A mixed economy is variously defined as an
economic system
An economic system, or economic order, is a system of Production (economics), production, resource allocation and Distribution (economics), distribution of goods and services within a society or a given geographic area. It includes the combinati ...
blending elements of a
market economy
A market economy is an economic system in which the decisions regarding investment, production and distribution to the consumers are guided by the price signals created by the forces of supply and demand, where all suppliers and consumers ...
with elements of a
planned economy
A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, part ...
,
markets
Market is a term used to describe concepts such as:
* Market (economics), system in which parties engage in transactions according to supply and demand
* Market economy
*Marketplace, a physical marketplace or public market
Geography
*Märket, a ...
with
state interventionism
Economic interventionism, sometimes also called state interventionism, is an economic policy position favouring government intervention in the market process with the intention of correcting market failures and promoting the general welfare o ...
, or
private enterprise
A privately held company (or simply a private company) is a company whose shares and related rights or obligations are not offered for public subscription or publicly negotiated in the respective listed markets, but rather the company's stock is ...
with
public enterprise
A state-owned enterprise (SOE) is a Government, government entity which is established or nationalised by the ''national government'' or ''provincial government'' by an executive order or an act of legislation in order to earn Profit (econom ...
. Common to all mixed economies is a combination of
free-market
In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any ot ...
principles and principles of
socialism
Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the e ...
.
While there is no single definition of a mixed economy, one definition is about a mixture of markets with state interventionism, referring specifically to a
capitalist market economy
A market economy is an economic system in which the decisions regarding investment, production and distribution to the consumers are guided by the price signals created by the forces of supply and demand, where all suppliers and consumers are ...
with strong
regulatory
Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. For ...
oversight and extensive interventions into markets. Another is that of active collaboration of
capitalist
Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, priva ...
and socialist visions. Yet another definition is apolitical in nature, strictly referring to an economy containing a mixture of private enterprise with public enterprise. Alternatively, a mixed economy can refer to a
reformist
Reformism is a political doctrine advocating the reform of an existing system or institution instead of its abolition and replacement.
Within the socialist movement, reformism is the view that gradual changes through existing institutions can eve ...
transitionary phase to a
socialist economy
Socialist economics comprises the economic theories, practices and norms of hypothetical and existing socialist economic systems. A socialist economic system is characterized by social ownership and operation of the means of production that may t ...
that allows a substantial role for private enterprise and contracting within a dominant economic framework of public ownership. This can extend to a
Soviet-type planned economy
Soviet-type economic planning (STP) is the specific model of centralized planning employed by Marxist–Leninist socialist states modeled on the economy of the Soviet Union (USSR).
The post-'' perestroika'' analysis of the system of the Soviet ...
that has been reformed to incorporate a greater role for markets in the allocation of
factors of production
In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilized amounts of the various inputs determine the quantity of output according to the relat ...
.
The idea behind a mixed economy, as advocated by
John Maynard Keynes
John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
and several others, was not to abandon the capitalist mode of production but to retain a predominance of
private ownership
Private property is a legal designation for the ownership of property by non-governmental Legal personality, legal entities. Private property is distinguishable from public property and Personal property, personal property, which is owned by a s ...
and control of the
means of production
The means of production is a term which describes land, labor and capital that can be used to produce products (such as goods or services); however, the term can also refer to anything that is used to produce products. It can also be used as an ...
, with profit-seeking enterprise and the
accumulation of capital
Capital accumulation is the dynamic that motivates the pursuit of profit, involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form of ...
as its fundamental driving force. The difference from a ''
laissez-faire
''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups. ...
'' capitalist system is that markets are subject to varying degrees of regulatory control and governments wield indirect
macroeconomic
Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole.
For example, using interest rates, taxes, and ...
influence through
fiscal
Fiscal usually refers to government finance. In this context, it may refer to:
Economics
* Fiscal policy, use of government expenditure to influence economic development
* Fiscal policy debate
* Fiscal adjustment, a reduction in the government ...
and
monetary
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are as ...
policies with a view to counteracting capitalism's history of
boom and bust
Business cycles are intervals of expansion followed by recession in economic activity. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are measured by examini ...
cycles,
unemployment
Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for Work (human activity), w ...
, and
economic inequality
There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of we ...
.
[Pollin, Robert (2007)]
"Resurrection of the Rentier"
(July–August). Book review of Andrew Glyn's ''Capitalism Unleashed: Finance, Globalization, and Welfare''. In ''New Left Review'' (46): 141–142. "The underlying premise behind the mixed economy was straightforward. Keynes and like-minded reformers were not willing to give up on capitalism, and in particular, two of its basic features: that ownership and control of the economy's means of production would remain primarily in the hands of private capitalists; and that most economic activity would be guided by 'market forces', that is, the dynamic combination of material self-seeking and competition. More specifically, the driving force of the mixed economy, as with free-market capitalism, should continue to be capitalists trying to make as much profit as they can. At the same time, Keynes was clear that in maintaining a profit-driven marketplace, it was also imperative to introduce policy interventions to counteract capitalism's inherent tendencies—demonstrated to devastating effect during the 1930s calamity—toward financial breakdowns, depressions, and mass unemployment. Keynes's framework also showed how full employment and social welfare interventions could be justified not simply on grounds of social uplift, but could also promote the stability of capitalism." In this framework, varying degrees of public utilities and
essential services
Essential services may refer to a class of occupations that have been legislated by a government to have special restrictions in regard to labour actions such as not being allowed to strike.
The International Labour Office, a United Nations age ...
are provided by the government, with state activity providing public goods and universal civic requirements, including
education
Education is a purposeful activity directed at achieving certain aims, such as transmitting knowledge or fostering skills and character traits. These aims may include the development of understanding, rationality, kindness, and honesty. Va ...
,
healthcare
Health care or healthcare is the improvement of health via the prevention, diagnosis, treatment, amelioration or cure of disease, illness, injury, and other physical and mental impairments in people. Health care is delivered by health profe ...
,
physical infrastructure
Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and priv ...
, and management of
public lands
In all modern states, a portion of land is held by central or local governments. This is called public land, state land, or Crown land (Australia, and Canada). The system of tenure of public land, and the terminology used, varies between countrie ...
. This contrasts with ''laissez-faire'' capitalism, where state activity is limited to maintaining order and security, and providing public goods and services, as well as the legal framework for the protection of
property rights
The right to property, or the right to own property (cf. ownership) is often classified as a human right for natural persons regarding their possessions. A general recognition of a right to private property is found more rarely and is typically ...
and enforcement of contracts.
