Advantages and disadvantages of Mixed Economy: Mixed economy is the economic system that is the mixer of socialist economy and capitalist economy. It runs with the combination of elements of a market economy and a planned economy. Typically it maintains private individuals or businesses’ own capital goods and government interference in economic activities to achieve social objectives like trade subsidies, tax credits, etc. There are some advantages and some drawbacks of a Mixed economy.
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What is a Mixed Economy? Advantages and Disadvantages of Mixed Economy
A Mixed economy is a combination of a private individual or free-market and some planned system to regulate the economy by the government. This type of system where there is a mixer of capitalism and socialism economy is a mixed economy. The market economy is the process of the production of goods and services that depend on supply and demand in the market, and the planned economy system is based on the planning public ownership on the free market by governments these include machinery, tools, etc. It maintains private ownership but controls its production by the government.
Basically, there are two types of mixed economic systems;
- One is where the economy is controlled by the private sector or business owner and there is very little control and regulation from the government. All the businesses, factories, and fields or farms are majorly controlled by owners.
- Another type of mixed economy is where the government sets its own industries, factories and invest on its own, and manages all the business or sometimes it works also as a joint sector with private owners.
- Advantages of a Mixed Economy
- Disadvantages of Mixed economy
- Comparison Table for Advantages and Disadvantages of Mixed Economy
- FAQ’s on Pros and Cons of a Mixed Economy
Advantages of a Mixed Economy
There are many benefits of a mixed economy that are helpful in maintaining economical balance which is
Both public and private sectors can survive: A mixed economy offers better options for not only private business growth but also public sectors to manage the economy without loss. They can work together. Public sectors like atomic energy, telecommunication, defence, and many others are totally run by the government and the private sector run their businesses on their own without any government interference but state government encourages the private sector to provide better incentive and better facilities to make nations economy strong.
Consumer supremacy is maintained: The consumer has the power to freely buy any goods or product of their own choices and needs. These goods can be produced by only the private sector according to consumers’ needs.
Incentives for inventions and product methodology: More inventions and more efficient products are produced in the free market that is rewarded which then encourage to produce more product efficiently and as a result consumer gets the best products.
Government control on ownership: Sometimes private business owner gain more profit increases the prices of goods but does not supply the proper output which means they stock the goods and make them available at a higher cost which is not in the favor of customers. This kind of monopoly is controlled by the government to give the customers maximum benefit.
Provide facilities for the weaker section: Weaker section of society sometimes gets exploited by the industrialist. The labourers and daily wages workers do not get facilities and also proper income of their work and the government have to interfere and give proper facilities and correct the injustice.
Economic imbalance is reduced: The government takes necessary steps to balance the economic inequality in the society weaker section gets job opportunities and good education to balance the economic difference between a private business that grows better in a mixed economy.
Disadvantages of Mixed economy
There are a few disadvantages of a mixed economy that are
Unclear government control: The aim of the private sector is to get maximum profit out of their business which is sometimes against the planning of the national planning system done by the government. Under the National plan, any private has to follow their guideline to run their business but they find it difficult. But most of the economy is likely to be in favour of the private sector which helps them to gain more profit.
Fear of the private sector: Generally people fear private sectors moving to public sectors due to the economical system structure of the national economy which tends to be in the favor of the private sector.
Difficulties of the public sector: The national economic structure for the public sector is planned nicely but then it fails to fulfil the demands, and thus there creates a trust issue for the long term.
Comparison Table for Advantages and Disadvantages of Mixed Economy
| Advantages of mixed economy | Disadvantages of mixed economy |
| Both public and private sectors can survive | Unclear government control |
| Consumer supremacy is maintained | Untrust on private sectors |
| Government control monopoly | Difficulties faced in public sectors |
| Weaker section gets benefits | Taxes are applied |
| Economic imbalance is reduced | If the business fails means you fail |
| Innovation and product methodology is rewarded | Reduces competition |
| Abundant resources can generate | Can tend towards government control |
FAQ’s on Pros and Cons of a Mixed Economy
Question 1.
What is a mixed economy? What are its advantages?
Answer:
A Mixed economy is a combination of a private individual or free-market and some planned system to regulate the economy by the government. This type of system where there is a mixer of capitalism and socialism economy is a mixed economy.
There are many benefits of a mixed economy that are helpful in maintaining an economical balance of society by the national plan
- Both public and private sectors can survive
- Consumer supremacy is maintained
- Incentives for inventions and product methodology
- Government control on ownership
- Provide facilities for the weaker sections to protect them
- Economic imbalance is reduced
Question 2.
What are the limitations of a mixed economy?
Answer:
In spite of various benefits there are some drawbacks of a mixed economy:
- High taxes implemented
- If the business does not work then there is no backup
- Private is not trusted fully
- No proper guidelines by the government.
Question 3.
Who controls the mixed economy system?
Answer:
In this system, both the private sector and government make decisions on which products or services must be good for the market and how they must be delivered.