Mixed economy - advantages and disadvantages

A mixed economy is a system that is based on the combination of different forms of ownership and the development of which is regulated by the market, national traditions and state constraints.

To date, the mixed economy is the most progressive, and the countries in which such a regime is established (Japan, Britain, Germany, Sweden, Italy and others) are the most developed and provide their population with the highest standard of living.

Signs of a mixed economy

Mixed economy (it is also called hybrid) includes the principles of market, planned and even traditional economies. So, for example, the basis of the Japanese "economic miracle" is the special traditional style of farming that is characteristic of this country.

The mixed economy is characterized by the concentration of the bulk of the productive forces in private hands, while the state has its own privileges and most often has a monopoly on socially important resources or economic assets (utilities, natural resources, etc.). The level of government 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 other functions. The mixed economy is further characterized by state intervention in the matter of licensing and quoting production volumes, establishing solid maximum prices for some social goods (essential products, medicines, children's and school goods, fuel, medical care, etc.). The state can also influence the economic system by establishing a tax policy and redistributing income, thus leveling the living standard of the rich and poor.

Mixed economy - advantages

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 quantities and for whom to produce." This allows you to combine economic efficiency with the satisfaction of the needs of the population, which reduces the social tension within the state. In such a system, everything is more or less balanced, there is no disastrous monopoly for the development of the market (except for strategically important and social goods), and a deficit that shakes the state from within is not allowed.

One of the subspecies of the mixed economy is the "socially-oriented economy," which combines preservation of competition, market freedom and state protection of the population from unscrupulous market participants and the negative effects of a market economy.

Mixed economy - shortcomings

Nevertheless, the mixed economy has its drawbacks. First, unlike the planned one, it can not completely get rid of such negative consequences as unemployment, inflation, excessive social gap between the rich and the poor. Excessive bias towards a planned economy can lead to a slippage of economic reforms, a stagnation in the renewal of production funds, a decline in the quality of goods. Excessive bias in the traditional economy can also be disastrous for the whole system, since it often does not take into account the current market needs and hinders the processes of globalization, preventing producers from entering new markets.

Nevertheless, today it is the mixed economy that is the most socially acceptable and, more than other systems, it provides economic growth and development.