About Western European economic models as championed by
conservatives
Conservatism is a cultural, social, and political philosophy that seeks to promote and to preserve traditional institutions, practices, and values. The central tenets of conservatism may vary in relation to the culture and civilization in ...
(
Christian democrats
__NOTOC__
Christian democratic parties are political parties that seek to apply Christian principles to public policy. The underlying Christian democracy movement emerged in 19th-century Europe, largely under the influence of Catholic social tea ...
),
liberals (
social liberals
Social liberalism (german: Sozialliberalismus, es, socioliberalismo, nl, Sociaalliberalisme), also known as new liberalism in the United Kingdom, modern liberalism, or simply liberalism in the contemporary United States, left-liberalism ...
), and
socialists
Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the eco ...
(
social democrats
Social democracy is a political, social, and economic philosophy within socialism that supports political and economic democracy. As a policy regime, it is described by academics as advocating economic and social interventions to promote so ...
) as part of the
post-war consensus
The post-war consensus, sometimes called the post-war compromise, was the economic order and social model of which the major political parties in post-war Britain shared a consensus supporting view, from the end of World War II in 1945 to the ...
, a mixed economy is in practice a form of capitalism where most industries are privately owned but there is a number of utilities and essential services under
public ownership
State ownership, also called government ownership and public ownership, is the ownership of an industry, asset, or enterprise by the state or a public body representing a community, as opposed to an individual or private party. Public ownershi ...
, usually around 15 to 20 percent. In the post-war era, Western European social democracy became associated with this economic model. As an economic ideal, mixed economies are supported by people of various political persuasions, in particular social democrats. The contemporary capitalist
welfare state
A welfare state is a form of government in which the state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal opportunity, equitabl ...
has been described as a type of mixed economy in the sense of state interventionism, as opposed to a mixture of planning and markets, since
economic planning
Economic planning is a resource allocation mechanism based on a computational procedure for solving a constrained maximization problem with an iterative process for obtaining its solution. Planning is a mechanism for the allocation of resources b ...
was not a key feature or component of the welfare state.
Overview
While there is no single all-encompassing definition of a mixed economy, there are generally two major definitions, one being political and the other apolitical. The political definition of a mixed economy refers to the degree of
state interventionism
Economic interventionism, sometimes also called state interventionism, is an economic policy position favouring government intervention in the market process with the intention of correcting market failures and promoting the general welfare o ...
in a market economy, portraying the state as encroaching onto the market under the assumption that the market is the natural mechanism for allocating resources. The political definition is limited to capitalistic economies and precludes an extension to non-capitalist systems, and aims to measure the degree of state influence through
public policies
Public policy is an institutionalized proposal or a group decision-making, decided set of elements like laws, regulations, guidelines, and actions to Problem solving, solve or address relevant and Social issue, real-world problems, guided by a co ...
in the market.
The apolitical definition relates to patterns of ownership and management of economic enterprises in an economy, strictly referring to a mix of public and private ownership of enterprises in the economy and is unconcerned with political forms and public policy. Alternatively, it refers to a mixture of economic planning and markets for the allocation of resources.
History
The term ''mixed economy'' arose in the context of political debate in the United Kingdom in the postwar period, although the set of policies later associated with the term had been advocated from at least the 1930s. The oldest documented mixed economies in the historical record are found as early as the
4th millennium BC
The 4th millennium BC spanned the years 4000 BC to 3001 BC. Some of the major changes in human culture during this time included the beginning of the Bronze Age and the invention of writing, which played a major role in starting recorded history. ...
in the
Ancient Mesopotamia
The history of Mesopotamia ranges from the earliest human occupation in the Paleolithic period up to Late antiquity. This history is pieced together from evidence retrieved from archaeological excavations and, after the introduction of writing i ...
n civilization in
city-states
A city-state is an independent sovereign city which serves as the center of political, economic, and cultural life over its contiguous territory. They have existed in many parts of the world since the dawn of history, including cities such as ...
such as
Uruk
Uruk, also known as Warka or Warkah, was an ancient city of Sumer (and later of Babylonia) situated east of the present bed of the Euphrates River on the dried-up ancient channel of the Euphrates east of modern Samawah, Al-Muthannā, Iraq.Harm ...
and
Ebla
Ebla ( Sumerian: ''eb₂-la'', ar, إبلا, modern: , Tell Mardikh) was one of the earliest kingdoms in Syria. Its remains constitute a tell located about southwest of Aleppo near the village of Mardikh. Ebla was an important center t ...
.
The economies of the
Ancient Greek
Ancient Greek includes the forms of the Greek language used in ancient Greece and the ancient world from around 1500 BC to 300 BC. It is often roughly divided into the following periods: Mycenaean Greek (), Dark Ages (), the Archaic peri ...
city-states can also best be characterized as mixed economies.
It is also possible that the
Phoenicia
Phoenicia () was an ancient thalassocratic civilization originating in the Levant region of the eastern Mediterranean, primarily located in modern Lebanon. The territory of the Phoenician city-states extended and shrank throughout their histor ...
n city-states depended on mixed economies to manage trade.
Before being conquered by the
Roman Republic
The Roman Republic ( la, Res publica Romana ) was a form of government of Rome and the era of the classical Roman civilization when it was run through public representation of the Roman people. Beginning with the overthrow of the Roman Kin ...
, the
Etruscan civilization
The Etruscan civilization () was developed by a people of Etruria in ancient Italy with a common language and culture who formed a federation of city-states. After conquering adjacent lands, its territory covered, at its greatest extent, roughl ...
engaged in a "strong mixed economy".
In general, the cities of the
Ancient Mediterranean
The history of the Mediterranean region and of the cultures and people of the Mediterranean Basin is important for understanding the origin and development of the Mesopotamian, Egyptian, Canaanite, Phoenician, Hebrew, Carthaginian, Minoan, Gre ...
in regions such as
North Africa
North Africa, or Northern Africa is a region encompassing the northern portion of the African continent. There is no singularly accepted scope for the region, and it is sometimes defined as stretching from the Atlantic shores of Mauritania in ...
,
Iberia
The Iberian Peninsula (),
**
* Aragonese and Occitan: ''Peninsula Iberica''
**
**
* french: Péninsule Ibérique
* mwl, Península Eibérica
* eu, Iberiar penintsula also known as Iberia, is a peninsula in southwestern Europe, defi ...
