What are Comparative Economic Systems?

Comparative economic systems is a field of study in economics that focuses on analyzing economic systems by comparing them to other types of economies. These comparisons may be used to examine the economic systems of real countries, or may be used to compare the principles of different economic theories. Analyzing economics through comparison is believed to be useful because no system is inherently perfect; by examining what benefits each theory or economy presents, economists can help craft and refine new theories to help improve future economic practice and thought.

Throughout human history, different economic systems have risen and fallen with the times. Feudalism reigned for centuries, relying on the work of a large peasant or slave class to support the activities of a noble and royal minority. With the adoption of new forms of government came the popularity of theories such as capitalism and socialism, which battled for predominance until the late 20th century. In the 21st century, most economies display some form of blended or mixed economy, using some principles of the mighty capitalist and socialist ideals, but also incorporating other functions that do not fit easily into any category. The study of comparative economic systems focuses on the similarity and differences of all of these systems, with an eye toward improving economic thought.

It is not uncommon for students to learn the basics of economy through the study of comparative economic systems. Especially in regions with a view toward pluralism, understanding the pros and cons of multiple systems can help students develop their own individual concepts and theories about economics. Socialism, which developed partially as a reaction to the downsides of capitalism, is often taught by comparing and contrasting it to traditional capitalism.

The study of comparative economic systems can also be important to understanding the behavior of different cultures and societies. Learning about past economic traditions and the evolution into modern forms of economy can help shed light on national character, history, and potential future growth. Studying modern economic systems as a product of their history is sometimes known as transitional comparative economic systems.

Some economic experts suggest that the study of comparative economic systems is most useful when approached without a privileged frame of reference. This means that students and teachers cannot presume the automatic superiority of one form of economics, such as the one in their own country, over all others. Objectivity in analysis can help highlight the true benefits and drawbacks of each type of economy; whereas subjective analysis may merely serve to re-emphasize beliefs that already exist.