Poets may not be the world's legislators, but they are our finest political theorists. Not that there's much competition.

Lewis Hyde, a gifted poet and translator, has had trouble making a living. This experience has led him to reflect on our current social arrangements, in which to do one's best work--to offer one's most precious gifts--may bring no return. The irrationality of these arrangements--competition and commodity production--has occurred to nearly everyone, if only in passing, and has goaded a great many people into print. Yet Hyde has original and fruitful things to say in this wise, charming, wide-ranging book.

The Gift is in part a history of the world we have lost, the world before the hegemony of the market. From ethnography and folklore, Hyde has reconstructed the economics and ethos of societies based on gift exchange. Trade is immemorial, of course; but production for a market, as an organizing principle of society, is new, as is the ethos of such a society: possessive individualism. Far more typical of human history is the circulation of goods and services on something like the following principles. First, social status is conferred not by wealth accumulated but by wealth disbursed. The "big man" is the one who throws the biggest parties, or whose ceremonial gifts are of exceptional quality and quantity. Second, "the gifts must always move": the reception of gifts or favors creates reciprocal obligations, though not exclusively to the donor. Everyone is embedded in a network of such obligations, so that in fact, as well as in theory, everything everyone possesses is owed to everyone else. Third, the material basis of the group's life--game, fish, fruit, trees, children--is considered a gift, for which mythical explanations, rites of thanksgiving, and rules of use must be formulated and administered, usually by priests. And so on, with all such principles giving expression to the primacy of the collective.

The anthropological record is sparse, so Hyde reconstructs a good deal of the ethos of premodernity from fairy tales. In the relevant tales, a magical gift is given to one person, it is hoarded, and disaster ensues; a similar gift is given to a second person, it is shared, and the second person is superabundantly rewarded. The many variations on this theme occasionally hint at different attitudes of giftedness and gratitude, but the morality of the tales is invariable: the generous are disproportionately rewarded and the selfish are disproportionately punished.

Hyde then offers a history of humankind's fall from grace: a history of usury. Usury--lending at interest--contravenes the ethics of a gift society: wealth must not be removed from circulation, all wealth belongs to one group, no person's gift may become another person's capital. The prohibition of usury was virtually unanimous in both religious and early civil society. But by the middle of the 19th century, nearly all usury laws had been repealed and the theology of usury, at least in industrial societies, had altered drastically. Somehow the possessive individualism on which capitalist ideology is based had crept into protestant theology and become ethical individualism, with its radical devaluation of the spiritual authority of the church. It is a fascinating chapter of intellectual history, masterfully narrated.

And yet the material Hyde has culled from ethnography, folklore, and religious history is open to a very different reading. On his own evidence and that of his main sources (in particular, Marshall Sahlin's Stone Age Economics), gift societies were--to exaggerate only slightly--Hobbesian societies. Gift exchange was, at least in part, a way of keeping the war of all against all in abeyance. Hyde understates the element of involuntary obligation and implicit sanction in the "institutions of positive reciprocity" he praises. Gift exchange among the Kwakuitl sounds a lot like hug exchange in California: something you do not out of spontaneous affection, but because if you don't, you're considered antisocial. Arguably, the purpose of gift-giving in premodern societies is not to bear witness to a lively sense of loving community, but to create a plausible appearance of it and to shore up that facsimile against the dimly sense disintegrative possibilities of individualism: envy, possessiveness, self-aggrandizement. Like the practices of Christian asceticism, the rituals of gift exchange are, to some extent, defense, or more precisely, reaction-formations.

Fairy tales obviously embody some of the worst as well as the best wisdom of the race. It is characteristic of the moral and psychological poverty of premodernity that in the tales Hyde cites, the victims--those who are too insecure and unhappy to give freely, to part with the gift--are blamed and further deprived, while the emotionally rich get richer, as if their generosity were not, like all virtue in a world of scarcity, an accident of temperament and upbringing.

In a chapter on "The Gift Community" and thereafter (the latter half of The Gift includes long stories of Whitman and Pound, using the conceptual apparatus developed earlier), Hyde overcomes temptations to romanticize premodernity and begins in earnest to grapple with the tensions that give his subject point and poignancy. Like all ancient institutions, gift exchange embodies hope as well as fears: hopes of rootedness, connectedness, mutuality, spontaneity, surrender; the benefits of eros. Market exchange, for all its world- and soul-destroying irrationality, embodies complementary hopes: mobility, separateness, individuality; logic, self-possession--the benefits of logos. And these polarities suggest others; criticism/myth, innovation/conservatism, rights/responsibilities, masculine/feminine. Hyde skillfully elicits one set of meanings after another from historical changes in modes of production and exchange, reckoning psychic loss and gain with keen compensation.

But what is to be done? Gift exchange, or primitive anarcho-communism, is no longer a possible form of social organization; it could only flourish within small, self-sufficient groups. In industrial society one can try to draw boundaries, to mark off privileged spheres--friendship, family, art, collective political work--within which commodity logic may be suspended and something like gift relations may operate. But commodity logic is relentless; in the end, someone must enter the market economy in order to support the privileged sphere.

How much of the spirit of the gift can be preserved? Hyde suggests that we look for an answer in the psychology of creativity and in the social relations of art and science. The Gift contains an exquisite evocation of what Hyde calls "creative commerce" and "labor of gratitude." Between colleagues, inspiration and example are paid for not by a fee but by the self-transformation of the recipient. The distributional premises of a competitive market economy are scarcity and the zero-sum. But to the extent that ideas circulate as gifts, the "wealth" of every individual in a cooperative creative "economy" ?in an art or science?increases simultaneously. And so, in a limited and fragile way, it really is true of the of the community of scientists and artists that "the free development of each is a condition of the free development of all."

This is an idealized portrait, of course: the egotism of actual artists and scientists is familiar enough. But that idealization at least suggests the right questions. What are the material conditions of creative freedom? Are freedom and justice best conceived as rights to full membership in a creative community? How would a world of artists, respectful of each other's gifts, organize their collective subsistence labor? This is what formal political theory, for all its portentous obscurity and spurious rigor, is about on those rare occasions when it's about anything at all.

The Gift does not pretend to rigor, It is no more than a sustained meditation, full of gaps and perplexities, intriguing hints, tentative suggestions, and above all, generous hopes. Still, if only as a memory and a prophecy, a glimpse from the realm of necessity into a realm of freedom, it is, like the best of gifts, good beyond expectation, beyond desert.