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Traditional and command economy

August 10, 2009
Traditional Economy
Traditional Economy is a system where the allocation of available resources is made on the basis of inheritance. It is found in rural regions with high level survival farming. Countries that evolve their economies past the traditional level often develop into market economies or command economies.
A traditional economy is where people produce most of what they need to survive. Hunting and gathering, farming, and herding cattle are the bases of traditional economy. People hunt for the food they eat or raise it themselves. Often they make their own clothing and tools. If they produce more food than they need, they trade the surplus, or extra food, for goods made by others.
Countries have traditional Economy
There is no traditional economy in the world now. India is not a traditional economy. Many economies continue with traditional small scale/ cottage/ village industries limited by local markets as well as traditional small scale fragmented land farming, but most economies have modern industries and transport, growing urbanization. None of the countries can be strictly referred to as traditional economies.
Command Economy
Command Economy or planned Economy is where the goods and services are available for the purchase and the prices are regulated by the central or state government. The government is has a power to take decision regarding the production, utilization of the finished product, and allocation of the revenues earned from the distribution. Government certified company will distribute the work among the labors.
However experience suggests that in planned economy in 20th century have not produced the high growth as free market or mixed economies. Free market economy means is an economy where the market is free to operate based on people wants and needs. The aim of command economy is to gather the resources that can be invested in a country and can get the profit. The government says that controlling the economy will give more jobs to people of the country which will increase the way of living of the people.
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