The traditional economy - what's it all about?

1 Jan 2007

Ralph Regenvanu, Director of the Vanuatu National Cultural Council explains the meaning of the 'year of the traditional economy' declared by the Vanuatu government in 2007.


What is the ‘traditional economy”?

The Concise Oxford Dictionary defines “economy” as “(administration or conditions of) concerns and resources of a community” and also as “(an) organised system”. At the most basic level, the ‘economy’ refers to how a society organises itself to sustain its members - how it manages and shares the resources it has between them, how it feeds, clothes and accommodates them, and how it instils in its members the values required in order to keep the society going. The economy also includes, therefore, governance - the way the community’s concerns are managed and transformed into rules and procedures, and the way in which resources are managed and allocated to meet the community’s needs according to these rules – and values - the basic shared concepts and understandings within a society which guide the actions of its members. These values in turn are embedded in the language that the members of the community use to communicate with each other.

The traditional economy (“kastom ekonomi” in Bislama) refers to the way in which our indigenous ni-Vanuatu societies are organised to look after the concerns and resources of their members. This is in contrast to the way the “Western”, “capitalist” or “cash” economy organises itself to look after the concerns and resources of its members.

The traditional economy is the main economy in Vanuatu

The reality of Vanuatu today is that the traditional economy is by far the most important and predominant economy in the country. Far more people participate in the traditional economy, and to a significantly greater extent, than they do in the cash economy.

In Vanuatu today, the great majority of people (roughly 80%), live in rural areas. Almost all of this 80% of the population:

-    live in settlements (villages) with other members of their traditional extended families, on land that is theirs under the rules of custom;

-    satisfy most of their food and other requirements using traditional methods and forms of land, sea and resource utilization (eg, gardening practices), on their customary land and sea;

-    speak their indigenous language;

-    are governed by traditional leaders (chiefs and chiefs councils);

-    have their disputes resolved within communities by traditional leaders using traditional dispute-resolution approaches; and

-    have participated in custom ceremonies which cement their place as members of their community.

 In addition, a large proportion of the other roughly 20% of ni-Vanuatu living in urban areas also participate in and rely on the traditional economy to a significant degree, utilizing kinship networks to access food and other resources and dealing with their disputes in the traditional way.

Today, even the most isolated rural dweller needs cash to pay for tea, sugar, kerosene, iron and steel implements and school fees. The fact that we are classified as a “Least Developed Country” by the United Nations, however, is based on the fact that the great majority of the population use only a tiny amount of cash in their lives. Their participation in the traditional economy is far more important and pervasive than their involvement with the cash economy. It is true to say, in fact, that the traditional economy constitutes the political, economic and social foundation of contemporary Vanuatu society.

The benefits of the traditional economy

There are many important benefits that Vanuatu gains from the strength of its traditional economy. One of the most important is that everyone has access to land on which to make gardens and from which to access food and make a living. The traditional concept of the right to use land which is not your own to make food gardens and access resources means that individuals or families who do not have access to their own customary land (or enough of it) to meet their needs can be given the right to use other families’ land. Another important benefit of the traditional economy is its excellent sustainable management of the natural environment. The main contributing factor to the New Economics Foundation’s declaration of Vanuatu as the “happiest country in the world” last year was (to quote from the report) our “extremely rich natural capita, with unspoilt coastlines and unique rainforests”. This rich natural capita has been achieved through thousands of years of excellent resource management traditions and practices by our ancestors, traditions that are still practiced today. Another important characteristic of the traditional economy which provides many social benefits is that establishing, maintaining and mending relationships between groups (be they families, clans or larger communities such as villages, language groups or even islands) is the most desired outcome of any ceremonial activity undertaken.

