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A mixed economy is an economic system that incorporates aspects of more than one economic system. This usually means an economy that contains both privately-owned and state-owned enterprises or that combines elements of capitalism and socialism, or a mix of market economy and planned economy characteristics. There is not one single definition for a mixed economy, but relevant aspects include: a degree of private economic freedom (including privately owned industry) intermingled with centralized economic planning (which may include intervention for environmentalism and social welfare, or state ownership of some of the means of production). For some states, there is not a consensus on whether they are capitalist, socialist, or mixed economies. Economies in states ranging from the United States to Cuba have been termed mixed economies.
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1 History 2 Philosophy 3 Elements of a mixed economy 4 Relation to form of government 5 Historic examples 6 Modern U.S. economy 7 "Third way" politics o 7.1 Origins o 7.2 Examples 7.2.1 Australia 7.2.2 United Kingdom 7.2.3 United States 7.2.4 Other o 7.3 Criticism 8 See also 9 Further reading 10 Sources and notes
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
As it is unlikely that an economy will contain a perfectly even mix. or mixed. socialist. Anthony Crosland and Andrew Shonfield were mostly associated with the British Labour Party. what is described rarely if ever exists in practice. or toward a market economy or command economy in varying degrees. Which economies are mixed? Private investment.  Elements of a mixed economy The elements of a mixed economy typically include a variety of freedoms: 2 .g. very closely resembles an ideal by applying the rubric that denominates that ideal. Hence. There is not a consensus on which economies are capitalist. combined with economic planning by the state. or various planned economies. toward capitalism or socialism. including significant regulations (e.had been advocated from at least the 1930s.  Philosophy The term mixed economy was coined to identify economic systems which stray from the ideals of either the free market. Most would not consider it unreasonable to label an economy that. mixed economies are usually noted as being skewed towards either private ownership or public ownership. including R. as we understand a "mixed economy" being a combination of governmental enterprise and free-enterprise. Supporters of the mixed economy.H. although similar views were expressed by Conservatives including Harold Macmillan. Tawney. freedom to buy. Critics of the British mixed economy. However. As most political-economic ideologies are defined in an idealized sense. the task of identifying it can become problematic. sell. while not being a perfect representation. and "mix" with elements of each other. when a system in question diverges to a significant extent from an idealised economic model or ideology. taxes. argued that what is called a mixed economy is a move toward socialism and increasing the influence of the state. wage or price controls). and profit. tariffs. and state-directed investment. It may be argued that the historical tendency of power holders in all times and places to limit the activities of market actors combined with the natural impossibility of monitoring and constraining all market actors has resulted in the fact that. including Ludwig von Mises and Friedrich von Hayek. the term "mixed economy" was coined. nearly every economy to develop in human history meets this definition.
petitions. buy whole enterprises to make the organization that creates wealth a form of wealth itself) to sell (same as buy) to hire (to create organizations that create wealth) to fire (to maintain organizations that create wealth) to organize (private enterprise for profit. Restrictions are sometimes placed on private mail systems by mixed economy governments. gas) water systems for drinking. make deals. A mail truck. stores. In many countries. This hospital run by the National Health Service in the United Kingdom. and services: • • • • • • • • • • • libraries and other information services roads and other transportation services schools and other education services hospitals and other health services banks and other financial services telephone. religions. advertisements.S.A TGV train in Paris operated by the publicly owned SNCF. sue the government. • • • • • • • • • • to possess means of production (farms. newspapers. For example. workers' and professional associations. create markets) to protest peacefully (marches. books. owned or controlled. infrastructure. factories. labor unions. mail and other communication services electricity and other energy services (eg oil. and waste disposal subsidies to agriculture and other businesses government-granted monopolies to otherwise private businesses legal assistance 3 . the rail network is partly or completely. create business partners.) to participate in managerial decisions (cooperative and participatory economics) to travel (needed to transport all the items in commerce. In most countries the state plays some role in the provision of health care. etc. agriculture. etc. the USPS enjoys a government monopoly on nonurgent letter mail as described in the Private Express Statutes. in the U.) to communicate (free speech. for resale. or state-owned factors of production.. to make deals in person. non-profit groups. make laws friendly to profit making and workers alike. for workers and owners to go to where needed) to buy (items for personal use. by the state. subsidized. remove pointless inefficiencies to maximize wealth creation) with tax-funded.
