Features of mixed economic systems

Written by shane hall
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Features of mixed economic systems
The U.S. and Canada provide two examples of mixed economies. (Jupiterimages/Photos.com/Getty Images)

Few nations operate economies that are purely free markets or centrally planned systems, where the government plans and directs all economic activity. Most countries operate mixed economies that blend features of capitalism and socialism. Mixed economies are diverse, with the proportions of capitalist and socialist features differing across nations; but they all retain certain similarities, including a social safety net, a system of government intervention and a mix of private and public ownership of industry.

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Social Safety Net

All mixed economies, including that of the United States, offer a social safety net, sometimes referred to as a welfare state. Government-funded social systems exist to ensure a minimum level of subsistence for citizens. Benefits provided under this safety net include, but are not limited to, a system of universal health care for all citizens or at least part of the population, publicly funded pensions, unemployment compensation and minimum wage laws. Elements of the social safety net in the U.S. include Social Security, minimum wage laws, unemployment insurance and the Medicare program, which provides health care for the elderly. In contrast to the U.S., some European countries, such as France, Germany and the United Kingdom, offer a more generous social safety net, including systems of universal health care.

Private Ownership

Private ownership of land and capital is an essential element of the free-enterprise system and an important feature of mixed economies. Under free enterprise, individuals are free to own property and operate their own businesses. A mixed economy retains this element of capitalist economics but also allows some government ownership of industry. The extent of private ownership and free enterprise varies across different mixed economies. The U.S. emphasises free enterprise while other countries nationalise certain industries, such as utilities, public transportation and energy. In addition, privately owned businesses in a mixed economy may be required to comply with various government regulations. Even the economy of communist China includes some market characteristics that suggest it could be considered a mixed economy, albeit one that retains many characteristics of a socialist planned economy. The website Economy Watch points out that reforms by China's government have led to privately owned businesses in the country's manufacturing and service sectors.

Government Intervention

A central characteristic of a mixed economy is that government can intervene to improve economic outcomes, especially during economic crises. For example, the U.S. and other governments, including those in Europe and Asia, employed a variety of interventions to alleviate the effects of the 2008 global financial crisis. The U.S. sought to stabilise the nation's banking system by providing £455 billion in federal funds for banks to clear their books of failed assets, such as residential real estate backed by subprime mortgages.


Mixed economies arise in many countries that try to accommodate a broad range of political and economic views about the role of government in the economy. This explains in part the varying blends of market and socialist characteristics in mixed economies around the world. The mixed economy of the U.S. may be the closest to a pure market economy. In contrast, the economies of communist North Korea and Cuba are almost entirely government-controlled, making them examples of planned socialist economies. China, as discussed previously, operates a mixed economy with many socialist characteristics because of extensive government ownership of many industries.

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