A traditional economy is based on a traditional approach. These economies are based on ancient rules and are the most basic type of economy. The focus in a traditional economy is only on the goods and services that match their customs, beliefs and histories. A traditional economy will use the barter system and has no concept of currency or money. Some pockets of Africa and the Middle East are the examples of traditional economic system. CHARACTERISTICS OF TRADITIONAL ECONOMIC SYSTEM: Now that we know a traditional economy is built upon traditions, customs and beliefs let’s look at some features of this economy:
1.Traditional economies are often based on agriculture, hunting, fishing and gathering.
2.Barter and trade is often used in place of money.
3.There is rarely a surplus produced. In other words, most of the goods and services are fully used. 4.Often, people in a traditional economy live in families or tribes.
5.Societies may follow herds of animals in order to hunt and sustain those in the traditional economy. 6.Many people progress from hunters to farmers where they can place permanent structures and start a society.
ADVANTAGES OF TRADITIONAL ECONOMIC SYSTEM: The advantages of traditional economic system are given below:
1.THE TRADITIONAL ECONOMY CENTERS AROUND THE FAMILY: Because traditional economies tend to be rurally-based, the needed skills to produce goods or services are handed down to each new generation. That means the skills and traditions gained by the elders within each family group become the expressions of how the economy operates in the future. That process helps to keep family units together, keeping the economy centered around meeting the needs of one another.
2.IT IS AN ECONOMY WHICH ALLOWS FOR MOVEMENT AND FREEDOM: The traditional economy is based on the concept that you go where you must to obtain the resources you require to survive. Traditional economies are often nomadic by design as that allows each family group to follow migration or seasonal patterns of food growth. Groups that are following the concepts of a traditional economy rarely need to trade with the outside world because they are able to produce everything they need on their own.
3.TRADITIONAL ECONOMIES ONLY PRODUCE WHAT THEY REQUIRE: Within the traditional economy, there is rarely any waste created when developing goods or services. Surplus is a rarity within this economy type as well. Most traditional economies will produce what they need and nothing more. That is because there is no value to this type of economy in the action of trading with someone else. Once needs are met, there is no need to continue producing.
4.IT HEAVILY RELIES ON THE BARTERING SYSTEM: Traditional economies rarely have a need for currency. That means when they do trade with other groups, the goal of the bartering is to obtain items that are required for survival. One group might be excellent farmers. Another group might be excellent hunters. By trading corn for venison, both groups can serve their individual needs better without the requirement of money changing hands to complete the transaction.
5.TRADITIONAL ECONOMIES USUALLY EVOLVE INTO A DIFFERENT TYPE OVER TIME: Once a traditional economy can settle into a routine which involves farming, a surplus will eventually develop through improve growing method. Instead of wasting that surplus, the economy will look to barter it with neighboring groups. If enough surpluses become available, the traditional economy will develop some type of currency. With currency, long-distance trades become possible to relieve the pressures of surplus products.
6.FRICTION IS A RARITY WITHIN A TRADITIONAL ECONOMY: Because the groups in a traditional economy are family-based, the amount of friction that is present within the economy is minimal. Each person knows their role within the economy and what is expected of them. That allows production levels to remain stable. Members also know what they will receive for their work, which makes it possible for all basic needs to meet.
7.TRADITIONAL ECONOMIES CAN BE VERY FRIENDLY TO THE ENVIRONMENT: A traditional economy does not operate on a mass scale. These economies are small. That mean they are less destructive to the environment without sacrificing the needs of members. Although they may have limited production capabilities, the outcomes of these economies are predictable, which makes planning for future needs easier compared to other economy types.
8.IT ISOLATES POPULATION GROUPS FROM THE OUTSIDE WORLD: Each traditional economy tends to form its own natural defenses, leading to stronger immune systems and a better overall quality of life.
9.TRADITIONAL ECONOMIES FOCUS ON THE SKILLS OF THE INDIVIDUAL: Although there are limited opportunities for job changes within a traditional economy, there is much less job dissatisfaction found within this economy type. People in a traditional economy are matched to jobs that make the best use of their natural talents and skills. That makes it easier for people to take pride in their work and love what they do since they are good at it.
DISADVANTAGES OF TRADITIONAL ECONOMIC SYSTEM: The disadvantages of traditional economic system are given below:
1.THERE ARE HIGH LEVELS OF COMPETITION IN TRADITIONAL ECONOMIES: Because traditional economies focus on meeting internal needs above any other need, there can be high competition levels for available resources. Groups that are closely positioned to one another may find themselves fighting often to command limited natural resources in their region. That competition can take on many forms, including war, which may further limit the availability of resources to all affected groups.
2.TRADITIONAL ECONOMIES CAN BE DEVASTATED BY NATURAL EVENTS: Weather plays a big role in determining the size and scope of success that a traditional economy receives. One bad growing season can be enough to stop farming altogether. To limit the negative impact that unexpected changes in weather may cause, families within this economy type tend to limit their overall population growth.
3.PEOPLE STARVE IF A HARVEST OR HUNTING IS POOR: The traditional economy relies upon the efforts of farmers, hunters and gatherers to provide food supports for the entire population. If there isn’t enough food that can be located, then there is a good chance that the people living within that economy will starve.
4.TRADITIONAL ECONOMIES ARE VULNERABLE TO OTHER ECONOMY TYPES: Other economy types, such as command economies or market economies, often consume the natural resources that the traditional economy uses to support themselves. Because the other economy types are usually more advanced technologically, they can decide to come in and take what they need or want to meet their own needs.
5.THIS ECONOMY TYPE PLACES POPULATIONS AT-RISK FOR INFECTIOUS DISEASES: Once the Europeans began moving into the Americas, the diseases they brought with them devastated family groups. Poaching and warfare helped to place many traditional economies at-risk for extinction. Over time, a traditional economy cannot compete with the technological advantages that other economy types offer.
6.THERE ARE FEW OPTIONS TO EXPAND PERSONAL HORIZONS: Within the traditional economy, each person tends to know what their role will be in the production cycle. That becomes their responsibility. For someone who wants to explore new options or try something different, the options available are few and far between. Many people within a traditional economy work the same job or fill the same role for most of their lives.
7.IT CAN DEVASTATE THE ENVIRONMENT: There have been numerous incidents where traditional economies harmed the environment instead of helping it. In Haiti, forests are in decline because wood is being used as a fuel source. Rainforests in South America are being destroyed to promote traditional economic growth. When the production of a traditional economy is not reflective of the needs of the environment, then it will eventually fail.
8.TRADITIONAL ECONOMIES CAN LIMIT MEDICAL ACCESS: Traditional economies often face high infant mortality rates because there is a lack of access to modern medical care. Children under the age of 5 are the most vulnerable population demographic within this economy type. From a young age, many children contribute to household production as means of self-survival, which is not always the healthiest way to live.
9.THERE ARE FEWER CHOICES AVAILABLE IN A TRADITIONAL ECONOMY: Because traditional economies only create what is needed, there are few consumer choices available for community members.