This paper is part of a larger study on how economically successful Indigenous people manage their involvement in the Indigenous economy and the mainstream economy at the same time. It attempts to develop some ideas about the Indigenous economy: how it works, and how it has been able to survive under the domination (and sometimes direct attack) of the mainstream capitalist economy. It argues that the Indigenous economic system has not been destroyed, despite the radical changes that have occurred in the Indigenous economy since the European invasion. Drawing on the work of economic anthropologists such as Marshall Sahlins (1974), and on theory developed by Mervyn Hartwig (1978) in the late 1970s, the paper suggests that Indigenous people continue to participate in the Indigenous economy as a separate economic system, contradictory to the dominant capitalist system, and carrying its own social relations, ideology and economic structure, even in the midst of the destruction of the 'traditional' way of life.
Despite this contradiction, the capitalist and Indigenous modes of production are able to coexist because consumption, distribution and exchange is what is most important in the Indigenous form, while production is the important thing for capitalism. The flexibility that capitalism allows in the sphere of consumption allows the Indigenous economy space to reproduce itself, while the flexibility that the Indigenous economy is able to tolerate in its spheres of production means that capitalist imperatives can be met or avoided. This explains why the Indigenous economy and its social forms have been so resilient in the face of an overwhelmingly powerful and coercive capitalist opposition.