Mixed economy
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Template:Progressivism A mixed economy is an economy that contains both private and public, or state owned (or controlled) enterprises. According to the American Heritage Dictionary, a mixed economy is defined as:
- An economic system that allows for the simultaneous operation of publicly and privately owned enterprises. Template:Ref
There is not one single definition for a mixed economy Template:Ref, but relevant aspects include; a degree of private economic freedom (including privately owned industry) intermingled with centralized economic planning (which may include intervention for environmentalism and social justice, or state ownership of some of means of production).
For some countries, there is not a consensus on whether they are capitalist, socialist, or mixed economies. Economies in countries ranging from the United States Template:Ref to Cuba Template:Ref have been termed mixed economies.
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Philosophy
A mixed economy contains private ownership of the means of production, infrastructure, and institutions but may also contain state-ownership of some of these things. It allows for private financial decisions by businesses and individuals, but not absolute nor near absolute autonomy, as many of these decisions are otherwise overridden by government.
The term mixed economy was coined to identify economic systems which stray from the ideals of either capitalism or various command economies and "mix" with elements of each other. As most political-economic ideologies are defined in an idealized sense, what is described rarely if ever exists in practice. Most would not consider it unreasonable to label an economy that, while not being a perfect representation, very closely resembles an ideal by applying the rubric that denominates that ideal. However, when a system in question diverges to a significant extent from an idealized economic model or ideology, the task of identifying it can become problematic. Hence, the term "mixed economy" was coined. As it is unlikely that an economy will contain a perfectly even mix, mixed economies are usually noted as being skewed either toward capitalism or statism in varying degrees.
Objection to the term
Ludwig von Mises argues, in Human Action, that there is no such thing as a mixed economy. He says "the market economy or capitalism, as it is usually called, and the socialist economy preclude one another. There is no mixture of the two systems possible or thinkable; there is no such thing as a mixed economy, a system that would be in part capitalist and in part socialist." He reasons that even state-owned enterprises are subject to market forces; government may tax citizens to subsidize losses but those taxes exert a market force. He says that state ownership of the some of the means of production "is a step on the way toward socialism, but not in itself socialism." Image:Small USPS Truck.jpg
Which economies are mixed?
There is not a consensus on which economies are capitalist, socialist, or mixed. For example, while many would call the economy in the U.S. capitalist, others call it mixed. For example, according to economic and business historian Robert Hessen: "a fully free economy (true laissez-faire) never has existed, but governmental authority over economic activity has sharply increased since the eighteenth century, and especially since the Great Depression...Today the United States, once the citadel of capitalism, is a "mixed economy" in which government bestows favors and imposes restrictions with no clear or consistent principle in mind." [1] Image:NHS NNUH entrance.jpg
Elements of a mixed economy
Image:The farmer's market near the Potala in Lhasa.jpg
The elements of a mixed economy typically include a variety of freedoms:
- to possess means of production (farms, factories, stores, etc.)
- to travel (needed to transport all the items in commerce, to make deals in person, for workers and owners to go to where needed)
- to buy (items for personal use, for resale; buy whole enterprises to make the organization that creates wealth a form of wealth itself)
- to sell (same as buy)
- to hire (to create organizations that create wealth)
- to fire (to maintain organizations that create wealth)
- to organize (private enterprise for profit, labor unions, workers' and professional associations, non-profit groups, religions, etc.)
- to communicate (free speech, newspapers, books, advertizements, make deals, create business partners, create markets)
- to protest peacefully (marches, petitions, sue the government, make laws friendly to profit making and workers alike, remove pointless inefficiencies to maximize wealth creation)
with tax-funded, subsidized, or state-owned services and infrastructure:
- legal assistance
- libraries and other information services
- roads and other transportation services
- schools and other education services
- hospitals and other health services
- personal and property protection at home and abroad (police, military)
- subsidies to agriculture and other businesses
- government monopolies and government-granted monopolies
- state-owned industry, such as telephone service and electricity.
and providing some autonomy over personal finances but including involuntary spending and investments such as transfer payments and other cash benefits such as:
- welfare for the poor
- social security for the aged and infirm
- government subsidies to business
- mandatory insurance (example: automobile}
and restricted by various laws, regulations:
- environmental regulation (example: toxins in land, water, air)
- labor regulation including minimum wage laws
- consumer regulation (example: product safety)
- antitrust laws
- intellectual property laws
- incorporation laws
- protectionism
- import and export controls, such as tarrifs and quotas
and taxes and fees written or enforced with manipulation of the economy in mind.
