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A mixed economy is variously defined as an
economic system An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea of a two-way effect is essential in the co ...
blending elements of a
market economy A market economy is an economic system An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The ide ...
with elements of a
planned economy A planned economy is a type of economic system An economic system, or economic order, is a system of Production (economics), production, allocation of resources, resource allocation and Distribution (economics), distribution of goods and servic ...
,
markets Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Sweden Art, entertainment, and media Films *Market (1965 film), ''Market'' (1965 ...
with state interventionism, or
private enterprise A privately held company or private company is a company which does not offer or trade its company stock In finance, stock (also capital stock) consists of all of the shares In financial markets A financial market is a market in which ...
with
public enterprise A state-owned enterprise (SOE) or government-owned enterprise (GOE) is a business enterprise Business is the activity of making one's living or making money by producing or buying and selling Product (business), products (such as goods an ...
. Common to all mixed economies is a combination of free-market principles and principles of socialism. 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 An economic system, or economic order, is a system of Production (economics), production, allocation of resources, resource allocation and Distribution (economics), distribution of goods and services wit ...
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 ...

regulatory
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 (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, a price s ...
and
socialist Socialism is a political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (social and political), power relations between individuals, s ...

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 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 that has been reformed to incorporate a greater role for markets in the allocation of
factors of production In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods a ...
. The idea behind a mixed economy, as advocated by John Maynard Keynes and some others, was not to abandon capitalism, 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, which is owned by a state entity, and from Collective ownershi ...
and control of the
means of production The means of production is a concept that encompasses the social use and ownership Ownership is the state or fact of exclusive right In Anglo-Saxon law Anglo-Saxon law (Old English Old English (, ), or Anglo-Saxon, is the earliest record ...
, with profit-seeking enterprise and the
accumulation of capital Capital accumulation (also termed the accumulation of capital) is the dynamic that motivates the pursuit of profit, involving the investment Investment is the dedication of an asset to attain an increase in value over a period of time. Invest ...
as its fundamental driving force. The difference from a laissez-faire 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 Economics () is the social science that studies how people interact with value; in particular, the Production (economics), producti ...
influence through and
monetary policies Monetary policy is the policy adopted by the monetary authority In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management o ...

monetary policies
with a view to counteracting capitalism's history of ,
unemployment Unemployment, according to the (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid or but currently available for work during the . Unemployment is measured by the unemplo ...
and income disparities. In this framework, varying degrees of public utilities and essential services are provided by the government, with state activity often limited to providing public goods and universal civic requirements, including
education Education is the process of facilitating learning, or the acquisition of knowledge, skills, value (ethics), values, morals, beliefs, habits, and personal development. Educational methods include teaching, training, storytelling, discussion ...

education
,
healthcare Healthcare is the maintenance or improvement of health Health, according to the , is "a state of complete physical, and social and not merely the absence of and ".. (2006)''Constitution of the World Health Organization''– ''Basic Docume ...

healthcare
, physical infrastructure and management of
public lands In all modern Sovereign state, states, a portion of land is held by central or local governments. This is called public land, state land, or Crown land (Australia, New Zealand and Canada). The system of tenure of public land, and the terminology us ...
.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."
This contrasts with laissez-faire capitalism, where state activity is limited to maintaining order and security, providing public goods and services, and providing the legal framework for the protection of property rights and enforcement of contracts. About Western European economic models as championed by
Christian democrats __NOTOC__ Christian democratic parties are political party, 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 Cat ...
,
liberals Liberal or liberalism may refer to: Politics *a supporter of liberalism, a political and moral philosophy **Liberalism by country *an adherent of a Liberal Party Arts, entertainment and media *''El Liberal'', a Spanish newspaper published betw ...

