Traditional Economics

Traditional economy is one of the types of economic management systems . Traditional economy differs from other ways of economy in that in it the practice of using resources is determined by traditions and customs.

For countries whose economies are of a traditional nature, the existence of different forms of economic management, based on different forms of relation to property, is inherent. Quite often, in this way, the communal form of ownership is maintained, for which a natural-social form of management is characteristic.

The traditional economy also implies the existence of small private property, which, as a rule, is the foundation for the creation and development of small-scale production (represented by artisans and peasant farms).

Basic decisions in the traditional economy can be taken in different ways. This is influenced by the type of the existing economic order. In a natural-community way of life, the main economic decisions are made by a small group of society members (council of elders) or head of the clan. As for artisans and peasants, they make such decisions on their own.

The traditional economy has various stimulating levers that spur economic development. The natural-communal way, basically, operates with material incentives in relation to labor relations. They are associated with the need to meet basic life needs.

In conditions of the predominance of small-scale production, incentives are economic levers: excess income over expenditure. Of course, given the fact that such an economy is based on the personal labor of the participants, the amounts of such incomes are not very large.

Traditional economy is based on backward technology, manual labor, agricultural production. The existence of established traditions hinders the expansion of the use of technology and the dissemination of advanced information.

In general, such an economy can be characterized as an underdeveloped, inactive, stagnant system. Today, there are no countries left in the world that are running the farm in a purely natural way. Virtually every market economy has already penetrated market relations.

At the same time, a rather significant percentage of the world's population lives in the conditions of development of economic relations characterized by the term "sub-economy". First of all, we are talking about third world countries. One of the satellites of such systems is poverty. The existing wealth is concentrated in the hands of a few.

A traditional economy may not even have an official currency and work through barter.

Centralized economy is governed by state bodies, on the basis of directive programs and plans, direct hierarchical subordination to subordinate higher authorities, with state ownership of all means of production.

The modern economy of Russia is characterized by close connection with the process of formation of new conditions of economic management, the transition from a centralized economy to a market economy. Before the reforms in Russia, state property accounted for about 90% of production assets and about 80% of those employed in the economy.

Bureaucratization and monopoly, state regulation of prices led to a reduction in economic incentives for work and generally hampered technological progress. This led to reforms in the 1990s, during which state ownership gradually began to move into private hands.

To date, the Russian economy has undergone such transformations as overcoming the state's economy, competitive relations in the market, the market infrastructure is undergoing intensive development.