A Comparative Analysis of Economic Systems: Past, Present, and Future

This essay undertakes a comparative analysis of various economic systems, beginning with an overview of the core operations of an economy, including resource allocation, production, and distribution of goods and services. It explores the evolution of economic systems, such as feudalism, socialism, capitalism, and communism, examining the transition between them through the lens of Marxian and mainstream economic theories. Part A focuses on the changes in economic systems, discussing historical materialism and dialectical materialism. Part B delves into the economic system of the future, specifically communism, analyzing its characteristics, origins, and potential shortcomings. The essay highlights the role of production, wealth, and capital formation in societal evolution, while also considering the influence of mainstream economic models like Rostov's stages of development. The discussion emphasizes the shift from capitalism to communism, the role of collective ownership, and the impact of centrally planned economies. The essay provides a comprehensive overview of the comparative economic systems, offering insights into their historical context and future prospects.

Running head: COMPARATIVE ECONOMIC SYSTEMS
COMPARATIVE ECONOMIC SYSTEMS
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1COMPARATIVE ECONOMIC SYSTEMS
TABLE OF CONTENT
PART-A: CHANGES OF ECONOMIC SYSTEMS.....................................................................................2
Economic System:.....................................................................................................................................2
Changes in economic system:....................................................................................................................2
Historical Materialism:..............................................................................................................................3
Dialectic Materialism:................................................................................................................................4
Mainstream Economic explanation:..........................................................................................................4
PART-B: ECONOMIC SYSTEM OF FUTURE: COMMUNISM...............................................................5
Reference:......................................................................................................................................................9

2COMPARATIVE ECONOMIC SYSTEMS
PART-A: CHANGES OF ECONOMIC SYSTEMS
An economic system broadly holds within it the basic operations of an economy pertaining to
allocation of resources, production and distribution of goods and services within a specific geographic
territory or society. These operations are possible through inclusion and combined existence of various
institutions, entities, agencies or decision-making bodies. Every economic system has an in-built structure
that is solely determined by the consumption and supply pattern of the social system or given community.
The modes of production, pattern of demand are derived from the basic faced by every economic system.
The basic questions focuses upon what is to be produced, for whom to produce and how to ensure
everyone meets their demand.
This discussion aims to present various economic systems that the human civilization experienced so far
capturing analytical factors behind transition of these systems over the period. The explanation is given in
light of Marxian and other economic theories.
Economic System:
Several economic systems have been evident in the human civilized societies so far, namely:
Feudalism, Socialism, Capitalism and Communism. Every economic system has different explanation of
the same economic events. There can be seen transition within the systems based on the theoretical
difference derived from epistemological differences of the theories shaping the structural formation of
society.
Production lies at the heart of any economic system and this makes the means of production a
crucial factor. The control and ownership of this means of production is one of the distinctive features of
economic system. For example, they either can be held privately, collectively by state or can have
common ownership. Decision-making is an important factor to combine and execute different economic
activities. Mechanism of co-ordination shapes up the decision making as it determines how information is
obtained and synthesized in decision-making 1. Decision-making pertains to planning which can take
form of centralized or decentralized system. Moreover, market force is another component of decision-
making. Organizational form comprising of two basic components: actors and regulators, which is
important systemic feature. Next important component is distribution system that allocates the goods,
1 Darlington, Ralph. Syndicalism and the transition to communism: An international comparative analysis. Ashgate
Publishing, Ltd., 2013.

