Traditional economies
About this video
Traditional economies are small-scale ways that families, clans or tribes organize themselves, focused on survival and happiness rather than measures like GDP or productivity. Roles are usually based on tradition, such as doing what your parents did, and trade happens mainly within the group, often by bartering instead of money. They describe much of human history and still exist inside modern economies.
You'll be able to
- describe the goals of a traditional economy and how they differ from GDP-focused economies.
- explain how roles are decided in a traditional economy.
- explain how trade usually happens in a traditional economy.
Key words
- Traditional economy
- A small-scale economy, like a family or tribe, where tradition guides roles and the goal is survival and well-being.
- GDP
- Gross domestic product, a measure of how much an economy produces; it doesn't measure happiness.
- Agrarian
- Based on farming.
- Bartering
- Trading goods or services directly for other goods or services, without money.
- Apprenticeship
- Learning a role or skill by working alongside someone experienced.
Transcript
- [Instructor] So let's talk a little bit more about traditional economies. As we've talked about in other videos, when we think about economics, we think about very large scale ways that resources are allocated. We oftentimes, at one end of a spectrum, might imagine a command economy, maybe where the government, some central body figures out who gets what.
And then at the other extreme, we might imagine a market economy. An economy where different people are producing different things and they're trading with each other. And there might be market prices that might many ways determine how resources get allocated.
And in between, you can have a mixed economy where maybe the government does certain things, maybe it does the military, it provides some regulations, it provides in certain countries, healthcare in a mixed economy. It might provide public education, but for a large part of the economy, it allows markets to be relatively running freely.
Now, traditional economies, we often might think of how humanity organized itself for most of human history, but it's also how a lot of even families or communities might organize themselves today at a smaller scale within any of one of these larger economies.
When we think of a traditional economy, we really think of a group of people. Maybe it's a family or it's a clan, or it's a tribe where they're not trying to measure things like GDP or productivity, but they're really just trying to say, hey, we all need to survive.
Survive and be happy. However we define being happy. Some economists sometimes point out that things like gross domestic product don't measure actual happiness. And sometimes money doesn't go along with being happy. And so in a traditional economy, they aren't looking at GDP figures, but it might be the tribe, the clan, the family, all working together to ensure as much as possible everyone's success.
So in this type of traditional economy, and there's a whole bunch of variation on how it could happen. It could be an agrarian economy like we see here. There might be herding, and we see herding in this picture as well. It could be based on hunting, it could be based on gathering.
But a lot of times the roles are based on tradition. Roles are driven by tradition. In many cases, the tradition might have different gender-based roles, or maybe whatever your parents did is more likely to be what your role is going to be. Maybe you got mentored or got an apprenticeship in that, and trade is primarily happening within this group.
Or maybe it's even allocated some way within the group. And when it happens, you're not usually talking about money. It's oftentimes bartering and especially if you're now going into other communities. So I'll leave you here. This is kind of a very broad way of thinking about economies, not just before some of our more modern command, mixed, market economies, but also how a lot of groups might organize themselves within these broader buckets.
But there's a lot of variation here, as I just mentioned, and it is interesting to think about that not on every level of society you have one of the, I would say the big GDP or productivity-focused types of categorization.
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