government investment in infrastructure through internal improvements.  Relation to form of government The mixed economy is most commonly associated with social democratic forms of government. 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 with the highest standard of living. However.  Historic examples American School (also known as the National System) is the economic philosophy that dominated United States national policies from the time of the American Civil War until the mid-twentieth century as the country's policies evolved in a free market direction. as well as various incentives for private corporations 4 . air) labor regulation including minimum wage laws consumer regulation (example: product safety) antitrust laws intellectual property laws incorporation laws protectionism import and export controls. most forms of government are consistent with some form of mixed economy. regulations: • • • • • • • • environmental regulation (example: toxins in land. such as tarrifs and quotas and taxes and fees written or enforced with manipulation of the economy in mind. energy and telecommunication infrastructures. water. given the broad range of economic systems that can be described by the term. such as transportation. It involved state control of a minority of the industry. It consisted of a three core policy initiatives: protecting industry through high tariffs (18611932) (changing to subsidies and reciprocity from 1932-1970's). surpassing the British Empire by the first half of the 20th century . Dirigisme is an economic policy initiated under Charles de Gaulle of France designating an economy where the government exerts strong directive influence.and providing some autonomy over personal finances but including involuntary spending and investments such as transfer payments and other cash benefits such as: • • • • welfare for the poor social security for the aged and infirm government subsidies to business mandatory insurance (example: automobile} and restricted by various laws.
Bill Clinton and Tony Blair. Intercity passenger rail (Amtrak) is a nationalized industry.  "Third way" politics This section is about a political philosophy. Under its influence France experienced what is called "Thirty Glorious Years" of profound economic growth. The FDA bans certain drugs. is considered a mixed economy.S. All American airports are government operated but all American airlines are private. The government has a virtual monopoly on the provision of policing.to merge or engage in certain projects. The government controls most of the road networks. The government tells manufacturers what to make if something is in need during war time. see Third way (disambiguation). for other uses. good working conditions. Waste collection and treatment are usually provided as a service by the local government. adherents of the "Third Way" 5 . public welfare and public services by using state intervention. Under its influence Germany has emerged from desolation and defeat to become an industrial giant within the European Union. The majority of pre-college education is government-provided and a large part of tertiary education is run by state governments. Some examples of this include: • • • • • • • • • • • • People can own their own businesses. economy The U. the economy of Syria is in practice a mixed economy comprising large state enterprises and small businesses.S. low inflation. The government controls the mail system. Social market economy is the economic policy of modern Germany that steers a middle path between socialism and capitalism and aims at maintaining a balance between a high rate of economic growth. The government has created a minimum wage law. The government provides social welfare payments to some citizens. as are almost all local trains. but political leaders make policies concerning these.  Modern U. Although nominally socialist. low levels of unemployment.
privatization. but chiefly stresses technological development. is a centrist political philosophy of governance that embraces a mix of market and interventionist philosophies. These ideas were implemented by both progressives and fascists in the early 20th Century. A "Third Way" approach has been adopted by some social democrats and social liberals in many Western liberal democracies.  Origins The use of the term extends back at least as far. Third way philosophies have been described as a synthesis of capitalism and socialism by its proponents. 13 of the Latham diaries). Former Australian Prime Minister Paul Keating is often cited as a key proto-Third Way leader. Robert Putnam. education. Giddens regularly expounds on Third Way philosophy through contributions to progressive policy think tank Policy Network. A leading defender of the spread of Third Way influence in modern democracies has been British sociologist Anthony Giddens. It is endorsed by some European social democratic parties.  The Third Way philosophy was developed in the 1950s by German ordoliberal economists such as Wilhelm Röpke. Keynesian economics. Ian Winter (Latham cites Winter's "Social Capital and Public Policy in Australia" on p. or Radical center.  Examples The Third Way is currently prominent in Europe. to when Pope Pius XI called for a Third Way between Socialism and Capitalism at the end of the 1800s. and competitive mechanisms to pursue economic progress and governmental objectives. and globalization into the mainstream centre-left political parties (following the crisis of socialism after the fall of the Berlin Wall).The Third Way. and by libertarians who advocate laissez-faire capitalism. resulting in the development of the concept of the social market economy.  Australia 6 . The Third Way rejects both socialism and laissez-faire approaches to economic governance. but has adherents in the Americas and Asia. as well as by some members of the Democratic Party of the United States (see below). Past invocations of a political 'third way' have included the Fabian Socialism. Franklin Roosevelt and Harold Macmillan's 1950s One Nation Conservatism. The term was later used by politicians in the 1990s who wished to incorporate Margaret Thatcher and Ronald Reagan's projects of economic deregulation.  The third way has been criticized by some conservatives. and Mark Lyon are amongst a range of academics who have recently contributed key academic theory behind Third-Way politics.
