It would be extremely easy to state that economics is an area of study that seeks efficient use of scarce resources to satisfy unlimited wants and that economic systems simply refer to the outcomes of economic activities, which are influenced by social, natural and political settings. However, it is clear that economics goes far beyond utilizing resources or levels of development and by comparing different economic systems one can analyze their importance and influence on other sectors of society. .
Apart from affecting other sectors, an economic system is also impacted by social, cultural and geographical forces along with the regular inputs of land, labor, and capital. Traditionally, economic systems were based on the imperative models of capitalism socialism and communism but recent political and economic developments across the world have caused dynamic changes in this area. The modern approach to comparing economic systems is more expansive and relates to their multidimensional attributes rather than studying the limited characteristics of ownership and means of production as with the traditional method. .
The main reasons behind this new approach to studying economic systems are the immense political and economic changes that took place both in the Western and Eastern hemispheres. The Soviet Union for example, which was well known for its socialism and centrally planned economy underwent radical reforms of society and market under Mikhail Gorbachev. These political reforms eventually led to the liberalization in the Soviet Union thus limiting the far-reaching role of the communist party. .
Changes in the Soviet Union consequently caused other communist regimes in Eastern European countries like Germany, Czechoslovakia and Bulgaria to collapse. This overthrow destroyed the monopoly of communists over political decisions as many of the countries attempted to reach out to the West and establish market economies.
