In his book Talking to my daughter about the economy, Yannis Varoufakis (2017), the former finance minister of Greece, provides an interesting story where he quotes Richard Radford, the British economist, who spent time in the prisoners of war camp as a captured British soldier during the Second World War. Using Radford’s experience Varoufakis explains to her young daughter the basic economic terms such as arbitrage, deflation, inflation, exchange value, and experiential value via what went on in the closed market created by the soldiers in the camp. Soldiers received packages from Red Cross periodically that included a few necessities – soap, toothpaste, food, etc. – as well as a few modest luxury items such as cigarettes, tea, coffee, and chocolate. The exchanges started between the tea-loving British soldiers and coffee-loving French soldiers. But soon the bartering became complex and cigarettes (because of their scale and durability) became the currency to barter other items. Some soldiers hoarded them to decrease the amount that is in circulation, and thus increase the value of the cigarettes as currency. A stressful night with bombing nearby, where many smoked a lot of cigarettes, created deflation. The news that war may end soon created inflation; and so on. The chapter ends with this anecdote: When Yannis shared this story with his father who was also jailed in political prisoners-jail during the Greek civil war of 1946-1949, his father’s response was telling. He said: “No we didn’t have any such market. We shared whatever packages each of us received. … That’s how it was. We helped each other out.”
This story highlights the difference between the market economy and the gift economy. It also emphasizes the importance of giving. While a market economy may maximize production and efficiency, a gift economy supports strong social ties, motivates involvement, and provides financial resilience.