What Does Subsistence Economy Mean in Business

Historically, all people lived in subsistence economies. This, of course, was before the existence of urbanization and large cities. As civilizations grew and developed, divisions of labor took place, different values were placed on different goods and services, and societies began to evolve into different types of economies. The ideology of sustainable development challenges the dominant monocultural vision that separates man from nature, nature from culture, etc., thus fragmenting what should have been an ecological continuum, human interaction with nature, into disjointed realms. The reason for this fragmentation is to divide the scenarios into many sub-scenarios, each of which can then be made more efficient. This way of approaching problems as if they have nothing to do with each other is the result of short-term thinking, which is not sustainable, since the essence of sustainability lies in the ability to think long-term. Focusing on increasing the yield of a particular crop through the use of fertilizers and pesticides could initially yield positive results, but could lead to soil damage due to their intensive use. Understanding the need for biodiversity to maintain the delicate balance in an ecosystem and paying attention to it when applying different production methods is a good start to practicing sustainability. A subsistence economy is one that focuses on the basic stock (the provision of food, clothing, housing) rather than the market. [1] From now on, “subsistence” is understood to mean that one provides for one`s needs at a minimum. Often, the subsistence economy is cashless and depends on natural resources to meet basic needs through hunting, gathering and agriculture.

In a subsistence economy, the economic surplus is minimal and is used only for commodity trade, and there is no industrialization. [2] [3] In hunting and collective management societies, resources are often, if not generally, underutilized. [4] Moreover, an often overlooked advantage of subsistence economies is that they are less environmentally destructive than industrial markets. Indeed, economic activities are traditional in nature and do not depend on chemicals or fossil fuels, and therefore do not contribute to water and air pollution. However, theoretical considerations suggest that, under certain circumstances, increased resource scarcity leads to new population growth: when the community`s natural resources are depleted, households need more “hands”. Undoubtedly, extra hands could be obtained if adults worked even harder, but in many cultures it would not be enough for men to collect firewood and fetch water for domestic use.68 Undoubtedly, additional hands could also be obtained if children were removed from school and taken to work. But as we`ve seen, most of the time, kids don`t go to school anyway. In short, when all other sources of additional labour become too expensive, more children are produced, further damaging the local resource base and prompting the household to grow even more. This does not necessarily mean that the fertility rate will increase. If the infant mortality rate were to fall, there would be no need for more births for a household to acquire more hands. In this way, however, poverty, household size and environmental degradation could reinforce each other in an increasing spiral. At a time when a set of opposing factors reduced the benefits of more children, thus stopping the spiral, many lives could have suffered from an exacerbation of poverty.

In the appendix, I provide a simple template to illustrate such possibilities. Instead of identifying “man-made” shocks such as wars and historical migrations, Durante (2010) takes a more radical approach, directly linking bourgeois capital to the environmental factors that determine the need for cooperation. The idea (similar to Ostrom, 1990) is that the first subsistence farming societies would develop a culture of cooperation and trust where it is necessary for survival. He argues that in regions where rainfall and temperature vary greatly from year to year, corporations had to develop bourgeois capital to support investments in irrigation and other major works that facilitated survival. Similarly, the development of citizen capital in regions with very different climatic conditions increases the chances of survival by facilitating trade and risk sharing. Using long-term climate data dating back to 1500 AD, he actually finds a significant correlation between confidence and these climate variables in the cross-section of European regions. .