In a traditional economy, the economic decisions are predominantly taken by tradition and convention. Such economies use primitive methods of production in their occupation. But both the sides of a coin must be judged before coming to a conclusion.
"The two ideas, justice and vocation, are inseparable.... It is by way of the principle and practice of vocation that sanctity and reverence enter into the human economy. It was thus possible for traditional cultures to conceive that "to work is to pray." (pg. 258, The Idea of a Local Economy)"
A traditional economy uses primitive methods for production or for conducting economic activities. Tradition and convention play a major role in the economic decisions taken. Predominantly, traditional occupations such as agriculture, hunting, and other allied activities are followed. In a traditional economy, the market is limited, and trade is carried out in a limited purview. A barter system is symbolic of a traditional economy.
Today, there are very less traces of a traditional economy in the world. Even as we read about it, we cannot even imagine our lives in an economy of this type. There might be some parts of certain countries that still follow the traditional economic system. But on the whole, it is taken to be primitive and disadvantageous. However, a traditional economy has its set of advantages too. Here we tell you about the strengths and weaknesses of traditional economies.
Occupations are passed on from one generation to the other. Thus, the job roles are specifically designed and allotted beforehand. Thus, there is less confusion and everyone is clear about what one is assigned to do.
Since families specialize in their activities and because the same business activities are carried out across generations, there is less competition in the economy. Families monopolize in their own business, and there is no interference.
Only those goods which are needed are produced. The economy operates in its close-knit members, and their needs are known beforehand. Thus, there is less surplus produced, and resources are used in the optimum way. There is no import or export from other economies, and only the available resources are used. There is very less wastage of resources. The needs of people are limited, unlike in the modern economy.
No one steals the job of the other in a traditional economy. There is a lot of support from people, and everyone tries to use the limited resources effectively. In a traditional economy, people live in less fear. Hence, there are very less chances of crime. There are less chances of a gap between the rich and the poor. The racing to accumulate wealth and preserve jobs, that is characteristic to a modern economy, is not a part of traditional economies. People lead a calmer life and are much more secure. There is a leader for every group whose say is final in all socio-economic decisions.
Since traditional methodologies are followed, there is less impact on the environment. The wastage is less, there is proper distribution of resources, and since there is less use of technology, there are less chances of harm to the environment.
Traditional economies use primitive methods of production, and thus, do not embrace modern ways. They resort to old methods, thus limiting the growth and development. They may also have certain blind faiths and belief systems that might hamper the overall development.
Tradition and convention is followed. So, people are usually wary of change and do not accept it easily. There is rigidity in their minds, and there is less acceptance to anything new.
With limited wants, and no development in technology, the main motto of the members of a traditional economy is survival. Much of their everyday efforts are dedicated towards achieving and satisfying their basic needs. Producing more than that, is difficult. Thus, the standard of living is low.
Modern amenities such as water supply, electricity, entertainment, etc. are absent. With less or no development in science or technology, medical facilities are inadequate. The awareness about health and medicine is less. Due to no advancements in infrastructure and other facilities, the instances of succumbing to death due to diseases and animal attacks are more.
Since occupations are transferred from one generation to another, there is less freedom to choose one's field of work. Typically, there is a leader whose decision is final. Anyone who does not follow the convention, might also be outcast from the group. Thus, there is almost no freedom of choosing one's profession, and traditions rule one's lifestyle. They may also have gender-designed roles, that are rigid and do not change easily.
In a modern economy, we have plethora of choices, right from our attire to our profession. But what many of us forget is the difference between needs and wants. While food, clothing, and shelter are our basic needs, anything above or apart from them is a want. A modern economy does give us a higher standard of living and choices in every aspect of life. However, the raised standard of living, developments in infrastructure and technology, and our constantly rising wants have negative effects too. Many natural resources are on the verge of depletion, the environmental problems are only growing, and life on the planet is at a risk of being wiped out. Moreover, there is fierce competition and the hunger for money and power is on the rise. The rich are oppressing the poor, and there is disparity in every aspect of life.
It is easy to criticize the traditional economy as being underdeveloped and primitive, but it's important to understand the dark side of a modern economy. While in a modern economy, only money rules, traditional economies help maintain the real essence of living.