Economics 322 - Comparative Economic Systems
Fall Semester, 2015
Towson University

Purpose / Procedures / Integrity / Requirements / Grading / Books / Schedule

Instructor: Dr. Howard Baetjer, Jr.
Office: Stephens 104b (go through the Accounting Department office to get there)
Phone: Office: (410)-704-2585
             Home: (410)-435-2664 (No calls after 9:00 p.m., please)
Office hours: Tuesdays and Thursdays, 1:30-3:00, and by appointment

Purpose of the course

The underlying purpose of this course is to help you improve your ability to make sense of political-economic systems and processes. Through taking the course, you should learn some essential concepts of political economy and develop habits of thinking that will help you use those concepts to make sense of the social world. The more immediate purpose of the course is to investigate how much economic freedom societies should have.  At one logical extreme, government might be used only to protect private property and enforce contracts, leaving citizens free to engage in any mutually agreeable exchanges they choose.  At the other extreme, government might own all property, plan centrally, and dictate all economic activities.  Between those two extremes, where should societies locate themselves?  Where according to the demands of justice?  Where in order to achieve the greatest economic well-being?  Are the answers to these last two questions different?  If so, which should we favor?

This is a fascinating and important topic. Its historical importance should be obvious: Under planned-economy ideology and policy, about half of Europe and much of Asia suffered terrible economic backwardness and deprivation, political terror, and environmental destruction for more than half of the last century. And millions of people were murdered by their own governments in the Soviet Union, China and the "killing fields" of Cambodia.  Yet, arguably, these regimes were not true communism, and perhaps true communism would have been much better.

Understanding the relative merits of more-free and more-planned economies is also important to understanding the present-day efforts of the governments of Russia and China to maintain a lot of central control of their economies while gaining the benefits of markets.  

Comparing economic systems is useful in still another way. It helps us understand our own political economy. The western democracies are mixed economies rather than free economies. We have a substantial amount of government intervention into economic affairs, rather than consistent laissez-faire. Western governments meddle in their economies extensively through restrictions that are improperly called “regulations,” and they provide “social safety nets” of different extent. The United States’ government has significantly increased its interference and participation in the financial, banking, and health care industries recently with the sweeping Dodd-Frank Act and the Affordable Care Act (ObamaCare). All this intervention has similarities to Soviet-type planning although it does not go nearly as far. Accordingly, understanding the problems of central planning can help us make sense of and evaluate much of our own policy.

Much government intervention in the U.S. economy today occurs through administrative agencies which have been given broad responsibilities and powers by regulation which does not specify rules, but rather expresses purposes, and leaves it to the administrative agencies to make and enforce the rules. We will study the rise and some of the problems with this “administrative state,” which is really a third kind of economic system, along with free economies and socialism.

The housing bubble of 1997-2007, the financial turmoil of 2008, and the Great Recession, whose unemployment lingers until today have been blamed by some on unfettered free markets, insufficient regulation, and capitalism run wild.  It has been blamed by others on wrong-headed government intervention in housing, money, and banking.  Who’s right?  Or are they both wrong?

The course aims to help you begin to answer these questions.

Writing clarity and organization

In its former life as Econ 323, this course was an advanced writing course satisfying the GenEd requirement I.D.  Even though the course no longer has an explicit writing focus, you will do a lot of writing. I’ll coach you on writing better as much as my time allows.  One goal of this writing is to help you improve your ability to express yourself clearly and persuasively. Economist Deirdre McCloskey, one of the best writers in the field, once wrote that our goal in writing should not be to make it possible for the reader to understand what we mean. It should be to make it impossible for the reader not to understand what we mean.  This course emphasizes CLARITY in both the particular phrasing and the overall organization of your ideas.  Correct grammar, punctuation, and word usage are expected. There are no quantitative problems or multiple choice questions in this course; every graded assignment is a writing assignment, so you must write clearly to earn a good grade.

