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It doesnt really matter. Depends on the victory you want to go for. If I want economy, I like civs like France, because I can build up fast with industrious and I got the commercial trait. If I want total peace and economy, then England is nice too, though that civ takes some time to develop. Usually in my economy games I go for civs with Commercial or Seafaring traits, which make up most of my games, since I dont play much by myself anymore, and the players I play with in default civ3 are usually not on a high difficulty lvl: so it would be too easy for me to use warfare.
Once easily defendable borders are established (which is easiest to do on an archipelago map), change government to Republic. The republic cannot support a large military (military over the limit costs 2 gold per turn), but it gets a commerce bonus and relatively lower corruption. At this point focus on tech and get key wonders (such as Smith's Trading Company, Copernicus' Observatory and Newton's University).
If you want to take over the world (which I usually do) you will need to switch government to communism. I like to make the switch after finishing the Theory of Evolution and getting the 2 free techs. The computer typically researches communism early in the Industrial era, so it should be easy enough to trade for it. Once the government switch is complete, kill off the weaker civilizations with infantry. Then wait until you have tanks and modern armor to kill off your main rivals.
Switch to democracy instead of communism if you want a more peaceful end, with the space race or diplomacy. If you want a culture victory, it is probably best to stay as a republic and skip the second phase of anarchy.
Fascism is never recommended. Monarchy can be used instead of Republic if you need the bigger military. If you frequently want to make use of forced labor, then Feudalism can be used.
TL DR, The best goverment is Despotism (early) to Republic (middle) then Communism (end)
Recently I've been playing on harder levels which has had an affect on my peoples tolerance for war, making democracy a pain. For the most part I don't have a problem with war/that government.
Then if you want everything beside military vicotry cjange to democarcy, otherwise chose fascism for their immense unit cap and lower corruption (the same as republic).
Communism is not as good as democracy if you want other type of victory than military and is not as good as fascism either. It just given you a little bit of both.
Republic is the best imo to get a tech lead an expand to other civs borders.
Communism is late game, if you like to have a world empire and have all the techs you need.
-comrad Fishdick