Generosity is one of the cornerstones of society. Lending a hand to your neighbor to complete a chore, helping a coworker or fellow student finish an assignment, or even giving money to a panhandler on the street are all ways that we feel we better the world around us. In the conversation of capitalism, however, generosity is very rarely discussed. When one thinks about a capitalist, it is often a money-grubbing, hoarding, ruthless businessman whose sole goal is to accumulate more personal wealth.
While this is true in many instances, Gilder argues in Chapter Three (“The Returns of Giving”) of his book Wealth and Poverty that generosity is a core tenet of capitalism. He states that giving, risking, and creating are the characteristic roles of the capitalist (Gilder, 27). However, when most of us think about generosity, we think of gifts given without expectation of repayment or return. It would be very awkward if every birthday, Christmas, anniversary, or congratulatory gift was carefully tracked and repayment was ensured by the giver. However, this is exactly how Gilder views the world in his writings. Going all the way back to early society, when tribes were forming with like minded individuals, Gilder argues that intertribal gifts were not merely to strengthen the social bond between tribes, but rather to place an implied burden of reciprocity on the receiver (Gilder, 28). Not only is the burden of reciprocity created, but Gilder discusses the need for the receiver to give a gift in return that is even grander than the original (Gilder, 28). In this way, gifts given are not solely to be generous or kind, but more so to create a return in your favor.
Gilder goes on to explain the tradition of the Siauai, who lived in the Solomon Islands. Men would endeavor to become a “mumi”, or the “big man” by exceeding the offerings given to them (Gilder, 29). This would create a delicate cycle, which Gilder describes in this passage:
“A young man proves himself capable of becoming a mumi by working harder than everyone else and by carefully restricting his own consumption of meat and coconuts. Eventually, he impresses his wife, children, and near relations with the seriousness of his intentions, and they vow to help him prepare for his first feast. If the feast is a success, his circle of supporters widens and he sets to work readying an even greater display of generosity. He aims next at the construction of a men’s clubhouse in which his male followers can lounge about and in which guests can be entertained and fed. Another feast is held at the consecration of the clubhouse, and if this is also a success his circle of supporters - people willing to work for the feast to come - grows still larger and he will begin to be spoken of as a mumi. Even though larger and larger feasts mean that the mui’s demands on his supporters become more irksome, the overall volume of production goes up (Gilder, 30).”
Though this tradition was practiced long ago, it is still found in some forms today. Just think about a young entrepreneur looking for investors. Oftentimes the entrepreneur will already be working a full or part-time job, and will have bills and responsibilities beyond their entrepreneurial endeavors. In the beginning stages of their efforts, this entrepreneur will work on their own time, and make sacrifices of their own interests, needs, and wants in order to set aside resources for their new business. When they have shown their progress and efforts to early investors, oftentimes friends and family members that will support them through their growth, they are rewarded through investments and other business advantages such as connections, word of mouth, and advice. In the same way, an aspiring mumi would have the support from their family, who would help to collect coconuts and fish for a feast. In a modern day “feast”, the entrepreneur will take the data, practices, and products that they have produced so far to even more serious investors, who can add to the (now much larger) investment that the entrepreneur and his circle of supporters thrives off of.
The main difference between the mumi’s of old and the entrepreneurs of today is that they often do not offer physical, instantaneous rewards to their followers or supporters. Rather than a feast, supporters are given dividends or returns of profits that follow their initial investment. The same principle is at work, however, that the small community grows rapidly, and the amount of resources is provided equally from across the community, rather than one person. Gilder sums this idea up by saying:
”Feasting and potlatching illustrate a capitalist tendency to assemble and distribute wealth (Gilder, 30).”
This idea of generosity in capitalism is even further explored by the analogy of an expensive Christmas gift. If someone gave you a gift that was worth hundreds, or even thousands of dollars, but you had no use for, then it is a near total waste of money. Careful gift-giving requires not only the means to purchase or produce a gift of personal value, but also of knowing the receiver well enough to choose a gift that they will value (Gilder, 32). In the same way, entrepreneurs must know the markets that they operate in well. Many individuals have enough money to pour into startups or projects, but without understanding what consumers want, there is little to no chance of success for them (Gilder, 32).
When I began reading the chapter, I was skeptical that generosity and the spirit of giving were at the center of capitalism. As Gilder continued his writing, I found myself agreeing with him in some aspects. Yes, oftentimes capitalistic systems are built around the idea of giving to others, rather than receiving at all times. However, this is not necessarily giving through generosity, but rather an unspoken agreement that you will be paid back more than you have invested. I think to look at gift-giving and acts of service as a monetary or social investment that should be paid back is an all-around sad state of mind, but the evidence Gilder provides is solid. There are many times throughout history, and many current instances as well (just think of billionaires starting charities or donating millions for tax breaks and to increase their social standing) that point towards this argument.
All in all, giving does have its place in capitalism, but it is a far cry from generosity. It is some of the most self-interested giving that can be done, but it has proven successful in many instances.
Gilder, G. F. (2012). Chapter Three: The Returns of Giving. In Wealth and poverty (pp. 27–49). essay, Regnery Publishing, Inc.
