Distribution and Exchange


When goods and services are given away, purchased, sold, or traded, there are potentially two components of the exchange--pure economic gain and social gain.  Both of these motives usually occur at the same time in non-market economies.  However, in market economies, the social component is often missing except when the exchange is between relatives or friends.  With strangers, the social gain is usually sacrificed for efficiency and speed.

Important exchange items in non-market economies include many more things than just food and manufactured objects.  The most valued gifts are likely to be courtesies, entertainment (e.g., songs, dances, and speeches), curing, military assistance, women (to be wives), and children.  In the Western World today, the idea that women and children could be given away as gifts is shocking.  However, that was not always the case in Europe.  Well into the 19th century, the heads of royal and wealthy families gave their daughters and sometimes sisters in marriage in order to establish or solidify economic and political alliances.  Men giving female relatives to potential male allies has been a powerful bonding tool throughout most of the world.

Gift exchanges are usually reciprocal click this icon to hear the preceding term pronounced.  That is to say, if you receive a gift, you are obliged to repay it with another gift.  Reciprocity click this icon to hear the preceding term pronounced typically results in a continuing sequence of giving, receiving, and repaying gifts.  Breaking this obligation to continue the reciprocity is commonly seen as a slight or even a rejection of the other person involved in the exchange.  Reciprocity is a binding mechanism in that its continuance helps to hold friends and families together.  Reciprocal exchanges generally do not redistribute a society's wealth in a way that causes some people to become richer than others.  Rather, they usually result in a circulation of goods and services.  There is not a net economic loss for individuals because they ultimately receive gifts in return.

Reciprocity requires adequacy of response but not necessarily mathematical equality.  In North America, for instance, when adults give a Christmas gift that cost $50 to a five year old child, they do not expect that the child will reciprocate with a gift that also cost $50.  If the child reciprocates with a small painting he or she made in school, it is usually considered to be a more than adequate response.


Types of Reciprocity

  photo of a North American birthday party--two women are giving their girlfriend a cake with candles and wrapped presents

  Example of generalized reciprocity
  giving birthday gifts to a friend
  (North America
)

Reciprocal exchanges are not all alike.  In 1965, an anthropologist named Marshall Sahlins observed that there are three distinct types of reciprocity that occur in human societies around the world--generalized, balanced, and negative.  Generalized reciprocity is gift giving without the expectation of an immediate return.  For example, if you are shopping with a friend and you buy him a cup of coffee, you may expect him to buy you one in return at some time in the future.  However, you would likely be mildly offended if he insisted on buying you a cup of coffee at the same time that you bought him one.  To do so would suggest that he does not wish to become involved in a continuing reciprocal exchange with you.  In a sense, it is a rejection of your token of friendship.

photo of indigenous farm women sitting on the ground selling their surplus crops in a rural town market in Papua New Guinea  

Example of balanced reciprocity
selling surplus vegetables in a
local market for money (Papua
New Guinea)

With balanced reciprocity, there is an explicit expectation of immediate return.  Simple barter or supermarket purchases involve this understanding.  If you walk out of a store without paying for the goods that you have taken, you very likely will be stopped by the store employees and possibly arrested because you failed to immediately reciprocate with the appropriate amount of money.  Christmas gifts in the Western World are also usually a form of roughly balanced reciprocity.  If you go to the home of relatives or close friends on Christmas and give them Christmas gifts, there is an expectation that you will receive gifts in return at the same time.  If you do not receive them, you are likely to infer that your relatives or friends either made a social mistake or do not care about you.  On the other hand, giving a birthday present is more like generalized reciprocity because you do not expect a gift in return when you give one.  However, you may expect to get one from the recipient of your gift later in the year when your birthday comes along.

  photo of a city street vendor selling his food at an exorbitant price

 Example of negative reciprocity
 selling prepared food in an urban
 center at an inflated price when
 there is very little competition
 and high demand (North America)

Negative reciprocity occurs when there is an attempt to get someone to exchange something he or she may not want to give up or when there is an attempt to get a more valued thing than you give in return.  This may involve trickery, coercion, or hard bargaining.  For instance, your neighbor may be offered a new job in a distant city starting in two days.  She desperately needs to sell her car before she leaves.  It is nearly new and it cost her $22,000.  You offer her $10,000 which she reluctantly accepts because there is no other choice.  Your taking advantage of her situation resulted in negative reciprocity.

photo of a well dressed young businesswoman talking with her superior  

 Example of negative reciprocity 
 being respectful towards a boss
 in order to get a promotion 
 (North America)

At times, negative reciprocity does not involve taking advantage of someone.  In fact, someone may willingly give you more than you believe that you are giving in return.  For example, a poor student wanting to go to an expensive university might be polite and respectful toward a rich uncle with the hope that he will help out financially.  That uncle may gladly pay for his nephew's or niece's education in return because of the attention and recognition that he receives.  The money is relatively unimportant to him compared to the respect and attention that is offered.  Likewise, an employee acting respectful, or even subservient, towards an employer in order to get a promotion could be considered an attempt at gaining a negative reciprocity advantage in the workplace.


