What, in economic terms, is a potlatch?
Since you have placed this in the Business section and have tagged it with "Economics," I will address the economic aspects of the potlatch instead of the social aspects. I have edited your question to reflect this.
"Potlatch" is a term that is used to refer to ceremonial feasts and gift-giving that occurred among Native Americans of the Pacific Northwest and neighboring parts of Canada. In economic terms, the potlatch was a means of redistributing wealth among a group of people.
At a potlatch, the host was expected to show his wealth in extravagant ways. One thing he was expected to do was to give away many gifts to those who came. Those who could would eventually reciprocate by giving their own potlatches.
Thus, a potlatch consisted (in economic terms) of a person with a great deal of wealth giving some of that wealth away. Some of the wealth would be given to people who could not reciprocate. In this way, the potlatch redistributed wealth among the people.