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What is a Mixed Economy?

By Adam Hill
Updated May 16, 2024
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A mixed economy is one in which there exists a mixture of free enterprise and government control. In some areas of a mixed economy, the government may even have a monopoly. Most of the developed countries of the world have a mixed economy. The mixture of two different economic philosophies can imply a variety of consequences for a country, some of which are seen as beneficial, while others are neutral or detrimental. Mixed economies are also known as dual economies.

In a typical mixed economy, the government may run such things as the postal service, rail lines, libraries, and in some cases, the health care service. Even in industries which are not owned or run by the government, its influence is very noticeable in the form of taxes and regulations like wage controls.

The economy of the United States is one of the more prominent examples of a mixed economy in the world. This is so because both private enterprise and government regulation have come to be integral and important to the economy as it now stands. For example, the principle of free enterprise is alive and well in the U.S. Businesses reserve the right to incorporate, and to employ and deny employment to whoever they wish, provided they do not engage in discrimination or other illegal employment practices. The means of production are still mostly privately owned, and private citizens can buy, sell, and invest any way they choose.

However, government regulation has a strong presence the U.S., as it does in many economies, because of the prevailing idea that some services are better provided for by the government than private enterprise. For example, most people all over the world have no problem with government control of things such as highway construction and repair, vital records like birth certificates, and of course, national defense. Despite the strong emphasis on individual freedom that is part of many countries' governing philosophies, it is generally accepted that these services and others like them are performed best at a government level.

A mixed economy, as viable as it may be, is not without some disadvantages. The biggest disadvantage is that the line between the public and private sectors easily becomes blurred, or shifts one way or another from time to time. In the long run, mixed economies usually evolve in the direction of more government control and less individual freedom. Even most of those who favor a degree of government control would likely concede that there must be a line drawn somewhere, but it is very difficult for a society as a whole to know where that point is. A mixed economy, therefore, is always in an evolutionary process.

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Discussion Comments

By anon340644 — On Jul 04, 2013

What are the three government regulations in a mixed economy?

By wecallherana — On Jul 28, 2010

The advantages of a mixed economy vary from country to country, however, most of the good things to say about them are their vast diversity and the overall mesh of culture. However, many countries are looked down on because of their mixed economy system simply because it doesn't have a healthy response time when it comes to other countries that might be in need of their help.

By lmorales — On Jul 28, 2010

@anon80442 - If you are speaking of the article, I think that the word perfect is nearly impossible to achieve in general. In specific, this topic covers a wide set of countries all over the world and it can be difficult to elaborate accurately enough in order to satisfy every person that reads it. However, if you walked away with just one piece of new information, that's a good thing. Mixed economies are all over the world and it's hard to focus on just one place without getting completely caught up in it.

By anon80442 — On Apr 27, 2010

it's good but not perfect. Some points are very good.

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