Redistributive Exchanges

Some economic exchanges are intended to distribute a society's wealth in a different way than exists at present.  These are referred to as redistributive exchanges click this icon to hear the preceding term pronounced.  They usually function as economic leveling mechanisms.  In the Western World, charity and progressive income tax systems are examples of redistributive exchanges.  Progressive income taxes are intended to make people with greater wealth give at higher rates than those at the bottom of the economic ladder.  Some of the tax money is then allocated to help the poorer members of society.  The intended net effect is to reduce or prevent extremes of wealth and poverty.  When wealthier individuals in a society make charitable donations, it can have a similar effect.  What the donors get in return may be a tax advantage, a relieved social conscience, and/or increased social status and recognition.  Indeed, one of the main reasons that some very wealthy individuals make sure that their large charity donations are publicized is because of the public recognition that results.

  map Showing the Northwest Coast Indian areas with the Kwakiutl highlighted
 
early 20th century photo of two Kwakiutl men in front of their wooden house and a totem pole

Redistributive exchanges are not unique to the Western World.  In fact, some of the most elaborate ones that we know of have been in small-scale societies with non-market economies.  The potlatch click this icon to hear the preceding term pronounced among the Indian cultures of the Northwest Coast region of North America is a good example.  This was a complex system of competitive feasting, speechmaking, and gift giving intended in part to enhance the status of the giver.  While potlatches were important traditions of Indian communities from Oregon to Southern Alaska, they are most well known among the Kwakiutl click this icon to hear the preceding term pronounced people of northern Vancouver Island and Queen Charlotte Strait in Western Canada.  For the Kwakiutl, potlatches were important social gatherings held to celebrate major life events such as a son's marriage, the birth of a child, a daughter's first menses, and the initiation of a sister's son into a secret society.  They also were used to assert or transfer ownership of economic and ceremonial privileges.  It sometimes took years to accumulate the things needed for a big potlatch.  Loans (with interest) had to be called in from relatives for this purpose.  When all was ready, high ranking, influential people from the local and other communities were invited for several days of feasting and entertaining.  Guests were seated according to their relative status.  The host made speeches and dramatically gave gifts of food, Hudson Bay Company blankets, canoes, slaves, rare native copper artifacts, and other valuable items to the guests.  The guests with higher status received more.  The host sometimes also destroyed money, wasted fish oil by throwing it on a fire, and did other things to show that he was willing to economically bankrupt himself in order to increase his social status.  The acceptance of the gifts was an affirmation of the host's generosity and subsequently of his increased status.  The feast and the gifts essentially placed the guests in debt to their host until they could at some future time invite him to their own potlatch and give him more than he gave them--in essence a return on an investment.  The potlatch served as a tool for one-upmanship for important Kwakiutl men.

During the 19th century, there was a continuous cycle of potlatches among the Kwakiutl in which the amount of wealth given away progressively escalated.  The Canadian government outlawed potlatches in 1884 partly out of the mistaken belief that the Kwakiutl were bankrupting themselves.  In fact, very little wealth was being lost.  What was happening was a redistribution of perishable goods and items of high value throughout the society.  Men who voluntarily gave away their wealth in potlatches were later the recipients of many potlatch gifts.  The Canadian government finally lifted their ban on potlatches in 1951.  Potlatches are again occurring openly among the Kwakiutl and some other indigenous peoples of the Northwest Coast.  Today, they are used to commemorate important family and clan events such as baby showers, weddings, school graduations, special anniversaries, and in memory of dead relatives.


NOTE:  While the 19th century Kwakiutl potlatch feasts were greatly focused on impressing other men of high status in order to move up in social ranking, this competitive aspect of gift giving was less important for other Northwest Coast societies.  Among the Salish click this icon to hear the preceding term pronounced people of Washington and Oregon, this sort of competition was considered to be inappropriate.  Among the Tlingit click this icon to hear the preceding term pronounced of southern Alaska, gifts given at mortuary potlatches were simply intended as compensation for assisting at the funeral.


