traditional economy definition
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What is a Traditional Economy?
Definition: A traditional economy is a basic economic system where customs and traditions are the predominant elements that shape the way trade and commerce is performed. It is fundamentally based on social support and community-oriented activities.
What Does Traditional Economy Mean?
A traditional system is probably the most basic form of an economic system. A given community or group of people engage in different activities individually to produce goods or services that are required by the rest of the group. These activities are normally agriculture or hunting.
In this modern era, this systems are considered underdeveloped, since they lack certain elements that increase the life quality of its participants, such as, proper medical assistance, basic utilities or even a local currency. Trading activities are conducted through barter and there is no “wealth” in terms of capital accumulation, since the system aims to fulfill the most fundamental biological needs.
On the other hand, tradition and customs are also important in this kind of environment. They are normally ruled by elders or leaders with sufficient expertise to judge and decide about economic policies or decisions, mostly concerned with proper distribution of goods.
Example
The Oribu tribe is a group of nomads that live in certain area of the Brazilian Jungle Forest. They have been studied for a while to understand how their economic system works and how resources are distributed among the tribe members. The last census made to them identified 1,000 members in the community. This study showed that they are mostly an agricultural community, they know how to locate adequate places to grow certain vegetables and fruits and they are also skilled fishermen.
When it comes to distribution, they have a tradition where everything obtained during the daily fishing activities is placed in the center of the camp. An individual referred to as “The Ancient” blesses the food and ask some local deity to prosper the tribe. Then, everyone steps to the center and start taking as much food as they need. They have this custom where no one takes more than what is actually needed. They function as a traditional economy and therefore, no currency is required for trading or distribution.
Historical development
Prehistoric and preliterate economic systems
Although economics is primarily concerned with the modus operandi of the market mechanism, an overview of premarket coordinative arrangements not only is interesting in itself but throws a useful light on the distinctive properties of market-run societies. The earliest and by far the most historically numerous of economic systems has been that of primitive society, for which tradition serves as the central means of bestowing order. Such economic forms of social organization are likely to be far more ancient than Cro-Magnon people, although a few of these forms are still preserved by such groups as the Inuit, Kalahari hunters, and Bedouin.
So far as is known, all tradition-bound peoples solve their economic problems today much as they did 10,000 years or perhaps 10,000 centuries ago—adapting by migration or movement to changes in season or climate, sustaining themselves by hunting and gathering or by slash-and-burn agriculture, and distributing their output by reference to well-defined social claims. The American writer Elizabeth Marshall Thomas described this distributive system in The Harmless People (rev. ed. 1989):
Centralized states
Very little is known of the origin of the second of the great systems of social coordination—namely, the creation of a central apparatus of command and rulership. From ancient clusters of population, impressive civilizations emerged in Egypt, China, and India during the 3rd millennium BCE, bringing with them not only dazzling advances in culture but also the potent instrument of state power as a new moving force in history.
The appearance of these centralized states is arguably the single most decisive alteration in economic, and perhaps in all, history. Although tradition still exerted its stabilizing and preserving role at the base of these societies—Adam Smith said that in “Indostan or ancient Egypt…every man was bound by a principle of religion to follow the occupation of his father”—the vast temple complexes, irrigation systems, fortifications, and cities of ancient India and China and of the kingdoms of the Inca and Maya attest unmistakably to the difference that the organizing principle of command brought to economic life.
Common Characteristics of a Traditional Economy
- The traditional economic system centres around a family or a tribe.
- Majority of the time they have a primitive occupation like farming, hunting or fishing.
- The community is self-sustained through fishing, hunting and farming.
- The traditional economic system does not trade. The market participants consume the products that are produced/collected, and they rely on bartering to get the products that they want.
- Traditional economies usually emerge because people in the area engage in hunting or fishing activities. They eventually settle down and gradually from a society that follows the conventional economic system.
Advantages of Traditional Economy
- The traditional economy offers less of a threat to the environment than another market system. People in the economy have conventional occupations like farming, fishing, hunting or cattle-rearing.
- There is no wastage in the traditional economy because the people in the economy consumes whatever they produce or gather.
Disadvantages of Traditional Economy
- Seasonal changes can disrupt the economy. If it is an offseason, it will directly affect the hunting and farming in the economy.
- In offseason times, people can starve because there is no food to utilize.
Traditional Economy Example
Countries like Bangladesh, Haiti makes use of primitive agriculture ways. They are, however, not a traditional economy because they do have modern occupations. A characteristic of a traditional economy is that the economy should be self-sustained. The Jarawa tribe of the Andaman Islands use primitive ways to survive.
The Oribu tribe is an example of nomads that live in the Brazilian. The tribe has been studied to see how they run their economy. A close look was given to how they distribute resources amongst each other.
The tribe consists of 1000 members. The Oribu tribe is a farming community that focus on growing fruits and vegetables, they are however skilled fishermen as well.
The tribe distribute the products that they harvested/obtained daily by placing all the food in the middle of the camp. An elder called the Ancient will go to the middle of the camp and bless the food before any of the members can take the food.
The community can then take as much food as they require. In their custom, no one takes more food than what is required for the day. This is a perfect example of a traditional economy because there is no currency required for trading or distribution of goods.
Traditional Economy Conclusion
- A traditional economy is a basic economic system where customs and traditions are the elements that determine the way trade and commerce are performed.
- A community engage in different activities individually to produce goods or services that are required by the rest of the community.
- The activities are typically centralized around agriculture or hunting.
- Common characteristics include family centred, use hunting, fishing or farming to get the required goods, the economy doesn’t trade.
- Advantages include there is no threat to the environment, and there is no wastage.
- Disadvantages include seasonal changes can disrupt the economy, leaving no food for the participant. This could lead to starvation.
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traditional economy definition
When Did It Begin
There is no way of knowing the details of the earliest traditional economic systems because the activities of the first human societies are beyond the scope of history, but human societies have no doubt sustained themselves in this way since the first human communities appeared on earth.
Certainly during prehistoric times most human societies would have organized their economic life in this way. Experts are unsure of exactly why or when human societies began moving away from tradition-based economies and toward the adoption of command economic systems. The third form of economic system, the market economy, did not begin to take hold until around the sixteenth century.
More Detailed Information
The fact that there have only been three basic economic configurations across all cultures since the dawn of humanity suggests that the problems confronting human communities have been remarkably consistent over time. Indeed, all societies must solve the problem of satisfying their members’ needs and wants in a way that ensures the survival of the group. To answer this challenge successfully (that is, to survive and achieve the group’s goals), a society must organize the actions of its members effectively.
This organization takes place, economically speaking, in two particular areas: production and distribution. Any society must produce the goods and services that its people need, and it must then distribute those goods and services among its people.
Recent Trends
There are, however, parts of Africa, Asia, and South America where tradition guides economic life. The people living in these communities are among the poorest in the world, and they lack the basic resources of education, health care, and sanitation that people in developed parts of the world enjoy.
As members of primitive communities within developing countries move to towns and villages and become citizens and taxpayers, they might improve their own material living conditions, but they diminish the chances for survival of the societies they leave behind.
