 The title of my talk has been inspired by the presence of gentlemen from Brazil at this conference And this reminded me that a few years back there was a very successful meme in in Brazil Which said less marks more Mises Menos marks mass Mises. I cannot pronounce it really the Brazilian way, but you get it, right? And it's a funny way of Concisely stating this even if you're not an expert of The work of Karl Marx of the work of Ludwig van Mises at least you know by and large what they stand for so you're on safeguards and saying well, I want less of this and more of the other guy of the other direction and also reminds me then of An anecdote of my my early years. So even before I got to the doctorate. I was studying in France and It was I had signed up for a Research class so we were initiated to research techniques and so on and each of us had to work finally on a research project So I presented my research project and then the director. He looked at me and we wilder meant Was a silence I grew very nervous and he opened his mouth and said I don't understand anything Which is what research directors sometimes should tell their students I says politely said it's not clear This made no sense at all. They asked me What kind of economics do you want to do like Sombart or like Mises That's the same kind of question, right and I had studied neither Sombart no Mises At that point I was 1991 or something like this But I knew what Sombart stood for and I knew what Mises stood for and I said, well, I guess more like Mises Then he said well, then why don't you do what's necessary to get this on the rails? Yeah, and they're one of the things of course that I did not write after this But eventually a few months later I started reading Mises. So this was the beginning of a very long-lasting love affair So we have here less Mars more Mises Mars refers to Marcel Moss who is a French sociologist anthropologist was the son-in-law of Emile Durkheim. I was one of the luminaries of Sociology of a certain type of course there were other sociologists before Durkheim But he became famous most notably because he tried to constitute social analysis on grounds diametrically opposed to economics And there were different types of sociology in the 19th century. You had people like Herbert Spencer who were Not only familiar with economics But you thought about economics should play of course a decisive role in in social analysis If we want to understand our society what society is how it evolves through our time and so on but others Were very uncomfortable with the libertarian conclusions that economists typically drew from their analysis and so they thought the problem is economics per se and They therefore set out to construe social analysis by excluding economics and on grounds so that would lead to other conclusions one famous case was Auguste Comte was often called the father of sociology because he used the word sociology for the first time in the mid 19th century But then there were other many others That followed so Durkheim and Moss are part of that tradition mouse became famous for a book and I think it's Only book that he published in 1925 I With the title Ludon essay so don essay on the gift so if you're a picture of both Moss he looks a little mousy and and and and in his book and the book had an enormous impact on 20th century anthropology and 20th century sociology and As I will explain in more detail later on the the funny thing about a book with this title The book with this book with this title was that in fact he explained why such a thing like as the as the gift Cannot exist and does not exist That's quite funny, but I'll explain this to you in some more detail and then I'll explain to you also why We are more much more solid grounds in developing and economics of gifts if we base ourselves on Ludwig von Liebmeser's work on on praxeology, which I have done in the in the past few months a past Year and a half or so and so I'm currently writing on a finishing a book That deals with the economics of gratuitousness So gratuitous goods that come most notably in the form of gifts But also in the unintentional form because economists sometimes call this the positive external effects So it's a general theory of Gifts and positive external effects right a theory of gratuitousness And I was drawn to this more or less by accident because was really not the my main focus of research, but I've been invited to to comment on Benedict the 16th Pope Benedict the 16th encyclical Caritas in Veritate Love in truth in which the Pope Highlights the importance of gratuitous goods most notably spiritual goods such as love hope and so on and also emphasize that gratuitous goods are part of the human economy and they should play Probably a greater role. So I've been invited many other economists have also commented on on this encyclical and try to Well develop a more systematic way of thinking about gifts So the the book my book is As a result of this it just got a little bit out of hand at first I thought I would pop just have a little manuscript of what about 50 pages or so now it's become much more bigger I hope you will be able to buy it next year or so Before I get to this Okay I'll This is actually the wrong. I need to switch back to this later. Okay in order to understand the impact of master most its first necessary to consider that Indeed by 1925 Gifts and gratuitous goods had played virtually no role or no significant role in standard economics And here just especially the very nefarious influence of British economics that is responsible for the state of affairs And Adams. Well, I mean it's a matter of fact Adam Smith had in in the wealth of nation is a very Important book but also important in size Under on the 600 or 80 pages of the addition that I use the word gratuitous does not occur Or it occurs. I think it's a single time and only to explain that well There is no such thing as a good to it is good and Adam Smith held that in In a natural economy under conditions of natural liberty All goods sell at their cost and all the prices tend to be equal to cost of production. So it's impossible to Provide anything gratuitously to other people, okay, you might have gifts Among friends and so on so that's fine, but that does not relate to the production of goods, right? So it's impossible to obtain a good without Paying the price and if you obtain a good with it without paying its full price It's