Natural economy is a type of economy in which money is not used in the transfer of resources among people. It is a system of allocating resources through direct

bartering In trade, barter (derived from ''baretor'') is a system of exchange in which participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money. Economists disti ...

, entitlement by law, or sharing out according to traditional custom. In the more complex forms of natural economy, some goods may act as a referent for fair bartering, but generally currency plays only a small role in allocating resources. As a corollary, the majority of goods produced in a system of natural economy are not produced for the purpose of exchanging them, but for direct consumption by the producers (

subsistence A subsistence economy is an economy directed to basic subsistence (the provision of food, clothing, shelter) rather than to the market. Henceforth, "subsistence" is understood as supporting oneself at a minimum level. Often, the subsistence econo ...

). As such, natural economies tend to be self-contained, where all the goods consumed are produced domestically. The term has often been used in opposition to other forms of economy, most notably capitalism. Rosa Luxemburg believed that the destruction of the natural economy was a necessary condition for the development of capitalism.

Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...

described the

Inca Empire The Inca Empire (also known as the Incan Empire and the Inka Empire), called ''Tawantinsuyu'' by its subjects, ( Quechua for the "Realm of the Four Parts", "four parts together" ) was the largest empire in pre-Columbian America. The adm ...

as a natural economy because it was both isolated and based around exchange rather than profit. Other writers have used a more relative sense of natural economy. Belgian economic historian

Henri Pirenne Henri Pirenne (; 23 December 1862 – 24 October 1935) was a Belgian historian. A medievalist of Walloon descent, he wrote a multivolume history of Belgium in French and became a prominent public intellectual. Pirenne made a lasting contributi ...

noted that

medieval Europe In the history of Europe, the Middle Ages or medieval period lasted approximately from the late 5th to the late 15th centuries, similar to the post-classical period of global history. It began with the fall of the Western Roman Empire a ...

has often been described as a natural economy despite the existence of money, since money played a much less significant role than in earlier or later periods.

References

Economic systems {{Econ-system-stub

See also

References