The Double Thank You of Gifts and the Market

December 24, 2018

As the Advent Season draws to a close and climaxes in the Christmas festivities on December 25th, it is useful to reflect on that central holiday tradition of the mutual exchange of gifts. In gift giving, each individual takes into consideration the other person to whom they are giving gifts, and in focusing on the other, they often find that reciprocally they will be focused on as well. This act of giving gifts perfectly blends selflessness with self-interest, which Aristotle considered to be the virtue of Justice, by seeking to receive love from others through freely giving one’s love to them. A functioning and prosperous economy in many ways resembles the act of gift giving, in seeking to match the desires of consumers with the work of producers.

When one purchases gifts for Christmas or Birthdays or any occasion, one first takes into account what they know about the receiver and attempts to satisfy those wants. A good producer similarly must take into account what they know about their customer and seek to satisfy their wants through their product. Where the purchase of an item differs from gift giving is in the existence of currency, a medium of exchange that makes a transaction easier to process. The need for a medium of exchange results from the type of relationship between producer and consumer. The producer only needs to fulfill a singular want across all their consumers, each consumer would need to fulfill a different want (from each other) in order to satisfy all the wants of the producer. The improbability of this occurring is referred to by economists as a “coincidence of wants,” and necessitates the existence of money for transactions to occur.

Nonetheless, each consumer still acts knowing that they need enough money to purchase an item from the producer, and as a result must still concern themselves with satisfying a more generic want. This means that despite the existence of a medium of exchange, the balancing of self-interest with selflessness must occur in a market transaction. Producers must freely give their labor in the anticipation that they can fulfill the wants of their customers to such a degree that the customer desires to fulfill their want for money.

Successful producers take satisfaction in their customer’s satisfaction in the same way that one takes pleasure in someone enjoying the gift they’ve received. And just as the receiver’s love for the person increases when they get a good gift, so does the consumer’s loyalty to the brand increase when they get a good product or service. When the mutual exchange of gifts occurs, both parties thank the other for giving them something, just as both producers and consumers thank each other in a transaction. This “double thank you” of the market binds everyone together in service to each other.

Now there are many who criticize the so-called “consumerism” that dominates the Holiday season, as people simply spend money out of obligation to give gifts rather than genuine love. But when one gives gifts without thinking about the other person, one does not fully receive their gratitude in return, and relationships can be strained. Each party, in an exchange of obligation rather than an exchange of free giving, is stressed and unhappy with the gifts they’ve both given and received. The strain this causes in personal relationships also causes strains between producers and consumers.

A business that does not sincerely concern itself with its customers will not earn their loyalty, and will not last very long. But in some cases, these sorts of businesses do survive, and also dominate our experience of transactions. Either as public utilities, government protected monopolies, or industries in highly regulated environments where competition is minimal, there are many businesses that continue to exist—seeing service to customers as simply something they have to do rather than something they want to do. These arrangements don’t resemble the free exchange that gives us the “double thank you” of the market.

Producers who genuinely seek their customer’s best interests are rewarded with love and success, just as gift-givers are when their gifts come from love. As Italian owner of his eponymous clothing label said: “Profit is the gift when creation is perfect.”

Ryan Khurana is a Catalyst Policy Fellow, Executive Director of the Institute for Advancing Prosperity, and a tech policy fellow at Young Voices.
Catalyst articles by Ryan Khurana