cost of production was something fishy going on and either the equilibrium has not yet been reached Or there's some fraud or something like this And this pretty much also the same stance So you find in in David Ricardo and you find it at the end of the 19th century in the marginalist economics of Leand virus and Stanley Jevons, right? So they have in their conceptions no place for gifts, right gifts are not part of the market economy gifts do not spontaneously result Or two it is good. So not the spontaneously result from market activities now there was a different approach That came to very different results Namely the approach we find in the in the French school of political economies So not the British tradition, but the French tradition and in the French tradition indeed gratuitous goods played a Important role even a central role and the the physiocrats had that all wealth ultimately resulted from nature So human beings by and large just transformed the wealth that they find in nature, but they do not create wealth and The wealth that we gain from nature is gratuitous. We do not produce the Substances that we find in the ground. We do not produce the laws of nature and so on all of this comes to us Gratuitous, and it's not of our making. We just are beneficiaries of these goods that come from nature and This was then this conception was so this was of the physiocrats So people like Francois Kiné and others in the mid 18th century and Then Jean-Baptiste say who was of course a disciple of Smith he He adopted essentially the the approach of Smith, but he Maintained some of the notions of the physiocrats So Jean-Baptiste say held that there are gratuitous goods and they play a very important role in the economy Only according to him these goods are not the object of political economy because in political economy We are only only dealing with those things that cost okay then after say the One economist was probably done the most to Develop an economics of gratuitous goods was Frederick Bastia. I could as well give a talk on Frederick Bastia I will not best Bastia made crucial contribution especially in highlighting the positive External effects that is the unintended gratuitous goods that result from the market process in particular from processes like capital accumulation right if you Have a few generations of people who save a lot of their income and they are therefore able to invest this income and build up a capital structure Then all other people benefit from them all other people who have done nothing to To create those goods But they are able to reap the benefits of those goods because as a consequence of capital investment You have machines you have infrastructure you have a road system and so on Suddenly you are able to obtain tomatoes and shoes and lamps and so on at much lower prices Then it would have been possible with Artisanal production and so on so purely hand production right so this was the crucial point stressed by Bastia and a few others around the mid 19th century but then this was completely forgotten and Economists set out to construct economics without gifts All right on very shaky foundation one one way this was being done one way to forget that there's always a gratuitous element gratuitous benefit in market activity one basic example would be In exchange, right? If two people exchange each one of them is giving up something that for him is less important than the thing that he receives That's the basic Theorem in the theory of exchange one that has been highlighted by kondiak and then especially by kalmanga and by later economists Now if we consider this basic fact then we see while in each exchange there is a gratuitous element something that I mean It's not the case that you pay exactly for all that you receive You always receive more than what you pay at least from your own point of view There's always a win-win situation And this was completely Neglected and the systematic reflection on on facts like this was neglected. So economics developed without gifts comes in Marcel Morse Durkheim and others who now set out to study gifts without economics and Morse a distant contrast to his father-in-law Durkheim. He had a more empirical bent. So he went to Polynesia Following up on another Western researcher by the name of Bronislav Malinovsky and so he's studying the behavior of the tribes of the Primitive tribes that he finds there. So why would he be interested in doing this might be just out of curiosity? What are these people doing since on but for them the whole project had a had a larger more transcendent meaning There were in a way. There were Rousseauists. I mean he doesn't quote Rousseau, but the whole approach The the test that the implicit hypothesis was Rousseauist Rousseau had held that primitive society was glorious and natural and good and healthy and Everything got screwed up When we developed civilization based on private property from then on it went downhill down the hill Well, not actually in material terms But certainly moral terms and the healthy social relationships and so on That was the Rousseauist hypothesis So if you believe that there is some truth through this then it might be interesting to study the conditions The behavior of primitive people because you might learn something that is of lasting value for your own society Because in our own societies, of course, we have for many centuries and millennia We have based our interactions on the institution of private property. So in a way, we are perverted We no longer count right our thoughts are in our habits are screwed up Too much exposition to the poison Let's turn back to the main spring of healthy relationships and study those tribes now the observation that Moss made one of the observations they made that inspired his book was in these tribes. They have no notion of gifts Now we come to the point that I wish to highlight right he publishes this book essay on the gift In which he explains that under natural conditions. There are no gifts Okay There are no gifts Whatever people do They cannot And to make it make it short right because I need to make sure they say everything is essential right The essential reason is that they have no property rights You see you can make a gift only if Out of something that you own Right, so it presupposes a gift is something that you give beyond what you owe And if I pay a price to a baker and so on well I owe him the sum of one