Chose from 4 given below,
1. Capitalism
2. Socialism
3. Mixed
4. Islamic Economic System
Each has its advantages and disadvantages. Capitalism apparently needs a good amount of work to fix, especially due to the recent financial crises. Socialism is proven unhealthy after the collapse of the eastern-mass power (particularly the Soviet Union). For Mixed system, we should know what to mix with what. Islamic system has not been proven empirically so far even though there is a potential but clear and independent tools have to be identified first since what is called Islamic nowadays is using a mixture of both Islamic and traditional tools.
Capitalism is the most efficient one, generating the best growth rates over long time. It is also extremely flawed. Communist system has failed miserably in practice, as it failed to deliver prosperity and was incapable to compete against capitalism.
Islamic system is restricted to Islamic countries, it's completely incompatible with non-Islamic countries. It still remains to be seen if it will be able to provide sustainability and growth in Islamic countries in a long term perspective.
Dear Imran! For all four systems you mentioned there are successful positive examples:
Socialism: China, Cuba, Vietnam, Iran
Capitalism: Hong Kong, Taiwan, United Kingdom, Australia, Singapore, Emirates
Mix of Capitalism and Socialism: Scandinavia, Germany, France, Canada, Japan, Netherlands, Belgium, Italy
Islamic System: Oman, Malaysia
Failed Systems: United States, Russia, Saudi Arabia, Brazil, Ukraine, Argentinia, Iraq, Syria, Egypt, Syria, Palestine. most African countries including South Africa
I include my report "Where did the Wealth go"
I agree with Alexander that there is no unique answer, and all depends on implementation.
The model of Adam Smith's invisible hand practically never works (at least due to externalities), and we need some state regulation. Transition from socialism to capitalism cannot be successful in the short run. Examples of the former USSR and some of eastern European countries show that without good set of laws (that require many years to be written) corruption can develop, and the welfare of citizens can drop even below those in socialist countries. There are problems with equal initial possibility, mafia spread.
Among successful western mix between socialism and capitalism I would add Austria. However, its welfare is also dropping today comparing to 1970s; there is less social security and still limited growth. It is still in successful group of EU countries, but EU economic crisis is growing.
P.S. I still do not understand why you consider US as failed system.
Dear Yuri, yes, of course Austria and Switzerland ar good examples.
A system (the one of the US) that creates more prioners than China and Europe together (2 mio), a system that tolerates 30,000 murders per year, a system that destroys almost the whole Middle East and spends half of the worlds military expenses, such a system is failed.
But in any failed systm there are some elites being lucky with it.
Alexander, what you are talking is politics and social science but not economics in narrow sense. Economically USA were quite successful for many decades. They even manage to keep huge debt without default. Yes, their capitalism gives lower social security than most of EU countries and Canada, but they were providing good opportunities for business-minded people to become rich, to get good education and finance to do scientific research.
Europe is doing something wrong today and thus US economically outperforms EU last year. Exchange rate of USD to Euro is growing. I am not much an advocate of the USA, but people in Brussels do something wrong. US economists always criticised EU for common currency without common tax law - this is the reason for financial divergence inside EU.
Well, economics today is very much mixed with geopolitics. Even when we talk about trade agreements and energy security, geopolitics seems to dominate, at least during the last 1-2 years. You may have a look at my paper:
https://www.researchgate.net/publication/277531087_Future_of_Natural_Gas_in_EU_Will_Geopolitics_Take_over_Economics
Conference Paper Future of Natural Gas in EU: Will Geopolitics Take over Economics?
If best be the penultimate:socialism according to Schumpeter. Have proven to be quite a resilient economic ideology in many countries. Appears in various guises.
http://www.futurecasts.com/J)%20Schumpeter%20on%20Socialism%201.htm
Following two articles maybe useful:
https://islamiceconomicsproject.wordpress.com/2012/09/24/circular-flow-model-an-islamic-economics-perspective/
https://islamiceconomicsproject.wordpress.com/2013/12/02/critical-questions-on-marxian-economics/
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