At WiseGEEK, we're committed to delivering accurate, trustworthy information. Our expert-authored content is rigorously fact-checked and sourced from credible authorities. Discover how we uphold the highest standards in providing you with reliable knowledge.
What Is a Natural Economy?
A natural economy is an economic system directly opposed to financial currency, or the currency that focuses on finances, money, profit and trade. Instead of paying for items, citizens barter for resources. Some forms of this economy set items at a certain value for fair bartering, but this is not necessarily inherent to the system. Resources, such as trees and water, are harvested for direct consumption, rather than for making money. This means a natural economy is based more on what nature can produce, rather than how much has to be harvested to make a profit.
A financial economy describes the economy adopted and used by most of the world. This economy focuses on using and making money, along with trading and harvesting resources for a profit. In this system, businesses use resources based on how much is needed to make a profit. All items also have a value, unlike a natural economy in which the value is based on the usefulness of the item instead of on arbitrary factors. Another term for a financial economy is "artificial economy, because this economic system is more about arbitrary values and profit instead of nature.
Bartering is the mainstream form of trade in a natural economy. In some systems, bartering is not used and the group of people in the economy allocates resources based on need. Money plays no part in this economy, but some systems set a value on items based on how useful the item is thought to be. This value system is created so bartering is fair between all parties involved.
Resources are needed for any economic system to survive. A financial economy is about taking resources based on profit. In a natural economy, profit is not part of the economy, so nature determines how much of the resources are harvested. This means much fewer resources are harvested.
For example, a field grows at a rate of 5 percent per year. A farmer in a financial economy knows he or she must harvest at least 8 percent of a particular field to make an adequate profit, even though that's more than what is grown. The natural economy may only harvest 5 percent of the field — to meet the economy's immediate needs. This is because the resources harvested in a natural economy are based on need, not profit.
Consumption in a natural economy, as opposed to a financial economy, is not done to excess. Instead, resources are taken as needed; otherwise, the resources are not harvested and remain in nature. This type of economy is more sustainable and ensures resources are not mined to exhaustion.
AS FEATURED ON:
AS FEATURED ON:
-
![A farmer knows how much of a harvest he needs per field in order to make a profit.]()
By: Johan LarsonA farmer knows how much of a harvest he needs per field in order to make a profit. -
![In a natural economy, resources, such as trees and water, are harvested for direct consumption, rather than for making money.]()
By: Massimo CattaneoIn a natural economy, resources, such as trees and water, are harvested for direct consumption, rather than for making money.
Discussion Comments
I wonder if it would be possible to combine aspects of both the natural economy and the financial economy for a new type of global economy. For example, essential goods would be bartered and luxury goods sold. I wonder if that would work.
@ddljohn-- I'm sure that the economy of nature is better for the earth, but I doubt that anyone can stay in this system for too long. It sounds like an attractive system but it has its disadvantages as well. For example, I won't have access to a variety of goods in that system. I will only have access to what's grown locally. Also, I may have to barter several times to get the good I want because a seller nearby may not have a need for what I'm bartering.
As they say, the grass appears greener on the other side. I'm sure that if we had a natural economy, we would wish that we had a financial economy instead.
It sounds like the natural economy is much better for the environment and the earth's natural resources. If we lived in a natural economy instead of a financial economy, we wouldn't be running out of natural resources, exploiting the environment and causing animal species to go extinct. I think a natural economy would also prevent a part of the world living in wealth and another part in poverty. Life standards would be more equal across the globe.
Does anyone agree with me?
Post your comments