Semi–subsistence sectors predominate throughout Pacific Island countries. But the nature of the social organisation that characterises them, remains generally unexamined. This paper introduces the concept of ‘traditional enterprise’, based on observations in Tonga, to help analytically illuminate the sector. It also investigates processes of household dynamics that lead to selective upward social mobility and the consequent fragmentation of the generalised peasant household. Better understanding of the basic units, goals and means of achieving them among the traditional, rural, or the ‘grass roots’ sectors should help the current developmentalist emphasis on informal sector growth.