Nearly any sort of nation may have a mixed economy. A mixed economy blends together elements of private enterprise and collective economic action and falls between the two poles of pure capitalism and pure socialism. Nations such as Norway and Germany are balanced near the middle of this spectrum and are some of the best examples of this style of economy, but both the United States and the People’s Republic of China could legitimately be said to have mixed economies. This sort of economic organization is most often seen in democracies, but a mixed economy may exist under many other types of political system as well.
The idea of the mixed economy is a product of the industrial age. Earlier societies featured different economic structures and arrangements, often based on custom, tradition, religion, or other factors that had little to do with either organized political life or economic forces. Industrialization unleashed tremendous productive forces in the world but also led to misery and hardship. Nations attempted to make the most of the productive forces, while limiting the suffering of ordinary people.
Bismarck’s Germany is a good example of an early attempt to create a mixed economy. The German Empire’s economic system was basically capitalist, and wealthy industrialists such as the Krupp family became tremendously wealthy. As a form of insurance against a revolution, Bismarck’s government stepped in to regulate working conditions and to fund welfare benefits in an effort to make the lives of workers easier. The German government also oversaw and supported large industrial enterprises, such as the creation of a national railroad system.
In the modern world, mixed economies are very common in democratic societies, although the balance between public control and free enterprise varies widely. Norway has a long tradition of offering a strong social safety net but still protecting property rights and fostering a capitalist economy. The United States has generally shown a stronger commitment to a capitalist economic system but still uses government regulation to limit the marketplace to some degree and provides some services on a social basis rather than through the marketplace.
A non-democratic society may make use of a mixed economy as well. Modern China is a good illustration of this. In the last years of the 20th century, China opted to make use of market economics to foster economic growth and development. The Communist Party retained absolute control over political life in the nation, however, and also kept several types of economic controls in place.