, and
Southern France
Southern France, also known as the South of France or colloquially in French language, French as , is a defined geographical area consisting of the regions of France that border the Atlantic Ocean south of the Marais Poitevin,Louis Papy, ''Le midi ...
, among others, all practiced some form of a mixed economy. According to the historians
Michael Rostovtzeff
Mikhail Ivanovich Rostovtzeff, or Rostovtsev (russian: Михаи́л Ива́нович Росто́вцев; – October 20, 1952), was a Russian historian whose career straddled the 19th and 20th centuries and who produced important works o ...
and
Pierre Lévêque
Pierre Lévêque (; 11 August 1921, in Chambéry – 5 March 2004, in Paris) was a 20th-century French historian of ancient and Hellenistic Greece.
Biography
Training
The son of an engineer, he spent his youth in the port of Bordeaux. Readi ...
, the economies of
Ancient Egypt, pre-Columbian
Mesoamerican
Mesoamerica is a historical region and cultural area in southern North America and most of Central America. It extends from approximately central Mexico through Belize, Guatemala, El Salvador, Honduras, Nicaragua, and northern Costa Rica. Withi ...
,
Ancient Peru
The Andean civilizations were complex societies of many cultures and peoples mainly developed in the river valleys of the coastal deserts of Peru. They stretched from the Andes of southern Colombia southward down the Andes to Chile and northwes ...
,
Ancient China
The earliest known written records of the history of China date from as early as 1250 BC, from the Shang dynasty (c. 1600–1046 BC), during the reign of king Wu Ding. Ancient historical texts such as the '' Book of Documents'' (early chapte ...
, and the
Roman Empire
The Roman Empire ( la, Imperium Romanum ; grc-gre, Βασιλεία τῶν Ῥωμαίων, Basileía tôn Rhōmaíōn) was the post-Republican period of ancient Rome. As a polity, it included large territorial holdings around the Mediterr ...
after
Diocletian
Diocletian (; la, Gaius Aurelius Valerius Diocletianus, grc, Διοκλητιανός, Diokletianós; c. 242/245 – 311/312), nicknamed ''Iovius'', was Roman emperor from 284 until his abdication in 305. He was born Gaius Valerius Diocles ...
all had the basic characteristics of mixed economies.
After the collapse of the
Western Roman Empire
The Western Roman Empire comprised the western provinces of the Roman Empire at any time during which they were administered by a separate independent Imperial court; in particular, this term is used in historiography to describe the period fr ...
, the
Byzantine Empire
The Byzantine Empire, also referred to as the Eastern Roman Empire or Byzantium, was the continuation of the Roman Empire primarily in its eastern provinces during Late Antiquity and the Middle Ages, when its capital city was Constantinopl ...
in its eastern part continued to have a mixed economy until its destruction by the
Ottoman Empire
The Ottoman Empire, * ; is an archaic version. The definite article forms and were synonymous * and el, Оθωμανική Αυτοκρατορία, Othōmanikē Avtokratoria, label=none * info page on book at Martin Luther University) ...
.
Medieval
In the history of Europe, the Middle Ages or medieval period lasted approximately from the late 5th to the late 15th centuries, similar to the Post-classical, post-classical period of World history (field), global history. It began with t ...
Islamic societies drew their primary material basis from the classical Mediterranean mixed economies that preceded them,
and the economies of Islamic empires such as the
Abbasid Caliphate
The Abbasid Caliphate ( or ; ar, الْخِلَافَةُ الْعَبَّاسِيَّة, ') was the third caliphate to succeed the Islamic prophet Muhammad. It was founded by a dynasty descended from Muhammad's uncle, Abbas ibn Abdul-Muttalib ...
dealt with their emerging, prominent capitalistic sectors or market economies through regulation via state, social, or religious institutions.
Due to having low, diffuse populations, and disconnected trade, the economies of Europe could not have supported centralized states or mixed economies and instead a primarily agrarian
feudalism
Feudalism, also known as the feudal system, was the combination of the legal, economic, military, cultural and political customs that flourished in medieval Europe between the 9th and 15th centuries. Broadly defined, it was a way of structur ...
predominated for the centuries following the collapse of Rome. With the recovery of populations and the rise of
medieval communes
Medieval communes in the European Middle Ages had sworn allegiances of mutual defense (both physical defense and of traditional freedoms) among the citizens of a town or city. These took many forms and varied widely in organization and makeup.
C ...
from the 11th century onward, economic and political power once again became centralized. According to
Murray Bookchin
Murray Bookchin (January 14, 1921 – July 30, 2006) was an American social theorist, author, orator, historian, and political philosopher. A pioneer in the environmental movement, Bookchin formulated and developed the theory of social ec ...
, mixed economies, which had grown out of the medieval communes, were beginning to emerge in Europe by the 15th century as feudalism declined.
In 17th-century France,
Jean-Baptiste Colbert
Jean-Baptiste Colbert (; 29 August 1619 – 6 September 1683) was a French statesman who served as First Minister of State from 1661 until his death in 1683 under the rule of King Louis XIV. His lasting impact on the organization of the countr ...
acting as finance minister for
Louis XIV
, house = Bourbon
, father = Louis XIII
, mother = Anne of Austria
, birth_date =
, birth_place = Château de Saint-Germain-en-Laye, Saint-Germain-en-Laye, France
, death_date =
, death_place = Palace of Vers ...
attempted to institute a mixed economy on a national scale.
The
American System initially proposed by the first
United States Secretary of the Treasury
The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...
,
Alexander Hamilton
Alexander Hamilton (January 11, 1755 or 1757July 12, 1804) was an American military officer, statesman, and Founding Father who served as the first United States secretary of the treasury from 1789 to 1795.
Born out of wedlock in Charlest ...
, and supported by later American leaders such as
Henry Clay
Henry Clay Sr. (April 12, 1777June 29, 1852) was an American attorney and statesman who represented Kentucky in both the U.S. Senate and House of Representatives. He was the seventh House speaker as well as the ninth secretary of state, al ...
,
John C Calhoun
John Caldwell Calhoun (; March 18, 1782March 31, 1850) was an American statesman and political theorist from South Carolina who held many important positions including being the seventh vice president of the United States from 1825 to 1832. He ...
, and
Daniel Webster
Daniel Webster (January 18, 1782 – October 24, 1852) was an American lawyer and statesman who represented New Hampshire and Massachusetts in the U.S. Congress and served as the U.S. Secretary of State under Presidents William Henry Harrison, ...
