Mixed Economy

Mixed Economy is an economic system which combines in itself the features of capitalism and that of the Socialism. Unlike a pure capitalistic economy, it has an important public sector, i.e. a number of industries which are owned and managed by the state. The State is not the all-pervasive owner of all means of production. Private enterprise is allowed and even encouraged to operate a large number of a industries and to own the various means of production. Thus in this economic system the public and private sectors exist side by side. It supports reduction in the inequality of incomes and seeks to achieve it through the fiscal machinery. It acts as a welfare state and undertakes a large number of functions and promotes the welfare of the common man.

It is an economic system in which both the private enterprise and a degree of state monopoly (usually in public services, defence, infrastructure, and basic industries) coexist. All modern economies are mixed where the means of production are shared between the private and public sectors. Also called dual economy

The public utility concerns like Post and Telegraph, Electricity etc are managed by State. There is also semi-public sector which includes all the concerns, which are jointly owned and managed by the private individuals and the State. Industrial, trading and commercial enterprises are also owned and managed by the individuals and they collectively constitute the private sector.

Merits of Mixed Economy

  • Interest of the people is well served
  • Adequate incentive to work hard
  • Resources may be properly utilized
  • Rapid development is possible

Demerits of Mixed Economy

  • Concentration of wealth in few hands
  • Existence of anti-social activities
  • Wastage of resources
  • Interest of Common man suffers

As one can see that mixed economy like socialist and capitalist economies has both advantages and disadvantages and therefore it will be always debatable whether a country should follow mixed economy structure or not.


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