Selling Salvation IV: Philanthropism

In my last post on this topic (Selling Salvation III:  Property and Prostitution) I talked about the ethics of trade — the free market exchange — and suggested that buying and selling anything is inherently, at the deepest level, an act of disrespect.

druidzodiacWhy? In brief, when you buy or sell something, you’re saying, “You’re worth $X to me.”  This demeans it.  You’ve bleached out its essential uniqueness and inherent absolute worth, and given it a value on a dollar scale.  In unfettered capitalism, everything is placed on a dollar scale, everthing becomes a commodity, and everything — including sex, work, life, and salvation — is valued only in the marketplace.

But the other extreme — living without trade — presents problems for daily living, because the exchange of goods is the foundation of the modern economy.  While capitalism is far from perfect, it has some serious moral and practical advantages over other economic systems used in the past (all of which relied heavily on the use of overt physical violence).  What alternative is there?

Ownership from the Inside Out

Back to first principles!

As I said in the previous post, philosophies of property tend to agree that ownership is based on the following:

  1. We own our bodies, and our labor.
  2. We own things we have mixed our labor with — food we have personally grown, objects we have personally made with our own hands, etc.
  3. We own things people give us willingly.
  4. We own things we have acquired in a voluntary mutual exchange (i.e. a purchase or barter).

In fact, we could add a #5 and a #6 to this list:  We own things we’ve won by gambling, and things taken by force.  Historically, these have been popular ways to acquire property.  But most people today (including me) would say gambling is of dubious morality, and taking things by force is simply stealing.  Any property you get by betting or theft isn’t really yours.

Well, if we remove #5 and #6 as ways to get property, why can’t we simply remove #4 as well?  Let us say, for the sake of argument, that Trade, like Theft and Gambling, is an illegitimate way to get property.  In other words, the only way you can own something is if it’s your body, or your labor, or something you made, or something you were given.

It’s pretty easy to imagine life without theft or gambling.  (Although, would that include the stock market?)

But what would it be like to live without trade?

Sharing and Peace

Actually, living without trade isn’t that hard to imagine.  Just imagine that everyone in the world is part of your immediate family.

I’d be willing to bet that you don’t buy and sell things with your friends and family.  With people you know, you give things freely, and you accept gifts freely.  When they visit, you don’t sell them dinner or drinks — you offer them whatever you have.  Even in modern capitalist America, gift-giving is an essential glue of society.  Buying or selling something from a friend or family member would actually be rather rude in most circles I know of.  It would cheapen the relationship.

Most tribes around the world operated on something like this “gift economy” prior to the arrival of capitalism.  Within the tribes, some types of property were held in common, and other types were shared, passed around, or given as gifts, according to need, ability, and ritual.  Of course, money was frequently used, but generally only between tribes — i.e., when they were dealing with people outside the “family”.  With strangers, gift-giving wasn’t a natural thing to do.  After all, how could you trust them to honor the gift, to return your kindness, if you had no ongoing relationship with them?

Gift-giving is, in fact, an exposure of vulnerability.  You are giving up something you own to benefit someone else, and if you don’t demand something in return, you may be just weakening yourself to no purpose.  You are impoverishing yourself intentionally, solely to help someone you don’t know.  On the face of it, it’s a mad thing to do with a stranger.

Trade as Protection

And this, I think, is the basic reason why trade, and not philanthropy, is the basic underpinning of the modern social order.  Every day in the global economy we interact with people we don’t know, and trade money and goods with them. Trading with strangers seems a lot safer than just giving them something.  And you imagine other people will be similarly careful.  You wouldn’t expect a grocer just to give you his produce, and you wouldn’t work in someone’s office for free.

Without an established relationship to build up trust, trade seems to be the only option.  Otherwise, you’re just too vulnerable.

Vulnerability and Strength

But being vulnerable doesn’t necessarily mean you’re going to get hurt.

A little over a year ago, I decided to give everything on this site away in exchange for donations of any amount.  I had put a lot of effort and thought and sweat into developing the services (astrological and name analysis readings) and making the products (mostly downloadable meditations and fiction), and the thought of simply giving them away for whatever people wanted to pay…  Well, there was certainly some hesitation there.

But on the other hand, I had a well-paying job, so I wasn’t putting my family’s livlihood on the line.  I wasn’t really that vulnerable; I could afford to be generous, and take the risk.

