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A system of trade in which the acquisition of goods is not the main object of trading. Rather, the focus is on developing and solidifying personal relationships between members of unconnected groups or tribes (reciprocity). The objects traded back and forth have no practical uses, and are often fixed in number, so that the same item may pass through many hands. The fixed number does not present a problem because keeping the objects would be pointless as they are essentially without value.

The main example of this is the Kula Ring in the Trobriand islands (a ring of islands in the southeast corner of Papua New Guinea). In that area there is a circular trade practiced of two specific luxury items: armbands (mwali) and shell necklaces (soulava). The items don’t possess value as jewelry (though it is permissible for men, women and children to wear them on occasion) and they do not function as a currency.

A man in possession of these items will leave with a canoe full of practical goods and either arm bands or necklaces. He will trade with connections inherited from maternal relatives, and, depending on the item he is trading, he will travel clockwise or counterclockwise around the ring, leaving one item and acquiring the other. The trading maintains social ties which might not otherwise exist and also serves as a means for Gimwali trade (simple bartering for needed goods), which is seen as less worthy and honorable.

In Argonauts of the Western Pacific, Bronislaw Malinowski first described this ring of trade, calling it a novel type of ethnological fact because it was both useful and ceremonial. In Coral Gardens And Their Magic, he added that the Kula system "is to a large extent a surrogate and substitute for head-hunting and war."

Also, Annette Weiner discovered that the system has a counterpart among women, involving the trade of grass skirts.

Sources:
http://www.spacegroove.com/efotiou/mauss.html
http://www.rtapng.com.pg/pngland/doc/toloh'ube.html
http://www.ahs.cqu.edu.au/humanities/history/52148/modules/world_tradeB.html
http://www.csuchico.edu/~curban/Malinowski1968.html


Much thanks to anthropod for taking the time to read, comment and help with this writeup!

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