What is Mixed Economy|How does it works in the Economy of the World| find all these and more below.
Since the beginning of Trading and Investment policies among Nations of the World, each Nation has been adopting its own system of Economy that each feels will better its Country's Economy.
While some chooses to run on full Private- Capitalism, others chose Socialism, where states take over the control of the Economy.
But overtime, most of these Countries are beginning to adopt the third force Economy, known as Mixed Economy.
To bring light to this Mixed Economy, Daily News Report had interview with an economist based in the United Kingdom - Dr. Susan Wilson
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| Dr. Susan Wilson |
Quest: Welcome on the Program Dr. To start with, what do we mean by the Mixed Economy system?
Guest: It's my pleasure. The Mixed Economy System is a structured framework that incorporates both Capitalism and Socialism structure to operate. In the other way round, the Mixed Economic system preserves the private properties and allows a degree of economic independence in capital use, but also enables governments to intervene in economic activities to accomplish its social goals.
In general, the Mixed Economy system is a system of Economy controlled by both the state and private individuals.
Furthermore, in the neoclassical theory, mixed economies are very less effective than pure free markets of capitalism, but government intervention advocates that the basic conditions needed for free-market efficiencies, such as: fair knowledge and rational market participants, cannot be met in actual practice.
Quest Does having a Mixed Economy shows that the State has major control over the economy?
Guest: No. Mixed economic system do not give absolute power to anyone; they all compete in the Market. Mixed Economy System do not prevent the private sector from seeking profit, but regulate business and can nationalize industries which provide a public good. Take for instance, the U.S. is a mixed economy, leaving ownership of the means of production in mostly private hands, but incorporating elements, such as manufacturing regulation, agricultural subsidies, and partial or sometimes full public ownership of some industries, such as letter delivery and national defense in the hands of Government.
Quest: What are some of the characteristics of the Mixed Economy System?
Guest: Some of the Characteristics of Mixed Economies include: allowing the interaction of demand and supply to determine price, that is, giving room for free market. It also protect private property. In some mixed Economy as well, It allows the Federal government to safeguard its people and its market. Thus, the government has a larger role in the Military, International trade, and National transportation. The Mixed Economy system is also driven by the motivation of the self-interest of individuals.
Quest: How is a Mixed Economy Different from Free Markets
Guest: The Mixed economic systems are not laissez-faire systems because the government gets involved in planning the use of certain resources and can exercise some control over private sector enterprises.
Government can also seek to redistribute wealth by taxing the private sectors and use tax funds to further social goals in the Country. Some of the common examples of government intervention in mixed economies include public-private partnerships, trade security, subsidies on some goods and services, targeted tax incentives and fiscal stimulus.
Quest: Why is it okay for Nations of the world to adopt Mixed Economy?
Guest: Mixed Economy reduces workload of Government. It will allow the government to focus on some sectors while other sectors are controlled by private individuals. Also, the citizens get to enjoy freedom; those freedom include to own and control means of Production, distribution and exchange of goods and services in the Country.
Since the force of demand and supply determines prices, this is more scientific and beneficial to the economy.
It also enjoys the advantage of central economic planning; this will help the economy increase more rapidly and in the correct direction.
Quest: What are the disadvantages to Mixed Economy System?
Guest: The disadvantages of Mixed Economy are:
Government takes larger control of the Economy. That is, they tend to lean more toward government control and less toward individual freedoms.
Also, unsuccessful regulations may paralyze features of production. This, in return, can cause the economic balance to shift cause.
Sometimes, government regulation requirements may cost a company so much that it puts it out of business.
Another negative impact is that the government decides the amount of tax on products, which leads to people complaining about high taxes and their unwillingness to pay them.
In addition, unsuccessful regulations may paralyze features of production. This, in return, can cause the economic balance to shift.
Quest: Are there Countries practicing this system? How do they operate?
Guest: Of course, many Countries of the World are practicing it.
Some of those Countries include Russia:
Mixed Economy in Russia:
Since the collapse of the Soviet Union in 1991, Russia went on to achieve high levels of sustained economic growth through the 2000s. And having previously opened its market up following the collapse of the Soviet Union, Russia benefited from trading with the West, particularly with its Oil. At the same time, it opened its markets up to private individuals to open their own businesses in a nod to a market-based system.
Mixed Economy in Nigeria in the West Africa:
The Country operates on a clear Mixed Economy system. In Nigeria, while some major sectors are operated by government, some are largely in collaboration with private individuals. Some of the sectors where the government focuses on include: Mining, Currency and Security; while private individuals have taken over the Country's production arm.
Mixed Economy in the United Kingdom:
The UK has been a pioneer mover of a free-markets throughout the years. It has a high degree of economic freedom in the fact that it has strong property rights and individuals can freely set up their own business; either big or small. The owners also face relatively little in the way of regulations by government.
Quest: Which system of Economy will you advice a Country to adopt?
Guest: A Country should adopt based on its population and size. For a less larger Country, a socialism is more better. While for a more larger Country, the Mixed Economy is more preferable as it allows both government and private individuals develope the economy. This will also reduce the workload of government and allow such government focus more on protecting lives and properties as a core obligation of every government.