3COMPARATIVE ECONOMIC SYSTEMS
services or even income among individuals, groups and organizations. All of these components operate
in their own way in every economic system, marks differences from one another, and paves the way
toward transition.
Changes in economic system:
The change in economic system has its root in the changes of social structure and operation. the
pool of economic knowledge and studies has few theory of social changes pertaining to research of Hegel,
Karl Marx. As per these economists, society reaches a new stages with new economic system and it has
been happening through the history with the help of struggle between social classes and conflicts among
them that marks their fall and paves way for new system. Two such concepts historical materialism and
dialectical materialism are discussed here.
Historical Materialism:
Economic system changes due to the presence of inner clash in every system in terms of the
differences in outlook that exerts different impact on society. The structure of society and its
development depends upon the material means of production 2. According to Karl Marx, it is the material
means of production that lies at the heart of historical materialism. Materialism forms the basis of social
transition bringing change and it is historical, as over the history and time, it has been tracing the human
societal evolution form one stage to another stage. Society formation and transition follows a historical
trend that has been materializing over years. The historical materialism define social superstructure based
upon the economic infrastructure that focuses on giving materialistic interpretation of history of society.
Means of production is the seed of materialism that gives birth to the concept of class from the concept of
who will own them 3. The historical materialism is the concept that traces down the unilinear evolution
that the society pass and move from one stage to the next reshaping the economic system into a new one.
The history of society suggests its stages to be primitive communism moving to slavery further moving to
slavery, feudalism, capitalism, socialism and finally reach communism. Marx not only explained in terms
of history of the social evolution but also carried a vision of the future that explains how every economic
system has carried seed of its own eradication or demolition and move into new system following
2 "Karl Marx Historical Materialism Materialist Conception Of History". 2017. Age-Of-The-Sage.Org.
http://www.age-of-the-sage.org/philosophy/history/marx_historical_materialism.html.
3 Bukharin, Nikolai. Historical materialism: A system of sociology. Routledge, 2013.

4COMPARATIVE ECONOMIC SYSTEMS
succession until and unless the ultimate sphere of communism is reached. As theory that backs, the social
transition has few conceptions within it that shapes the historical materialism as an explanatory tool.
Society is seemed as whole system that carries inter-relation within it. This interrelation pertains to
institutions, social groups, doctrines and beliefs that are related in integrated way. Marx explains how
society carries in its core the mutability in inherent way and that is materialized in reality through the
inner conflicts and contradictions taking place internally. The nature of man is also an pre-determinant of
the historical materialism to take place and its is defined as originally potential. Human nature is also
potentially revolutionary that possess the power to bring changes through revolution and rebel in contrast
to the prevalent limited human nature. The result of production from material means is not the originator
of wealth. It is the process or act of production that brings forth social relationships among the people
engaging them and free of their will. The history reveals how these social relationships gave birth to class
relation and concept of class that is the starting point of fall and rise of economic system.
Dialectic Materialism:
This theory owes its origination in the work of Hegel but Marxist explanation of the dialectic
materialism outlines the existential facts of the entire universe, earth and its people and what makes them
go on over time. Having radical difference from all other philosophies, this theory earns the label of
communist philosophy. The interpretation of world is multidimensional based on variation of the theorists
and the core concept is to bring change into it. The concept of materialism here refers to the fact that
material is the only existential form of everything within and around us. Even the perception, thoughts,,
abstraction and ideas people have are nothing but reflection of material objects either prevalent in society
or in human rain. Reality is based upon object and no information lies outside of this domain. Dialectic
refers to the essence of contradiction and conflict existent in everything around us. This conflict giving
birth to fight that destroys one system just to build another taking the society to a new stage4. This change
is inherent. This theory explains the existence of opposites in a system, which gets polarized. The base
point of a change lies within the very system-taking place through struggle and confliction leading toward
more developed and advanced stage of the socioeconomic stage. This concept elucidate how existing seed
of conflicts changed primitive communal society to communism through the stages of slavery. Serfdom,
capitalism and socialism. The internal destructive factor put its head up and destroyed it for a new system
to come up.
4 1938: Dialectical And Historical Materialism". 2017.Marxists.Org.
https://www.marxists.org/reference/archive/stalin/works/1938/09.htm