reductions in trade tariffs. The Third Way style of governing was firmly adopted and partly redefined during the Administration of President Bill Clinton. Either capitalism or socialism: there exists no middle way. such as floating the Australian Dollar. Ludwig von Mises. In his book Liberalism Mises wrote. After Tony Blair came to power in the UK Clinton. and a stronger preference for market solutions to traditional problems (as in pollution markets). Gerhard Schröder of Germany. deregulated the banking system and other economic deregulation.  Blair is a particular follower of the ideas of Anthony Giddens. Ferenc Gyurcsány of Hungary.S. the Bob Hawke and Paul Keating governments pursued many economic policies associated with economic rationalism. whose book's preface was written by Anthony Giddens. Third Way adherents emphasize fiscal conservatism. Democrats founded a new Washington. DC organization entitled Third Way. several veteran U. is also written from broadly this centrist position. Harold Macmillan's book The Middle Way. and Zafarullah Khan Jamali of Pakistan. taxation reforms.  United States In the United States.Under the centre-left Australian Labor Party from 1983 to 1996. privatisation of Qantas and Commonwealth Bank. some replacement of welfare with workfare. while rejecting pure laissez-faire economics and other libertarian positions. or to delegate the entire management of production and distribution to the government.  United Kingdom Former Prime Minister Tony Blair of the United Kingdom is cited as a Third Way politician. Blair and other leading Third Way adherents organized conferences to promote the Third Way in 1997 at Chequers in England.  In 2004. first published in 1938. a libertarian Austrian School economist and classical liberal thinker."  Other Other leaders who have adopted elements of the Third Way style of governance include François Bayrou of France." Advocates of laissez-faire capitalism continue to be staunch 7 . changed from wagefixing to enterprise bargaining. which bills itself as a "strategy center for progressives.  Criticism In the 1920s.  The Democratic Leadership Council are adherents of Third Way politics. "There is simply no other choice than this: either to abstain from interference in the free play of the market. accused the "middle way" of mixing capitalism and socialism.
