Mixed Economy• Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. Most mixed economies can be described as market economies with strong regulatory oversight.
• The basic plan of the mixed economy is that the means of production are mainly under private ownership; that markets remain the dominant form of economic coordination; and that profit-seeking enterprises and the accumulation of capital would remain the fundamental driving force behind economic activity.• Additionally, the government would wield considerable influence over the economy through fiscal and monetary policies designed to counteract economic downturns and capitalisms tendency toward financial crises and unemployment , along with playing a role in social welfare interventions.
Features Of Mixed Economy• Private and public sector exist side by side. Thus, economic activities are carried out by individuals as well as the government.• Private and public sectors are required to function in a properly coordinated manner.• A part from national security, government engages itself in those activities that the private enterprises consider as unprofitable or beyond this reach.• All basic and heavy industries and other strategic sector of an economy e.g., banking, transport, energy etc. are controlled by the government. Agriculture, consumer goods and other industries trade are left for the private sector.
Advantages• Since mixed economy involves both government and private enterprises it has the advantage of taking the benefits of capitalist nature of private companies and socialist nature of government.• There is less inequality of income because intent of government is to have a balanced economic growth of an economy.• Mixed economy allows individuals to run their business and make profits but at the same time it places some responsibility on these companies by inducing them to contribute towards the welfare of society.
Disadvantages• Since welfare of society is important in a mixed economy it leads to lower than optimum use of the resources because government mobilize the resources towards the production of those goods and services which are beneficial for the society as a whole rather than producing those goods and services which in economic terms are more beneficial for an economy.• Under mixed economy private enterprises have to face lot of difficulty because of various government loopholes like favoritism and bureaucratic nature which is prevalent in mixed economy.