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Mainstream Economic explanation:
Neoclassical school and Keynesian school of economics consist the two basic pillars of
mainstream economics. Even though there is no evident explanation of these theories on social and
economic system changes few of the models of neo classical economics pertaining to development and
growth of a nation can explain changes of economic system to some extent.
Firstly Rostov’s five stages of development can be a good example marking out changes in the
economic system from primary rural agricultural sector to tertiary and modern economic sector of service
5. The economy starts at traditional society focusing on agricultural production applying primitive ways of
production featured with low productivity of labor, low production and saving consequently that further
generates lower surplus. With mechanization in production process the output rises in the next stage and
boosts the production as well as savings in this sector. This also releases labors making them idle and
looking for employment opportunity they migrate to urban sector. Industrial sector employs them and the
take-off stage takes place with growth in industrialization. This over time diversifies and reach a matured
stage that initiates the inception of age pertaining to mass consumption. The basis of social transition and
consequent economic outlook of them stem from the operation of production, quantum of saving and
surplus that promotes growth in the economy. Role of production, wealth and capital formation and
accumulation are dominant explanatory tool to outline the evolution of society and economic systems.
Moreover growth model of Harrod-Domar and Lewis Model of rural-urban migration and structural
change set exemplary analysis of societal structural change.
PART-B: ECONOMIC SYSTEM OF FUTURE: COMMUNISM
The fall of capitalism and socialism not only highlighted the shortcomings in these economic
systems but marked the importance of a new system that would drive the society. The fall of capitalism
paved the ground for equality to take over the exploitation by demolishing it and forming a new social
structure with newer visions that shaped up the Communist society and its operative structure.
5 Welker, Jason. 2017. "Models Of Economic Growth And Development". Economics In Plain English.
http://welkerswikinomics.com/blog/2012/01/30/models-for-economic-growth-ib-economics

6COMPARATIVE ECONOMIC SYSTEMS
Communism is an economic system characterized by collective ownership of factors of production
The government has the ownership of the resources pertaining to factors of production viz labor, capital,
other natural resources. The decision of allocation and services to be provided lies with the government’s
discretion. The doctrine of communism has its theoretical origination in the research work of Karl Marx
and Frederick Engles. The core essence of communism has similarity with socialism both proposing ways
of eliminating exploitation of masses by few. The forces of capitalism in society pushed workers to pay
greater work effort for little pay back over time rigorously. That intensifies the exploitation. Communism
focused at eradicating existing class distinctions and exploitation positively in order to bring equality in
the social system even outside the operation of government.
As per the theoretical discussion made by Marx and Engles. There exists class struggle between
large masses termed as proletariat6. They possessed only wealth that was own labor that they could offer
in the production process. Factor of production included material means of production and labor power.
Proletariat owns the latter while ruling class who has access and claim over the land, raw materials,
machines, equipments and tools used in production owns the former. This ruling class was termed as
bourgeoisie in the Marxian interpretation. State as civil body was found to be central instrumental
element in capitalism via the enforcement of stronghold of the capitalists on the operations of
government. This necessitated the idea of revolution and political violence and forces to overthrow the
capitalism as economic system.
The major attribute of communist society is thematic existence of centrally planned economy
operative within system. The ownership of the means of production vested in government and they are
managed and utilized by the employee of the states. The operations of the employee revolve around
economic planning made by appointed planners through political parties. They determine the prices and
set target relating to allocation and production. Inefficiency also lies in this economic system due to the
desire of the communist party to retail power. The lust for power led the allocation of natural resources
toward industrial production and defense that did injustice to mass who requires food on first hand to
survive. The increasing demand and limited supply or production led to intense competition of the
necessary goods and product. This worsens the social welfare of the countries and agitated people.
Stroking feature of communism is that it promotes self-reliant economy discouraging cross
border trade, investment. The economic system makes major political decision through the operation of
higher ranked members of communist party. The communism as an economic system aimed at serving
6 Bunge, Mario. Scientific materialism. Vol. 9. Springer Science & Business Media, 2012.