Among many of the indigenous societies of New Guinea, elaborate redistributive exchanges similar to the potlatch have been very important cultural traditions.  In order to increase personal status and become a respected "big man," senior men often spent years accumulating pigs and other valuable, exotic items such as cassowaries click this icon to hear the preceding term pronounced (large birds similar to emus and ostriches) in order to give them away at elaborate ritual feasts.  As in the case of the potlatch, recipients of pigs and other valuable things were obliged to return gifts of greater value at some time in the future.  Failure to do so would be unthinkable because of the loss of respect and status that would result.  Perhaps the most well known of the New Guinea pig give-away traditions was among the Kawelka of the Central Highlands.  As a result of trade with the outside world, the Kawelka pig give-away events had grown in scale by the 1970's to include motorbikes, trucks, and tens of thousands of Australian dollars.  At times, the total value of the goods given away reached hundreds of thousands of dollars.  This was an extraordinarily large fortune for essentially subsistence base horticultural societies.  It is important to keep in mind that most of this wealth actually circulated within the society.  As a result, there was very little net loss.  However, a small number of the pigs were eaten and the cassowaries were usually killed for their feathers.

map of the Southwest Pacific Ocean with New Guinea highlighted   Photo of a group of Papua New Guinea men with brightly painted bodies arranging their head ornaments in preparation for a ceremony  

Papua New
Guinea men
preparing
themselves
for a ceremony


Commerce Between Small-scale Societies

So far, we have primarily examined the nature of economic exchanges within a single society.  As the scale of societies gets larger, they increasingly become involved in commercial exchanges with other societies.

During the last two centuries, international commerce resulted in an enormous redistribution of wealth to the industrialized nations located mostly in the northern hemisphere.  This process essentially began with Western European nations draining the surpluses from their colonies in Asia, Africa, and the Americas.  The colonies provided raw materials at low prices for European factories, and the colonists bought the products of those factories at elevated prices.  The net effect of this institutionalized negative reciprocity has been that the majority of the former European colonies are still underdeveloped poor nations.

As the old colonial empires collapsed over the last half century, multinational corporations and large banks continued the process of draining the surpluses from underdeveloped regions and funneling them mainly into Western Europe, North America, Korea, Japan, Taiwan, Hong Kong, Singapore, and a few oil rich nations (especially around the Persian Gulf).  China and India are in the process of joining this club of major international creditors.  It is not likely that this progressive redistribution of global wealth to a few rich nations can go on forever without serious consequences for the global economy.  Trade imbalances can cripple economies in debtor nations when their debts become larger than they can repay.  It is sobering to realize that the largest national debt in the world is owed by the United States.  In fact, the U.S. has had a massive trade shortfall every year for nearly 30 years.  It is unlikely that the U.S. or any other nation can continue to be a net importer of goods for long without major negative impacts on its economy.  The U.S. still has the largest economy in the world.  Consequently, an economic crisis in the U.S. can cause extremely serious problems globally--there can be a domino effect which would devastate international trade.

Commerce among small-scale societies in the past usually involved more institutionalized balanced reciprocity than is found in the international trade system today.  In addition, commerce generally involved considerably more social gain.  An example of such inter-societal commerce among small-scale societies was the Kula Ring click this icon to hear the preceding term pronounced of the Southwest Pacific Ocean.  This was an extensive network of inter-island trade to the east and northeast of New Guinea.  The Kula Ring was studied firsthand among the Trobriand click this icon to hear the preceding term pronounced Islanders during World War I by an anthropologist named Bronislaw Malinowski.  At that time, it still operated largely in its purely indigenous form.

The Kula Ring was a closed trading system in which only established senior male trading partners from each island could participate.  The trade was carried out with large outrigger sailing canoes.  Long, dangerous sea voyages were undertaken for the purpose of this trade.  On the surface, it appeared to be primarily an exchange of gift items and ceremonial feasting organized to reinforce bonds between senior trading partners.  The trade network was essentially circular.  If a trader was traveling in a clockwise direction around the circuit, he would give long necklaces of red shells (soulava) as gifts to his trading partner.  If he was traveling in a counterclockwise direction, he would give armbands of white shells (mwali).  These necklaces and armbands were the kula items.

map showing New Guinea and the islands to the east with the Trobriand Islands marked and the direction shown for the distribution of the two kinds of Kula Ring gifts  

photo of 12 Trobriand Island men on a small trading canoe

     Kaibola men of the Trobriand Islands

The way in which traders greeted each other on arriving at an island and carried out their trade was prescribed by tradition.  While the senior trading partners formally greeted each other and reinforced their friendship and authority by giving kula gifts, the younger men usually unloaded more practical trade items on the beach to be bartered.  These were mostly surplus luxury items from their home islands.  The kula gifts were exchanged with the assumption of generalized reciprocity.  The regular trade goods were mostly traded in a manner that resulted in balanced reciprocity.  If asked why they were undertaking these long distance trading expeditions, the Trobriand Islanders would very likely emphasize the social rather than the economic gain.  However, both were the result.

 

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This page was last updated on Saturday, December 20, 2008.
Copyright 2003-2008 by Dennis O'Neil. All rights reserved.
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