free-market hole. the "third way. • • • • • • • • • Social Democracy "A socialist movement that advocates a mixed economy of private and public ownership combined with a welfare state. Czechoslovakia's finance minister. square. after the fall of his country's communist government. industrial and professional groups. voluntary. round socialism into a lean." Corporatism "Historically." More recently. Václav Klaus." Statism "is a term to describe any economic system where a government implements a significant degree of centralized economic planning" Welfare state "In many "welfare states"." In 1990.  See also Note: Quotes in this section indicate content taken from the article in question." Public-private partnership "a system in which a government service or private business venture is funded and operated through a partnership of government and one or more private sector companies. Some also classify the Third Way as neosocialism or "neoliberalism with a social touch". The politicians are still simply trying to twist fattened. For example. declared." Pluralism "In a pluralistic society. The market is indivisible. a mixed economy). a critic of capitalist-socialist hybridization wrote." Social Market Economy "The social market economy seeks a middle path between socialism and capitalism (i. To pursue a so-called Third Way is foolish." 8 .e. and a strategy to bring the socialdemocratic parties back to power where they have lost elections. welfare is not actually provided by the state. mainly to solicit our vote. "We want a market economy without any adjectives. It did not work. "Third-Way economics is merely another political trial balloon. and we must be explicit that we are not aiming for a more efficient version of a system that has failed. it cannot be an instrument the hands of central planners. corporatism or corporativism (Italian corporativismo) is a political system in which legislative power is given to corporations that represent economic.opponents of a mixed economy. but by a combination of independent. Any compromises with that will only fuzzy up the problems we have. Slavoj Zizek argues that the notion of the Third Way emerged as the only alternative to the victorious global capitalism and its notion of liberal democracy when the Second Way crumbled. We had our experience with this in the 1960s when we looked for a socialism with a human face." Nationalization "is the act of taking assets into state ownership." Third way is sometimes described as an idea of former social-democrats which replaces socialism with capitalism and a minimum of socialism. power and decision-making (and the ownership of the results of exercising power) are more diffused. mutualist and government services." Public sector "is that part of economic and administrative life that deals with the delivery of goods and services by and for the government. Critics argue that third way politicians are in favour of ideas and policies that ultimately serve the interests of corporate power and the wealthy at the expense of the working class and the poor.
Dynamics of the Mixed Economy: Toward a Theory of Interventionism London: Routledge 1997 Third way • • • • • • • • • The Third Way by Anthony Giddens (ISBN 0-7456-2267-4). (1991) America’s Welfare State: From Roosevelt to Reagan. Futures. Washington.” Journal of Economic Literature.  Sources and notes 1. Buchanan. James M. 30(2): 741-803. James E. Cronin. State and Society in Twentieth-Century Britain.on the third way's mix of left and right. Sanford Ikeda. (1991) The Politics of State Expansion: War. a review essay looking at the economics literature Berkowitz. Right and the Third Way' .S. Derthick. Alternatives book looks at criticism of the third way.  Further reading • • • • • • Barr. The Johns Hopkins University Press. Nicholas (“Economic theory and the welfare state: a survey and interpretation. (1986) Liberty. progressives Sourcewatch. 2003—about Mussolini and Blair.Third way • • • Radical center Centrism Centrist Party (United States) This entry is related to. but not included in the Political ideologies series or one of its sub-series. The Third Way and Beyond: Criticisms. Edward D. The Guardian. DC: The Brookings Institution. ^ 9 . Quirk (1985) The Politics of Deregulation. July 1.an Answer to Blair by Patrick Harrington Official website of Policy Network 'Left. 1992. Market and State: Political Economy in the 1980s New York University Press. Other related articles can be found at the Politics Portal. Third Way a strategy center for U.com 2. Martha and Paul J.org entry on the Third Way Foundation The Third Way . followed by The Third Way And Its Critics (ISBN 0-7456-2450-2) NEXUS Third Way Debate Summary Why Tony is not a guitar-wielding facist [sic] dictator. ^ Mixed economy. Dictionary. New York: Routledge.
