What is a Traditional Economy?

Definition: A traditional economy is a basic economic system where customs and traditions are the predominant elements that shape the way trade and commerce is performed. It is fundamentally based on social support and community-oriented activities.

What Does Traditional Economy Mean?

A traditional system is probably the most basic form of an economic system. A given community or group of people engage in different activities individually to produce goods or services that are required by the rest of the group. These activities are normally agriculture or hunting.

In this modern era, this systems are considered underdeveloped, since they lack certain elements that increase the life quality of its participants, such as, proper medical assistance, basic utilities or even a local currency. Trading activities are conducted through barter and there is no “wealth” in terms of capital accumulation, since the system aims to fulfill the most fundamental biological needs.

On the other hand, tradition and customs are also important in this kind of environment. They are normally ruled by elders or leaders with sufficient expertise to judge and decide about economic policies or decisions, mostly concerned with proper distribution of goods.


The Oribu tribe is a group of nomads that live in certain area of the Brazilian Jungle Forest. They have been studied for a while to understand how their economic system works and how resources are distributed among the tribe members. The last census made to them identified 1,000 members in the community. This study showed that they are mostly an agricultural community, they know how to locate adequate places to grow certain vegetables and fruits and they are also skilled fishermen.

When it comes to distribution, they have a tradition where everything obtained during the daily fishing activities is placed in the center of the camp. An individual referred to as “The Ancient” blesses the food and ask some local deity to prosper the tribe. Then, everyone steps to the center and start taking as much food as they need. They have this custom where no one takes more than what is actually needed. They function as a traditional economy and therefore, no currency is required for trading or distribution.