Most successful, thriving societies hinge on the presence of a functional economic system. Economics allow these societies to study and manage various social and financial variables, ultimately resulting in a better understanding of their overall productivity and stability.
Here, I take a look at one of the four main economic systems: traditional economics.
Also known as subsistence economics, the traditional economic system commonly holds a self-explanatory title; it is the longest standing and most “traditional” form of economics in the world. Many traditional economic values hold true to this day, in both traditional-based societies and in those adopting more modern systems. In fact, “there are certain elements of a traditional economy that those in more advanced economies, such as Mixed, would like to see return to prominence.”
What makes it unique?
With the aforementioned information in mind, traditional economic systems are essentially unique in their ability to not be unique — they hold many basic characteristics present in the other forms of economics, be this a direct presence or a foundational, influential one. However, traditional systems are distinguishable through their prominence in areas rooted in cherished customs and beliefs. Influencing factors, in this regard, may include religious practices, cultural traditions, or location-specific morals. Naturally, many of these locations tend to be rural, farming-based areas located in second- and third-world countries.
Additionally, traditional economic systems do not partake in the types of profit and surplus commonly exhibited in the other major systems. As a result of low wealth and/or resources, much of the surplus produced from traditional systems is either wasted, distributed, or paid to a higher authority.
Put simply, traditional systems value the importance of history and tradition above all else, and this moral serves as the system’s nucleus in all other fields of operation and management. This approach can prove problematic in that these societies may miss out on developments found in more advanced Western economic systems, such as medicinal and technological advancements.
What are some examples?
Common examples of traditional economic societies may include Inuit communities, South Indian tea plantations, or other tribe-based cultures that turn to bartering as their sole form of trade. Traditional systems are generally found in Africa, Asia, Latin America and the Middle East.