mixing some individual ownership and regulation. A mixed economy thus combines the characteristics of both CAPITALISM and SOCIALISM." Dlamini. Australian governments are reducing these activities by privatising state-operated businesses. The Complete Idiots Guide to Economics. p. with little government intervention. Norton & Company (1999). which became known as a "mixed economy. and there is more interference by the STATE than there would be in a MARKET ECONOMY. 2. Arthur Jr. Joint Economic Committee Economic Classics. W." Mixed economy entry in The New Dictionary of Cultural Literacy. 9"In a market economy. a divions of Thomson Canada Limited (2004). transport. too. In common with capitalist economies such as the UK and New Zealand. "One containing features of both capitalism and socialism. as well as privately owned enterprises in the same areas. Third Edition. "The broad liberal objective is a balanced and flexible "mixed economy. Alpha Books (2003)." Diane Kendall. "A economy in which a substantial number. Rick Linden. it is an economy with a combination of both the private and the public ownership of means of production. December 1994. Tom. Jane Lothian Murray. Sociology In Our Timesictionary." The Failure of Economic Interventionism. Houghton Mifflin Company (2002). distribution and exchange are undertaken by the government. with some measure of control by the central government." Gorman. energy generation and health services. are mixed economies. could provide a "third path" between pure socialism and capitalism. provides a striking illustration of the transition to a mixed economy.. "An economy that combines elements of capitalism and socialism.In a command economy. Most industrial economies. Nelson. though by no means all.o o o o o o o o o Mixed economy entry in The Norton Dictionary of Modern Thought by Alan and Trombley. academic and political elites in the West insisted that "socialism prudently applied." by the likes of themselves mostly." Mixed economy entry in The Language of Money by Edna Carew.. with major state-owned enterprises in communications. In other words. p. Other examples are seen in eastern Europe and the former Soviet Union. What is an economy anyway? How does it Work? "A mixed economy is an economy containing the characteristics of both capitalism and socialism. Chapter 13. the private-sector businesses and consumers decide what they will produce and purchase. Executive Clarity (2006). Boston: Riverside Press (1962)." Mixed economy entry in Political Dictionary. On this third path. Australia is a mixed economy. "A mixed economy combines elements of a market economy (capitalism) with elements of a command economy (socialism). where newly independent states have embraced the principles of private enterprise. 535." government would selectively and carefully intervene into the free market to "improve" it" Schlesinger. the government largely 10 .. No. now including those in the post-communist world." thus seeking to occupy that middle ground between capitalism and socialism whose viability has so long been denied by both capitalists and socialists. banking. also known as a planned economy. "an economy in which elements from the free enterprise system are combined with elements of socialism. "With a hubris peculiar to intellectuals and the politicians who expediently latch onto their scribblings. Liberalism in America: A Note for Europeans from The Politics of Hope. of the activities of production. China. W. Bongile P.
employment systems. About the Third Way".determines what is produced and in what amounts. ISBN 0-8371-9586-1. 18. A. ^ The Library of Economics and Liberty on-line Book titled The National System of Political Economy by Friedrich List 11. ^ www. ^ Gardner. St. The consumer role is so great. Indeed. 17.S. and income levels to the extent that today we have a particular kind of mixed economy. ^ Third Way Debate Summary 21. (4 April. Sidney Blumenthal.) 11 . R. 8. 2002). ^ BBC News | UK Politics | All aboard the Third Way 24. Farrar. Conn: Greenwood Press. Straus and Giroux. ^ Reisman. ^ Global Political Economy. Random House.". 2005 25. R. (Source English translation. Westport. Retrieved on 2007-07-11. H. ^ "Bashan. ^ "Democratic Leadership Council. ISBN 0-04-323014-8. ^ The Making of Modern British Politics. p. ISBN 1-85196-214-X. (1 June. Antonio Romero In 1998 "Transformations have occurred in property ownership. Martin Pugh 13. both market forces and government decisions determine which goods and services are produced and how they are distributed. P. Whys of a Philosophical Scrivener. Pickering & Chatto Ltd.info is coming soon! 22. Retrieved on 2007-07-07. ^ (Boritt. ^ BBC News | EUROPE | 'Third Way' gets world hearing 27. (1977). ^ "Democratic Leadership Council. (1964). Richardson. Lind) 12.. Retrieved on 2007-07-07. In a mixed economy. Retrieved on 2007-07-07. 20. About the Third Way. John F Harris. ^ The Challenges of Cuba's Economy .third-way. 1998). 19. Private businesses produce most goods and services. ^ (Gardner) 15." 5. that the nation is sometimes characterized as having a 'consumer economy'. ^ Mises. ^ How the U. The Future of socialism. ^ DLC: About The Third Way 28. 126 10. 9. Economy Works article says "The United States is said to have a mixed economy because privately owned businesses and government both play important roles. 2003 26. 1927. Martin's Press (1991). Is the Third War at a Dead End? Cato Institute. ^ A variety of definitions for mixed economy.An Interview with Dr. ^ "Dale. The International Herland. ^ BBC News | EUROPE | 'Third Way' gets world hearing 30. ^ Tawney. and almost two-thirds of the nation's total economic output goes to individuals for personal use (the remaining one-third is bought by government and business). David A. ^ The Clinton Wars. London: Allen and Unwin. 1985. ^ Crosland. (5 November. in fact. 7. 4. Theories of the Mixed Economy (Theories of the mixed economy). Robert O'Brien and Marc Williams 14. ^ The Survivor:Bill Clinton in the White House." 6. Martin. Equality." 3.".". ^ (Gardner) 16. ^ Third Way: 29. Thinking Ahead / Commentary : What a 'Third Way' Is Really About. some of the most enduring debates of American economic history focus on the relative roles of the public and private sectors. The American free enterprise system emphasizes private ownership. 2000). ^ Leader: Blair's new third way | Politics | The Observer 23. Ludwig von  Liberalism.