Getting help on your writing: Students are expected to write at a college level.  Sadly, many students arrive at Towson poorly prepared to do so.  It is not usually your fault, but the fault of the dreadful writing instruction you have received in school. Even if it is not your fault, it is your problem. You are in college now and I’ll expect you to write at a college level.  Here are three programs that you can use to improve:

For help with organization and content, please make an appointment with the CBE Writing Proficiency Program, located in Stephens Hall 117, by calling 410-704-4379 or sending an e-mail to The program is available Monday through Friday during the semester.  Writing consultants in the program will review your work and provide feedback.  See the Program website:

If you need help with basic grammar and punctuation, you have two options.  You may contact the university’s Writing Center at Alternatively, you can find information on specific points of grammar and punctuation online at Towson’s Online Writing Support:

Course catalog description

Effects of alternative institutional arrangements on incentives and individual behavior affecting the allocation of resources.  Differences between decentralized or market systems and centralized or government planning. Prerequisites: ECON 201/203 and ECON 202/204.

Course Procedures

Online logistics

We will use Blackboard, the university's web-based system for facilitating course delivery.  If the university’s software systems are working properly, they will enroll you in this course's Blackboard site.  For further information about the Blackboard system, and to log in to this course’s Blackboard site, please go to To log in, go to Please explore the system and read my "Announcements." 

Our Facebook group page is here: Please use it for any and all course-related questions, comments, insights, links, or whatever. In particular, please use it to ask non-private questions of me (send personal or private questions by email).


The course centers on the readings. I expect students to do all the week's reading before the first class meeting each week, so that you can participate helpfully in class discussions. Courses such as this one, which depend on active discussions among the students, are greatly improved by students’ doing the reading thoroughly before class. Those who don't prepare adequately free ride on the efforts of their classmates, to their own embarrassment and others’ annoyance. By contrast, when everyone is prepared, discussions can be lively and rewarding. Please commit yourself to preparing thoroughly each week if you take the course.

That said, I do not expect you to study all the reading, as you would a poem or technical textbook.  Some of the reading, especially on the socialist calculation debate, is difficult. For most readings I have posted notes ("Notes on the Readings") at our Blackboard site. These guides point out which passages you may skim, which you should read, and which you should study. 

Most weeks, either in addition to the reading notes or interspersed in those notes, I’ll give you discussion questions on that week’s readings. Please come prepared with tentative answers to the discussion questions, ready to discuss them, with relevant passages in the readings marked up and noted.

Always bring to class hard copy of the readings assigned for that week.


Deadlines should be deadlines.  Lateness on any assignment may be penalized at 5% per day, including weekend days, beginning the day and time the assignment is due, unless some extraordinary emergency has caused the lateness.  Printer failures, hard drive failures, bad disks, crowded computer labs and the like are all normal occurrences that you should anticipate and allow for.  Lateness for reasons such as these may not be excused.

"Blind" grading 

Please never identify yourself on the front of any paper you hand in. Instead, put your name ONLY on the BOTTOM of the BACK of the LAST PAGE of your paper, written lightly.  This practice is to prevent me from knowing who you are as I grade your work.  Not knowing who has written what helps me avoid any unconscious bias or waste of time wondering if I'm being fair.

Academic Integrity

This should go without saying, but let us say it anyway: Be honest. Present as your own work only your own work. Your integrity is far more important than your grade. Practice integrity in your actions and you will build it in yourself. Anyone who cheats or plagiarizes will fail the course.

The danger area for academic dishonesty in this course is plagiarism. Plagiarism is presenting others' words or ideas as your own. Learn what plagiarism is and how to avoid it! There will be many occasions in this course where you can inadvertently fall into plagiarism; don’t!  To help you avoid plagiarism, I provide two links to useful discussions of plagiarism offered by other universities. You will find them in the "External Links" section of our Blackboard site. Study them until you are certain that you understand what plagiarism is and how to avoid it. To get you started, here's "[a] good rule of thumb for written material taken from another author," from Professor J. Douglas Woods of the University of Toronto: "if it amounts to more than three connected words, give the citation for it." (This used to be at the following now-broken link:

Your first assignment is to read through the web pages on plagiarism to which I provide you links, then email me a short note from our Blackboard Discussion Board (you’ll see there what to do) either telling me that you have read and understand them or asking for clarification of particulars.

