A subsistence economy is a non-monetary economy which relies on natural resources to provide for basic needs, through hunting, gathering, and subsistence agriculture. “Subsistence” means supporting oneself at a minimum level; in a subsistence economy, economic surplus is minimal and only used to trade for basic goods, and there is no industrialization.
In the history of the world, before the first cities, all humans lived in a subsistence economy. As urbanization, civilization, and division of labor spread, various societies moved to other economic systems at various times. Some remain relatively unchanged, ranging from uncontacted peoples, to poor areas of developing countries, to some cultures that choose to retain a traditional economy.
Capital can be generally defined as assets invested with the expectation that their value will increase, usually because there is the expectation of profit, rent, interest, royalties, capital gain or some other kind of return. However, this type of economy cannot usually become wealthy by virtue of the system, and instead requires further investments to stimulate economic growth. In other words, a subsistence economy only possesses enough goods to be used by a particular nation to maintain its existence and provides little to no surplus for other investments.
|Year||Subsistence Income Per Day (Current $)|
Global annual mean subsistence income is estimated at 1 ounce of gold equivalent.
- Hunting and gathering techniques, also known as foraging:
- Artisan fishing — a term which particularly applies to coastal or island ethnic groups using traditional techniques for subsistence fishing.
- Aboriginal whaling, including the Subsistence hunting of the bowhead whale in the Arctic
- Horticulture — plant cultivation, based on the use of simple tools.
- Subsistence agriculture — agricultural cultivation involving continuous use of arable (crop) land, and is more labor-intensive than horticulture.
- Pastoralism, the raising of grazing animals:
- Pastoral nomadism — all members of the pastoral society follow the herd throughout the year.
- Transhumance or agro-pastoralism — part of the society follows the herd, while the other part maintains a home village.
- Ranch agriculture — non-nomadic pastoralism with a defined territory.
- Distribution and exchange:
- Reciprocity — exchange between social equals.
- Potlatching — a widely studied ritual in which sponsors (helped by their entourages) gave away resources and manufactured wealth while generating prestige for themselves.
- LETS — Local Exchange Trading Systems.
- A parasitical society, subsisting on the produce of a separate host society
- Garbage picking, when subsisting in a larger economy
- ^“What is subsistence economy? definition and meaning”. BusinessDictionary.com. Archived from the original on 1 November 2017. Retrieved 7 April 2018.
- ^“Archived copy”. Archived from the original on 2008-10-07. Retrieved 2009-11-01. Chief Seattle to President Pierce regarding sale of land
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.