Mixed Economy

DEFINITION
Mixed economy is an economic system which is
combination of capitalistic economic freedom and
principles of socialistic economic control .
 Mixed economy aroused when the two systems
suffered failure and need of third system was felt.

These failures are elaborated separately as:

Failure of capitalism
Failure of socialism
 FAILURE OF CAPITALISM
During nineteenth
century,
all countries had free
market
economies and the
government
intervention
was
quite
But, small.
with the passage of time, the evils of
capitalism such
as unemployment, inequalities in distribution of
income
and wealth and business cycle became quite
clear
 FAILURE OF SOCIALISM
In the beginning of 20th
century,
some countries adopted
socialism. But
The
soonrate
theof economic
drawbacks
growth
surfaced up.
slowed down and people
started resenting the loss
of
their personal freedom.

Socialist economies failed

to
match the rapid progress
 WHY MIXED ECONOMY

The term "mixed economy" arose

in the
context of political debate in the
United
Kingdom
Mixed in the postwar
economy period
is an economic
system in which both the state
and
private sector direct the economy,
reflecting characteristics of both
market economies and planned
economies.
 SUPPORTERS AND
CRITICS OF MIXED
ECONOMY:
Supporters of the mixed economy :
R.H.Tawney
Anthony Crosland
Andrew Shonfield
Harold Macmillan.
Critics of British Mixed Economy:
Ludwig von Mises
Friedrich von Hayek
 MAKING OF MIXED
ECONOMY
The making of mixed economy is divided into three
different sections stated as follows:
Private Sector
Public Sector
Autonomous Bodies/Semi-Public Sector
 PRIVATE SECTOR
In economics the private sector is that part of the
economy, sometimes referred to as the citizen sector,
which is run by private individuals or groups, usually as a
means of enterprise for profit, and is not controlled by the
state.
EXAMPLE
 PUBLIC SECTOR
The part of the economy concerned with providing basic
government services to the public is called public sector.

The composition of the public sector varies by country,

but in most countries the public sector includes such
services as the police, military, public roads, public
primary education and healthcare for the poor.
EXAMPLES:
 AUTONOMOUS BODY

Autonomous bodies are those in which public

and private sector work together by merging
their resources either to increase the efficiency
or to supplement the deficiency of resources.

Still it does not mean that all autonomous

bodies are efficient in their work. There is always
possibility of lack of performance or inefficiency
from public sector.
EXAMPLES
REASONS WHY MIXED
ECONOMY DEVELOPED

The demerits of two economic systems acted as the

initiative for the need of third economic system.
 DEMERITS OF
CAPITALISM

Exploitation
Inequality of wealth distribution
Inappropriate use of productive
resources
Emerging of monopolies
Unemployment
DEMERITS OF SOCIALISM

Inefficiency
Consumers suffer
Economic inequality
Non existence of political
and economic freedom
Non-existence of
competition
 CAHARCTERISTICS OF
MIXED ECONOMY

Co-existence of public and private sector.

Middle of the road Policy.
Freedom and control.
Economic planning.
Monopolies are regulated.
MERITS OF MIXED
ECONOMY

Efficient
Freedom of decision
making of Consumer
Planned development
Increase in National
Production
DEMERITS OF MIXED
ECONOMY
Corruption
Fear of nationalization
Bureaucracy and red
tapism
Conflict between public
and private sector
 COUNTRIES HAVING
MIXED ECONOMIC SYSTEM
Almost all the countries have mixed economy system.
America is supposed to be the Capitalistic economy but role
of government is also seen there. China is considered to be
the Socialistic country but private sector also exists there.

Pakistan
EXAMPLES
India
Scotland
Australia
Japan
Germany
UK
A mixed economy is a mix between socialism
and capitalism.

In this system the freedom in the economic

activities are
influenced by the Government's regulation
and licensing
policies.