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Mixed Economy Essay

1853 words - 8 pages

Mixed Economy
A mixed economy is an economic system that incorporates aspects of more than one economic system. This usually means an economy that contains both privately-owned and state-owned enterprises or that combines elements of capitalism and socialism, or a mix of market economy and planned economy characteristics. This system overcomes the disadvantages of both the market and planned economic systems.
* Resources are owned both by the government as well as private individuals. i.e. co-existence of both public sector and private sector.
* Market forces prevail but are closely monitored by the government.
* Producers and consumer have sovereignty to ...view middle of the document...

It prevails in most of the countries of the world.

The mixed economy is helpful in increasing national production in the country. Both public and private sectors work hard to bring about more production. The problems created by free enterprise and too much public control are solved through mixed economy. It provides freedom of enterprise ownership and profit earning as well as social welfare and political freedom. And all the national recourses are utilized under mixed economy.

Mixed economy is half way house. It is not helpful in achieving optimal use of nationalresources. The mixed economy suffers from the drawbacks of both the capitalism and the socialism. Mixed economy seldom achieved progress. It suffers from continues back wardness. Under mixed economy wastage of different types occurs in the economy

Advantages & Disadvantages of Mixed Economic System
By Tasos Vossos, eHow Contributor
A mixed economic system refers to the combination of private and public control within a given economy. The concept behind this system is taking advantage of private enterprises' productivity, while regulating the economy to avoid crises and achieve equal distribution of wealth. You can see examples of mixed economies across Europe, Australia and the United States; however, even traditionally socialist economies have adopted free market values, such as the New Economic Policy in the early Soviet Union and "socialism with Chinese characteristics." All cases of mixed economies can reveal the system's advantages and disadvantages.
Protecting the Economy
* In a pure free-market economy, the issues of what to produce, how to produce and how to distribute the goods are answered by the "invisible hand of the market," demand and supply. However, this system is based entirely on trends which are subject to change quickly, especially in the case of non-essential goods, such as clothing and technology products. This could be the reason of periodic crises, until demand and supply restabilize the market. A mixed economy can prevent such events by allowing the government to intervene with state-directed investments and fluctuating tariffs for example.
Helping Producers and Consumers
* In mixed economies, governments can set limits on the minimum price suppliers can sell their goods, as well as a cap on retail price. This way, both suppliers can be sure of the minimum amount they can gain through their work, while consumers are protected against skyrocketing prices in times of increased demand. For this reason, government agencies, such as the Federal Trading Commission in the U.S. and the Office of Fair Trading in the U.K., are responsible for the prevention of illegal iniquitous policies against supplies or consumers.
Harming Competition
* A mixed economy allowing government intervention in the form of state monopolies harms competition, which can have serious effects in the...

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