What are the Characteristics and Main Ideas of the Traditional Economy?

One of the basic pillars of any society is the economic organization. Throughout the evolution of man, different economic systems have developed, adapting to the needs of each people. In this article we will talk about the characteristics and main ideas of the traditional economy.

However, before talking specifically about traditional economics, you should have a general idea of ​​what those are. economic systems that have been formed over the years. Keep reading, because in the next section we will briefly explain the classification of these systems.

Types of economic systems

We can classify economic systems depending on whether or not there is private property, or according to the way in which decisions are made and productive activities are coordinated. In the first case we have two types of economy: the capitalist economy and the socialist economy or planned.

In the case of the capitalist system, people and companies carry out the production and marketing of goods and services following market trends, governed by supply and demand. In this, money plays an important role in the daily life of the population. It is also called the free economy.

On the other hand, in a socialist system the state replaces private property by a system in which the means of production and distribution of goods and services are collective. This seeks that social classes disappear and that all individuals have the same wealth. Usually requires a lot of planning.

characteristics of the traditional economy

If we classify the economic systems depending on how decisions are made, gives rise to the traditional economy, the authoritarian economy and the market economy. The latter are the capitalist economies themselves, in which the population makes the decisions, with the advantages and disadvantages that this entails.

The authoritarian economies, As their name indicates, they are those in which decisions are made by a central power or authority, which is usually the State as the owner of the means of production. In the next section we will tell you more about the characteristics of the traditional economy.

Characteristics and main ideas of the traditional economy

The traditional economy is a system that It is based on customs, beliefs and traditions (worth the redundancy) typical of a region or a particular society or community. In this, economic decisions are guided by the skills acquired through the routine practice, over centuries, of the same activities.

One of the most basic characteristics of the traditional economy is that income is generated from activities such as agriculture, livestock, fishing and hunting, and the production of handicrafts. Likewise, in general lines he does not usually use money, but barter as a method of commercialization and exchange.

This conditions that traditional economies have a low level of productivity, which it works basically for the self-sufficiency of the community, but that does not allow the existence of a system of globalization or international trade with import or export of goods or services.

characteristics and ideas of traditional economics

Although it may seem primitive to you, this type of economy still practiced in many parts of the world. Above all, traditional systems have been maintained in the Middle East, Asia and Africa; but you can also get communities that practice it spread throughout America.

Ideas on which traditional economics is based

  • Resources should be distributed equitably among members of the community.
  • All members of the community participate in the production process in one way or another, and they know the importance of the work they carry out.
  • They produce what they need to live, without ambitions to obtain extra profit due to the activity they carry out, and without worrying about the importance of maintaining international relations.
  • The environment must be conserved, as it is the source of most (if not all) of the resources they use to subsist and produce other items. However, they are also dependent on the conditions of nature, being seriously affected by climate change and pollution.

We hope that with this article the characteristics and main ideas of the traditional economy have become clear to you. Don’t forget to share it on your social networks!

How useful did you find this content?

Click on a star to rate!

Average score 0 / 5. Counting of votes: 0

So far, no votes. Be the first to rate this content.

I'm sorry this content was not useful for you!

Let me improve this content!

Tell me, how can I improve this content?

Deja un comentario