ABSTRACT
Since its detailed description by Bronislaw Malinowski the Kula Ring has been cited and analyzed over and over again as a classical example of a ceremonial exchange of gifts. This chapter briefly describes the basic features of the Kula system which are essential for the author's explanation sketch. It outlines the basic problem of social order and the prerequisites for the development of stable bilateral constitutional contracts. The chapter also describes an "organic" process that leads to the observed ring structure of exchanges, given the geographical and economic boundary conditions. While the transfer of control over the means of physical coercion to the state changes the structure of the game, the endogenous development of social order by the process described leaves the basic dilemma unchanged. Finally, the chapter analyzes the stabilizing function of the ceremonial exchange of gifts and elaborates the self-enforcing incentive mechanisms inherent in this structure of exchange.
