The reason that there is no discussion of the economics of the Shire in LOTR is because it’s not relevant to the story and the land and the people are all fictional. It doesn’t have to work.
Tolkien was setting up a dichotomy between the idyllic, paradise-like shire where everyone lives in harmony with nature and has lots of leisure time and no one wants of necessities and everyone gets along , etc, is to set up a counterpoint vs industrialization and ugliness and capitalism etc. it’s just a big old trope. Just like sets in a play, it’s two-dimensional. It’s also a backdrop setting up an “innocence lost” storyline for the protagonists.
The bottom line is that it’s a utopia and utopias only exist in stories; real people are fallible and have many motivations, some of which are not noble, and so such a place can’t exist.