Mixed Economy or Dual Economy

A mixed economy or dual economy is an economy where both the public and private sectors coexist harmoniously. It falls between the capitalist economy, i.e., free markets and socialist economies, and enjoys the benefit of both types.

In this type of economy, some part is left to the free market, whereas some part of the activities is managed by the government. A mixed economy is based on a system that allows private enterprises to run most businesses. However, the government intervenes in some aspects of the economy, such as health, education, and waste management. 

In a mixed economy, the government plays a crucial role in regulating private businesses. Presently, most economies are mixed, but the degree of government intervention differs from country to country. Apart from the USA, India is also one such country that has adopted a mixed economic model for its development. 

The basic idea behind the formulation of a mixed economy is to develop a unique system that can have the benefits of both capitalist and socialist economies. 

A mixed economy has the characteristics of market, command, and traditional economies and is considered the most flexible system better suited to various countries. The free market is closely associated with the capitalist economy, and a command economy is generally associated with socialism. 

Characteristics of a mixed economy or dual economy

There are specific characteristics that can determine whether an economy is mixed. Some of the critical characteristics are given below for better understanding: 

• Private and public ownership

In a mixed or dual economy, both public and private ownership exist. Mixed economies also promote ownership through joint sectors, which the government and private companies run. 

• Cooperative sector

In a mixed economy, another sector co-exists simultaneously, i.e., the cooperative sector. The main aim of this sector is to work for society; the government provides financial assistance to this sector for its development, especially co-operatives engaged in the agricultural, dairy, and small scale and cottage industries. 

• Private property 

Another characteristic of a mixed economy is that individuals/businesses can maintain private property ownership. In this type of economy, all individuals are free to produce goods and services, acquire and hold property, choose the occupation of their interest and demand products/services they want. 

• Regulation 

In a capitalist economy, goods and services are freely sold without the government’s intervention. Whereas a mixed economy allows some operations to be carried on freely, in some sectors, the government’s role is much more active in regulating the same. 

• Social welfare

One of the important characteristics of a mixed economy is that it provides social security to its citizens, especially for the disabled, unemployed, and elderly. 

It aims to reduce the gap in the level of wealth their citizens acquire, thereby minimising the social inequalities. Furthermore, governments in mixed economies also work to improve social security, public health care, public education systems, etc.

Advantages of a mixed economy

A mixed economy or dual economy enjoys certain advantages over other economies. Some of the advantages are summarised below for quick reference: 

• Free markets

One of the most significant advantages of a mixed economy is that supply and demand decide market prices. Although a mixed economy does not allow markets to run free such as in capitalist economies, it still allows for free competition in many markets. 

• Economic stability

In a mixed economy, all economic activities are planned systematically. The government performs this task through various detailed plans for the entire economy. As the economic activities are well planned, it promotes economic stability. 

• Public goods

In a capitalist system, it would be up to the free market to provide goods and services to consumers at any cost. But some of the goods and services are considered unprofitable, such as facilitating parks, libraries and education. However, providing these facilities might not directly benefit the capitalist economy but certainly has unputdownable benefits for society. 

In a mixed economy, these public goods or services are duly supplied by the government. It ultimately allows the economy to be more productive and efficient. 

• Promotes equality 

Mixed economies rely more on a ‘welfare state’ and aim to maintain a balance between the rich and poor, thereby promoting equality. In this type of economy, not only does the capitalist have the money and resources to run a business, but the government also provides loans, grants and rebates to the general public to run their business or for education. 

Hence, mixed economies promote equality in society and allow everyone to grow. 

• Social welfare

Mixed economies also enjoy the benefits exclusive to socialist economies, such as social welfare. The government’s main role is to provide some form of social safety net to the needy. Through various policies and programmes, the government of a mixed economy provides benefits to the unemployed, disabled, pensioners and aged people. 

Conclusion

A mixed or dual economy combines the features of a socialist and capitalist economy; hence, the advantages from both sectors are present in a mixed economy. Also, there is an environment of healthy competition in the market in this type of economy, and no cut-throat competition or negative tactics are implemented because of the government’s oversight. Another important point is that because the industrialists are also part of this type of economy, they boost healthy competition.