7COMPARATIVE ECONOMIC SYSTEMS
the proletariat but what has been found that the economic system gave birth to repressive government that
followed the same path of exploitation and vandalism through misuse of power failing the very concept of
communism that rose from the ashes of capitalism. The Communism had its basis upon a core concept
that drives individual from following ability to following needs. Ability of human allow them to work
employing the skills they have to do things they are good at. It pushes them to edge and extracts out the
maximum out of each one’s effort 7. On the other hand each according to his ability to need refers to
people would work only up till they think necessary and sufficient stopping the over exhaustion of their
effort. This system also ensures how enlightened motivation of the working people keeps them working
and distributes the result of their effort to everyone even including those who cannot work. Communism
ensures that everyone irrespective of working or not should receive the fruit of labor in form of basic
amenities of life. The extraction of profit by the capitalist as in capitalism is no longer viable and
entertained under this system rather the profit is explained to be shared by all of the workers and
contributors to the production.
Karl Marx in his popular book Communist Manifesto discussed how society moves toward an
economic system possessing marked difference form capitalism that had sown the seed of its own
destruction within its operation. The society propels to reach a system where all land property holding is
abolished and everybody pays rent of land to use it without holding it or claiming it as own. The new
system has ensured graduated income tax that follows heavy progressive taxation 8. Right of inheritance is
abolished too. Properties held and owned by refugees and emigrants are confiscated from them an d held
only by government. The labor laws in this system reshape their value and life putting equality as top
concern. All the labors are equally liable as well as gainer of the production process. Agriculture has
availability of industrial army or reserve army of labor that consolidates the supply of workers in the
sector. Contrast to capitalism the new economic system focuses on combined existence of both
agriculture as well as industry in order to bridge the gap between primary and secondary sector, rural and
urban sector equitable distribution of population and subsequent production and wealth9. Education is
given primary importance in this system and it is also the channel through which the evolution of society
takes place encompassing mass enlightenment. Establishment of public schools and provision of free
education is mandatory. Abolition of child labor is important step taken toward mass movement that aims
7 Sherman, Howard. J. 2012. "Contemporary Radical Economics". The Journal Of Economic Education 15 (4): 265.
8 Wardell, Mark L., and Stephen P. Turner, eds. Sociological Theory in Transition (RLE Social Theory). Routledge,
2014.
9 Bunge, Mario. Scientific materialism. Vol. 9. Springer Science & Business Media, 2012.

8COMPARATIVE ECONOMIC SYSTEMS
at combining education and era of industrial production. Credit availability is centralized and operated
through national government. It brings forth the importance of the national bank with capital of state and
monopoly power10. Modes of communication and transportation are maintained and controlled by the
state government. The setting up of factories on lands requires government to sanction it. Cultivation of
wasteland and improvement of soil depends upon the lands getting used up by factories in state.
Communism is symbolic system envisioning state ownership as valid stage of societal transition.
Advantages
Communism holds in its core central economic planning that has greater implication on large
scale mobilizing economic resources for the mass betterment. As a result, massive opportunities of
project s and industrial power are generated. In this system, individual self-interest is overridden and
brings forth subjugated welfare of the general population that helps in achieving social goals 11. Moreover
communism is embodiment of equality. It makes the education, employment and healthcare easily
accessible to all the population. Role of government in owning, controlling resources as well as allotting
money to the business and production prevents growing monopolies in business.
Disadvantages
There are some shortcomings of the Communism as well. It hampers the personal growth of the
individuals by imposing excessive control on the lives of the citizen. It promotes classless society where
no one is above the other and everyone shares equality of status and opportunity. This imposes negativity
on the growth of personal improvement leaving no room for development. Another downside of the
economic system is government dictation falling heavy on the people. Government is ultimate controller
and ruler of the economic system so as the driving of entire system. This stagnates as well as suffocates
the individual freedom and evolution of humanity12. It also ignores the bliss of democracy smothering the
basic rights and freedoms in aspects of speech, presenting opinion and even criticizing. Important
10 Yifu Lin, Justin. 2015. "The Washington Consensus Revisited: A New Structural Economics Perspective". The
Journal Of Economic Policy Reform 18 (2): 96-113.
11 Goldstein, Philip. Post-Marxist theory: an introduction. SUNY Press, 2012.
12 Teschke, Benno. "IR theory, historical materialism, and the false promise of international historical
sociology." Spectrum: Journal of Global Studies 6, no. 1 (2014): 1-66.

9COMPARATIVE ECONOMIC SYSTEMS
negative essence in Communism is that it stops the business owners from making more or extra money as
it can be seen in free market economy. Communist countries tie the hands of business people never
allowing them to supersede one another hampering the equality motive. It not only makes becoming rich
impossible but also stops accumulation of capital that has deep implication for the progress of society.
.

10COMPARATIVE ECONOMIC SYSTEMS
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11COMPARATIVE ECONOMIC SYSTEMS
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