A traditional economic system is one in which behaviour is based primarily on tradition, custom, and habit. There is little change in the pattern of goods produced from year to year, other than those imposed by the vagaries of nature. The techniques of production also follow traditional patterns, except when the effects of an occasional new invention are felt. Finally, production is allocated among the members according to long-established traditions. In short, the solutions of the economic problems (what to produce, how to produce, and how to distribute) are given by traditions. Such a system works best in an unchanging environment. Under static conditions, a system that does not continually require people to make choices can prove effective in meeting economic and social needs.
Traditional systems were common in earlier times. The feudal system, under which most people lived in medieval Europe, was a largely traditional society. Peasants, artisans, and most other living in villages inherited their positions in that society. They also usually inherited their specific jobs, which they handled in traditional ways. For example, the black-smith made customary charges for dealing with horses brought to him, and it would have been unthinkable for him to decline his services to any villager who requested them. Today only a few small, isolated, self-sufficient communities still retain
mainly traditional systems. Examples can be found in the Canadian Arctic and in Patagonia. Also, in many less-developed countries significant aspects of economic behaviour are still governed by traditional patterns.