liberals
, and
social democratsSocial Democrats is a name used by a number of political parties A political party is an organization that coordinates candidates to compete in a country's elections. It is common for the members of a political party to have similar ideas about ...
as part of the
post-war consensus The post-war consensus is a thesis that describes the political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (social and political), po ...
, a mixed economy is a form of capitalism where most industries are privately owned, with only a small number of public utilities and essential services under public ownership, usually 15–20%. 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, typically
centre-left Centre-left politics (British English British English (BrE) is the standard dialect A standard language (also standard variety, standard dialect, and standard) is a language variety that has undergone substantial codification of gramma ...
and
centre-right Centre-right politics (British English) or center-right politics (American English), also referred to as moderate-right politics, lean to the Right-wing politics, right of the Left–right politics, political spectrum, but are closer to the Centr ...
such as Christian democrats or social democrats. The contemporary capitalist
welfare state The 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 Equal o ...
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 In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Co ...
was never a feature or key 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 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 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 The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usage is mixed. The Guardian' and Telegraph' use Britain as a synonym for the United Kingdom. Some prefer to use Britain as shorth ...

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 through 3001 BC. Some of the major changes in human culture during this time included the beginning of the Bronze Age The Bronze Age is a prehistoric Periodization, period that was characterized b ...
in the
Ancient Mesopotamia The (pre)history of Mesopotamia ranges from the earliest human occupation in the Paleolithic period up to the Late antiquity. This history is pieced together from evidence retrieved from archaeological excavations and, after the introduction of w ...
n civilization in
city-states A city-state is an independent sovereign Sovereign is a title which can be applied to the highest leader in various categories. The word is borrowed from Old French ''souverain'', which is ultimately derived from the Latin Latin (, or ...
such as
Uruk Uruk, also known as Warka, was an ancient city of (and later of ) situated east of the present bed of the River on the dried-up ancient channel of the Euphrates east of modern , , .Harmansah, 2007 Uruk is the for the . Uruk played a leading ...
and
Ebla Ebla (Sumer Sumer ()The name is from '; ''kig̃ir'', written and ,approximately "land of the civilized kings" or "native land". means "native, local", ifrom ''The Pennsylvania Sumerian Dictionary''). Literally, "land of the native ...

Ebla
. The economies of the
Ancient Greek Ancient Greek includes the forms of the Greek language Greek ( el, label=Modern Greek Modern Greek (, , or , ''Kiní Neoellinikí Glóssa''), generally referred to by speakers simply as Greek (, ), refers collectively to the diale ...
city-states can also best be characterized as mixed economies. It is also possible that the
Phoenicia Phoenicia () was an ancient Ancient history is the aggregate of past eventsWordNet Search – 3 ...
n city-states depended on mixed economies to manage trade. Before being conquered by the
Roman Republic The Roman Republic ( la, Rēs pūblica Rōmāna ) was a state of the classical Roman civilization, run through public In public relations Public relations (PR) is the practice of managing and disseminating information from an indiv ...
, the
Etruscan civilization The Etruscan civilization () of ancient Italy The history of Italy covers the Ancient Period, the Middle Ages and the modern era. Since classical times, ancient Phoenicians, Magna Graecia, Greeks, Etruscan civilization, Etruscans, and Celts ha ...
engaged in a," strong mixed economy". In general the cities of the ancient
Mediterranean The Mediterranean Sea is a sea connected to the Atlantic Ocean, surrounded by the Mediterranean Basin and almost completely enclosed by land: on the north by Western Europe, Western and Southern Europe and Anatolia, on the south by North Africa ...
, 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 th ...

North Africa
,
Iberia The Iberian Peninsula , ** * Aragonese language, Aragonese and Occitan language, Occitan: ''Peninsula Iberica'' ** ** * french: Péninsule Ibérique * mwl, Península Eibérica * eu, Iberiar penintsula also known as Iberia, is a penin ...

Iberia
,
Southern France Southern France, also known as the South of France or colloquially in French French (french: français(e), link=no) may refer to: * Something of, from, or related to France France (), officially the French Republic (french: link=no, Répub ...
, etc. 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 on ...

