[Originally published May 2016]
Although it is sometimes imagined that a world based on gift-giving rather than market exchange would be a world without scarcity or want, we are still left with the problem of manufacturing and producing complex goods that require markets to allocate resources.
Moreover, if we remember that the act of gift-giving requires both the giver and the recipient to agree to the exchange, we quickly find that the situation is more complex than we initially thought.
Both Donor and Receiver Must Agree
A gift is an unconditional transfer of an economic good from one person (the donor) to another person (the beneficiary). In the case of a service, the donor agrees to provide the service to the beneficiary, and the latter accepts to receive it as a gift.
If it is truly a gift in the real sense, the good is freely given and the decision to abandon the good comes with no strings attached. For the donor, it is not the fulfillment of an obligation, and it cannot be claimed as a right by the beneficiary. In particular, it is not a remuneration for some economic good provided by the beneficiary to the donor. To be sure, in practice, there are lots of cases of “false gifts” in which a transfer of property rights has some of the characteristics of a true gift, but not all of them.
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It is necessary that both sides agree to it. If both sides agree, then the beneficiary benefits, but the donor benefits too.
This seems to be a matter of course as far as the beneficiary is concerned. After all, he receives an economic good without any payment, which is why he is called the beneficiary. However, it is…