, exhibited the traits of a mixed economy combining
protectionism
Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. ...
, ''
laissez-faire
''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups. ...
'', and
infrastructure
Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and priv ...
spending.
After 1851,
Napoleon III
Napoleon III (Charles Louis Napoléon Bonaparte; 20 April 18089 January 1873) was the first President of France (as Louis-Napoléon Bonaparte) from 1848 to 1852 and the last monarch of France as Emperor of the French from 1852 to 1870. A nephew ...
began the process of replacing the old
agricultural
Agriculture or farming is the practice of cultivating Plant, plants and livestock. Agriculture was the key development in the rise of Sedentism, sedentary human civilization, whereby farming of Domestication, domesticated species created food ...
economy of France with one that was mixed and focused on
industrialization
Industrialisation ( alternatively spelled industrialization) is the period of social and economic change that transforms a human group from an agrarian society into an industrial society. This involves an extensive re-organisation of an econo ...
.
By 1914 and the start of
World War I
World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...
, Germany had developed a mixed economy with government co-ownership of infrastructure and industry along with a comprehensive social welfare system.
After the
1929 stock crash and subsequent
Great Depression
The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
threw much of the global economy into a severe economic decline, British economists such as
John Maynard Keynes
John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
began to advocate for economic theories that argued more government intervention in the economy.
Harold Macmillan
Maurice Harold Macmillan, 1st Earl of Stockton, (10 February 1894 – 29 December 1986) was a British Conservative statesman and politician who was Prime Minister of the United Kingdom from 1957 to 1963. Caricatured as "Supermac", he ...
, a British politician in the
Conservative Party
The Conservative Party is a name used by many political parties around the world. These political parties are generally right-wing though their exact ideologies can range from center-right to far-right.
Political parties called The Conservative P ...
, also began to advocate for a mixed economy in his books ''Reconstruction'' (1933) and ''
The Middle Way
Middle Way is the term that Siddhartha Gautama used to describe the character of the path he discovered that leads to liberation.
Middle way or Middleway may also refer to:
*''Doctrine of the Mean'', a doctrine of Confucianism
*Golden mean (philos ...
'' (1938).
Supporters of the mixed economy included
R. H. Tawney
Richard Henry Tawney (30 November 1880 – 16 January 1962) was an English economic historian, social critic, ethical socialist,Noel W. Thompson. ''Political economy and the Labour Party: the economics of democratic socialism, 1884-2005''. 2nd ...
,
Anthony Crosland
Charles Anthony Raven Crosland (29 August 191819 February 1977) was a British Labour Party politician and author. A social democrat on the right wing of the Labour Party, he was a prominent socialist intellectual. His influential book ''The ...
,
and
Andrew Shonfield
Sir Andrew Akiba Shonfield (10 August 1917 – 23 January 1981) was a British economist best known for writing ''Modern Capitalism'' (1966), a book that documented the rise of long-term planning in postwar Europe. Shonfield's argument that plann ...
, who were mostly associated with the
Labour Party in the United Kingdom. During the
post-war period
In Western usage, the phrase post-war era (or postwar era) usually refers to the time since the end of World War II. More broadly, a post-war period (or postwar period) is the interval immediately following the end of a war. A post-war period c ...
and coinciding with the
Golden Age of Capitalism
Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, priva ...
, there was general worldwide rejection of ''laissez-faire'' economics as capitalist countries embraced mixed economies founded on economic planning, intervention, and welfare.
Political philosophy
In the apolitical sense, the term mixed economy is used to describe economic systems that combine various elements of
market economies
A market economy is an economic system in which the decisions regarding investment, production and distribution to the consumers are guided by the price signals created by the forces of supply and demand, where all suppliers and consumers are ...
and
planned economies
A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, part ...
. As most political-economic
ideologies
An ideology is a set of beliefs or philosophies attributed to a person or group of persons, especially those held for reasons that are not purely epistemic, in which "practical elements are as prominent as theoretical ones." Formerly applied pri ...
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. When a system in question, diverges to a significant extent from an idealized
economic model
In economics, a model is a theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them. The economic model is a simplified, often mathematical, framework desig ...
or ideology, the task of identifying it can become problematic, and 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 towards either
private ownership
Private property is a legal designation for the ownership of property by non-governmental Legal personality, legal entities. Private property is distinguishable from public property and Personal property, personal property, which is owned by a s ...
or
public ownership
State ownership, also called government ownership and public ownership, is the ownership of an industry, asset, or enterprise by the state or a public body representing a community, as opposed to an individual or private party. Public ownershi ...
, toward
capitalism
Capitalism is an economic system based on the private ownership of the means of production and their operation for Profit (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, pric ...
or
socialism
Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the e ...
, or a
market economy
A market economy is an economic system in which the decisions regarding investment, production and distribution to the consumers are guided by the price signals created by the forces of supply and demand, where all suppliers and consumers ...
or
command economy
A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, part ...
in varying degrees.
[Vuong, Quan-Hoang]
''Financial Markets in Vietnam's Transition Economy: Facts, Insights, Implications''
. , VDM Verlag
Omniscriptum Publishing Group, formerly known as VDM Verlag Dr. Müller, is a German publishing group headquartered in Riga, Latvia. Founded in 2002 in Düsseldorf, its book production is based on print-to-order technology.
The company publi ...
, February 2010, 66123 Saarbrücken, Germany.
Catholic social teaching
Jesuit author
David Hollenbach
Rev. David Hollenbach, S.J. (born October 6, 1942 in Philadelphia, PA.) is a Jesuit priest, professor, author, and moral theologian currently serving as the Pedro Arrupe Distinguished Research Professor of the Walsh School of Foreign Service at ...
has argued that
Catholic social teaching
Catholic social teaching, commonly abbreviated CST, is an area of Catholic doctrine concerning matters of human dignity and the common good in society. The ideas address oppression, the role of the state (polity), state, subsidiarity, social o ...
calls for a "new form" of mixed economy. He refers back to
Pope Pius XI
Pope Pius XI ( it, Pio XI), born Ambrogio Damiano Achille Ratti (; 31 May 1857 – 10 February 1939), was head of the Catholic Church from 6 February 1922 to his death in February 1939. He was the first sovereign of Vatican City fro ...
