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Mixed Economy

Mixed Economy
The economy of a nation is based upon a certain ideology. A mixed economy is primarily a combination of a capitalist and socialist ideology, but may include other ideologies and influences too.
OpinionFront Staff
Any economy as mentioned above is based upon ideologies and certain principles. These principles are nothing but a doctrine that set primary and secondary functions of the nation's economy. These principles also play quite an effective role in defining the manner and direction in which the national economy must proceed. These ideologies and principles are converted into a practical application with the help of a system of laws, governmental bodies and the banking system of a nation.

In the modern era, two types of economies namely, the capitalist economy and the socialist economy are observed. A capitalist economy is principally characterized by private sector ownerships of a large number of undertakings. Socialist economy, on the other hand, is characterized by a large number of undertakings closely controlled or owned by the government.

What is a Mixed Economy

There is no specific or concrete definition of mixed economies that can be put forth. The definition and also the advantages of a mixed type of economy can be better elaborated by stating that such an economy is a mixture of one or more economic ideologies that are predominantly conceived from a collaboration of capitalism and socialism. Some defining features include.
  • Centralized economic planning and legislature
  • Decentralized execution of policies and legislation
  • Participation of grassroots level government in policy formulation
  • Government ownership of key industries such as communications and infrastructure, defense productions, steel production, mining, energy, etc.
  • Stringent economic and labor laws
  • Decentralization of economic concentration and even distribution of wealth
  • In case, if the nation is a democratic republic, members of legislature can be of different ideologies
These might not be all the features of the mixed economies as there are several other unique features that can be found within the economy itself. However, the basic feature of liberty in business and regulation by the government is found. Examples of such an economy include several national economies such as Germany, Canada, Australia, etc.

Pros and Cons of a Mixed Economy

Capitalism and socialism are two opposing concepts and socialism is often termed to be a reaction to capitalism. Though the system covers up the drawbacks of both the ideologies, this type of economy is also characterized by certain pros and cons.

It is successful in providing the citizens of the state with some basic necessities. These necessities cover up all infrastructure, food, clothing and shelter, absolute defense forces, protection of rights of citizens and freedom to set up private enterprise in almost all sectors, except for the ones where civilian enterprise is banned. However, this monopoly is not very healthy as though the services are provided, they tend to be quite underdeveloped and rife with corruption.

This economy is also restrictive to many international trade activities that enable the domestic industry to thrive. This might sound very comforting for regional entrepreneurs, but is not healthy as the domestic industry is not competent enough to match the international standards. Corruption at an unchecked rate, excessive taxation and inflation are some other characteristics that tend to plague the success of a mixed economy.

Overall concrete implementation of policies and a respect for government and the motherland in the people's heart tends to create an excellent and well-settled economy with largely positive results.