Economic system of simple societies

The productive skills are simple and productivity is low therefore these societies cannot sustain large population size. Most of the adult members are engaged in food gathering activities.

There is little or no surplus so the social inequalities are not significant and economic interaction takes place within egalitarian frame-work.

The production system is simple but exchange of goods and services assume a complex form. The forms of exchange are reciprocal and redistributive type.

The members lack high degree of achievement motivation as there is neither any intense preoccupation on generation and accumulation of economic surplus.Infact most economic activities emphasize on giving rather than storing or accumulation. Private ownership of means of production is non-existent.

There is no clear separation between domestic economy and community economy as they overlap to varying degrees.

The economic system is dominated by sacred consisting of magic-religious ideas.

The innovation is rare and change is slow. The customary practices and norms regulate production and exchange of goods and services.