Mixed Economic System

Mixed Economic System Definition

A Mixed Economic System is a combination of both capitalistic and socialistic ideals allowing protection of private assets while simultaneously allowing liberty in the use of capital together with federal intervention in economic decision making to achieve social objectives involving trade protection, fiscal stimulus in the form of trade subsidies, tax credit being common illustrations of federal influence thereby allowing public-private partnership treaty.


A mixed economy is an economic arrangement of a free market and socialistic ideals which makes it follow a pattern of capitalism and socialism together. Mixed economies uphold private ownership of production activities but within governmental control.

Mixed economies involve governmental control on companies that provide essential goods and services used by the public at large like airport, transport, mining, electricity, telecom, railways, water supply, food, medicine, banking, and defense. All present age economies are examples of mixed economies though there being widespread criticism by various economists on the economic bearings of mixed economic systems.

Mixed Economic System

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Types of Mixed Economies

There are broadly two types of Mixed economies:

Types of Fixed Economies

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Features of Mixed Economic Systems

Present-day economics are asynchrony of more than two economic systems. The public and private sectors work together while vying for the same set of resources. Mixed economic systems do not prohibit the private sector from profiteering but do impose regulatory measures on industries of national significance and public consumption. The world economies in modern-day times in the world are mostly mixed economies involving socialistic and capitalistic features.

  • #1 – Coexistence of Multiple Sectors: In this system, the three major sectors viz. private, public and mixed sectors thrive together in peace. The mixed sector is jointly driven by government and private companiesPrivate CompaniesA privately held company refers to the separate legal entity registered with SEC having a limited number of outstanding share capital and shareowners. read more with more than half control by the Government.
  • #2 – Co-operatives: In a mixed economy there is a cooperative sector whose objective is to provide financial support to cooperative societies involved in agriculture, animal husbandry or warehousing.
  • #3 – Freedom of Operation: The choice to produce goods and provide services, buy capital assets, choice of profession, products or services is given to the public but to check monopolistic forces the government maintains state control.
  • #4 – Economic Management: There is a federal planning body in a mixed economy. All sectors of the economy adhere to the economic plan of the state to fulfill various set targets. Economic planning is not rigid but acts as a common guideline for the overall prosperity and growth of the national economy.
  • #5 – Welfare of Society: One of the prime targets of a mixed economy is social welfare. It fights to reduce the gap between the rich and the poor by providing job opportunities and reducing poverty. The other targets being social and economic security, health care and free or subsidized education up to high school for all.

Characteristics of a Mixed Economic System

Following are the characteristics of a mixed economic system –

#1 – Co- Survival of Public and Private Sectors

There is a harmonious co-survival of public, private and combined sectors. The private sector firms are profit-oriented. Production in these sectors is controlled by private entities. However, the state reserves control over such entities. Industries in the public sector are social welfare centered entities largely controlled by Govt. bodies. The combined sectors work in cohesion in public-private partnershipsPublic-private PartnershipsPubic-private partnership refers to a collaborative model whereby the government agency collaborates with a private sector organization to accomplish a large-scale infrastructure project through private funding. Such projects include the construction of dams, bridges, airports, roads, etc.read more.

#2 – Economic Planning

In a mixed economy the govt. takes concern of both the public and private sectors in economic and fiscal planning taking measures favoring both. There is just resource allocation attempting to coincide with the productive strength of capitalismCapitalismCapitalism is an economic system consisting of businesses, resources, capital goods, and labour. Private entities own it, and the income is derived by the level of production of these factors. Because of the private hands, these entities can be operated efficiently and maximize their production activity also.read more and just distribution of socialism. The government policies are framed so that there is the existence of public companies in rural areas also providing stimulus packages and tax relies on private companies to set shop in backward areas.

#3 – Safeguarding of Consumer Rights

The interests of the end consumers are protected in a mixed economy. The consumers are given enhanced freedom to buy products and services of their choice. The government regulates the prices of the products so that they may not be exploited by Private groups.

#4 – Protection of Labor Rights

The government protects the working class from exploitation by private parties. The factories Act, Minimum wages Act are some of the measures taken to protect the interests of the labor force.

Advantages of Mixed Economic System

The following are the advantages of a mixed economic system –

Disadvantages of Mixed Economy

The following are the disadvantages of a mixed economic system –


While a mixed economy is good for the economy as a whole, the balanced growth of public and private parties and the market equilibrium should be maintained.

This has been a guide to Mixed Economic System and its definition. Here we discuss types, characteristics of the mixed economic systems along with advantages, and disadvantages. You can learn more from the following articles –