The Advantages and Disadvantages of a Mixed Market

Written by jody hanson
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The Advantages and Disadvantages of a Mixed Market
The United States has a mixed market economy. (Stockbyte/Stockbyte/Getty Images)

Like every system, there are pros and cons to the mixed market. According to Dinesh Bakshi, a mixed economy combines the theories of capitalism and socialism. The result is a combination of privately-owned enterprises and state-owned operations produces a hybrid system that has a foot in both camps. In a mixed market, the capitalist forces takes precedence because they offer an efficient response to consumer preferences. Social decisions -- public education, health care and military spending -- are made by the government. "The Times" reports that most countries have a mixed economy of some sort.

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Producer Sovereignty

Factories in a mixed market economy are free to produce what they want. The government, however, monitors the goods more closely than in a pure free enterprise system. The benefit is that dangerous goods can't be as easily produced. The disadvantage is that creative developments may be stymied by bureaucratic interference. Some people view unfettered free market competition as an advantage and feel that in a mixed market the rivalry is held in check. Conversely, others feel that the consumer and environmental protections offered by a mixed market are essential.

Central Planning

Central planning is essential in a mixed market. The advantage of central planning is that there is a big-picture overview of the economy. The downside is that the market forces are reigned in to fit into the plan, rather than the plan being flexible enough to encourage more private business development. The natural resources -- and access to them -- are held in government hands. This is an advantage in some regards -- they can't be sold off -- but a disadvantage in that factories may not get the raw materials they require for production.

Consumer Choice

Consumers in a mixed market maintain the power to vote with their money. The advantage is that they can purchase the goods and services they want. The disadvantage is that their selection may not be as wide a range as it is in a pure free market.

Job Security

In a mixed market jobs are more secure than in a unregulated capitalist environment. The advantage is that workers know they have a job for life and that they will be eligible for a pension when they retire. The disadvantage is that it is difficult to get rid of inefficient workers.

Monopolies

In some instances in a mixed market the government may have a monopoly on a particular good or service. This is an advantage in cases where the government subsidises products, such as staples like flour and oil. It can be a disadvantage, however, if the market is so restricted that all you can buy is white bread or sunflower seed oil.

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