8 Advantages and Disadvantages of the Mixed Economy

As the name implies, a mixed economy is a form of system where all activities in production, as well as those performed by private and government entities, blends capitalism with various kinds of regulations. However, more and more people these days are wondering what this type of economy is all about, causing them to study it and discover its advantages and disadvantages. It is best to look into these things to be able to know where we stand on this matter.

List of Advantages of Mixed Economy

1. It promotes a quick economic development.
In this type of economic system, both the public and private sectors can operate equally, which means that economic development will be quicker. This is especially true considering that economic resources will be utilized efficiently. Also, depletion of resources will be slowed down.

2. It creates a balance in regional developments.
The planning commission of a country will be able to create policies for the improvement of every region. In addition, the government would also try to develop each sector of the population.

3. It encourages lesser income inequality.
With a mixed economy, there will be lesser inequality when it comes to income, where the inheritance law is applied to enable members of society to become richer. As for the public sector, it would try to provide economic utility to the general public, leading to further reduction of inequality in income.

4. It provides the freedom to own a private property.
People are free to obtain property in a mixed economy, which means that the idea to work even more will be encouraged. Again, this will help in the fast economic development, especially in the areas of industries and agriculture.

List of Disadvantages of Mixed Economy

1. It brings about the fear of nationalization.
As the private and public sectors coexists, the government would have the ability to own and nationalize any industry. This means that private entities will have to stay on the psychological apprehension that their business would be nationalized or taken over by the government.

2. It could risk the government to go too far.
In a mixed economy, determining the exact role of the government in the private sector would sometimes become a guessing game that would result to unfair practices in both sides. It is believed that the government would manage the economy poorly, so its involvement is usually regarded as inappropriate.

3. It observes lesser use of resources.
While the interest of the society is important in this system, it also hinders maximum use of available resources. This is primarily because of the government trying to mobilize resources to produce products and services that are generally beneficial for society, rather than doing it for the betterment of the economy.

4. It can lead to higher taxes.
With more state intervention in the economy, it would mean that the government would invest more and would get their funds largely from tax revenues. More taxes would be required from the people, which can lead to negative consequences.

Basically, the success or failure of a mixed economy would still depend on how it is managed. However, based on the advantages and disadvantages listed above, we will be able to know whether it will do our country any good or just make situations even worse.

About the Blog Post Author
Natalie Regoli is a seasoned writer, who is also our editor-in-chief. If you have any questions about the content of this blog post, then please send our editor-in-chief a message here.