A traditional economy is an economic system where customs, traditions, and beliefs shape the goods and services that are produced, as well as the distribution and consumption of these goods and services. In this type of economy, people generally live in rural or agricultural communities, and economic activities are often based on subsistence farming, fishing, and hunting.
- Centering around a family or tribe: In a traditional economy, families and tribes are the fundamental social units. Economic activities are often organized around kinship ties, and family or tribal elders typically make important economic decisions.
- Existing in a hunter-gatherer and nomadic society: Traditional economies often exist in societies that rely on hunting, gathering, and fishing for their subsistence. Such societies are usually nomadic, moving from one place to another in search of food and resources.
- Producing only what it needs: Traditional economies are typically self-sufficient and produce only what is needed for survival. There is no surplus production for trade or export.
- Relying on a barter system: In traditional economies, goods and services are often exchanged through barter, which involves trading one item for another without the use of money. For example, a hunter might trade meat with a farmer for vegetables.
- Evolving once it starts farming and settling: Traditional economies often evolve into agricultural economies once people start farming and settling in one place. This transition can lead to the emergence of new economic activities, such as trade, specialization, and the development of markets.
Overall, a traditional economy is characterized by its reliance on traditional customs, practices, and beliefs to organize economic activity. It is often contrasted with market-based economies, which rely on market forces to determine the production and distribution of goods and services.