's statement that government "should supply help to the members of the social body, but may never destroy or absorb them". Hollenbach writes that a socially just mixed economy involves labor, management, and the state working together through a
pluralistic system that distributes
economic power
Economic power refers to the ability of countries, businesses or individuals to improve living standards. It increases their ability to make decisions on their own that benefit them. Scholars of international relations also refer to the economic p ...
widely.
Pope Francis
Pope Francis ( la, Franciscus; it, Francesco; es, link=, Francisco; born Jorge Mario Bergoglio, 17 December 1936) is the head of the Catholic Church. He has been the bishop of Rome and sovereign of the Vatican City State since 13 March 2013. ...
has criticised
neoliberalism
Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent fa ...
throughout his papacy and encouraged state welfare programs for "the redistribution of wealth, looking out for the dignity of the poorest who risk always ending up crushed by the powerful". In ''
Evangelii gaudium'', he states: "Some people continue to defend
trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting."
Catholic social teaching opposes both
unregulated capitalism
Economic liberalism is a List of political ideologies, political and economic ideology that supports a market economy based on individualism and private property in the means of production. Adam Smith is considered one of the primary initial wr ...
and
state socialism
State socialism is a political and economic ideology within the socialist movement that advocates state ownership of the means of production. This is intended either as a temporary measure, or as a characteristic of socialism in the transition fr ...
. Subsequent scholars have noted that conceiving of
subsidiarity
Subsidiarity is a principle of social organization that holds that social and political issues should be dealt with at the most immediate or local level that is consistent with their resolution. The ''Oxford English Dictionary'' defines subsidi ...
as a "top-down, government-driven political exercise" requires a selective reading of 1960s encyclicals. A more comprehensive reading of Catholic social teaching suggests a conceptualization of subsidiarity as a "bottom-up concept" that is "rooted in recognition of a common humanity, not in the political equivalent of ''
noblese oblige
''Noblesse oblige'' (; ; literally “nobility obliges”) is a French expression from a time when French (more specifically, Anglo-Norman) was the language of the English nobility, and retains in English the meaning that nobility extends beyo ...
''".
Fascism
Although
fascism
Fascism is a far-right, authoritarian, ultra-nationalist political ideology and movement,: "extreme militaristic nationalism, contempt for electoral democracy and political and cultural liberalism, a belief in natural social hierarchy an ...
is primarily a political ideology that stresses the importance of cultural and social issues over economics, it is generally supportive of a broadly capitalistic mixed economy. It supports state interventionism into markets and private enterprise, alongside a
fascist corporatist framework, referred to as a
third position
The Third Position is a set of neo-fascist political ideologies that were first described in Western Europe following the Second World War. Developed in the context of the Cold War, it developed its name through the claim that it represented a ...
that ostensibly aims to be a middle-ground between socialism and capitalism by mediating labor and business disputes to promote national unity. 20th-century fascist regimes in Italy and Germany adopted large public works programs to stimulate their economies and state interventionism in largely
private sector
The private sector is the part of the economy, sometimes referred to as the citizen sector, which is owned by private groups, usually as a means of establishment for profit or non profit, rather than being owned by the government.
Employment
The ...
-dominated economies to promote re-armament and national interests. During
World War II
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...
, Germany implemented a war economy that combined a free market with central planning. The Nazi government collaborated with leading German business interests, who supported the war effort in exchange for advantageous contracts, subsidies, the suppression of trade unions, and the allowance of cartels and monopolies. Scholars have drawn parallels between the American
New Deal
The New Deal was a series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the United States between 1933 and 1939. Major federal programs agencies included the Civilian Cons ...
and public works programs promoted by fascism, arguing that fascism similarly arose in response to the threat of socialist revolution and aimed to "save capitalism" and private property.
Socialism
Mixed economies understood as a mixture of socially owned and private enterprises have been predicted and advocated by various socialists as a necessary transitional form between capitalism and socialism. Additionally, several proposals for socialist systems call for a mixture of different forms of enterprise ownership including a role for private enterprise. For example,
Alexander Nove
Alexander Nove, FRSE, FBA (born Aleksandr Yakovlevich Novakovsky; russian: Алекса́ндр Я́ковлевич Новако́вский; also published under Alec Nove; 24 November 1915 – 15 May 1994) was a Professor of Economics at the ...
's conception of feasible socialism outlines an economic system based on a combination of state enterprises for large industries, worker and consumer cooperatives, private enterprises for small-scale operations, and individually-owned enterprises. The social democratic theorist
Eduard Bernstein
Eduard Bernstein (; 6 January 1850 – 18 December 1932) was a German social democratic Marxist theorist and politician. A member of the Social Democratic Party of Germany (SPD), Bernstein had held close association to Karl Marx and Friedric ...
advocated a form of a mixed economy, believing that a mixed system of
state-owned enterprise
A state-owned enterprise (SOE) is a Government, government entity which is established or nationalised by the ''national government'' or ''provincial government'' by an executive order or an act of legislation in order to earn Profit (econom ...
s,
cooperative
A cooperative (also known as co-operative, co-op, or coop) is "an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically-control ...
s, and
private enterprise
A privately held company (or simply a private company) is a company whose shares and related rights or obligations are not offered for public subscription or publicly negotiated in the respective listed markets, but rather the company's stock is ...
s would be necessary for a long period before capitalism would evolve of its own accord into socialism.
[Steger, Manfred B. ''The Quest for Evolutionary Socialism: Eduard Bernstein And Social Democracy''. Cambridge, England, UK; New York, New York, USA: Cambridge University Press, 1997. pg. 146.]
Following the
Russian Civil War
, date = October Revolution, 7 November 1917 – Yakut revolt, 16 June 1923{{Efn, The main phase ended on 25 October 1922. Revolt against the Bolsheviks continued Basmachi movement, in Central Asia and Tungus Republic, the Far East th ...
,
Vladimir Lenin
Vladimir Ilyich Ulyanov. ( 1870 – 21 January 1924), better known as Vladimir Lenin,. was a Russian revolutionary, politician, and political theorist. He served as the first and founding head of government of Soviet Russia from 1917 to 19 ...
adopted the
New Economic Policy
The New Economic Policy (NEP) () was an economic policy of the Soviet Union proposed by Vladimir Lenin in 1921 as a temporary expedient. Lenin characterized the NEP in 1922 as an economic system that would include "a free market and capitalism, ...
in the
Soviet Union
The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, it was nominally a federal union of fifteen national ...