because I wish to have the bread as part of our deal I owe Maybe protection services to my children to my wife and so on so this is not a gift that I provide But it's something that Due to my status as a husband as a father and so on that that are also this is not a gift But if I do something beyond this That's a gift. I give a smile to a complete stranger I give a sum of money to a beggar and so on so I don't owe him anything, but I It's precisely where I make a gift I can make a gift only because I own what I give my time my money and so on is my time is my money right if I didn't own it if let's say the money in my pocket is just Objects of paper and so on floating around it just so happens to be in my paper, but I'm just the current carrier of these objects, but really it's part of common property and you all of you and even the people beyond this room in some way have Acclaim on these objects. Well, then I could not really give them to in the strict sense to anybody else because first of all would be kind of wrong that I unilaterally decide how how to use them and You would not be fully entitled to do this so how is it in in the primitive society and primitive society everything is ruled by a Custom and by generation overlapping relationships of claims and obligations everybody is Indicted to some extent to all other people to which extent is ruled by custom and how things have always been done So it's not you yourself will make any decision whatsoever and you could not because you don't own actually anything and Therefore he also comes to a methodological point right you cannot analyze Cannot perform social analysis meaningfully by observing and starting from individual behavior It makes no sense because individual behavior is embedded in a network of claims and obligations that Overreach the individual and they're overlapping and have always been there unending without beginning without end Okay, so you have to study social reality as a whole as a totality You cannot just pick on a part of that social reality and build your analysis from there and goes goes very far Now let me give you a little quote from from Mars Okay, the last point right so that that falls from is that So this this is how Things stand in a natural primitive Society now we come with our civilization and this realization creates property rights and is based on property rights is built on property rights Now according to Mars is this has just partially supplanted the natural order that is still lingering under the surface And we have instituted these legal institutions law contract and so on but this is just the legal blah blah is the legal fiction Intellectual superstructure as Marx would say and but the underlying reality is that well, there is no clear There are no clear-cut property rights. There are only claims and obligations that embed everybody in a unending flow So as a consequence these natural relationships still subsist and We are screwing up with the artificial modern institutions of property contract and so on and the appropriate way what we should do is to get rid of them and the way to get rid of them is by Reverting back to the national order as far as possible most notably through social legislation and so on so creating welfare states and other forms of collective Production and distribution of goods. So this is this quote All our social insurance legislation a piece of state socialism that has already been realized now of course he thinks that's great Is inspired by the following principle the worker has given his life and his labor on the one hand to the Collectivity and on the other hand to his employers And so it's not just a deal right you sign a contract. That's just a legal fiction Right. This is a modern superstition that we believe has just a contract with the employer. He has given to society and today would say he has also given to the little birds and to the The insects and whatever else is calling around in nature Although the worker has to contribute to his insurance those who have benefited from his services have not discharged Discharged their debt to him through the payment of wages It's just something that they've Made up on their own. It's just a fiction The state itself representing the community owes him as do his employers together with some assistance From himself a certain security in life against unemployment sickness old age and death, right? So what we appear then is this is a whole research program, which is based on the hypothesis implicit hypothesis is in fact Amounts to a full-blown vindication of the of the welfare state. Okay, so that's the whole point now This approach is Well can be criticized on on on on various grounds The most important one is of course well that Private property, right? I just not in positions They come from out of space or come just from the government just perverting the operation of a natural society private property contract and so on are very old institution It's true that they have not existed at At all times and so on but certainly they have existed as far as civilization goes and from Both observation and theory. We know that private property rights has not been instituted by the state But has grown from bottom up by people who just wanted to solve daily problems That's the very point of Carl Manga's theory of the spontaneous emergence of social institutions, right? Which he presented in 1883 And so it's because people realize that collective property leads to problems such as the tragedy of the commons, right? That overconsumption of a collective good that they start privatizing those goods even though in the short run it might mean that they are being deprived, right? Therefore private property deprived of free access to goods that previously were Accessible to all of them, right? You have a some meadow and so on was previously accessible to everybody But the point is as long as you have just a few users I mean you can very well have a collective meadow But as soon as people start starting to build up big hurts and so the animals are trembling down the grass and so on And finally it doesn't help you to have free access to something that is no longer a good And so whereas if you institute private property while you you get actually more of that good So it's it's it's not actually correct to say that This The private property order has been imposed top-down and then of course one thing that most never does is