INTRODUCTION

Society is based on the division of labor. Each man produces some good or service in excess of his own needs. Each man seeks to exchange or sell that surplus. Each man acts in order to be paid.

PART ONE

THE NATURE OF GRATUITOUS GOODS

1

GRATUITOUS GOODS

It is appropriate to begin with a formal definition of our subject. So far, we have loosely referred to “gratuitous goods” as gifts and similar goods that are received without payment. This corresponds to the meaning of the adjective gratuitous that we find in standard dictionaries. A gratuitous good is not compensation. It is not received in exchange for something that the beneficiary is or has done. It is not a payment, a prize, a reward, or a tribute. It comes without any apparent good reason. It comes for free. It is gratis.

2

THE NATURE OF DONATIONS

Donations are the best-known gratuitous goods. Most everybody receives and makes them on a regular basis. Children receive the love and care of their parents, grand-parents, and other relatives. The handicapped, the elderly, and the hapless stranger receive gratuitous assistance. Almost everyone receives birthday presents. And almost everyone has wished other people a good day or a good night.

3

MOTIVATIONS OF DONATIONS

Donations have final, formal, efficient, and material causes. Economics is mainly concerned with the efficient ones. It looks at the human choices that bring donations about. But we have seen that the final cause—the general purpose or objective—of donations is the central pivot toward which all other causes are geared. Before we turn to the economics of donations, it is therefore advisable to study how human choices are motivated by this purpose.

4

RECIPROCATIONS

PART TWO

GRATUITOUS GOODS
IN A FREE ECONOMY

5

THE ECONOMICS OF DONATIONS

Donations have causes and consequences that spring from their purpose. But they also have causes and effects that spring from the fact that they are human actions. Leisure activities and gifts exist because there are people who effectively choose to donate their time and material resources. These choices, their causes and consequences, are the subject of the present chapter.

6

BENEFICIAL SIDE EFFECTS
OF HUMAN ACTION

In market exchange, there is no intention to gratuitously provide economic goods to other people. The intention is to provide and receive payments. Exchanges are based on contracts that regulate the obligations of buyers and sellers. Mutual obligation is not a mere by-product but the very purpose of a contract. We may therefore say that, by definition, the parties to an exchange do not intend to provide any economic benefits gratuitously.

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THE EQUIVALENCE POSTULATE

Side-effect goods are an essential feature of all exchanges. Side-effect goods are fueled by economic growth. They are built into the DNA of a market economy, which can be understood as one great organism geared toward the spontaneous production of manifold gratuitous services.