It’s the Chinese New Year, and the financial press has been full of stories of massive Chinese purchases of gold (for instance here and here), as gold (molded into rabbits to signify that it was given in the year of the rabbit) has emerged as this year’s gift of choice. Chinese buyers are purchasing gold in quantities the market has never seen before not as an investment in the traditional economic sense, but for purposes of satisfying their obligations in the gift economy.
The gift economy is something that economists don’t talk much about. It is for the most part treated as an evolutionary precursor to the market economy. The simple story most economic historians tell is a tale of progression from status to contract–from old fashioned relationships built on gifts to modern markets made up of arms-length transactions among strangers. Where the reality of the significance of gifts to modern markets just can’t be avoided, as here (because the price of gold is skyrocketing), the gift economy is usually treated as a cultural oddity, just a little aberration to the general rules of economic action. But anthropologists have amassed generations of data on how gift economies and market economies interact in many societies around the world–how economic tokens like money can become the stuff of gifts, and how gifts (from whales’ teeth in Fiji to sexual relations in New York) can become marketable commodities. It turns out that gift economies are extremely complex and variable phenomena that require as much data and as much theory to understand as market economies. (It would be impossible to even begin to summarize that literature here, but it begins with Marcel Mauss’ classic, The Gift, written a century ago, and after that just about every serious anthropologist has wrestled with the subject in every part of the world. For a great literature review, see Hiro Miyazaki’s chapter in The Oxford Handbook of Material Culture Studies, Oxford University Press, 2010).
Now that the Chinese economy is number two though, it is probably time for the world to start paying attention to what economic anthropologists know about gift-giving: any serious China expert knows that markets don’t work in China without gifts, and that it is through gifts (as well as markets) that every kind of relationship that is significant to markets, from a company’s relations with regulators, to relations among investors to obligations between employers and employees gets built and maintained. Moreover, as the legal scholar and former dean of Peking University Law School Zhu Suli is currently finding, in research to be presented as the 2011 Clarke Lecture at the Cornell Law School, much of the astounding profits of Chinese enterprises are now being funneled into fulfilling stakeholders’ gift obligations–such as the massive resources a young man’s family must hand over to the family of their son’s prospective spouse in exchange for the “gift” of a wife. And it turns out that there is astronomical inflation in the price of brides these days in China, as people become richer, and the supply of daughters becomes ever more limited as a result of the one child policy and families’ preference for sons. You simply can’t understand the logic of Chinese markets, or for that matter of Chinese actors’ investment strategies and economic activities globally, without understanding the theory and practice of gift-giving.