Mixed Economy

Mixed economy

Mixed economy is an economic system in which both the private sector andstate direct the economy, reflecting characteristics of both market economiesand planned economies.

Most mixed economies can be described as market economies with strong regulatory oversight and governmental provision ofpublic goods. Some mixed economies also feature a variety of state-run enterprises.

In general the mixed economy is characterised by the private ownership of themeans of production, the dominance of markets for economic coordination, with profit-seeking enterprise and the accumulation of capital remaining the fundamental driving force behind economic activity. But unlike a free-market economy, the government would wield indirect macroeconomic influence over the economy through fiscal and monetary policies designed to counteract economic downturns and capitalism's tendency toward financial crises andunemployment, along with playing a role in interventions that promote social welfare.

Subsequently, some mixed economies have expanded in scope to include a role for indicative economic planning and/or large public enterprisesectors.

There is not one single definition for a mixed economy, with it defined variously as a mixture of free markets with state interventionism, or as a mixture of public and private enterprise, or as a mixture between markets and economic planning. The relative strength or weakness of each component in the national economy can vary greatly between countries. Economies ranging from the United States to Cuba have been termed mixed economies. The term is also used to describe the economies of countries which are referred to as welfare  states,  such    as  the Nordic countries.  Governments  in  mixed    economies often provide environmental          protection, maintenance of employment standards, a standardized welfaresystem, and maintenance of competition.

As an economic ideal, mixed economies are supported by people of various political persuasions, typically centre-left andcentre-right, such as social democrats or Christian democrats. Supporters view mixed economies as a compromise between state socialism and free-market capitalism that is superior in net effect to either of those.