; the introduction of a mixed economy serving as a temporary expedient for rebuilding the nation. The policy eased the restrictions of
war communism
War communism or military communism (russian: Военный коммунизм, ''Voyennyy kommunizm'') was the economic and political system that existed in Soviet Russia during the Russian Civil War from 1918 to 1921.
According to Soviet histo ...
and allowed a return of markets, where private individuals could administer small and medium-sized enterprises, while the state would control large industries, banks and foreign trade. The
Socialist Republic of Vietnam
Vietnam or Viet Nam ( vi, Việt Nam, ), officially the Socialist Republic of Vietnam,., group="n" is a country in Southeast Asia, at the eastern edge of mainland Southeast Asia, with an area of and population of 96 million, making it ...
describes its economy as a
socialist-oriented market economy
The socialist-oriented market economy (Vietnamese: ''Kinh tế thị trường theo định hướng xã hội chủ nghĩa'') is the official title given to the current economic system in the Socialist Republic of Vietnam. It is described as a ...
that consists of a mixture of public, private, and cooperative enterprise—a mixed economy that is oriented toward the long-term development of a socialist economy. The
People's Republic of China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
adopted a
socialist market economy
The socialist market economy (SME) is the economic system and model of economic development employed in the People's Republic of China. The system is a market economy with the predominance of public ownership and state-owned enterprises. Th ...
, which represents an early stage of socialist development according to the
Chinese Communist Party
The Chinese Communist Party (CCP), officially the Communist Party of China (CPC), is the founding and One-party state, sole ruling party of the China, People's Republic of China (PRC). Under the leadership of Mao Zedong, the CCP emerged victoriou ...
(CCP). The CCP takes the
Marxist–Leninist
Marxism is a left-wing to far-left method of socioeconomic analysis that uses a materialist interpretation of historical development, better known as historical materialism, to understand class relations and social conflict and a dialect ...
position that an economic system containing diverse forms of ownership—but with the
public sector
The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, infra ...
playing a decisive role—is a necessary characteristic of an economy in the preliminary stage of developing socialism.
In the early post-war era in Western Europe, social democratic parties rejected the
Stalinist
Stalinism is the means of governing and Marxist-Leninist policies implemented in the Soviet Union from 1927 to 1953 by Joseph Stalin. It included the creation of a one-party totalitarian police state, rapid industrialization, the theory o ...
political and economic model then current in the Soviet Union, committing themselves either to an alternative path to socialism or to a compromise between capitalism and socialism. In this period, social democrats embraced a mixed economy based on the predominance of private property and a minority of essential utilities and public services under public ownership. As a result, social democracy became associated with
Keynesian economics
Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output an ...
,
state interventionism
Economic interventionism, sometimes also called state interventionism, is an economic policy position favouring government intervention in the market process with the intention of correcting market failures and promoting the general welfare o ...
, and the
welfare state
A welfare state is a form of government in which the state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal opportunity, equitabl ...
. Social democratic governments in practice largely maintain the capitalist mode of production (
factor market
In economics, a factor market is a market where factors of production are bought and sold. Factor markets allocate factors of production, including land, labour and capital, and distribute income to the owners of productive resources, such as wage ...
s,
private property
Private property is a legal designation for the ownership of property by non-governmental legal entities. Private property is distinguishable from public property and personal property, which is owned by a state entity, and from collective or ...
, and
wage labor
Wage labour (also wage labor in American English), usually referred to as paid work, paid employment, or paid labour, refers to the socioeconomic relationship between a worker and an employer in which the worker sells their labour power under a ...
) under a mixed economy, and pledge to reform capitalism and make society more egalitarian and democratic.
Typology
Mix of free markets and state intervention
This meaning of a mixed economy refers to a combination of market forces with state intervention in the form of regulations, macroeconomic policies and social welfare interventions aimed at improving market outcomes. As such, this type of mixed economy falls under the framework of a capitalistic market economy, with macroeconomic interventions aimed at promoting the stability of capitalism.
Other examples of common government activity in this form of mixed economy include
environmental protection
Environmental protection is the practice of protecting the natural environment by individuals, organizations and governments. Its objectives are to conserve natural resources and the existing natural environment and, where possible, to repair dam ...
, maintenance of
employment standards, a standardized
welfare
Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specificall ...
system, and
economic competition
In economics, competition is a scenario where different economic firmsThis article follows the general economic convention of referring to all actors as firms; examples in include individuals and brands or divisions within the same (legal) firm ...
with
antitrust laws
Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust l ...
. Most contemporary market-oriented economies fall under this category, including the
economy of the United States
The United States is a highly developed mixed-market economy and has the world's largest nominal GDP and net wealth. It has the second-largest by purchasing power parity (PPP) behind China. It has the world's seventh-highest per capita GD ...
. The term is also used to describe the economies of countries that feature extensive
welfare state
A welfare state is a form of government in which the state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal opportunity, equitabl ...
s, such as the
Nordic model
The Nordic model comprises the economic and social policies as well as typical cultural practices common to the Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden). This includes a comprehensive welfare state and multi-level coll ...
practiced by the
Nordic countries
The Nordic countries (also known as the Nordics or ''Norden''; literal translation, lit. 'the North') are a geographical and cultural region in Northern Europe and the Atlantic Ocean, North Atlantic. It includes the sovereign states of Denmar ...
, which combine free markets with an extensive welfare state.
The
American School is the economic philosophy that dominated United States national policies from the time of the
American Civil War
The American Civil War (April 12, 1861 – May 26, 1865; also known by other names) was a civil war in the United States. It was fought between the Union ("the North") and the Confederacy ("the South"), the latter formed by states th ...
until the mid-20th century. It consisted of three core policy initiatives: protecting industry through high tariffs (1861–1932; changing to subsidies and reciprocity from 1932–the 1970s), government investment in infrastructure through
internal improvements
Internal improvements is the term used historically in the United States for public works from the end of the American Revolution through much of the 19th century, mainly for the creation of a transportation infrastructure: roads, turnpikes, canal ...
, and a
national bank
In banking, the term national bank carries several meanings:
* a bank owned by the state
* an ordinary private bank which operates nationally (as opposed to regionally or locally or even internationally)
* in the United States, an ordinary p ...
to promote the growth of productive enterprises. During this period, the United States grew into the largest economy in the world, surpassing the United Kingdom by 1880. The
social market economy
The social market economy (SOME; german: soziale Marktwirtschaft), also called Rhine capitalism, Rhine-Alpine capitalism, the Rhenish model, and social capitalism, is a socioeconomic model combining a free-market capitalist economic system alon ...
is the economic policy of modern Germany that steers a middle path between the goals of social democracy and capitalism within the framework of a private market economy and aims at maintaining a balance between a high rate of
economic growth
Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of ...
