The different types of economic systems that are broad generalisations, in reality they are much more complex and mixed and in a world which is increasingly interconnected there is no pure type. However, for purposes of understanding we would present the following types:
The most basic level of economic development, with the simplest ‘division of labour’, is the hunting and gathering economy. By ‘division of labour’ we mean economic specialisation of society’s task, each of these tasks is connected with other related tasks. In the hunting and gathering economies there is no cultivation and no manufacturing. People obtain their survival necessities directly from nature. The men usually hunt and women gather fruits, roots etc.
These societies are organised in small ‘bands’ of people, about 15 to 30 people. The small size of such societies is dictated by the nature of their economy. Hunting and gathering can support only a limited number of people, at subsistence level, producing enough food, clothing shelter to be able to survive.
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There is no surplus in other words there is nothing left after people meet their basic needs. Hunting and gathering societies are often nomadic. Once they use up the available resources in one place they move on to another place, usually within a limited range.
Since hunting gathering societies have a limited degree of specialisation of tasks or discussion of labour, the band or clan had a greater degree of similarity of experience. Therefore, there is a greater level of consensus and community participation in all aspects of life. Also ownership is communal.
From the origin of human societies several million years ago, roughly around 10,000 B.C. all societies had hunting and gathering economies. Today there are few societies which practice hunting and gathering, even if they do, they have introduced new techniques and influences from the larger world around them. Some of the best examples of hunting gathering societies are the Bush People of Kalahari Desert.
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When small societies learned the more complex mechanism of sowing seeds and growing plants and breading animals so that they could domesticate and breed herds of them, they were in a position to enter a new phase – the pastoral phase. This phase involved cultivation on a small scale, usually gardens, for immediate, limited subsistence level consumption.
The technology used was very simple primarily human power and hand tools such as hoes and plows that are more often pushed by a person. The other aspect of this economy is the herding of livestock. These tasks of growing plants and raising animals obviously involved a fair an amount of settled life.
Among the pastoralist there are the nomadic varieties that follow a seasonal migration pattern that can vary from years to year. The time and destination of migration are determined by primarily by the needs of herd animals for water and fodder.
These nomadic societies do not create permanent settlements but they live in tents or other relatively easily constructed dwelling year round. The pastoral society is larger than a hunting gathering society but still relatively smaller. The division of labour is little, based on age and sex as in the hunting gathering societies.
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Many social scientists and experts believe that cultivation of crops probably started in an agrarian economy, where cultivation of crops took primacy over hunting and gathering for food.
This is accompanied by technological innovations such as metal tools, the invention of the plough using animal power to tilling of the land. In agricultural society’s permanent settlement are the rule. Sufficient food surplus can be produced to feed larger groups.
Thus agrarian societies are organisationally more complex with definitive hierarchal structures. With more surplus food available some members of the society were free to pursue other occupations like weaving, pottery, metalwork, etc. Agrarian economies made it possible for towns and cities to develop and for full-time crafts people and traders to emerge.
There was also sufficient production to support a ruling class as well as a range of specialised occupations including administrations, soldiering and scholars. Many eminent civilisations were agrarian societies. Ancient Rome was a bustling city with links to distant points by trade routes both by land and sea.
During the last 200 or more year, the changes that have taken place in social organisation and economic systems have been tremendous. The shift was machines replacing human and animal power. The replacing of hand labour with power-driven machinery and the economic and the social change that resulted from this is known as ‘Industrial Revolution’. Various path breaking innovations such as the steam engine, spinning jenny, among others, made possible mechanised production on a large scale to meet needs of the masses of people.
From England, industrialisation spread to Europe and other parts of the world. Since the power driven machinery had to be stationed at a particular place, as they were huge, there arose the factory system. The factory is a place where workers could assemble at one place and work on the machine.
The cost, size and complexity of this machinery made it unsuitable for the earlier system of scattered production in small shops and homes. The factory system had many consequences: A new class of factory workers emerged. These workers had a different relationship with factory owners and their employers, which was impersonal and detached.
In contrast to hand production, which had individual touch and interpretation, factory production was standardised. Standardisation made it possible from parts to be easily replaceable, leading to assembly line production, where different parts were produced by different workers and then assembled together. This kind of assembly line production produced a sense of estrangement from one’s work. Karl Marx the famous thinker elaborated on this situation of alienation.