Michael Rostovtzeff
and Pierre Lévêque the economies of
Ancient Egypt Ancient Egypt was a civilization  A civilization (or civilisation) is a that is characterized by , , a form of government, and systems of communication (such as ). Civilizations are intimately associated with additional char ...

Ancient Egypt
, pre-Columbian
Mesoamerican Mesoamerica is a historical and important 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 Cost ...
,
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 , , image_flag = Flag_of_Peru.svg , image_coat = Escudo_nacio ...
,
Ancient China The earliest known written records of the history of China date from as early as 1250 BC, from the Shang dynasty The Shang dynasty (), also historically known as the Yin dynasty (), was a Chinese dynasty Dynasties in Chinese h ...
, and the
Roman Empire The Roman Empire ( la, Imperium Rōmānum ; grc-gre, Βασιλεία τῶν Ῥωμαίων, Basileía tôn Rhōmaíōn) was the post-Republican Republican can refer to: Political ideology * An advocate of a republic, a type of governme ...

Roman Empire
after
Diocletian Diocletian (; la, Gaius Aurelius Valerius Diocletianus; born Diocles; 22 December c. 244 – 3 December 311) was from 284 to 305. Born to a family of low status in , Diocletian rose through the ranks of the military to become a commander of ...
all had the basic characteristics of mixed economies. After the collapse of the of the Roman Empire, the eastern half or
Byzantine Empire The Byzantine Empire, also referred to as the Eastern Roman Empire, or Byzantium, was the continuation of the Roman Empire The Roman Empire ( la, Imperium Rōmānum ; grc-gre, Βασιλεία τῶν Ῥωμαίων, Basileía tôn ...

Byzantine Empire
continued to have a mixed economy until its destruction by the
Ottomans The Ottoman Turks or Osmanlı Turks ( tr, Osmanlı Türkleri), were the Turkic people The Turkic peoples are a collection of ethnic groups of Central Asia, Central, East Asia, East, North Asia, North and West Asia as well as parts of Europe and ...
.
Medieval In the history of Europe The history of Europe concerns itself with the discovery and collection, the study, organization and presentation and the interpretation of past events and affairs of the people of Europe since the beginning of ...
Islam Islam (; ar, اَلْإِسْلَامُ, al-’Islām, "submission o God Oh God may refer to: * An exclamation; similar to "oh no", "oh yes", "oh my", "aw goodness", "ah gosh", "ah gawd"; see interjection An interjection is a word or ex ...
ic societies drew their primary material basis from the classical Mediterranean mixed economies that preceded them, and therefore the economies of Islamic empires such as the
Abbasid Caliphate The Abbasid Caliphate ( or ar, اَلْخِلَافَةُ ٱلْعَبَّاسِيَّةُ, ') was the third caliphate A caliphate ( ar, خِلَافَة, ) is an Islamic state under the leadership of an Islamic steward with the tit ...

Abbasid Caliphate
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 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, and cultural customs that flourished in Medieval Europe In the history of Europe The history of Europe concerns itself with the disc ...
predominated for the centuries following the collapse of Rome. However, with the recovery of populations and the rise of medieval communes 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 anarchist, political philosopher, trade-union organizer, and educator. A pioneer in the environmental movement, Bookchin formulated and developed the theory of social ec ...

Murray Bookchin
by the 15th century mixed economies, which had grown out of the medieval communes, were beginning to emerge in Europe 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 organisation of the country's ...

Jean-Baptiste Colbert
acting as finance minister for
Louis XIV , house = House of Bourbon, Bourbon , father = Louis XIII, Louis XIII of France , mother = Anne of Austria , birth_date = , birth_place = Château de Saint-Germain-en-Laye, Saint-Germain-en-Laye, Kingdom of France, F ...

