No Zuckerberg, Social Media Can’t Help us Reach a Gift Economy

No Zuckerberg, Social Media Can’t Help us Reach a Gift Economy

One of the more interesting passages in David Kirkpatrick’s The Facebook Effect is the first little bit of Chapter 15.  It seems Kirkpatrick queried Zuckerberg about what the ultimate effect of facebook might be and Zuckerberg’s answer was fascinating.  I’m going to present the section and then analyze it from philosophical, sociological and economic perspectives.

He responded [to the question of what Facebook might become] by talking about the potlatch.  That’s a traditional celebration and feast of native peoples on the northwest coast of North America.  Each celebrant contributes what food and goods they can, and anyone takes what they want.  The highest  status goes to those who give the most away…

The thing that binds those communities together and makes the potlatch work is the fact that the community is small enough that people can see each other’s contributions.  But once one of those societies gets past a certain point in size the system breaks down.  People can no longer see everything that’s going on, and you get freeloaders…

Zuckerberg says Facebook and other forces on the Internet now create sufficient transparency for gift economies to operate at a large scale.

This statement stood out to me on two fronts.  First, there is a more fundamental consideration about whether gift economies are a “good” thing or not.  Regular readers would expect me to take issue with the second point because of my objectivist leanings.  After all, the quote that adorned my review of Ayn Rand’s Fountainhead is, “Independence is the only gauge of human virtue and value. What a man is and makes of himself; not what he has or hasn’t done for others. There is no substitute for personal dignity.”  I don’t have a problem with the concept of a gift economy though, and let me explain why.  A true objectivist wouldn’t care too much that she gained a great deal of recognition for providing the most gifts back to the community, but her love for her work would guide her to give a large amount (probably much more then was necessary to gain prestige).  As long as the rest of the community felt compelled to give her whatever was necessary to survive and create, an objectivist could feel at home in a gift economy.

Philosophy aside, the main problem two problems I have with Zuckerberg’s theory are sociological and economic respectively.

  1. First, while the Social Web certainly increases visibility/accountability a person can have over their social sphere, it simultaneously increases the size of the social sphere.  After Facebook and Twitter and whatever else have finished maturing, I think the people at the edge of our social sphere will be at least as remote as they are now.  The edge of our social sphere will just be further away (in a logical sense, not a physical sense).
  2. The only attribute Zuckerberg contributes to the success or failure of a gift economy is size of population.  This is of course a shallow evaluation.  The types of products being traded matters significantly as well.  I imagine that both the variety of products and the required specialization of labor today would defeat a gift economy.

    The variety of products would mean that you couldn’t just go to the potlatch (or virtual potlatch in this case) and say “I need a jacket, all the jackets are bear skin, I’ll just pick one up.”  You would go to the potlatch saying, “I want that red Polo jacket.”  Undoubtedly someone else would want the same jacket and you’d get in an argument over who should get it.  Then you’d start measuring who deserved the jacket based on what they gave and… oh wait, that’s why we have money.The specialization required to make today’s products requires two things.  First, there must be people who work for other people.  Try to think of a way to make that happen without money.

    Second, there is a need for capital.  Think about Facebook itself, they have raised close to half a billion dollars of funding.  That would mean that for their first few years of existence Mark Zuckerberg would have had to show up at the virtual potlatch and take away hundreds of millions of dollars worth of servers and such to build his company before he could actually give at the potlatch.  If everyone wants to start a company, how do we decide who we let take more at the potlatch then they give?  That’s the kind of thing money comes in handy for.

I’m not saying that Facebook and social media won’t make the economy better.  I have, in fact, emphatically argued just the opposite on this blog.  I am saying we need to set a better goal then a gift economy.