, low inflation, low levels of unemployment, good working conditions, and public welfare and public services by using state intervention. Under its influence, Germany emerged from desolation and defeat to become an industrial giant within the
European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...
.
Mix of private and public enterprise
This type of mixed economy specifically refers to a mixture of private and public ownership of industry and the means of production. As such, it is sometimes described as a "middle path" or transitional state between capitalism and socialism but can also refer to a mixture of
state capitalism
State capitalism is an economic system in which the state undertakes business and commercial (i.e. for-profit) economic activity and where the means of production are nationalized as state-owned enterprises (including the processes of capital a ...
with private capitalism. Examples include the economies of
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
,
Norway
Norway, officially the Kingdom of Norway, is a Nordic country in Northern Europe, the mainland territory of which comprises the western and northernmost portion of the Scandinavian Peninsula. The remote Arctic island of Jan Mayen and t ...
,
Singapore
Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
, and
Vietnam
Vietnam or Viet Nam ( vi, Việt Nam, ), officially the Socialist Republic of Vietnam,., group="n" is a country in Southeast Asia, at the eastern edge of mainland Southeast Asia, with an area of and population of 96 million, making i ...
—all of which feature large state-owned enterprise sectors operating alongside large private sectors. The French economy featured a large state sector from 1945 until 1986, mixing a substantial amount of state-owned enterprises and nationalized firms with private enterprises.
Following the Chinese economic reforms initiated in 1978, the Chinese economy has reformed its state-owned enterprises and allowed greater scope for private enterprises to operate alongside the state and collective sectors. In the 1990s, the central government concentrated its ownership in strategic sectors of the economy, but local and provincial level state-owned enterprises continue to operate in almost every industry including information technology, automobiles, machinery, and hospitality. The latest round of state-owned enterprise reform initiated in 2013 stressed increased dividend payouts of state enterprises to the central government and mixed-ownership reform which includes partial private investment into state-owned firms. As a result, many nominally private-sector firms are partially state-owned by various levels of government and state institutional investors, and many state-owned enterprises are partially privately owned resulting in a mixed ownership economy.
Mix of markets and economic planning
This type of mixed economy refers to a combination of economic planning with market forces for the guiding of production in an economy and may coincide with a mixture of private and public enterprise. It can include capitalist economies with indicative macroeconomic planning policies and socialist planned economies that introduced market forces into their economies such as in Hungary's
Goulash Communism
Goulash Communism ( hu, gulyáskommunizmus), also commonly called Kádárism or the Hungarian Thaw, is the variety of socialism in Hungary following the Hungarian Revolution of 1956. János Kádár and the Hungarian People's Republic imposed polic ...
, which inaugurated the
New Economic Mechanism The New Economic Mechanism (NEM) ( hu, Új gazdasági mechanizmus) was a major economic reform launched in the People's Republic of Hungary in 1968. Between 1972 and 1978, it was curtailed by the prevailing winds of Eastern Bloc politics. During th ...
reforms in 1968 that introduced market processes into its planned economy. Under this system, firms were still publicly owned but not subject to physical production targets and output quotas specified by a national plan. Firms were attached to state ministries that had the power to merge, dissolve and reorganize them and which established the firm's operating sector. Enterprises had to acquire their inputs and sell their outputs in markets, eventually eroding away at the Soviet-style planned economy.
Dirigisme
Dirigisme or dirigism () is an economic doctrine in which the state plays a strong directive (policies) role contrary to a merely regulatory interventionist role over a market economy. As an economic doctrine, dirigisme is the opposite of ''lai ...
was an economic policy initiated under
Charles de Gaulle
Charles André Joseph Marie de Gaulle (; ; (commonly abbreviated as CDG) 22 November 18909 November 1970) was a French army officer and statesman who led Free France against Nazi Germany in World War II and chaired the Provisional Government ...
in France, designating an economy where the government exerts strong directive influence through
indicative planning
Indicative planning is a form of economic planning implemented by a state in an effort to solve the problem of imperfect information in market economies by coordination of private and public investment through forecasts and output targets. The res ...
. In the period of dirigisme, the French state used indicative economic planning to supplement market forces for guiding its market economy. It involved state control of industries such as transportation, energy and telecommunication infrastructures as well as various incentives for private corporations to merge or engage in certain projects. Under its influence, France experienced what is called
Thirty Glorious Years
''Les Trente Glorieuses'' (; 'The Glorious Thirty') was a thirty-year period of economic growth in France between 1945 and 1975, following the end of the Second World War. The name was first used by the French demographer Jean Fourastié, who ...
of profound economic growth.
[Gardner, Martin (1991). ''Whys of a Philosophical Scrivener''. St. Martin's Press.]
Green New Deal
Green New Deal (GND) proposals call for public policy to address climate change along with achieving other social aims like job creation and reducing economic inequality. The name refers back to the New Deal, a set of social and economic refo ...
(GND) proposals call for social and economic reforms to address
climate change
In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to E ...
and
economic inequality
There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of we ...
using economic planning with market forces for the guiding of production. The reforms involve phasing out fossil fuels through the implementation of a
carbon price
Carbon pricing (or pricing), also known as cap and trade (CAT) or emissions trading scheme (ETS), is a method for nations to reduce global warming. The cost is applied to greenhouse gas emissions in order to encourage polluters to reduce the co ...
and emission regulations, while increasing state spending on
renewable energy
Renewable energy is energy that is collected from renewable resources that are naturally replenished on a human timescale. It includes sources such as sunlight, wind, the movement of water, and geothermal heat. Although most renewable energy ...
. Additionally, it calls for greater welfare spending, public housing, and job security. GND proposals seek to maintain capitalism but involve economic planning to reduce carbon emissions and inequality through increased taxation, social spending, and state ownership of essential utilities such as the
electrical grid
An electrical grid is an interconnected network for electricity delivery from producers to consumers. Electrical grids vary in size and can cover whole countries or continents. It consists of:Kaplan, S. M. (2009). Smart Grid. Electrical Power ...
.
