A mixed economy is a system that is based on a combination of different forms of ownership and the development of which is regulated by the market, national traditions and state restrictions.
Today, the mixed economy is the most progressive, and the countries in which such a regime is established (Japan, Great Britain, Germany, Sweden, Italy and others) are the most developed and provide their people with the highest standard of living.
Signs of a Mixed Economy
A mixed economy (also called a hybrid) includes the principles of a market, planned, and even traditional economy. So, for example, the basis of the Japanese “economic miracle” is a special traditional style of housekeeping characteristic of this country.
A mixed economy is characterized by the concentration of the bulk of the productive forces in private hands, while the state has certain privileges and most often has a monopoly on socially important resources or economic assets (utilities, natural resources, etc.). The level of state intervention in the economy can be both high enough (50% of controlled economic resources) and lower (up to 20%). Due to this, the state provides social policy, replenishes the budget, creates reserves and performs its other functions. The mixed economy is additionally characterized by government intervention in licensing and quotas of production volumes, setting firm maximum prices for certain social types of goods (basic necessities, medicines, children's and school goods, fuel, medical care, etc.). The state can also influence the economic system by establishing tax policies and redistributing incomes, thus leveling the living standards of the rich and the poor.
Mixed Economy - Benefits
In a mixed economy, the state, producers and consumers play an important role in solving the main issue of the economy: "what, how, in what quantity and for whom to produce." This allows you to combine economic efficiency with meeting the needs of the population, which reduces social stress within the state. In such a system, everything is more or less balanced, there is no monopoly that is detrimental to the development of the market (except for strategically important and social goods) and there is no shortage that shakes the state from the inside.
One of the subspecies of a mixed economy is a “socially-oriented economy”, which combines the preservation of competition, market freedom and state protection of the population from unscrupulous market participants and the negative consequences of a market economy.
Mixed economy - disadvantages
However, a mixed economy has its drawbacks. Firstly, unlike the planned one, it cannot completely overcome such negative consequences as unemployment, inflation, and the excessive social gap between rich and poor. Excessive bias towards a planned economy can lead to a stall in economic reforms, stagnation in updating production assets, and a decrease in the quality of goods. Excessive bias in the traditional economy can also be detrimental to the whole system, as it often does not take into account current market needs and inhibits globalization processes, preventing manufacturers from entering new markets.
Nevertheless, today it is the mixed economy that is the most socially acceptable and, to a greater extent than other systems, provides economic growth and development.