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A few years ago, the newspapers of New York City were ablaze with a controversy about dozens of plots of derelict land that had been slowly turned into urban oases. Should these beautiful community gardens that neighborhoods had created on trash-filled lots be allowed to stay in the public domain? Or should the mayor and city government, heeding the call of developers, try to generate new tax revenues on the reclaimed sites by selling them to private investors.

The community gardens emerged in a realm that the market had written off as worthless. Throughout the 1970s and 1980s, the New York City real estate market had abandoned hundreds of buildings and city lots as unprofitable. Investors stopped paying taxes on the sites, and the City became the legal owner of some 11,000 nontaxable vacant lots. Many became rubble-strewn magnets for trash, junked cars, drug dealing, and prostitution, with predictable effects on neighborhoods.

Distressed at this deterioration, a group of self-styled “green guerillas” began to assert control over the sites. “We cut fences open with wire cutters and took sledgehammers to sidewalks to plant trees,” said Tom Fox, an early activist. Soon, the City of New York began formally to allow residents to use the sites as community gardens, with the understanding that the property might eventually be sold.

In the Lower East Side and Harlem, Coney Island and Brooklyn, neighborhoods came together to clean up the discarded tires and trash, and plant dogwood trees and vegetable gardens. Over time, hundreds of cool, green oases in the asphalt cityscape emerged — places that helped local communities see themselves as communities. Families would gather in some gardens for baptisms, birthday parties, and weddings. Other gardens were sites of poetry readings and performances, mentoring programs and organic gardening classes.

Over 800 community gardens sprang up throughout the five boroughs, and with them, an economic and social revival of the neighborhoods.

“Ten years ago, this community had gone to ashes,” said community advocate Astin Jacobo. “But now there is a return to green. We’re emerging. We’re seeing things return to the way it should be!”

Perhaps most importantly, the gardens gave neighborhood residents a chance to govern a segment of their lives. A city bureaucracy was not needed to “administer” the sites; self-selected neighborhood groups shouldered the burden, and the sites became organic expressions and possessions of their communities.

By the 1990s, greenery and social vitality were boosting the rents of storefronts and apartments, which, ironically, alerted the city to the growing economic value of the sites. In 1997, Mayor Giuliani proposed auctioning 115 of the gardens to raise $3.5 to $10 million. For the mayor, the sites were vacant lots: underutilized sources of tax revenue that should be sold to private investors.

“These properties should go for some useful purpose, rather than lying fallow,” said a city official, in support of the mayor.

The mayor’s plan ignited an uproar, as hundreds of citizens demonstrated — some through civil disobedience — in numerous attempts to save the gardens. Determined to eke maximum revenue from the sites, the city rejected an offer by the Trust for Public Land to buy 112 garden lots for $2 million. Then, one day before a planned auction of the sites in May 1999, actress Bette Midler donated $1 million to help the TPL and other organizations consummate a purchase of the lots for $3 million.

The gift economy

How you interpret the story of New York City’s community gardens depends a great deal upon the narrative you choose. Under the narrative favored by Mayor Giuliani, the sale of the garden sites is a case of using the market to maximize wealth and exploit underutilized resources more efficiently: an open-and-shut case of neoclassical economics. But to a large segment of the city’s residents, the community gardens exemplify the power of the gift economy.

New York City’s community gardens are robust precisely because they are not governed by either the market or government. Unlike the market, which revolves around trade and money, or government, which is based on law and police powers, the gift economy is driven by people voluntarily coming together. Eventually that process can create a commons.

No one paid or forced thousands of New Yorkers — not a famously altruistic group — to clean up the abandoned lots and create lively, attractive urban gardens. They chose to do so. It was in their “self-interest,” but not in the rational, calculating sense meant by most market theorists.

While the community gardens have economic value, as Mayor Giuliani keenly recognized, that is not the primary meaning of the resource to its creators. Members of a gift economy prize particular individuals, places, and shared experiences; they value such nonmonetary benefits as the after-school gardening program for junior high school children that Janus Barton started at the Bushwick garden across the street from a brothel and crack house, and the greenhouse in a Harlem garden where unemployed women learned how to can tomatoes and dry flowers and herbs as part of a small business.

