A traditional economy is an economic system where economic decisions are based on customs and traditions. It is the opposite of a capitalist mixed economy which is primarily driven by exploitation and profit motives.
It is also different to command economies as it is not controlled and managed by a central government.
Traditional economies are often agricultural, with families or other groups working together to produce goods. A barter system may be used to exchange goods and services.
These types of economies are usually based on agriculture, but some also include fishing, hunting, and gathering. Generally, people only take resources that will satisfy their immediate needs. These activities often take place within a community or tribe that shares common values and beliefs. The primary goal of a traditional economy is to maintain the stability of these social relationships.
Common Characteristics of Traditional Economies
There are several common characteristics of traditional economies. These include:
- A focus on subsistence living: The primary goal of a traditional economy is to provide for the basic needs of the people. This means that people only produce and consume what they need to survive. There is little or no surplus production.
- A barter system: Traditional economies often use a barter system to exchange goods and services. This means that people trade goods and services without the use of money.
- Lack of technological advancement: Traditional economies tend to have very little technology. This is because they focus on meeting the needs of the people rather than on profit or production.
- Reliance on natural resources: Traditional economies often rely heavily on natural resources. This means that they use resources that are readily available, such as plants and animals.
- Strong sense of community: Traditional economies often have a strong sense of community. This is because people rely on each other for help and support.
- Lack of specialization: Traditional economies tend to be less specialized. This means that people often do a variety of tasks and are not experts in any one area.
Traditional Economy Examples
1. Subsistence Farming Communities
Subsistence farming is a type of agriculture in which farmers grow crops and raise livestock primarily for consumption by their families, rather than for sale. They do not have any surplus to sell or trade.
This is the most common type of traditional economy. It is based on agriculture and is typically found in developing countries.
This is often done in areas with limited farmland and/or poor soils, where commercial agriculture is not possible. In many cases, subsistence farmers are able to meet their basic needs by growing a wide variety of crops, including grains, fruits, and vegetables.
They also typically keep a few animals, such as chickens or goats, for eggs, milk, and meat. In some cases, subsistence farmers may sell surplus crops or livestock in order to purchase other necessities, such as clothing or medical supplies. However, their primary goal is to maintain self-sufficiency.
2. The Open-Field System of Farming
The Open-Field System of Farming was a system used in medieval Europe. Under this system, farmers would each have a strip of land within a large field. Each farmer had to grow crops on their plot to either feed themselves or trade with other farmers in the field.
The strips would be of different sizes and shapes, depending on the size and shape of the field. Each farmer would own several strips, which were separated by furrows.
Typically, open-field farms had crops of wheat, rye, and barley. The farmers would rotate the crops each year, so that one crop would be planted in each field every three years. This system allowed farmers to maximize the use of the land and minimize the risk of crop failure.
The downsides of this system were that it was very labor-intensive and that it left the fields vulnerable to pests and diseases.
3. Bartering Economies
Bartering is another common element of a traditional economy. It is the exchange of goods and services without the use of money. For example, a farmer may trade a bushel of wheat for a pig.
Bartering was prominent in traditional economies because money was not yet invented. It is still used today in some traditional economies, as well as in situations where money is not readily available.
For example, bartering is often used in developing countries, where currency may be unstable or unavailable. It is also used in situations where one does not have the necessary currency, such as when traveling to a foreign country.
4. Gift Economies
One of the primary features of a traditional economy is that it is not designed for profit. Rather it is designed to meet the needs of the community members.
As a result, it can often lead to a substantial gift economy. This is an economic system in which people give gifts to one another, without expecting anything in return.
Gift economies are based on the principle of reciprocity, where people give gifts to people going through hard times expecting that they will receive gifts in return when they go through hard times later on.
However, the gifts are not always given directly to the person who gave the original gift. For example, a person may give a gift to someone in their extended family, knowing that the gift will eventually come back to them from another member of the family.
Gift economies are often found in traditional societies, where people have strong social ties and feel a sense of obligation to help others.
5. Hunters and Gatherers
Many traditional economies are based on hunting and gathering. This means that the people in these societies rely on wild animals and plants for their food, rather than domesticating animals or growing crops.
In some cases, such as in the Amazon rainforest, people may also rely on the forest for their shelter, medicines, and other needs.
Traditional societies that rely on hunting and gathering often have a deep knowledge of their local environment and the plants and animals that live there.
This knowledge is often passed down from generation to generation, through oral traditions.
6. Nomadic Cattle Herders of Africa
Nomadic cattle herders are a type of traditional society that is based on the herding of animals. They move around with their herds in search of grazing land.
Nomadic cattle herders are often found in Africa and Asia. They typically live in tents or yurts and only take with them what they need. This way of life is often seen as more environmentally sustainable than settled agriculture. It allows people to live in harmony with the animals they depend on.
An example of a culture that are still nomadic cattle herders is the Maasai people of Kenya and Tanzania.
7. The Kula Ring
The Kula ring is a system of trade that was developed by the people of the Trobriand Islands in Papua New Guinea. It is based on the exchange of gifts between different clans.
The Kula ring is a way for people to build social relationships and create bonds of trust. It also allows for the exchange of goods and ideas between different cultures.
