Business, Legal & Accounting Glossary
An economic system in which the government imposes boundaries on capitalism to limit the concentration of power and achieve social balance. The U.S. economic system is a mixed economy.
The characteristics of a market economy and command economy combine to form a mixed economy. It incorporates elements of both socialism and capitalism. In a mixed economy, state-owned enterprises and privately owned enterprises co-exist. The economic activities in such an economic system are controlled neither by the business entities that comprise market forces nor by the government. In a mixed economy, both these come together and ensure economic development.
As per the basic definition of a mixed economy, it is an economic system that has incorporated elements of more than one type of economic system. A major example of a mixed economy is the United States of America. Basic elements of a mixed economy include centralized economic planning and economic freedom.
Most economies of the world are mixed economies.
The partial domination of the market by business entities ensures that economic decisions are taken in time. The presence of the state government, on the other hand, guarantees a stable economy. A mixed economy offers great freedom in the economic sphere. These include:
Mixed economies exist in states that feature social democratic forms of government.
It is a blend of freedoms and regulations, ever-changing due to the lack of principles involved. It is created in an effort to have the benefits of freedom yet still accord the government its power.
The regulations in such an economy always force people to behave contrary to their own interests, and as a result of these regulations never end in positive results. When a certain policy fails, it is assisted up by other legislature with the view that more regulation will produce improved results. However, at times, these results can end in mass protest or even oppression to force people into adopting them.
India has followed a mixed economic pattern since independence. Both the public and private sectors coexist. The state’s planning machinery plays a significant role in allocating resources across various sectors.
The United States of America follows a mixed economic system. It calls for private business entities competing in a suitable business environment, each putting in its best to maximize its profits. This competition is balanced by the existence of public ownership entities that stress on the welfare of the society at large. However, each individual business entity will always strive to put its shareholders first (as opposed to society).
Nowadays a certain type of mixed economy exists in most countries. However, mixed economies are most commonly associated with social democratic forms of government.
Some major examples of a mixed economy are:
Laissez-Faire
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This glossary post was last updated: 21st November, 2021 | 0 Views.