Economies all across the globe are nothing but mixed economies. The two end factors of the spectrum are Capitalism and Socialism. When the features of both these ends are combined, we get a mixed economy. Now, we will explore what is a mixed economy with its features and merits. As denoted by the name, a mixed economy combines both the command and market economy. Therefore, it follows the price mechanism alongside central economic planning. The production means are decided by private and public ownership. However, it is the market forces that set the price, demand and supply. The government intervenes to eliminate the possibilities of monopolization and discrimination.
A mixed economy definition exists to handle the cons of a capitalist or socialist economy. The mixed economy system aims to come up with a unique solution. It supports the concept of liberty towards private ownership. The mixed economy also notes the demerits of capitalism. It comes up with proposals to the government to avoid any discrimination among the citizens.
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What are the features of a Mixed Economy?
In the mixed economy system, all three sectors exist together that is the private sector, public sector and joint sector. The government and private companies together hold the responsibilities of the respective division. 51% of the total ownership belongs to the state itself.
According to the mixed economy definition, a cooperative sector exists in a mixed economy. The significance of this sector is vital. In mixed economy countries, the government provides necessary items and financial aids to the areas involved in cooperative societies like warehousing, dairy industry and more.
To be precise, in a mixed economy, we denote that the individuals have complete liberty to manufacture goods and items and choose property and occupation according to their choice. The regulating body maintains control to avoid all sorts of discrimination and monopolistic issues.
In a mixed economy, the central planning authority exists. All the sectors of the firm follow this rule and plan to pursue their goals. The plan is solely observed with the motive to attain national economic growth.
The significant look out of a mixed economy is the social welfare of society. It focuses on eliminating the unemployment issues from the country. The mixed economy definition further says it enhances social security and public education facilities.
Merits of a Mixed Economy
The mixed economic system has certain advantages. The following are the benefits of a mixed economy.
The mixed economy combines both the features of a socialist and capitalist economy. Therefore, advantages from both sectors are present in a mixed economy. For example, absolute individual liberty is there in a diverse economy. Again, economic freedom can be gained too in a mixed economy.
An arguably mixed economy is the method to establish socialism in a country following peaceful and democratic ways. For example, the economy can move towards socialism through the progressive extension of the public sector.
In a mixed economy, the private sector's efficient management is combined with the public sector's financial soundness. Resultantly, the country achieves a rapid rate of economic growth.
The evils of the capitalist system, such as inflation, unemployment, etc., can be removed in the mixed economic order. In the modern world, the objective of the government is to establish a welfare state. In the welfare state, the government aims at achieving maximum welfare for the maximum number of people. Arguably, maximum prosperity can be gained through the extension of the public sector. It is possible only in a mixed economic system. This one is among the most significant advantages of a mixed economy.
Did you Know?
Here are some of the fantastic facts about the features of Mixed Economy that you will be surprised to read.
In a mixed economy, though the private and public sectors exist side by side, the government puts certain restrictions on the working of the private sector. It is among the unique characteristics of a mixed economy.
There are some acts passed by the government to regulate the dos and don'ts of the private sector. Consumer sovereignty stays intact in a mixed economy.
Solved Example on What is Mixed Economy
Q. Which among the following Systems is followed in India?
None of the three
Ans. The right answer is the third option Mixed. In India, a mixed economy prevails. All the sectors, i.e., private, public and joint, exist side by side. Following the guidelines of mixed economy definition, Central economic planning authority exists in India, so does the price mechanism.