and experiential value via what went on in the closed market created by soldiers in the camp.
Soldiers received packages from the Red Cross periodically that included necessities such as soap, toothpaste, and food, as well as modest luxury items such as cigarettes, tea, coffee, and chocolate. Exchanges started between tea-loving British soldiers and coffee-loving French soldiers.
Soon the bartering became complex and cigarettes, because of their scale and durability, became the currency used to barter other items. Some soldiers hoarded them to decrease the amount in circulation and increase the value of the cigarettes as currency.
The chapter ends with an anecdote. When Varoufakis shared this story with his father, who was jailed in a political prisoners’ jail during the Greek civil war of 1946-1949, his father’s response was telling. He said they had no such market; they shared whatever packages each received and helped each other out.
This story highlights the difference between the market economy and the gift economy. It also emphasizes the importance of giving. While a market economy may maximize production and efficiency, a gift economy supports strong social ties, motivates involvement, and provides financial resilience.
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