A subsistence economy is an economy directed to basic subsistence (the provision of food, clothing, shelter) rather than to the market.[1] Henceforth, "subsistence" is understood as supporting oneself at a minimum level. Often, the subsistence economy is moneyless and relies on natural resources to provide for basic needs through hunting, gathering, and agriculture. In a subsistence economy, economic surplus is minimal and only used to trade for basic goods, and there is no industrialization.[2][3] In hunting and gathering societies, resources are often if not typically underused.[4]

In human history, 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 marginalized 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.[citation needed]

It is common for a surplus capital to be invested in social capital such as feasting.[5]

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  1. ^ 'Subsistence agriculture' in: Alan Barnard and Jonathan Spencer, eds. (1996) Encyclopedia of Social and Cultural Anthropology, London and New York: Routledge, p.624.
  2. ^ "What is subsistence economy? definition and meaning". BusinessDictionary.com. Archived from the original on 1 November 2017. Retrieved 7 April 2018.
  3. ^ "Subsistence Economy". Archived from the original on 2008-10-07. Retrieved 2009-11-01. Chief Seattle to President Pierce regarding sale of land
  4. ^ Marshall Sahlins (1972) Stone Age Economics, Chicago and New York: Aldine-Atherton, passim e.g. pp.17,34,42,50.
  5. ^ http://www3.brandonu.ca/cjns/30.2/03boyd.pdf[bare URL PDF]