Frequently I will encourage you to work together. It is especially useful to get someone else to look over your written work and point out errors and unclear phrasing. Doing so is perfectly acceptable, even when the assignment is for a grade. But don't let someone else write your work for you, and make clear to your reader what is your own, what is joint effort, and what is others’. When in doubt, cite your classmate.


Participation in class discussions: Speak up in class. Class participation grades will be based on class attendance and contributions to class dialogue.

Unless special circumstances intervene in a particular case, I will deduct one point from the ten points of participation credit for every class meeting missed after the first four misses. The reason for my counting attendance so heavily is that much of what we learn we will learn in dialogue, discussion, and my Socratic presentations in class. In order for those to work well, people need to be present and up to speed on previous class discussions. I hope you will learn a lot from talking with each other. You can’t do that if you are not in class.

The portion of the class participation grade based on contributions to class dialogue I will base not on whether a comment or answer is right or wrong—often we won’t be able to know that for sure—but on how well it helps us all make sense of what we are studying. Asking a thoughtful question about a passage from the reading, for example, or helpfully expanding on a fellow student’s insight, is excellent participation. Note well: participation must be grounded in the course readings to be valuable. No ill-thought-out, baseless comments, please! By contrast, answering a question with a directly pertinent quotation from the readings is sweet. Read carefully. Underline. Share what you learn.

Again, always bring to class hard copy of the readings assigned for that week. This is necessary preparation for good participation.

Short papers

Most weeks you will be required to write a short (about two pages, double-spaced) paper on what you read and discuss in class. The paper will be due (usually on Monday of) the following week. The idea is that you will learn well by first reading, then discussing the ideas in the reading, then writing up your reactions to the ideas. (I plan ten of these, the first ungraded.) I will drop your two lowest grades on these in calculating the course grade. These count 49 percent of the course grade.

Paper relating the ideas of Sowell and Bellamy (assignment updated as of Sep. 25, 2015)

You have one longer paper to write, due Sep. 30, about the first two books we read.

Bellamy's Looking Backward, 2000-1887 can be understood as the author's recommendation of the economic system and society he describes. Those with a constrained vision of the world, as Thomas Sowell presents it, would reject Bellamy's recommendation; they would believe that it is a bad idea even to try to achieve the kind of world Bellamy describes.

Your assignment is to tell why those with a constrained vision would believe that it is a bad idea to try to achieve the kind of world Bellamy describes.

Your answer may include reasons those with the constrained vision might give as to why Bellamy's world simply cannot be achieved, and why the attempt to achieve it would be dangerous.

Answer as thoroughly as you can in four to six pages.

Standards for written work

All papers should meet the following standards:

Writing quality:  Papers must be clearly written, using correct grammar. They should be sensibly organized, edited, and proofread.  Grammar, punctuation, spelling and the like will count up to half the paper's grade.  On each paper, every additional error in basic correctness of writing will count more than the last.

Format:  Submit hard copy only, please, unless I ask you to submit a paper electronically; submit no papers by email.  (The opportunity cost of my time going back and forth to the printer to collect your work is too high for that.)  Please print with a word processor; double-space; format neatly.  Use a normal-sized font.  Staple multiple sheets together.

Name placement:  Please write your name only on the bottom of the back of the last page to help me avoid bias based on my expectations of different students.

Late or missed assignments:  Late papers will be accepted even though they are late. They may be penalized 5% per 24-hour period (including weekend days), beginning at class time the day they are due.  Please submit late papers to my faculty mailbox or underneath my office door; write both the due date and the date and time when you drop it off on bottom of the back of the paper by your name.

The final exam must be taken on its scheduled date unless you arrange some other time with me, well before the exam date.  If some emergency prevents you from taking the exam on schedule, you must present a written explanation of the problem before the exam, or as soon as possible afterwards, so that we can make alternative arrangements.

