An alternative to the market system is administrative control by some agency over all transactions. This agency will issue edicts or commands as to how much of each good and service should be produced, exchanged, and consumed by each economic unit. Central planning may be one way of administering such an economy. The central plan, drawn up by the government, shows the amounts of each commodity produced by the various firms and allocated to different households for consumption. This is an example of complete planning of production, consumption, and exchange for the whole economy.
In a traditional society, production and consumption patterns are governed by tradition; every persons place within the economic system is fixed by parentage, religion, and custom. Transactions take place on the basis of tradition, too. People belonging to a certain group or caste may have an obligation to care for other persons, provide them with food and shelter, care for their health, and promote education. Clearly, in a system where every decision is made on the basis of tradition alone, progress may be difficult to achieve. A stagnant society may result.
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