We people who are living in present generation have seen only those economies which runs on the basis of market forces of demand and supply but centuries back there were many economies which didn’t run on the concept of demand and supply, neither they used money as a medium for exchange of goods and services rather and such economies were called traditional economy. A traditional economy as the name suggests is that economy which runs on the basis tradition and culture of the people which they inherit from their ancestors and terms such as industries, technology money and so on were elusive. In order to understand this term one should look at the features of the traditional economy –
Traditional Economy Features
No surplus Production
In traditional economies, people used to produce goods for their survival and hence there was no question of surplus production of goods as people used to consume whatever they produced which in turn resulted in lack of wastage which is the case with other economies where people produce more in anticipation of selling the excess production in the market for profit. In simple words producing goods for profit does not come in the dictionary of the people following traditional economy practices.
No concept of Money
Another feature of the traditional economy is that there is no concept of money in this economic system because people follow barter system of trade in which goods or services are exchanged with other goods and services and thus negating any medium of exchange like money.
No use of Machines and Technology
People in this economic system depends on agriculture, fishing, hunting and other non-industrial methods for their livelihood and hence they do not make use of any machines and technology was beyond their reach which ensured that people never cared about productivity as well achieving efficiency in their field of work. In simple words, industries and technology take a backseat in this form of an economic system.
Narrow Minded and Suppressive
The thinking of people in this form of economy was limited to satisfaction of their day to day needs and their whole world was their family and nearby people which meant that their thinking was narrow in nature as they did not think big besides they were suppressive in the sense that they never backed young people to innovate because young people were told to work and live according to traditions and culture.
Traditions are followed Strictly
People following the traditional economy follows the traditions and culture of their elder and forefathers strictly in every aspect of life whether its work related, family related or for any other aspect of life.
Environment-Friendly
Since the idea of a traditional economy is to have a self-sustaining economy there is no drain on nature as people use only what they require. In simple words threats like global warming, climate change would not have been there if people followed traditional economy practices.
Lack of Planning
People in case of traditional economies do not plan for the future so suppose there is natural calamity like floods or drought or earthquake than people do not have any buffer stocks or supplies so as to survive such calamities rather those who survived will migrate to other places where there are resources for their future survival.
As one can see from the above features of the traditional economy that in present times this economic system is not feasible still it has historic significance and that is the reason why economist all over the world study this form of economic system.