Definitions

Economic systems

Comparative economic systems

Comparative economic systems is the subfield of economics dealing with the comparative study of different systems of economic organization, such as capitalism, socialism, feudalism and the mixed economy.

The comparative study of economic systems was of significant practical and political significance during the Cold War, when the relative merits of capitalist and communist systems of economic and political organization were a central topic of political concern. One of the most important early contributions was the calculation debate regarding the assertion of Ludwig von Mises that a system of central planning could never work because the information generated by a price system would never be available to planners. One response was the advocacy and partial implementation of systems of market socialism.

With the fall of Communism, attention shifted to problems of transition economies. With a handful of exceptions, all currently existing systems are capitalist in orientation, though the substantial economic role of the state supports the alternative view that the mixed economy has emerged as the dominant form of economic organisations.

Even in the absence of substantial differences between countries, the comparative study of economic systems of resource allocation is of considerable value in illustrating the implications of alternative methods of resource allocation, including markets, households, centralised allocation and custom.

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