Louis XIV
attempted to institute a mixed economy on a national scale. The American system initially proposed by the first
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
Secretary of the Treasury The United States secretary of the treasury is the head of the United States Department of the Treasury, which is concerned with all financial and monetary matters relating to the federal government, and, until 2003, also included several major ...
Alexander Hamilton Alexander Hamilton (January 11, 1755 or 1757July 12, 1804) was an American statesman, politician, legal scholar, military commander, lawyer, banker, and economist. He was one of the Founding Fathers of the United States The Founding Fa ...

Alexander Hamilton
and supported by later US leaders such as
Henry Clay Henry Clay Sr. (April 12, 1777June 29, 1852) was an American attorney Attorney may refer to: Roles * Attorney at law, an official title of lawyers in some jurisdictions * Attorney general, the principal legal officer of (or advisor to) a gov ...

Henry Clay
, John C Calhoun, and
Daniel Webster Daniel Webster (January 18, 1782 – October 24, 1852) was an American lawyer and statesman who represented New Hampshire New Hampshire ( ) is a state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a ...

Daniel Webster
exhibited the traits of a mixed economy combining
protectionism 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. Proponents argue that protectionist policies sh ...
,
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects hav ...
, and . By 1914 and the start of
World War I World War I, often abbreviated as WWI or WW1, also known as the First World War or the Great War, was a global war A world war is "a war engaged in by all or most of the principal nations of the world". The term is usually reserved for ...

World War I
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 was a severe worldwide economic depression An economic depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a economic recession, recess ...
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 An economist is a professional and practitioner in the social science Social science is the branch The branches and leaves of a ...

John Maynard Keynes
began to advocate for economic theories which argued for 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 Conservatism is an aesthetic Aesthetics, or esthetics (), is a branch of philosophy that deals with the nat ...

Harold Macmillan
, a conservative politician in the British
Tory Party The Tories were a political faction Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations between individuals, such as the distribution of resources or stat ...

Tory Party
also began to advocate for a mixed economy in his books ''Reconstruction'' (1933) and '' The Middle Way'' (1938). Supporters of the mixed economy, included ,
Anthony Crosland Charles Anthony Raven Crosland (29 August 191819 February 1977), known as Anthony Crosland, Tony Crosland or C. A. R. Crosland, was a British Labour Party politician and author. Crosland served as Member of Parliament for South Gloucestershir ...
and Andrew Shonfield who were mostly associated with the
Labour Party Labour Party or Labor Party may refer to: Angola *MPLA, known for some years as "Popular Movement for the Liberation of Angola – Labour Party" Antigua and Barbuda *Antigua and Barbuda Labour Party Argentina *Labour Party (Argentina) Armenia ...
. During the
post-war period Image:Frenchciviliansburon.jpg, 275px, A French family returns to their village, Buron, northwest of Caen, which was completely destroyed Battle for Caen, during fighting, 18 July 1944 In Western world, Western usage, the phrase post-war era (or ...
and coinciding
Golden Age 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, a price sy ...
, 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 An economic system, or economic order, is a system of Production (economics), production, allocation of resources, resource allocation and Distribution (economics), distribution of goods and services wit ...
and
planned economies A planned economy is a type of economic system where investment To invest is to allocate money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with th ...
. As most political-economic
ideologies An ideology () is a set of belief A belief is an attitude Attitude may refer to: Philosophy and psychology * Attitude (psychology) In psychology Psychology is the science of mind and behavior. Psychology includes the study of co ...
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, however, diverges to a significant extent from an idealized
economic model In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
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 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, which is owned by a state entity, and from Collective ownershi ...
or
public ownership State ownership, also called government ownership and public ownership, is the ownership of an industry Industry may refer to: Economics * Industry (economics) In macroeconomics, an industry is a branch of an economy that produces a clos ...
, toward
capitalism Capitalism is an economic system An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea o ...

capitalism
or
socialism Socialism is a political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (social and political), power relations between individuals, ...
, or a
market economy A market economy is an economic system An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The ide ...
or
command economy A planned economy is a type of economic system An economic system, or economic order, is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A ...
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 on demand, print-to-order technology. T ...