..ISBN 0-674-36213-6) 12 • • • ." (from "Hamilton's Republic" Introduction pg. 2007. ^ No Third Way Out: Creating A Capitalist Czechoslovakia Reason."Congress must shape its legislation as to incidentally aid all branches of industry. ^ Neosocialism versus Neoliberalism? 35. 33. As a Republican concluded.. Simon & Schuster division in the USA . The return of the Third Way." (from "The Greatest Nation of the Earth" Chapter 4 titled "Directing the Legislation of the Country to the Improvement of the Country: Tariff and Tax Legislation" pg.published 1990 by Praeger Publishers in the USA . the Republicans had developed a series of high tariffs and taxes thar reflected the economic theories of Carey and Wayland and were designed to strengthen and benefit all parts of the American economy. ^ Delay.for ordinary expenses of Government. Accessed April 22. raising the standard of living for everyone.The patron saint of the American School was Alexander Hamilton. the Republicans. ^ National Review: Reinventing socialism: the triumph of neosocialism is the defining characteristic of politics today • Gill: "By 1880 the United States of America had overtaken and surpassed England as industrial leader of the world... by presoding over the industrialization of the United State. elaborated in the nineteenth century by economists like Henry Carey (who advised President Lincoln). render the people prosperous. foreclosed the option that the United States would remain a rural society with an agrarian economy. inspired the "American System" of Henry Clay and the protectionist import-substitution policies of Lincoln and his successors in the Republican party well into the twentieth century.. whose Report on Manufactures (1791) had called for federal government activism in sponsoring infrastructure development and industrialization behind tariff walls that would keep out British manufactured goods. June 1990. Accessed April 22.31. the Progressives. and enable them to pay taxes.ISBN 0-684-83160-0) Lind: "During the nineteenth century the dominant school of American political economy was the "American School" of developmental economic nationalism." and ".ISBN 0-684-831600) Richardson: "By 1865.the Federalists. Ludwig von Mises Institute.The American School. 39-49 . 229-230 published 1997 by Free Press.... Attempts to Escape the Logic of Capitalism 34. 136-137 published 1997 by the President and Fellows of Harvard College in the USA .published 1997 by Free Press. the Whigs.: (from "Trade Wars Against America: A History of United States Trade and Monetary Policy" Chapter 6 titled "America becomes Number 1" pg.." (from "Hamilton's Republic" Part III "The American School of National Economy" pg. xiv-xv .ISBN 0-275-93316-4) Lind: "Lincoln and his successors in the Republican party of 1865-1932. 32. Simon & Schuster division in the USA . the National Republicans. ^ Slavoj Zizek. Katy Harwood.. 2007. as so many Jeffersonians had hoped..Hamiltonian side.
Curry. was an ex-Democrat. 196-197 published 1994 by University of Illinois Press in the USA ." and "The man Lincoln selected for the sensitive position of Secretary of the Treasury. as Leornard P. And this. and a western progressive of the Lincoln stamp in everything from a tariff to a national bank. the historian of the legislation has aptly written. Salmon P. Chase.'" (from "Lincoln and the Economics of the American Dream" Chapter 14 titled "The Whig in the White House" pg.ISBN 0252064453 13 . one whom Joseph Dorfman could even describe as 'a good Hamiltonian.• Boritt: "Lincoln thus had the pleasure of signing into law much of the program he had worked for through the better part of his political life. amounted to a "blueprint for modern America. but of the moderate cariety on economics.
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