During the Cold War, the study of economic systems was heavily marked by the bifurcation of Europe and of the global security architecture more generally, into two mutually hostile “blocks” or spheres of interest. While the “free world” was associated with liberal market economy, the communist counterpart was seen to practice central economic planning. The Third World, in consequence, was divided into countries that had been dragooned into the Soviet-type system and those that were viewed simply as underdeveloped versions of the West.

Although sporadic attempts were made to introduce nuance – for example, by presenting Japan as a distinct “model” of its own – economic thinking remained dominated by the perception of plan and market as the respective hallmarks of two mutually exclusive economic systems. The tradition of comparative economics that emerged with discussions of market socialism in the 1930s was in consequence devoted to comparison of the respective mechanisms of resource allocation that were associated with socialism (central planning) and capitalism (the market). The main ambition was to investigate the circumstances under which either of the two could be held to produce greater efficiency.

The sudden collapse of Soviet economic planning put an abrupt end to such discussions. The impact on the academic world was profound and unavoidably marked by the general sense of elation, celebrating the victory of democracy and liberal market economy, in some cases even hypothesizing the end of history.