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Reciprocity, Redistribution, and Market Exchange

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Many of us may only think of our familiar capitalist market in the West when we think of economies, but it is important to remember that, historically, a variety of economic systems have been in use by the world's people. Some of these systems are still in use today in some regions of the world. Here are three important economic systems to know about:

  • Reciprocity: the exchanging of goods of equal value.
  • Redistribution: the redirecting of a pile of goods to a populace through a central authority.
  • Market Exchange: commerce through a price on goods in a market.


Growing up, I was fond of the idea of a gift economy, or reciprocity. I still greatly admire it, though it is not the primary system I live in. A gift economy builds actual relationships with the people around you, builds face-to-face business as fairly equal agents, and gives you the sense that you have some bargaining power. Goods can be valued for their practical use within a community, instead of having a price set abstractly. It's hard to make a gift-economy work on a global scale because it's awkward to bow to somebody in China if you're in North America. If you're not in Brazil, you can't as easily see that your Brazilian friend is in want of a tea kettle whereby you could take one over to her in exchange for a flower vase. Twenty-first-century North Americans have forgotten how to swap tea kettles for vases, though a vast majority of pre-colonial Americans certainly practiced a gift economy for countless centuries. We may sometimes do it today, but we've forgotten it's still a kind of economy. CC0 Public Domain CC0 Public Domain


Redistribution, something of a step-up in the sharing ethos of reciprocity, can look like several things. First, many think of communism. It is true that the infamous state-mandated communisms of the twentieth century were founded on the ethos of sharing, but those systems greatly lacked in compassion and even basic social awareness of people's physical and emotional needs. It may be said that countries such as the USSR and communist China have used their economic system as a name-only cover for other agendas. A better, far more humane example of redistributionism is the democratic socialism of several North European countries, such as Sweden and the Netherlands. These countries, which are known for high taxes, are simultaneously well-known for their high standard of livability and humane political practices, achieved in part by a tax system that supports a social safety net. But perhaps they were able to achieve this way of life only by mixing redistributionism with... CC0 Public Domain CC0 Public Domain

Market Economy

...capitalism. Now, I am not here to necessarily attack or support pure capitalism. Life is complicated. Capitalism, like many things, brings a mixed bag of tremendous blessings, comforts, opportunities, and an abundance of resources alongside new problems, such as its impact on the environment or those born into economically disadvantaged families who may struggle to make ends meet without help from the human community.

In the modern world we usually give money for objects; a market economy. “Cold cash for a warm feeling we don't know we need,” I observed to my friend in conversation about this. It is true that in a market economy we often buy more than we strictly need, but wanting to have desirable things around is also very natural in its own way. Markets are very old and have been functioning successfully by providing what people both need and want. This appeals to our drive for survival and wellbeing.

Most people in the developed world don't have to worry about starvation because we are fortunate to live in a place where we can always have on our shelves more food than we need. Sometimes I fantasize about living from the fruit of a garden but that's a huge amount of work for so much uncertainly subject to the winds. But thanks to modern industry, I can have any book I want for relatively cheap, a dream my ancestors a thousand years ago couldn't've fathomed. In fact, so valuable were the hand-copied books of the middle ages that even bibles were chained to the shelves and altars of churches so the peasants who couldn't read it wouldn't steal it to sell, or unknowingly employ the precious parchment for the cleaning of one's posterior! If mass-production of books made available to the common person for a commoner's price has revolutionized literacy, I can't argue with the proven possibilities of industry for improving quality of life and accessibility to resources. CC0 Public Domain CC0 Public Domain

And There's Always Social Currency

It is helpful to keep in mind alternative types of economies. For the larger part of history, people lived without the kind of money we have today. But we have always had currency, that which flows, to measure the exchange of energy. It may have been the exchange of labor in a village. A mother's tremendous work at raising a child would then be honored for its enormous value: she wouldn't be asked to "work" outside of childcare, because raising a kid is already a ton of valuable work. It's the ultimate contribution to society, cultivating a human. She may not have had "money" in our modern idea of it, but she had status, and therefore power, because she brought life into the world.

Today, there are still a lot of other things that can give a person power, a kind of social currency, even in the market economy. Physical appearance, attractiveness, gender, style of dress, and ethnicity would be among the top considerations. But these are negligible next to money. Who you know can give you power: social relationships are frequently a foot in the door to power. Where you live can give you power: some locations have more resources than others. These social powers are as old as time. CC0 Public Domain CC0 Public Domain


Mallios, Seth. "Gift Exchange in Early Virginia Indian Society." Gift Exchange in Early Virginia Indian Society. May 30, 2014. Accessed August 10, 2016.

Tschen-Emmons, James B., Ph.D. Artifacts From Medieval Europe. Santa Barbara, CA: ABC-CLIO, 2015.

O'Neil, Dennis. "Economic Systems: Distribution and Exchange." Economic Systems: Distribution and Exchange. December 20, 2008. Accessed August 10, 2016.

"The Secret of Their Success." The Economist. February 2013. Accessed August 10, 2016.

© 2016 Amber MV


pret1102 on July 24, 2018:

" It's hard to make a gift-economy work on a global-scale because it's awkward to bow to somebody in China if you're in North America. If you're not in Brazil, you can't as easily see that your Brazilian friend is in want of a tea kettle whereby you could take one over to her in exchange for a flower vase. "

I think you miss the boat here. Gift Economy is easily possible on Global scale but when people of whole world want that. Then when your friend is in need of a tea kettle in Brazil, someone next living within 500 meters will give her that. You need not to worry being in North America. In actual Gift Economy, we will focus more locally till possible as that saves lots of energy and resources. Today, America buys all clothes from Bangladesh and India or from other countries, but it Gift Economy, thing which is possible to produce locally will be produce locally, keeping this in practice, clothes will be produced in America. So you do not need to ask Indian friend to send you clothes. In this whole world some metals are available in some part of the world only, and in that case it will be checked what is possible? Bringing that metal as raw material from that country and produce useful stuff locally here or produce useful stuff from that metal in that country and bring finished good here. Everything will work more logically, more practically, unlike in present economy, just sake of economic reason we buy things from far country ignoring so many other factors.

FlourishAnyway from USA on August 28, 2016:

This is a well-written hub that reviews the systems without getting political or preachy. Great job. It would be nice if we had more of a gift economy on a local level. Unfortunately, there always seem to be care givers and care receivers.