Reminder about academic honesty in your papers:  Remember that whenever you use a scholar's words you must put them in quotation marks and identify the source (in our course, just putting the page number in parentheses will do where the book or article being discussed is obvious).  Failure to do so is plagiarism.  Also be careful not to alter a writer’s wording superficially and offer it as your own.  To do so is plagiarism.  Because you are explaining the author's ideas, you should indicate in the citations what pages those ideas come from.

Final examination: This will be a normal exam, written in the designated exam period, Monday, December 14, 5:15-7:15 pm.  (Please verify that I’m reading the schedule correctly.) 


Graded assignments

Percent of grade

Short papers

Bellamy-Sowell paper


Final exam






The grading scale is as follows:

93 - 100
90 - 93
87 - 90
83 - 87
80 - 83
77 - 80
70 - 77
60 - 70
  0 - 60


Grades in the A range are awarded only for excellent work, work that shows mastery of the subject.

Grades in the B range indicate good work, work that shows significant grasp of the subject.

Grades in the C range indicate satisfactory work.

We all know what D and F mean.

Required readings - books

Thomas Sowell, A Conflict of Visions
Edward Bellamy, Looking Backward

Charles Murray, By the People

Articles and book chapters in a required photocopied packet


Recommended reading

Diana Hacker, A Writer's Reference

Schedule of assignments


Reading assignments

Writing assignments 
(and selected class activities)

Aug. 26

Syllabus, "I, Pencil" in class.

Do plagiarism exercise on Blackboard.

Aug. 31

Thomas Sowell, A Conflict of Visions, Preface - Chapter 3

Short paper #1 (ungraded) due Wednesday. "Profit, Loss and Discovery" lecture on Wednesday

Sep. 7

Sep. 9

Labor Day

Thomas Sowell, A Conflict of Visions, Chapters 4 - 6



Sep. 14

Thomas Sowell, A Conflict of Visions, Chapter 7 - end (you may skip Chapter 9, the final chapter)

Sep. 21

Bellamy, Looking Backward, Chapters 1-14

Sep. 28

Bellamy, Looking Backward, Chapters 15-28 (end)

Sowell-Bellamy paper due Wednesday

Oct. 5

David Ramsay Steele, From Marx to Mises, Chapter 1, "A quick look at the Mises argument" (packet) (27 pp.)
Ludwig von Mises, “Economic Calculation in the Socialist Commonwealth,” (packet) (44 pp.)

Oct. 12

F.A. Hayek, “Socialist Calculation II: The State of the Debate” (1935), Chapter VIII of Individualism and Economic Order (packet) (33 pp.)

Short paper on Mises

Oct. 19

Oskar Lange, “On the Economic Theory of Socialism” (packet) (72 pp.)

Short paper on Hayek 1935

Oct. 26

F.A. Hayek, “Socialist Calculation III: The Competitive ‘Solution,’” (1940), Chapter IX of Individualism and Economic Order and “The Use of Knowledge in Society,” (1940) Chapter IV of Individualism and Economic Order) (packet) (43 pp.)

Short paper on Lange

Nov. 2

"Planning with Material Balances in Soviet-Type Economies" by J. M. Montias, American Economic Review, Dec. 1959, Vol. 49, No. 5, pp. 963-969 and 976-981 only (packet)
"The Road to Nowhere" by Peter Boettke (packet)

Short paper on Hayek

Nov. 9

Charles Murray, By the People, chapters to be announced

Nov. 16

Charles Murray, By the People, chapters to be announced; Howard Baetjer Jr., “Regulating Regulators: Government v. Markets,” Cato Journal (forthcoming, handout)


Nov. 23

Nov. 25

Charles Murray, By the People, chapters to be announced; listen to EconTalk podcast with Lee Ohanian, Arnold Kling, and John Cochrane of July 13, 2015, first 31 minutes


Nov. 30

Daniel B. Klein, "Planning and the Two Coordinations, with Illustration in Urban Transit" (packet) (17 pp.)

Dec. 7

Prepare for the final exam

Wrap up and review

 Final Examination: Monday, December 14, 5:15-7:15.  (Please check this day and time against the university schedule to make sure I have it correct.)