Abstract
This chapter explains comparative economic systems. The institutions and organization of an economy influence economic outcomes. All economic systems, despite their differences, face similar constraints. Scarcity of economic goods confronts both individuals and nations with a budgetary problem. No nation is able to produce as much as its citizens would like to consume. Therefore, regardless of economic organization, choices must be made. The decision to satisfy one desire leaves many other desires unsatisfied. All economic systems are constrained by the bonds of scarcity. Economic organization is important because it affects everyone's actions. Changes in the structure of incentives alter human behavior in both capitalist and socialist countries. Every economic system has a legal framework within which the rights of resource owners are defined. Practically all economic systems guarantee the rights of individuals to sell their own human capital, their labor and to the highest bidder. Every economy must have a mechanism that coordinates the economic activity of micro units such as business firms, individual resource owners, and consumers.
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