Kathmandu school of law

Dadhikot,Bhaktapur-9
Concept ,meaning ,features ,merits and demerits about mixed economy
system

Neplease economics

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Concept about mixed economy: Mixed economy is system that combines and contains
both aspect of capitalism and socialism economy. A mixed economy protect private property and
allows a level of economy freedom in the use of capital also by this system it allows government
to interfere in economic activities in order to achieve social aims. Concept of this types of
economy is newly developed .A mixed economy has three of the following features of market
economy.

 It protects private property.

 It allows the free market and the laws of supply and demand to determine prices.
 It is driven by the motivation of the self-interest of individuals.

And it has some characteristics of a command economy in some area .It allows the government
to safe guard its people and its market .The government has large role in the military
,international trade ,National transportation and other infrastructure .The government creates a
central plan that guides the economy.

According to Murad “Mixed economy is that economy in which both government and private
individuals exercise economic control.

According to prof.Samuelsom “Mixed economy is that economy in which both public and
private sectors cooperates”.

This system is followed by many developed and developing country in the world .Here are some
list about the share of government spending as a% of GDP

 Iceland =57%
 Sweden=52%
 France =52.8%
 United Kingdom=47.3%
 India=27%
 Germany=43.7%
 Nepal =19.7%

Main features of Mixed Economy

 Co-existence of private and public sector: In this type of system we can see the
existence of both public and private sectors. In public sector ,industries like
defence,power,energy,basic industries etc,are set up. while in private sector all the
consumer goods industries,agriculture,small-scale industries are developed. The
government encourages both the sectors to develop side by side .
 Personal Freedom: In this system there is full freedom of choice of occupation although
complete liberty is not given to consumer but at the same time government can regulate
price in public interest through public distribution system.
 Private property is allowed: In this system of economy any one can have or can acquire
their own private property .It must be ensure that the profit and property may not
concentrated in few pockets.
 Economic plannings: In these systems there is also the role of government thus
government also always tries to promote economic development of country by bringing
out various economical plans and cards.
 Price Mechanism and controlled price: In this system price mechanism and regulated
price operate side by side
 Profit motive and social Welfare: In this system there are both profit motive like
capitalism and social welfare in socialist economy. The principle aim of a mixed
economy is to maximize social welfare. To remove inequalities of income and wealth,
and unemployment and poverty such socially useful measures as social security, public
works etc are adopted to help poor.
 Check on economic Inequalities: In this system ,Government takes several measures to
reduce the gap between rich and poor through progressive taxation on income and wealth.
Different kinds helps job opportunity ,concessions, old age pension, free medical
facilities and free education are taken to improve the slandered of poor people thus by
this it helps to reduce economic inequalities.
 Control of Monopoly power: In this system government plays an important role to
control monopoly practices among the private entrepreneurs through effective legislative
measures.

Advantages of mixed economy

1. Encouragement to private sector: Mixed economy system provides encouragement to
private sector and it gets proper opportunity to grow. It leads to increase in capital
formation within the country.
2. Optimum utilization of the resource: Both public and private sector work together for
fulfilling need of the consumers. It optimizes the utilization of the resources. Public
sector works for social benefit while private sector makes the optimum use of these
resources for maximization of profit.
3. Economic Development: Under this system, both government and private sector join their
hands for the development of socio-economic infrastructures, Moreover, government
enacts many legislative measures to safe guard the interests of the poor and weaker
section of the society. Hence, for any underdeveloped country, mixed economy is a right
choice.