Within political discourse, mixed economies are supported by people of various political leanings, particularly the centre-left and centre-right. Debate reigns over the appropriate levels of private and public ownership, capitalism and socialism, and government planning within an economy. The centre-left usually supports markets but argues for a higher degree of regulation, public ownership, and planning within an economy. The centre-right generally accepts some level of public ownership and government intervention but argues for lower government regulation and greater privatisation. In 2010, Australian economist
John Quiggin
John Quiggin (born 29 March 1956) is an Australian economist, a professor at the University of Queensland. He was formerly an Australian Research Council Laureate Fellow and Federation Fellow and a member of the board of the Climate Change Aut ...
wrote: "The experience of the twentieth century suggests that a mixed economy will outperform both central planning and laissez-faire. The real question for policy debates is one of determining the appropriate mix and the way in which the public and private sectors should interact."
Criticism
Numerous economists have questioned the validity of the entire concept of a mixed economy when understood to be a mixture of
capitalism
Capitalism is an economic system based on the private ownership of the means of production and their operation for Profit (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, pric ...
and
socialism
Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the e ...
. Critics who argue that capitalism and socialism cannot coexist believe either market logic or economic planning must be prevalent within an economy.
In ''
Human Action
''Human Action: A Treatise on Economics'' is a work by the Austrian economist and philosopher Ludwig von Mises. Widely considered Mises' ''magnum opus'', it presents the case for laissez-faire capitalism based on praxeology, his method to under ...
'',
Ludwig von Mises
Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and Sociology, sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberali ...
argued that there can be no mixture of capitalism and socialism. Mises elaborated on this point by contending that even if a market economy contained numerous state-run or nationalized enterprises, this would not make the economy mixed because the existence of such organizations does not alter the fundamental characteristics of the market economy. These publicly owned enterprises would still be subject to market sovereignty as they would have to acquire
capital good
The economic concept of a capital good (also called complex product systems (CoPS),H. Rush, "Managing innovation in complex product systems (CoPS)," IEE Colloquium on EPSRC Technology Management Initiative (Engineering & Physical Sciences Researc ...
s through markets, strive to maximize profits, or at the least try to minimize costs, and utilize monetary accounting for economic calculation.
Friedrich von Hayek
Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Hayek ...
and Mises argued that there can be no lasting middle ground between economic planning and a market economy, and any move in the direction of socialist planning is an unintentional move toward what
Hilaire Belloc
Joseph Hilaire Pierre René Belloc (, ; 27 July 187016 July 1953) was a Franco-English writer and historian of the early twentieth century. Belloc was also an orator, poet, sailor, satirist, writer of letters, soldier, and political activist. H ...
called "
the servile state
''The Servile State'' is a 1912 book by Hilaire Belloc, primarily a history of capitalism in Europe, and a repudiation of the convergence of big business with the state. Belloc lays out two alternatives: distributism and collectivism.
Overview
...
".
Classical and
orthodox Marxist
Orthodox Marxism is the body of Marxist thought that emerged after the death of Karl Marx (1818–1883) and which became the official philosophy of the majority of the socialist movement as represented in the Second International until the Firs ...
theorists also dispute the viability of a mixed economy as a middle ground between socialism and capitalism. Irrespective of enterprise ownership, either the capitalist
law of value
The law of the value of commodities (German: ''Wertgesetz der Waren''), known simply as the law of value, is a central concept in Karl Marx's critique of political economy first expounded in his polemic ''The Poverty of Philosophy'' (1847) against ...
and
accumulation of capital
Capital accumulation is the dynamic that motivates the pursuit of profit, involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form of ...
drive the economy or conscious planning and non-monetary forms of valuation, such as
calculation in kind
__NOTOC__
Calculation in kind or calculation in-natura is a way of valuating resources and a system of accounting that uses disaggregated physical magnitudes as opposed to a common unit of calculation. As the basis for a socialist economy, it was ...
, ultimately drive the economy. From the Great Depression onward, extant mixed economies in the Western world are still functionally capitalist because the economic system remains based on competition and profit production.
See also
*
Corporatism
Corporatism is a collectivist political ideology which advocates the organization of society by corporate groups, such as agricultural, labour, military, business, scientific, or guild associations, on the basis of their common interests. The ...
*
Distributism
Distributism is an economic theory asserting that the world's productive assets should be widely owned rather than concentrated.
Developed in the late 19th and early 20th centuries, distributism was based upon Catholic social teaching prin ...
*
Political economy
Political economy is the study of how Macroeconomics, economic systems (e.g. Marketplace, markets and Economy, national economies) and Politics, political systems (e.g. law, Institution, institutions, government) are linked. Widely studied ph ...
*
Public–private partnership
A public–private partnership (PPP, 3P, or P3) is a long-term arrangement between a government and private sector institutions.Hodge, G. A and Greve, C. (2007), Public–Private Partnerships: An International Performance Review, Public Administ ...
*
Social corporatism
Social corporatism, also called social democratic corporatism, is a form of economic tripartite corporatism based upon a social partnership between the interests of capital and labour, involving collective bargaining between representatives of em ...
*
Social credit
Social credit is a distributive philosophy of political economy developed by C. H. Douglas. Douglas attributed economic downturns to discrepancies between the cost of goods and the compensation of the workers who made them. To combat what he ...
*
Third Way
The Third Way is a centrist political position that attempts to reconcile right-wing and left-wing politics by advocating a varying synthesis of centre-right economic policies with centre-left social policies. The Third Way was born from a ...
*
Tripartisme Tripartisme () was the mode of government in France from 1944 to 1947, when the country was ruled by a three-party alliance of communists, socialists and Christian democrats, represented by the French Communist Party (PCF), the French Section of the ...
*
Types of capitalism
Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, priva ...
Sources and notes
Further reading
* Buchanan, James M. (1986) ''Liberty, Market and State: Political Economy in the 1980s'' New York University Press.
* Buckwitz, George D. (1991) ''America’s Welfare State: From Roosevelt to Reagan.'' The Johns Hopkins University Press.
* Derthick, Martha and Paul J. Quirk (1985) The Politics of Deregulation. Washington, D.C.: The Brookings Institution.
* Gross, Kyle B. (1991) The Politics of State Expansion: War, State and Society in Twentieth-Century Britain. New York: Routledge.
* Rosin, Kirk (1992). "Economic theory and the welfare state: a survey and interpretation". ''Journal of Economic Literature''. 30 (2): 741–803. A review essay looking at the economics literature.
* Sanford Ikeda (1997). ''Dynamics of the Mixed Economy: Toward a Theory of Interventionism''. London: Routledge.
External links
Mixed economyat ''
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