Relation to form of government
While governments with harsh restrictions on economic and civil liberties can choose to begin a process to implement a mixed economy, many believe that it cannot be long sustained without causing that government to also implement more and more of the elements of a liberal democracy (or, conversely, that implementing liberal democractic reforms inevitably leads to liberalization of the economy). For example, "the mainstream view holds that China’s WTO entry and the opening of its media system to foreign owners will inevitably undermine the CCP’s authoritarian control and facilitate press freedom." [2]
The economic freedoms that are a necessary part the capitalist portion of a mixed economy are part of a continuum of freedoms, ranging from those that require no governance to those that require very substantial governance in regard to (for example) establishing rule of law that protects private property and free markets (the details are beyond the scope of this article). Many say that economic freedoms are themselves important defining elements of a liberal democracy. [3]
The western democracies implemented elements of capitalism and democracy over the last 300 years or so and perhaps are an example of this.
While the future of China is anyone's guess, many think China can not long follow the economic path the western democracies took without also, perhaps in spite of itself, implementing - over time, incrementally - the elements of liberal democracy. U.S. Secretary of State Condoleezza Rice was quoted by the New York Times as saying on March 19, 2005 in Tokyo, "[When China's leaders] look around them in Asia, they will see that freedom works....They will see that freedom of religion and respect for human rights are part of the foundation of decent and successful societies". [4]
Historic examples
The American System is an economic philosophy that dominated the United States policies from 1861 until 1929 that consisted of a three-part policy of: protecting industry through high tariffs or subsidies, government investment in infrastructure through internal improvements, and a national bank to promote the growth of productive enterprises. During this period the United States grew into the largest economy in the world with the highest standard of living, surpassing the British Empire by 1900. However, it is not established that this was the cause of prosperity, and free market advocates such as Adam Smith argue that such interventionism limits possibilities of greater prosperity.
Dirigisme is an economic policy initiated under Charles DeGaulle of France designating an economy where the government exerts strong directive influence. It involved state control of a minority of the industry, such as transportation, energy and telecommunication infrastructures, as well as various incentives for private corporations to merge or engage in certain projects. Under it's influence France experience what is called "Thirty Glorious Years" of profound economic growth.
Social market economy is the economic policy of modern Germany that steeres a middle path between socialism and liberalism and aimes at maintaining a balance between a high rate of economic growth, low inflation, low levels of unemployment, good working conditions, public welfare and public services by using state intervention. Under it's influence Germany has emerged from desolation and defeat to become an industrial giant within the European Union.
See also
- Corporatism "Historically, corporatism or corporativism (Italian corporativismo) is a political system in which legislative power is given to corporations that represent economic, industrial and professional groups."
- Nationalisation "is the act of taking assets into state ownership."
- Pluralism "In a pluralistic society, power and decision-making (and the ownership of the results of exercising power) are more diffused."
- Public sector "is that part of economic and administrative life that deals with the delivery of goods and services by and for the government."
- Public-private partnership "a system in which a government service or private business venture is funded and operated through a partnership of government and one or more private sector companies."
- Statism "is a term to describe any economic system where a government implements a significant degree of centralized economic planning"
- Welfare state "In many "welfare states", welfare is not actually provided by the state, but by a combination of independent, voluntary, mutualist and government services."
References
- Barr, Nicholas (“Economic theory and the welfare state: a survey and interpretation.” Journal of Economic Literature, 30(2): 741-803. 1992, a review essay looking at the economics literature
- Berkowitz, Edward D. (1991) America’s Welfare State: From Roosevelt to Reagan. The Johns Hopkins University Press.
- Buchanan, James M. (1986) Liberty, Market and State: Political Economy in the 1980s New York University Press.
- Cronin, James E. (1991) The Politics of State Expansion: War, State and Society in Twentieth-Century Britain. New York: Routledge.
- Derthick, Martha and Paul J. Quirk (1985) The Politics of Deregulation. Washington, DC: The Brookings Institution.
- Sanford Ikeda; Dynamics of the Mixed Economy: Toward a Theory of Interventionism London: Routledge 1997 a hostile (Austrian) approach
Sources
- Template:Note Dictionary.com - Mixed Economy
- Template:Note A variety of definitions for mixed economy.
- Template:Note About.com - A Mixed Economy: The Role of the Market
- Template:Note The Challenges of Cuba's Economy - An Interview with Dr. Antonio Romeroca:Economia mixta
et:Segamajandus pt:Economia mista sk:Zmiešaná ekonomika fi:Sekatalous zh:混合经济