The concrete benefits of the traditional economy, then, are that:

-    there is more than enough food for everyone in the country, and we enjoy a food security that only comes with growing your own food;

-    the traditional diet that uses food from the gardens is safe, healthy and nutritious;

-    there is no homelessness in Vanuatu, a boast (as far as I know from my travels around the world) that only us, the Solomon Islands and PNG can make (the three countries in which the traditional economy is probably the strongest);

-    we have no old peoples’ homes and no mental asylums - everyone is cared for within the extended family unit;

-    we enjoy a general level of peace and social harmony throughout the country that is the result of traditional values of respect, equity, the promotion of relationships and a restorative community-based system of dispute resolution.

The “Economic opportunities fact finding mission” sponsored by NZAID and AusAID last year had the benefit - compared to earlier economic studies - of being undertaken after the concept of the traditional economy was becoming widely known locally. Accordingly, its report recognised that “many of the functions of modern growth – well-being, stability, equity, social cohesion and sustainable livelihoods for an expanded population - are also well provided for through Vanuatu’s strong and deeply held customary values including its custom economy”, and stated that efforts to promote this economy “should be supported”. More importantly, the report stated that

[Vanuatu’s] most understated productive-sector is the massive response within its traditional (island) economy to a rapidly growing population. … Although growth of Vanuatu’s GDP has not been spectacular, it’s traditional, largely non-monetarised, rural economy has successfully supported a 90% increase in the rural population in the 26 years since independence (from about 95,000 in 1980 to an estimated 180,000 now)


(Bazeley, P. and B. Mullen, “Vanuatu: Economic Opportunities Fact-finding Mission”, UK and Australia, 2006).


The cash economy is undermining the traditional economy

Unfortunately, the current development model being promoted in Vanuatu, and the “development” policies and activities being enacted as a result, are directly destroying, displacing, eroding and threatening this traditional economy. The alienation of land from the traditional economy through leasehold title, for example, is removing the means for ordinary people to be economically productive and enjoy food and social security. In addition, as can be seen on Efate, most of the “development” of this leased land is massively degrading our natural environment and greatly reducing the rich natural capita referred to in the New Economics Foundation report.

Many policies of the Government and our international development partners place high value on cash and the outputs of the Western economy (eg, consumer goods), while either explicitly or implicitly denigrating the value of the traditional economy and its outputs. These new values are being reported in the media and promoted through the education system. We are both importing the Western lifestyle (as well as importing foreign investors) and educating ourselves to want and expect this lifestyle. However, the Western lifestyle and the capitalist economy are premised on ignoring the community (individualism), unsustainable use of the environment (consumerism) and removing food and social security – all basic foundations of the traditional economy. As a result, we are seeing a loss of many positive traditional values (eg, respect) and the loss of the indigenous languages that transmit these values. The traditional governance system - by far the most important system of governance in Vanuatu, much more so than the “Government” – is being eroded and distorted because we have invested so very little in its development since independence, while the current wave of “good governance” capacity-building initiatives funded by our international development partners are all aimed at “improving” only the Western governance system (parliament and the bureaucracy). Most worryingly, the socioeconomic basis for a truly sustainable and self reliant development for this country – which must have as its basis the traditional economy - is being eroded.

The best example of all this is Port Vila itself. As rural people know all too well, over 90% of the cash available in Vanuatu at any one time circulates within Port Vila, never gets out into the rural areas and is eventually sent out of the country as repatriated profits or to purchase consumer goods. By far the largest part of the Western economy operates in Port Vila. Yet Port Vila is the one place in the country where the most real poverty, homelessness, hunger (malnutrition) and lifestyle diseases are now being experienced, as well as the greatest disparity between rich and poor. The obvious conclusion we can draw from this fact is that it is the Western cash economy that is creating poverty and hardship where there was none before, while the traditional economy continues to support and provide livelihoods to the great majority as it has done for millennia.

Why is this happening?

There are a number of factors that are contributing to the erosion of the traditional economy by the cash economy.

