Mixed economy - the pros and cons of a modern mixed economy

The government of each country understands that the standard of living of the entire state depends on the economy. For this reason, it is very important not to make a mistake with the choice. A mixed economy is one of the most effective options. What are the features of the mixed economy and what are its advantages and disadvantages?

What is a mixed economy?

Thanks to the mixed economy, entrepreneurs and even individuals can make independent decisions in the field of finance. Their autonomy is limited by the fact that society or the state has priority in these financial matters. A mixed economy is a system where both the state and the private sector play an important role in the production, distribution, exchange and consumption of all resources, material wealth in the country.

Often, the ideas of a mixed economy are loyal to democratic socialism. Within the framework of this system, the state and private enterprises, as well as various corporations, are able to manage production assets, handle the movement of goods, make sales transactions, hire and dismiss employees, in fact being equal players in the market.

What are the main goals of the mixed economy?

This system has its own important tasks. Experts call not one goal of the mixed economy:

1. Providing employment of the population.
2. Proper use of production capacity.
3. Stabilization of prices.
4. Ensuring a one-time increase in labor productivity and payment.
5. Balancing the balance of payments.

Signs of a mixed economy

In many countries with very high incomes, a mixed system of economy is used. Here, legal entities and individuals can decide on the distribution and movement of funds independently. Residents of such countries know what is characteristic of a mixed economy:

1. Partial integration of production within the nation and beyond.
2. State and private property are joint.
3. There is no budget restriction.
4. Productivity of labor is stimulated by means of factor incomes.
5. The organization of production is based on the principle of "demand = supply".
6. The presence of competition in the market.
7. The state is engaged in regulating the national economy.
8. There is a shadow economy and goods banned by the government.

Mixed economy - pros and cons

None of the modern systems can not be called ideal. This type of economy has both its advantages and disadvantages. Among the advantages of a mixed economy:

1. Combination of economic efficiency with the needs of the population.
2. Absence of monopoly and deficit, which can negatively affect the state.
3. Social orientation of the economy.
4. Providing not only economic growth, but also development.

However, the principles of a mixed economy have their own negative sides:

1. It, unlike the traditional, is not able to get rid of such negative points as inflation, unemployment, a visible social gap between rich and poor people.
2. Possible stagnation of production assets.
3. Deteriorating quality of goods.
4. The inhibition of the process of producers' exit to new markets.

Pros of the mixed economy

Most economists argue that the mixed type of economy has many advantages:

1. The state and producers, consumers are important in solving the fundamental issue of the economic system - what, how, for whom and in what volume is required to produce. This gives such an opportunity to combine economic efficiency with the satisfaction of the needs of the entire population, which can reduce social tension within the entire state.
2. In the system, everything is balanced and there is no monopoly, and there is no deficit that can shake the state from within.
3. Social orientation of the economy, which combines the preservation of competition, market freedom and protection of the population at the state level from not very conscientious market participants and the negative effects of the market economy.
4. Provides both economic growth and development.

Cons of mixed economy

Despite of a lot of advantages, the shortcomings of the mixed economy are also called:

1. It is not able to eradicate inflation , unemployment, the gap between the wealthy and the poor.
2. Possible decline in the quality of goods and stagnant production assets.
3. Deceleration of producers' exit to new markets.

Models of mixed economy

Experts say that the modern mixed economy has such models:

1. Neo-ethatist mixed economy - with it the nationalized sector is developed, the policy is active countercyclical and structural, the system of so-called transfer payments is developed.
2. The neoliberal mixed economy is characterized by countercyclical policies. Here the state strives to provide conditions for effective work of the market.
3. The model of coordinated action is based on certain coordinated work and cooperation of representatives of social structures - government, trade unions and employers.

American model of mixed economy

Economists argue that the American model of a mixed economy is inherent:

1. The ability of all markets to function independently, without monitoring their activities by the government.
2. The ability of both legal entities and individuals to possess private property without government control.
3. Manufacturers can work on a competitive basis, which can provide quality services and low prices.
4. The consumer can determine by his demand the production of goods and services.

German model of mixed economy

The German model has its own peculiarities of mixed economy. Among its characteristic differences:

1. Social orientation.
2. Separation of social policy from economic.
3. The source for social protection of the population is not the profit of enterprises, but social budgetary and extra-budgetary funds.

The Swedish model of mixed economy

The Swedish model of the economy attracted attention back in the sixties thanks to a significant economic growth combined with a set of reforms and a stable society. This model has two main objectives:

1. Create acceptable conditions for employment.
2. Aligning the income line.

Here the characteristic of the mixed economy is based on political and economic stability, progressive growth and a high standard of living of people. This became real after the introduction at the state level of such principles:

1. The country has both a corporate and political culture at a high level, which allows resolving even the most difficult disputes, relying on diplomatic negotiations and mutual concessions.
2. Competitiveness of industry, interacting simultaneously with scientific, private and public institutions.
3. Government support in the development of innovative technologies, which are oriented towards optimizing economic processes.

Japanese model of mixed economy

Residents of the country of the rising sun say that the mixed economy in Japan has its own specifics. Among its features:

1. Very strong national traditions, the influence of which can be traced at many stages of the economic process.
2. Specific relationships between management and subordinate.
3. The continuing institution of heredity.
4. Strong interference of the state in all processes.
5. Social justice.

Mixed economy - books

A mixed market economy is described in the literature. Among the most interesting and popular books:

1. "Study on the nature and causes of the wealth of nations" Adam Smith . Here the ideas and thoughts of the author's contemporaries are generalized, a system of categories, principles and methods of economics is developed.
2. "Capitalism and Freedom" Milton Friedman . The publication describes many postulates that in the future can become a real foundation upon which many liberal reforms are based.
3. "The Great Lie" Paul Krugman . A well-known American economist writes about the most popular American problems and ways to solve them.