One advantage of a traditional economy is that it tends to be more stable than a market economy. Traditional economies are based on tradition and custom that guide them in a way that makes sense to all participants.Continue Reading
A traditional economy is, as the name suggests, based on long-established traditions. Typically, traditional economies rely on fishing, simple farming, hunting and gathering. The medium of exchange tends to be barter rather than money. Over the centuries, these societies have worked out a system that sustains the community and the environment around them. Though such systems are not always equitable, they do allow a community to persist indefinitely provided that the environment does not change drastically and that outsiders do not bring conflict or new, potentially destabilizing ideas.
Though most traditional economies have faded, some communities still structure their lives according to the customs of their history. One such group is the Inuit. Though they interact with other market-based economies around them, they also still participate in traditional activities such as whale-hunting, and they divide the gains of such ventures according to the old ways. The stability of traditional economies suffers severe threats, however, when climatic conditions change and their traditions, which are by nature inflexible, cannot adapt to the new realities of the environment.Learn more about Economics