The Variety Of Economic Systems

The Comparative Study Of Economic Systems

A casual glance around the world reveals that man uses various forms of economic organization to gain a livelihood. The underlying purpose of ev­ery form is the same: to ensure that the goods and services required for physical existence and social cohesiveness are provided on a regular basis. The way man attempts to achieve this basic purpose differs from age to age and from place to place. We are interested here in the different forms of economic organization—that is, the different economic systems-through which man seeks to fulfill his material needs.

The Variety Of Economic Systems

Man does not live by (or for) bread alone, and every economic system is deeply embedded in a complex web of social patterns. One extreme of the spectrum is the type of system that emphasizes freedom and incentive for the individual to follow his own interests as worker, investor, consumer, or business entrepreneur. At the other extreme is a system in which group values play the leading role in organizing, planning, and carrying on eco­nomic activity.

Most actual economic systems operate at a considerable distance from either extreme. Family structure, for instance, imposes limitations on individuals when a customary internal division of labor exists. The family group may also be the relevant unit of decision making in supply­ing labor services or acquiring goods for consumption outside the family circle. In some societies the range of family obligation extends to distant cousins and in-laws for whom sustenance or employment must be furnished upon request.

Employment relations are another area in which social norms influ­ence individual behavior. College students beginning summer jobs are often advised by fellow workers to "make the work last" if they go about their tasks too energetically. American workers readily move from one employer to another, while Japanese workers usually enter into a lifetime employ­ment relationship with a single firm that guarantees not only employment but also housing, recreational facilities, and sometimes a focus for family and religious life.

Loyalty is an elusive commodity which, according to economist Ken­neth Arrow, "if you have to pay a price for, you probably haven't bought." Yet loyalty—to family, village, ethnic group, or nation—is a powerful cohesive force in allowing economic systems to operate smoothly. As eco­nomic systems become more complex and impersonal, they must rely more heavily on a legal structure to regulate economic arrangements between individuals that were previously a matter of social rights and obligations.

By means of the following three examples, we will attempt to illustrate the diversity of conceivable economic systems and to jar the reader loose from the unconscious ethnocentricity that tends to equate one's own eco­nomic system with the way things necessarily ought to be done. These examples, one each from Utopian fiction, from economic anthropology, and from the contemporary world, serve our purposes better than would any listing of economic categories and definitions.