The power of a gift economy is difficult for the empiricists of our market culture to understand. We are accustomed to assigning value to things we can measure — corporate bottom lines, Nielsen ratings, cost-benefit analyses. We have trouble valuing intangibles that are not traded in the market and which therefore have no price. How is something of value created by giving away one’s time, commitment, and property? Traditional economic theory and property law cannot explain how a social matrix as intangible and seemingly ephemeral as gift economies can be so powerful.

Yet the effects are hard to deny. Gift economies are potent systems for eliciting and developing behaviors that the market cannot — sharing, collaboration, honor, trust, sociability, loyalty. In this capacity, gift economies are an important force in creating wealth, both the material kind prized by the market and the social and spiritual kind needed by any happy, integrated human being.

The vitality of gift exchange, writes Lewis Hyde, one of the most eloquent students of the subject, comes from the passage of a gift through one person to another and yet another. As a circle of gift exchange increases in size, an increase in value materializes.

As Hyde puts it: “Scarcity and abundance have as much to do with the form of exchange as with how much material wealth is at hand. Scarcity appears when wealth cannot flow. … Wealth ceases to move freely when all things are counted and priced. It may accumulate in great heaps, but fewer and fewer people can afford to enjoy it. … Under the assumptions of exchange trade, property is plagued by entropy, and wealth can become scarce even as it increases.”

When anthropologist Bronislaw Malinowski studied the Trobriand Islanders in the western Pacific, he was stunned to discover that ritual gifts such as shell necklaces made a steady progression around an archipelago of islands over the course of 10 years. People “owned” the cherished gift object for a year or two, but were socially obliged to pass it on. This is the same sentiment that apprentices feel after leaving their masters — an obligation to honor the gift that was freely given to them by passing it along to deserving successors. Several fairy tales — as well as a biblical parable — warn that a gift that is hoarded loses its generative powers, withers, and dies.

What’s remarkable about gift economies is that they can flourish in the most unlikely places — in rundown neighborhoods, on the Internet, in scientific communities, in blood donation systems, in drug and alcohol rehab groups.

The hacker economy

In the early days of computing, a great deal of software was developed through a gift economy in university settings. Hackers shared; that was the sacred ethic. As cerebral fanatics who followed their passions to create the most ingenious software, hackers took pleasure in creating cool things for one another’s delight.

The social and ethical norms of the hacker community at this early stage of the computer revolution were strikingly similar to those of the scientific method or Jeffersonian democracy. All procedures and outcomes were subject to the scrutiny of all. Openness allowed error to be more rapidly identified and corrected. Openness also built in accountability to the process of change and allowed innovation and improvement to be more readily embraced.

The commercialization of computing in the 1970s and 1980s introduced a very different dynamic to software development. As software programming moved from universities to the marketplace, a closed, proprietary process arose.

Yet lurking in the shadow of this mighty new industry, the free software movement has quietly persisted and grown, exemplifying the stubborn vitality of the gift economy. Empowered by the Internet, a global corps of computer aficionados arose to develop, improve, and freely share software. This process has generated hundreds of top-quality software programs, many of which have become critical operating components of the Internet.

What most distinguishes free software from off-the-shelf proprietary software is the openness of the source code, and thus the user’s freedom to use and distribute the software in whatever ways desired. Anyone with the expertise can “look under the hood” of the software and modify the engine, change the carburetor or install turbochargers. Inelegant designs can be changed, and bugs can be fixed. Sellers cannot coerce users into buying “bloatware” (overblown, inefficient packages with gratuitous features), Windows-compatible applications, or gratuitous upgrades made necessary by planned obsolescence. Free software also allows users to avoid constant upgrades in computer hardware.

This is where Richard Stallman, an MIT programming legend, entered the scene. Stallman realized that anyone could make minor changes in a free software program and then copyright it. Without some new legal vehicle, the benefits of free software could be privatized and withheld from the community of users. The commons would collapse.

Stallman’s brilliant innovation was the General Public License (GPL), sometimes known as “copyleft,” which is essentially a form of copyright protection achieved through contract law. “To copyleft a program,” writes Stallman, “first we copyright it; then we add distribution terms, which are a legal instrument that gives everyone the rights to use, modify, and redistribute the program’s code or any program derived from it, but only if the distribution terms are unchanged.” The GPL creates a commons in software development “to which anyone may add, but from which no one may subtract.”

“Users of GPL’d code know that future improvements and repairs will be accessible from the commons, and need not fear either the disappearance of their supplier or that someone will use a particularly attractive improvement or a desperately needed repair as leverage for ‘taking the program private’,” writes attorney Eben Moglen.