This trade system was first introduced to the west by Bronislaw Malinowski who famously wrote:
“Why would men risk life and limb to travel across huge expanses of dangerous ocean to give away what appear to be worthless trinkets?”
Here, you can see the kula ring system has many of the hallmarks of traditional economies: subsistence living, lack of currency, and a reliance on social relationships for the sustenance of the community.
The Kula ring is still practiced today and is an important part of the Trobriand Islander’s way of life.
Manorialism is a type of feudal economic system that was common in medieval Europe. It was based on the feudal system, where peasants (or serfs) worked the land owned by the lord of the manor.
In return for their labor, the peasants were given a portion of the crops they produced. They also had to pay rent and taxes to the lord of the manor.
Manorialism was replaced by capitalism during the Industrial Revolution. However, it is still practiced in some parts of the world, such as in Sub-Saharan Africa.
A commune is a type of intentional community. It is based on the shared ownership of property and resources. It aims to eschew capitalist ideology for a more traditional style of living where the people are self-sustaining and self-reliant.
Communes are often founded with the intention of creating alternative societies that are more equal, democratic, and environmentally sustainable.
One famous example of a commune is the kibbutz in Israel. Kibbutzim were originally founded as socialist agricultural communities. Today, they are more capitalist in nature but still maintain some communal aspects, such as the sharing of child-rearing responsibilities.
Other examples of communes include Findhorn in Scotland and Damanhur in Italy.
10. Traditional Fishing Communities
Fishing is another common element of traditional economies. This is because fish are a major source of food that is abundant in traditional societies that live by rivers and lakes.
People in traditional fishing societies often have a deep knowledge of the different types of fish, as well as the best times and places to go fishing.
There are usually members of the community whose community role is to fish for the nightly meals.
11. Indigenous Whale and Seal Hunters
While whale and seal hunting is banned in most nations, there are carve-outs for Native Canadian cultures who have relied on it as part of their traditional economies for centuries.
These cultures make the most out of every part of the animals to make them go as far as possible. For example, the meat is eaten, the blubber is used for oil, and the bones are used for tools. The by-products of the animals don’t go to the capitalist economy but are used for traditional means.
12. Reliance on Natural Resources
Traditional economies rely heavily on natural resources. This is because they do not have the technology or infrastructure to support commercial agriculture or manufacturing.
Furthermore, people from traditional economies often live in harmony with nature and know which resources they can rely on at different types of the year.
As a result, traditional economies are often found in areas with rich natural resources, such as forests, rivers, and coastal areas.
13. Collecting Wood for Fuel
Another common element of traditional economies is the reliance on wood for fuel. This is because wood is usually the only fuel source available in traditional societies. They don’t have the technology to mine for coals.
As a result, people in these societies often have to collect wood for fuel on a daily basis. This can be a time-consuming and physically demanding task, particularly in societies where there is no technology to help with the collection or transportation of wood.
In some cases, such as in the Arctic, people may also use wood for shelter and heat.
14. Carting Water from Wells
Another common element of traditional economies is the need to cart water from wells. This is because most traditional societies tend not to have running water or plumbing. Furthermore, they generally only gather the water they need for their daily needs – no more, no less.
As a result, people in these societies often have to collect water from wells on a daily basis. This is a task often given to the children in the family.
15. Farmers Markets
Farmers markets are a type of market found in traditional economies. They are different from regular markets because they only sell locally-grown food.
The food at farmers markets is usually organic and pesticide-free. Furthermore, the prices are often negotiable, which allows people to get a fair price for their goods.
In modern cities, farmers markets have made a resurgence among people seeking to reconnect with the concept of local living and traditional economies.
16. Using Every Part of the Animal after a Hunt
In many traditional economies, people make use of every part of the animal after a hunt. For example, the meat is eaten, the hide is used for clothing or shelter, and the bones are used for tools.
This practice is based on the principle of waste not, want not. It ensures that nothing goes to waste and that everyone got what they needed. People who are critical of capitalism point to how traditional societies were more economical and considerate about their resource use which minimized their impact on the environment.
Permaculture is an agricultural system that mimics the patterns found in nature. It is based on the principle of working with, rather than against, natural processes.
Permaculture aims to create systems that are self-sustaining and require minimal input from outside sources. This includes using techniques such as crop rotation, composting, and water harvesting.
Permaculture is often seen as a more sustainable way of agriculture that is less damaging to the environment. It is also considered to be more efficient, as it requires less work to maintain.
One famous proponent of permaculture is Bill Mollison, who has written extensively on the subject. He is credited with coining the term “permaculture” and has helped to spread the idea around the world.
Today, there are permaculture farms and gardens in many countries. They often serve as demonstration sites for others who are interested in learning more about this type of agriculture.
Some economists argue that traditional economies are more efficient than market economies because they make use of all available resources. For example, in a traditional agricultural society, every family member may contribute to the farm in some way. In contrast, in a market economy, only those who are able and willing to work are able to earn an income.
Others argue that traditional economies are less efficient because they limit people’s ability to specialize and innovate. This argument is often used to justify why countries with traditional economies should adopt market-based reforms. Traditional economies are also often criticized for being unresponsive to change and resistant to new ideas.
Dr. Chris Drew is the founder of the Helpful Professor. He holds a PhD in education and has published over 20 articles in scholarly journals. He is the former editor of the Journal of Learning Development in Higher Education.