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What Are the Different Types of Mixed Economic Systems?

A statue of Deng Xiaoping, the Chinese politician who introduced the socialist market economy in China.
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  • Written By: Osmand Vitez
  • Edited By: PJP Schroeder
  • Last Modified Date: 08 April 2014
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Mixed economic systems are those that use both market and planned economy attributes. A few different types of mixed economic systems exist, with the most common being planned or command economies. Beneath each of these broad headers are a few more types. The purpose of mixing capitalist and socialist principles is an attempt to regulate the free market. Individuals who believe in mixed economies often believe in the restriction of freedom, which keeps people from engaging in their own self-interests.

A planned economy exists when a government entity makes many major decisions regarding the basic use of resources in the economy. Activities like the collection, distribution, and production of goods and services all come down to government decisions. Market prices attached to goods may also come from the government. Here, the natural market forces that typically exist between businesses and individuals cannot direct economic activity. The attributes of government control are often heavily involved in mixed economic systems.

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Command economies take the principles from a planned economy many steps further in terms of state control. A command economy may rely heavily on socialist or collectivist principles, where the rewards earned by businesses or individuals go to the state or a collective pool. In short, there is no real protection of personal property, and the private use of economic gain faces immense pressure, with the result being the inability to engage in economic self-interest. There is no real economic planning that exists with a command economy. The government or collectivist society simply controls the entire economy.

Nations can create mixed economic systems by taking attributes from the two economic systems above and a market economy. For example, there may be two major sectors in the economy: public and private. The government owns several businesses, while private individuals own other businesses. While the two sectors can work with each other, there is also the ability for the government to dominate certain industries if necessary. Mixed economic systems can also change or alter current market economies through some form of government intervention.

Regulation is often the biggest tool government wields in mixed economic systems. Governments usually attempt to create fair economic systems, with no real concept of fair being defined. What one individual decides is fair is often subjective, with another seeing fairness as immoral or improper. A mixed economy can also be less efficient due to the slow nature of a large government to change policies through its bureaucracy. Responding to consumer demand is also difficult as the government cannot know what a consumer wants or desires.

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