The GPL, in short, prevents enclosure of the free software commons and creates a legally protected space for it to flourish. Because no one can seize the surplus value created within the commons, programmers are willing to contribute their time and energy to improving it. The commons is protected and stays protected.

The crowning achievement of the GPL may be the success of the Linux operating system. The program was begun as a kernel by Finnish graduate student Linus Torvalds, and within months, a community of programmers began to improve and extend the Unix-based operating system, incorporating many programs written by Stallman and friends. Despite having no bureaucratic organization, corporate structure, or market incentives — only cheap and easy communication via the Internet — tens of thousands of computer programmers around the globe volunteered their time throughout the 1990s to develop a remarkably stable and robust operating system. The program, which is considered superior to Microsoft’s NT server system, now commands a phenomenal 27 percent of the server market. The GPL is the chief reason that Linux and dozens of other programs have been able to flourish without being privatized.

The gift economy of blood and science

One of the most vivid case studies comparing the performance of market and gift economies is Richard Titmuss’s examination of British and American blood banks in the 1960s. Drawing upon extensive empirical data, Titmuss concluded that commercial blood systems generally produce blood supplies of less safety, purity, and potency than volunteer systems; are more hazardous to the health of donors; and over the long run produce greater shortages of blood.

What can possibly account for these counter- intuitive deviations from market theory, which holds that the price system produces the most efficient outcomes and highest quality product? It turns out that the introduction of money into the blood transaction encourages doctors to skirt prescribed safety rules and tends to attract more drug addicts, alcoholics, prisoners, and derelicts than altruistic appeals do.

According to Titmuss, Britain’s National Blood Transfusion Service “has allowed and encouraged sentiments of altruism, reciprocity, and societal duty to express themselves; to be made explicit and identifiable in measurable patterns of behavior by all social groups and classes.” In this context, the gift economy regime is not simply “nice.” It is actually more efficient, cheaper, and safer.

It is not widely appreciated that much of the power and creativity of scientific inquiry stems from a gift economy. While researchers are of course dependent upon grants and other sources of money, historically their work has not been shaped by market pressures. The organizing principle of scientific research has been gift-giving relationships with other members of the scholarly community. A scientist’s achievements are measured by recognition in academic societies and journals, and the naming of discoveries. Papers submitted to scientific journals are considered “contributions.” There is a presumption that work will be openly shared and scrutinized, and that everyone will be free to build on a communal body of scientific work.

The gift economy is now under siege as never before. As Jennifer Washburn and Exal Press have shown in their Atlantic Monthly article on the “kept university,” corporate money is introducing new proprietary controls over the creation and dissemination of knowledge.

Why should anyone want to protect the gift economy of academic research when the market promises to be more efficient and rational?

The answer, says Warren O. Hagstrom, a sociologist of science, is that a gift economy is a superior system for maintaining a group’s commitment to
certain (extra-market) values. In science, it is considered indispensable that researchers be objective and open-minded in assessing evidence. They must be willing to publish their results and subject them to open scrutiny. They must respect the collective body of research upon which everyone depends — by crediting noteworthy predecessors, for example, and not “polluting” the common knowledge with phony or skewed research. The long-term integrity and creative power of scientific inquiry depends upon these shared values.

Market forces are ill-suited to sustaining these values, however, because monetary punishment and reward are a problematic tool for nurturing moral commitment. By contrast, a gift economy is particularly effective in cultivating deep and unswerving values.

The cornucopia of the commons

Gift exchange is a powerful force in creating and sustaining the commons. It offers a surprisingly effective means of preserving certain values from the imperialism of the market and the coercions of the state. It may be tempting to patronize the gift economy as archaic or “soft,” but the evidence is too strong to ignore: gift exchange is a powerful force for social reconstruction and a more civilized, competitive market.

It is a mistake, also, to regard the gift economy simply as a high-minded preserve for altruism. It is, rather, a different way of pursuing self-interest. In a gift economy, one’s “self-interest” has a much broader, more humanistic feel than the utilitarian rationalism of economic theory. Furthermore, the positive externalities of gift exchanges can feed on each other and expand.

This points to the folly of talking about “social capital,” as so many sociologists and political scientists do. Capital is something that is depleted as it is used. But a gift economy has an inherently expansionary dynamic, growing the more that it is used. While it needs material goods to function, the gift economy’s real wealth-generating capacity derives from a social commerce of the human spirit.