The most important of these is that we are not measuring or quantifying the contribution of the traditional economy to national well-being. Unfortunately, the only measure of national well-being that seems to matter to policy-makers in Vanuatu today is that of Gross Domestic Product (GDP) per capita – a crude measure of only the cash value of activities or production. It has been widely recognised for decades that GDP per capita is a misleading measure of economic activity that often promotes socially and environmentally destructive policies. As Robert Kennedy said in his opening speech on the first day of his campaign for the Presidency of the United States in 1968:

Gross National Product counts air pollution and cigarette advertising and ambulances to clear our highways of carnage. It counts special locks on our doors and the jails for the people who break them. It counts the destruction of the redwoods and the loss of our natural wonders. It counts napalm and it counts nuclear warheads and armored cars for the police to fight the riots in our cities…Yet the Gross National Product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry, or the strength of our marriages, the intelligence of our public debates or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile.

 (Quoted in Caulfield, C., “Masters of Illusion: The World Bank and the Poverty of Nations”, New York, 1996).

To use a current example from Vanuatu, the simple act of leasing and clearing of a piece of land would add to Vanuatu’s GDP – and therefore count as positive “development of the economy” – because the lease of the land, the hire of the bulldozer and the chainsaw, the purchase of the fuel to run them and the payment of labour could all be counted in cash. What would not be counted in cash would be the loss of gardening land and access to bush resources for the children of the land-holding family for at least two generations, the cutting down of ancient trees and the clearing of bush that provides habitat for wildlife and holds the rainwater in the ground, the pollution of the air, land and water with fuel and chemicals, the destruction of cultural sites important to identity, the weakening of the natural sea barrier resulting from removal of sand and whether the amount each labourer was paid constituted a decent living wage. On the other hand, a large extended family of 40 or so people producing all the food and other materials they require to live from their land and sea areas, providing food to other families as part of traditional relationships, as well as safeguarding their natural environment and important places of identity for the benefit of their future descendants, do not add one vatu to the GDP.

It is because GDP per capita is the measure we use of national well being that we have the strange situation where Vanuatu – a country with no homelessness - is classified as a “Least Developed Country” by the United Nations, while there are thousands of homeless people sleeping on the streets in our “rich”, “developed country” neighbour Australia. As the New Economics Foundation report demonstrated, when other measures of well-being are used (and not cash), suddenly Vanuatu is ranked at the top of a list of all countries in terms of the well-being of our citizens.

The lack of recognition of the traditional economy in Government policy is directly related to the lack of any measures we have for valuing it – it proves the truism that what we cannot measure, we cannot value. This is why there is a general lack of legal and policy safeguards to ensure the continuing operation and benefits of the traditional economy and why, where these safeguards exist, they have not been made a priority. For example, we still have a very badly implemented Environmental Impact Assessment (EIA) process, no mandatory social or cultural impact assessment for development projects, no effective land use planning or zoning, and no official process for undertaking genuine consultation with communities about what kind of “development” they would like to see take place.

However, the main reason the Government is not prioritising policies to support and promote the traditional economy is that the government is primarily concerned with obtaining more cash in order to fulfil its mandate to provide and extend services to the population. As the traditional economy is not a source of cash, very little attention has therefore been paid to it. This Government imperative is given further support by Vanuatu’s traditional bilateral partners (Australia, France, the EU, New Zealand), as well as from multilateral agencies such as the World and Asian Development Banks, all of which encourage the adoption of pro-foreign investment and pro-monetarisation policies to increase GDP at the expense of the traditional economy. And the education our own policy-makers are receiving does not assist them to ‘think outside the box’ when it comes to this tunnel-vision approach to development – in many ways, in fact, our education system is all about promoting the logic of the cash economy and a desire for imported consumer goods.

The traditional economy as the basis for sustainable development

The most widely-accepted definition of “sustainable development” is that given by the famous “Bruntland Report”: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (World Commission on Environment and Development, “Our common future”, Oxford, 1987).