VDM Verlag
, February 2010, 66123 Saarbrücken, Germany.


Catholic social teaching

Jesuit author David Hollenbach has argued that
Catholic social teaching Catholic social teaching, commonly abbreviated as CST, is an area of Catholic doctrine concerning matters of human dignity Dignity is the Rights, right of a person to be valued and respected for their own sake, and to be treated ethically. It is ...
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 The Catholic Church, often referred to as the Roman Catholic Church, is the List of Christia ...
'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 Economists use several concepts featuring the word power: * Market power is the ability of a firm to profitably raise the market price of a good or service over marginal cost. ** Monopoly power is a strong form of market power—the ability to set ...
widely. Catholic social teaching opposes both unregulated capitalism and
state socialism State socialism is a Political ideology, political and economic ideology within the socialist movement advocating state ownership of the means of production, either as a temporary measure or as a characteristic of socialism in the transition from ...
. However, subsequent scholars have noted that conceiving of subsidiarity 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''".


Fascism

Although
fascism Fascism () is a form of far-right, authoritarian ultranationalism characterized by dictatorial power, forcible suppression of opposition, and strong regimentation of society and the economy that rose to prominence in early 20th-century Europ ...

fascism
is primarily a political ideology that stresses the importance of cultural and social issues over economics, fascism is generally supportive of a broadly capitalistic mixed economy. Fascism supports state interventionism into markets and private enterprise, alongside a
corporatist Corporatism is a political ideology which advocates the organization of society by Corporate group (sociology), corporate groups, such as agricultural, labour, military, scientific, or guild associations, on the basis of their common interests. ...
framework, referred to as the "
third position The Third Position is a set of neo-fascist political ideologies that developed 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 third posit ...
" 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, state interventionism in largely private-sector dominated economies to promote re-armament and national interests. Scholars have drawn parallels between the American
New Deal The New Deal was a series of programs, public work projects, financial reforms, and regulations Regulation is the management of complex systems according to a set of rules and trends. In systems theory Systems theory is the interdisciplinar ...
and public works programs promoted by fascism, arguing that fascism similarly arose in response to the threat of socialist revolution and similarly aimed to "save capitalism" and private property.


Social democracy

In the early post-war era in Western Europe, social democratic parties rejected the
Stalinist Stalinism is the means of governing and policies which were implemented in the Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a Federalism, federal socialist state in Northern Eurasia tha ...
political and economic model then current in the
Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a that spanned during its existence from 1922 to 1991. It was nominally a of multiple national ; in practice and were highly until its final years. The ...
, committing themselves either to an alternate 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, with only 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 John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946) was an English economist, whose ideas fundamentally changed the t ...
, state interventionism and the
welfare state The 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 Equal o ...
while abandoning the prior goal of replacing the capitalist system (
factor market In economics Economics () is a social science Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within those societies. ...
s,
private property Private property is a legal designation for the ownership of property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the prope ...
and
wage labor A wage is the distribution from an employer Employment is the relationship between two party (law), parties, usually based on a employment contract, contract where work is paid for, where one party, which may be a corporation, for profit ...
) with a qualitatively different
economic system An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea of a two-way effect is essential in the co ...
through reformed capitalism.


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 Fellowship of the Royal Society of Edinburgh (FRSE) is an award granted to individuals that the Royal Society of Edinburgh, Scotland's national academy of science and Literature, letters, judged to be "eminently distingui ...
'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 Social democracy is a political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social ...

Eduard Bernstein
advocated a form of a mixed economy, believing that a mixed system of
public In public relations Public relations (PR) is the practice of managing and disseminating information from an individual or an organization An organization, or organisation (English in the Commonwealth of Nations, Commonwealth Engli ...
,
cooperative A cooperative (also known as co-operative, co-op, or coop) is "an autonomous The federal subject The federal subjects of Russia, also referred to as the subjects of the Russian Federation (russian: субъекты Российск ...
and
private enterprise A privately held company or private company is a company which does not offer or trade its company stock In finance, stock (also capital stock) consists of all of the shares In financial markets A financial market is a market in which ...
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. The
People's Republic of China China (), officially the People's Republic of China (PRC; ), is a country in East Asia East Asia is the eastern region of Asia Asia () is Earth's largest and most populous continent, located primarily in the Eastern Hemisphere ...

