Fundamentals of Traditional Economy
A traditional economy is based on three basic characteristics:
1. It is guided by traditions passed down through generations
2. It incorporates a combination of hunting, fishing, and agriculture
3. It has a possibility of using barter instead of money.
A traditional economy can represent two sides of the same stick. For example, many people who are living an a traditional economy, tend to be living in poverty. However, their basic needs are being met. With that being said, there are many advantages and may/may not outweigh the disadvantages...
ADVANTAGES VS. DISADVANTAGES
- Traditional economies are generally less destructive to the environment...however, they are extremely vulnerable due to changes in the weather.
- In a traditional economy, everybody knows and understands their role in production, however, this also limits population growth because when harvest/hunting is poor, people are eligible to starve.
- Distribution of resources are generally pretty well-known in a traditional economy, due to the history of tradition, however, they are also more vulnerable to market and command economies which have superior resources.
THREE BASIC QUESTIONS
What will be produced?
The main purpose of a traditional economy would be to produce the basic needs for survival. Countries which use a traditional economic system generally rely on methods introduced by hunters and gatherers to supply their food. They also produce items that were produced in previous time period, depending on the group/country.
How will it be produced?
Traditional economics is largely influenced by hunters and gatherers and rely on this for their production. However, they also use tools from a market economy to help them get there. For example, when hunting, they use weapons and guns supplied by a country with a market economy. Social status and roles determine who does what, and how everything will be implemented.
For whom will it be produced?
Countries that implement a traditional economy usually only supply for themselves, because that is all they need. This also goes along with anybody who have ever used their products before.