to consider the advantages that come along with With this order right like many sociologists after him he would implicitly Presuppose or consider that all the goods that they currently exist while they're there just there Right there the result of productive forces that they do their work without Being dependent on a private property on an exchange order. So all these goods are just there And we just need to distribute them differently very unsatisfactory and it's just a wrong conclusion So we need when it comes to to gifts, we need to forget mouse I think and we need to build the analysis of gifts on foundations that are much more realistic and Especially that can rely on those elements that have been developed by Frederick Bastia and by Mises in particular So we have the economics of gifts the economics of gifts must be built on The the institution of private property. It's a very important point. There is no such thing as a gift Where there are no private property rights? gift is always something that is transmitted in excess of what is owed and Then what is owed must be limited? and if claims and obligations are unlimited if I have Unlimited claims and obligations on all wealth that exists in the world Well, I could not obtain a gift because everything would be owed to me in the first place All right to some extent. Nobody could give me a gift All right, and if I Ode to everybody in the world to you in the room and everywhere else all things that I have to some extent At least well, I could not make it make a gift because I owe you anyway Right, so wouldn't be a gift would just be a payment or a settlement of a social relationship social bond that Isn't of my own making so gifts This very charming institution in fact one of the most important one more of the most human Phenomena right there are no gifts among lions or ants or whatever other crawling beasts right there There's no such thing as a gift is it's eminent in the human It's that what allows us to support people who cannot help themselves is through a gift I had small children old people handicapped people and so on they rely on gifts And a developed market economy must rely on gifts because we are all mortal And so we cannot make it beyond our death So if we want to build up production structures that are lasting right and and in gear to what the satisfaction of Generations of future consumers Well, we need to bequeath at some point That property as we make a gift to somebody we cannot exchange with that person and we need to give So private property is fundamental and then I will in the few minutes that remain just give a few To well, it's two important examples. The one has already been mentioned implicitly There are several elements of an economics of gratuitous goods that we find in Mises one is his insistence that we as inheritors of Civilization we are the lucky hairs of previous generations Francis related to this inheritance necessity To the importance of the capital structure and so on we didn't create it Was was this hotel was it built by your family, but you didn't build it right exactly So you and you didn't pay for it and so you You received it right And so it is with most other things I always tell my students just look around in our town We have so we have a town that goes back to to Roman times you have even buildings are still left from from a Roman times So well look I mean we are the lucky hairs Right of all the generations who build it up before us and then transmitted It's all we have to do is just to keep it up as well as we can Another important example is Mises theory of the creative genius Mises has reflected a lot on on the social Significance of the creative genius the creative genius is a person who? pursues an artistic or scientific enterprise Just for the merits of this work itself He doesn't seek a compensation out of this. He doesn't he's not a professional Right. He's not a professional economist who wants to turn the buck on Becoming good at knowing statistics and economic theory and so on he is interested in the science itself He wants to promote the science itself Our colleague Joe Salerno in the US. He has written a very nice essay You can look this up on the internet on the difference between a vocational and a professional economist very nice piece in which he highlights The different mental attitude now in the case of creative genius Of course we have we're talking here not just about people who are doing things for their own merit But who are particularly good at doing this and people like Mozart and Bach and in Goethe and Shakespeare and so on So all of humanity benefits from it and there's no exchange between them and you mean okay They might sell a few of their books and so on but the benefits that derive from it I mean you can you cannot it's not part of exchange. It's something that spontaneous realize it's not an intended benefit, right? So they are they are pursuing these activities out of love for the subject itself But the benefits that result from other people from it though unintended are very real So they're gratuitous goods springing from the activity of the creative genius and then of course there are other elements that also helpful such as helpful for the construction of a theory of false gifts, right false gifts are very current for example in in Marketing advertising and so on You always see people say I hear you buy one and you get one free Okay, that's a false gift because what it really amounts to is is a price reduction, right? We will sell it half the price just so there's nothing free there, right? And they're also completely frauds gifts like all the handouts that come from the welfare state, but also the The gratuitous credit, right? Mises and Bastia they could not imagine negative interest rates, right? Which we have today negative interest rates mean actually that you are being paid for getting into debt Okay, that's what it means now. Is this a gift? Well to make it short, it's not right as we know because although the money might come for free and you might actually Get paid for taking it The goods that you can buy with it do not come for free, right? So it's in fact, it's a forced redistribution in favor of the beneficiaries of such a scheme And that's very easy to see if you know the economics of Frederick Bastia and Ludwig from Mises And in that sense, I should say yes, we need less morse and more Mises. Thank you for your attention