Well, it paid off.  I continued to make money — and in fact, at first, I made a lot more money.  (I’ll explain why in a moment.)  Then my income pretty much dried up, but that’s mostly because Life intervened, and I had no time to post new blog entries, encourage traffic, or promote or create new products.

How did I start making more money when I went to a pay-what-you-want system?  Gather ’round, and I’ll lay it out for you…

  • For any product in a market economy, the price tag of the product has to fall between two extremes:  how much it costs to make the product and the value of the product to the customer.
  • If the value is below the cost, no one will buy it because it costs too much to make.
  • If the price tag falls below the cost to make the product, then the store selling the product loses money on every sale and goes out of business.
  • If the price tag goes above the value to the customer, then people will not be willing to pay for it, and the store selling it goes out of business.
  • If the store selling the product has a monopoly on it, or if various stores doing the selling are in collusion or have created a cartel, the price tag of the product will be up near the value, i.e. as much as people are willing to pay.  There is no competition to bring the price down.
  • If there is true market competition, the price tag of the product will be down near the cost, because the sellers will be competing to get the sales and continually undercutting each other.
  • But, if you let customers choose their own price, you have effectively removed price competition.  How can anyone undercut you if you haven’t set a price?
  • Since you’ve removed competition, it’s almost as though you have a monopoly.  Prices (set by customers themselves) will tend to be closer to the value than the cost.  If customers don’t know what your cost is, then, if they can, they will probably choose to pay a price close to the value, since most people try to be fair (in my experience, and psychological experiments confirm this).
  • Since a competitive sales environment drives prices down towards the cost, but people would probably choose to pay something closer to the value, in theory, on average, you should make more money on each sale if you let people choose their own prices.
  • At the same time, you never have to turn anyone away because they can’t pay.

There is one huge caveat here.  If you’re operating a philanthropist store in the middle of a capitalist system, then customers will have some idea of what your cost is — it’s close to what the capitalist stores are charging.  So that will tend to keep your donations lower than they might have been.    But this is ok — the point of a philanthropist store, after all, is not to get rich.  It’s to provide a service or product to as many people as possible at whatever price they can afford.  If you drive competitive capitalist stores out of business in the process, that’s just a pleasant side effect…

It may seem crazy to think of non-profits driving for-profit stores out of business, but it happens all the time.  In the middle ages, churches drove banks out of business by offering interest-free loans.  Firefox, the open source browser created by Mozilla (a non-profit), is slowly driving down Microsoft’s Internet Explorer, even though Explorer is given away free with every copy of Windows.  USAA, which started out as a non-profit automobile insurance company for military families, is gowing fast and now offering other insurance, banking, and financial services with excellent service and amazingly low prices.

Non-profit organizations are thiriving everywhere in the heart of capitalist America.  Almost all universities and colleges are non-profit, and many of the best ones are private, with no government subsidies at all.  Habitat for Humanity isn’t on the verge of taking over the housing business, but it’s growing and operating in places for-profit companies fear to go, like New Orleans.

Peace in the Greater Circle

What if the whole economy ran this way?  And I don’t just mean non-profits — I mean philanthropism, in which stores give away their products for whatever you can afford to pay.  In the next post on this topic, I’ll address that possibility, and speculate on what it might take for us all to get to that promised land.
pdsp-landscape

Comments

  1. Jeff — the current ATLANTIC MONTHLY has an article about the New Orleans housing boom (a boom in innovations as well as in more usually measured criteria). You may want to read it — I strongly recommend that you do so.

  2. Jeff Lilly says:

    Thanks for the recommendation! I definitely will.

  3. Hi Jeff,
    Thank you for answering questions I’ve pondered for a long time. This series of articles are perfect and found me with divine timing.
    I have been aware of your blog via Slade for some time now, but it was your comment regarding Steve P.’s divorce announcement that finally made me click over here. So glad I did! 🙂
    Back to the topic – I once had a yard sale and decided not to price anything, but when someone wanted an item, I would say, “make an offer”. I was very pleased with the results. Nice to consider applying this model in other ways.
    Also, the Science of Getting Rich (.net) site offers a course for which you set your own fee. Apparently that has been wildly successful for the site owner as well as the visitors.
    Here’s to this wonderful new trend taking over!
    Pleased to meet ya,
    Joy

  4. Jeff Lilly says:

    Thanks for the kind words, Joy. 🙂

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  1. […] A fascinating article about a woman who lives without money. Interesting particularly from the point of view of philanthropic economics. […]

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