It should be obvious that after 26 years of political independence, Vanuatu is economically more dependent and less self reliant than ever, and continuing to move further away from the sustainability embedded in our traditional economy. We are traveling down a road of “development” that is well known because it has been the prescription given to so many other countries of the Third World before us. But as the father of independence and Vanuatu’s first prime minister, Walter Lini, stated:

The future of Vanuatu will very much depend on what approach the Government decides to take. If Vanuatu decides to imitate other countries of the world, there can be no freedom in terms of being one’s own master with one’s own individual identity. But in deciding to be truly independent from any other country, whether within the region or afar, we shall have to work even harder to achieve this. The main effort will then be to really polish up our very own Pacific and Melanesian ideas, to make them the basis of unity in our own country and within our region and to give us the necessary strength and direction to choose wisely what we want and do not want for the future.

 Quoted inVanuatu: Twenti wan tingting long team blong independens”, Suva, 1980.


We are incredibly lucky in Vanuatu to have a traditional economy as strong as ours - it is Vanuatu’s greatest asset and also our greatest opportunity when it comes to achieving real sustainable development. In terms of achieving all the catchword markers of well-being in development-speak: “equity”, “environmental sustainability”, food security”, “social security”, “good governance” and “stability”, the traditional economy is the only proven system we have. In terms of coping with the needs of a much higher population - which will soon become our greatest national challenge - the traditional economy is also the only proven system we have. It would seem obvious, therefore, and “efficient” in terms of allocating and using resources and capacities already at hand as a basis for development, to focus on strengthening the traditional economy so that it can continue to satisfy most needs of the majority while also finding ways to develop its application to satisfying other non-traditional basic needs (in particular, access to health and education services). It would also seem obvious that, whilst pursuing an increased GDP, we need to take all possible steps to prevent this pursuit from undermining the traditional economy. A lesson we can learn from successful business is to stick to and enhance what you know and do best – your natural advantage.

The year of the traditional economy

The purpose of the Government’s declaration of 2007 as the “Year of the traditional economy” is to:

 a)    sensitise and raise the awareness of people about the central and crucial role the traditional economy plays in providing livelihoods, security and sustainable development outcomes to the population (this is a sensitisation that is probably most required in urban areas and among educated policy-makers, as the rural majority are already quite aware of this);

b)    encourage the revitalisation of traditional cultural practices and heritage, including resource management and governance practices, as the basis for the continuing strength of the traditional economy;

c)     encourage people who are involved in production within the traditional economy to value their role and to continue expanding production of traditional foods and wealth items within the traditional economy;

d)    encourage the Government to adopt and pursue development strategies for Vanuatu that strengthen and enhance the traditional economy, and revoke policies that displace and degrade it;

e)    prioritise the putting in place of safeguards to prevent activities to develop the cash economy negatively impacting upon the traditional economy - that is, to adopt a “precautionary” approach to development through such means as proper and broad-based planning, genuine community consultations, impact assessment, etc;

f)     encourage and facilitate the exchange of cash for traditional food and wealth items, both to generate cash incomes for people involved in the (rural) traditional economy and to encourage the revival of traditional practices and the eating of local food amongst those primarily involved in the (urban) cash economy.

Vanuatu is at the critical stage in its development where it can still continue to enjoy the best of both worlds – the benefits of the traditional economy and the benefits of the cash economy and Western technology. However, the more we ignore the “elephant in the kitchen” that is the traditional economy, and the more it is weakened, the door to this remarkable opportunity is fast closing.

 The countries of the Third World that have a real option to choose indigenous rather than Western solutions to their problems are those with access to a strong cultural heritage

M. Friberg and B. Hettne, “Greening of the world” in H. Addo (ed) “Development as social transformation”, London, 1985, quoted in K. Nurse, “Culture as the Fourth Pillar of Sustainable Development”, Paper prepared for the Commonwealth Secretariat, June 2006.


This article originally appeared on the Vanuatu Cultural Centre website and can be downloaded as a Word document here: