Question

Answer the following question:
Discuss the nature of primitive economies.

Answer 1

Primitive economic systems have characteristics that make them structurally different from modem economic system:

They are:

1. Inadequate, ineffective, and wasteful use of nature (in the absence of advanced technology), (For example shifting cultivation where the agricultural surplus is also not created).
2. Money as a store of value and a medium of exchange is not widely used in primitive society. Therefore modern concepts such as banking and credit are absent. Relations in primitive societies are based on barter.
3. The profit motive of economic dealings is absent in primitive economies. Mutual obligation, sharing, and solidarity are important.
4. The co-operative and collective efforts are important in these economies which are communal economies.
5. The rate of innovation is very low in these economies. Therefore there is stability and uniformity due to simplicity and uniformity of the techniques used.
6. The market as an institution is absent. Weekly markets or seasonal markets exist. Therefore competition and monopoly are absent.
7. Economic activities in primitive societies are directed largely to the manufacture of consumption and not the production of goods.