Merits of Mixed Economy
Mixed economy has the following merits available to capitalist economies and socialist economies.
1. Economic freedom and existence of private property which ensures incentive to work and capital formation.
2. Price mechanism and competition forces operating in the private sector promoting eflcient decisions and better resource allocation.
3. Consumers are benefitted through consumers’ sovereignty and freedom of choice.
4. Appropriate incentives for innovation and technological progress.
5. Encourages enterprise and risk taking.
6. Advantages of economic planning and rapid economic development on the basis of plan priorities.
7. Comparatively greater economic and social equality and freedom from exploitation due to greater state participation and direction of economic activities.
8. Disadvantages of cut-throat competition averted through government’s legislative measures such as environment and labour regulations.
However, mixed economy is not always a ‘golden path’ between capitalism and socialism. It suuers from substantial uncertainties. Mixed economy is characterised by excessive controls by the state resulting in reduced incentives and constrained growth of the private sector, poor implementation of planning, higher rates of taxation, lack of eflciency, corruption, wastage of resources, undue delays in economic decisions and poor performance of the public sector. Moreover, it is very diflcult to maintain a proper balance between the public and private sectors. In the absence of strong governmental initiatives, the private sector is likely to grow disproportionately. The system would then resemble capitalism with all its disadvantages.
Mixed economy has the following merits available to capitalist economies and socialist economies.
1. Economic freedom and existence of private property which ensures incentive to work and capital formation.
2. Price mechanism and competition forces operating in the private sector promoting eflcient decisions and better resource allocation.
3. Consumers are benefitted through consumers’ sovereignty and freedom of choice.
4. Appropriate incentives for innovation and technological progress.
5. Encourages enterprise and risk taking.
6. Advantages of economic planning and rapid economic development on the basis of plan priorities.
7. Comparatively greater economic and social equality and freedom from exploitation due to greater state participation and direction of economic activities.
8. Disadvantages of cut-throat competition averted through government’s legislative measures such as environment and labour regulations.
However, mixed economy is not always a ‘golden path’ between capitalism and socialism. It suuers from substantial uncertainties. Mixed economy is characterised by excessive controls by the state resulting in reduced incentives and constrained growth of the private sector, poor implementation of planning, higher rates of taxation, lack of eflciency, corruption, wastage of resources, undue delays in economic decisions and poor performance of the public sector. Moreover, it is very diflcult to maintain a proper balance between the public and private sectors. In the absence of strong governmental initiatives, the private sector is likely to grow disproportionately. The system would then resemble capitalism with all its disadvantages.
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