Traditional Economic System: Meaning, Merits & Demerits
Traditional economic system is the type of economy system that prevailed in all independent human organization or settlements prior to their contact with the outside world. In Africa, for instance, feudalism and communism predominated before contact with Europeans.
Features of Traditional Economic System
- Free access to ownership of factors of production which was later broken by the rise of feudalism.
- Subsistence production characterized by gardening, hunting and subsistence farming.
- Trade by barter and lack of division of labour.
- Basic economic, problems were solved by reference to traditional values and customs.
Advantages of Traditional Economic System
- Hunger, poverty and unemployment were rare.
- People dissipated little energy to get most of their basic needs and as such they had high levels of leisure.
- There were little incidences of social evils such‘ as frustration, alienation, crime, resentment, theft and other social evils.
Disadvantages of Traditional Economic System
- People had little control of their environment.
- The use of tradition and custom to address basic economic problems may not be based on modern concepts of economic rationality, equity and social justice.
- People’s progress and achievement tend to be ascriptive by reasons of birth and not by achievement.