19 - COMPARATIVE ECONOMIC SYSTEMS

Abstract

This chapter presents an overview of comparative economic systems. The institutions and organizations of an economy influence economic outcomes. The chapter focuses primarily on private property and market-directed economies. The economies of the United States, Canada, Australia, Japan, and most of Western Europe fall into this category. These economies do not always rely on market forces. The government regulates many private industries. Government ownership and operation of utilities, transportation, communication, and educational facilities are not uncommon, even in Western countries. In addition, taxes and government subsidies are sometimes used to alter market outcomes. At present, one-third of the world's population lives in the Soviet Union, Eastern Europe, and China. The economies of these countries are organized along socialist lines. They are characterized by central planning and government ownership. Market-directed capitalism and centrally planned socialism are two systems of economic organization. However, there are many variations of each. For example, the economic organization of Yugoslavia differs substantially from that of the Soviet Union. The Japanese economy differs from the capitalistic organization of the United States and western European countries. After examining the general institutional arrangements of both socialist and capitalist systems, the chapter focuses on the economic organization and performance of three interesting economies—those of the Soviet Union, Yugoslavia, and Japan.