People's Republic of China
adopted a
socialist market economy The socialist market economy (SME) is the economic system An economic system, or economic order, is a system of Production (economics), production, allocation of resources, resource allocation and Distribution (economics), distribution of g ...
which represents an early stage of socialist development according to the
Communist Party of China 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). The CCP leads List of political parties in China, eight other ...

Communist Party of China
. The communist party takes the Marxist–Leninist position that an economic system containing diverse forms of ownership—but with the public sector playing a decisive role—is a necessary characteristic of an economy in the preliminary stage of developing socialism. The Socialist Republic of Vietnam describes its economy as a socialist-oriented market economy 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.


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, maintenance of employment standards, a standardized welfare system and Competition law, maintenance of competition. Most contemporary market-oriented economies fall under this category, including the economy of the United States. The term is also used to describe the economies of countries that feature extensive
welfare state The 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 Equal o ...
s such as the Nordic model practiced by the Nordic countries which combine free markets with an extensive welfare state. The German social market economy 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, low inflation, low levels of unemployment, good working conditions, 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 American School (economics), American School is the economic philosophy that dominated United States national policies from the time of the American Civil War until the mid-twentieth 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 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, surpassing the United Kingdom by 1880.


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 it can also refer to a mixture of state capitalism with private capitalism. Examples include the economies of Socialist market economy, China, Economy of Norway, Norway, Economy of Singapore, Singapore and Economy of Vietnam, Vietnam—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 Goulash Communism, Hungary. Dirigisme was an economic policy initiated under Charles de Gaulle in France, designating an economy where the government exerts strong directive influence through Indicative planning, indicative economic planning. 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 of profound economic growth.(Gardner) Hungary inaugurated the New Economic Mechanism 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. In 2010, Australian economist John Quiggin 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."''Zombie Economics: How Dead Ideas Still Walk among Us''
John Quiggin, Princeton University Press, 2010, page 78. The author made this statement in his chapter which is sharply critical of the strong version of "The Efficient Market Hypothesis," esp. as it pertains to financial markets.


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 An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea o ...

capitalism
and
socialism Socialism is a political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (social and political), power relations between individuals, ...
. In ''Human Action'', Ludwig von Mises argued that there can be no mixture of capitalism and socialism—either market logic or economic planning must dominate an economy. 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 goods through markets, strive to maximize profits or at the least try to minimize costs and utilize monetary accounting for economic calculation. Friedrich von Hayek as well as 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 called "The Servile State, the servile state". Classical Marxism, Classical and Orthodox Marxism, orthodox Marxist 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 and
accumulation of capital Capital accumulation (also termed the accumulation of capital) is the dynamic that motivates the pursuit of profit, involving the investment Investment is the dedication of an asset to attain an increase in value over a period of time. Invest ...
drive the economy or conscious planning and Calculation in kind, non-monetary forms of valuation ultimately drive the economy. From the Great Depression onward, extant mixed economies in the Western world are still functionally capitalist because they operate based on capital accumulation.


See also

* Christian democracy ** Distributism ** Social credit * Corporatism * Dirigisme * Economic planning * Economic interventionism *
Keynesian economics Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946) was an English economist, whose ideas fundamentally changed the t ...
* Market economy * National conservatism * Neo-nationalism * Political economy * Public-private partnership * Public sector * Regulation * Social liberalism * Third Way * Third Position * Capitalism#Types of capitalism, Types of capitalism


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 economy
at ''Encyclopædia Britannica'' Online {{DEFAULTSORT:Mixed Economy Capitalism Economic ideologies Economic systems Political philosophy Social democracy Welfare state Welfare economics