Mixed Economies
LETS REVIEW DIFFERENT ECONOMIES
• Market or Capitalismprivate ownership of
items and freedom to use
the items as we see fit
• Socialism- people own
some resources and
government owns the
rest. How much the
government owns varies
from country to country
• Traditional- decisions are
made according to
traditions, progress is
difficult.
• Command- government
makes all the decisions on
what to produce and how
much to produce.
Why Mixed Economies Exist
• Remember there are
three main economies
– Traditional
– Command
– Market
• The definition for these
economies are clear
cut.
• Most economies do not
fit the entire definition
• Most economies will
detour away from the
original idea of a
traditional, command,
or market economy
Why Mixed Economies Exist Continued
• When there is a historical
event or a decline in the
economy
• These are reasons why a
government might alter their
economy to fit the needs of
the people
• In conclusion: there is no such
thing as a PURE market
economy, traditional economy,
or command economy.
• ALL governments alter one of
these economies to meet the
needs of their people
An Example of Why a country might
alter the original economies
• America was a powerful
market economy based
off of a free market UNTIL
the Great Depression
occurred in the 1930’s.
• Conditions got so bad in
America that the
government had to create
programs that went
against a free market in
order to help the people
– Unemployment
– Social Security
• Therefore, we are no
longer a pure Market
Economy, we are now a
mixed economy
SO What is a Mixed Economy?
• Mixed economies are
economies that have
characteristics of one of
the three main
economies BUT have
changed slightly to
meet the needs of their
people
Shared Characteristics of Mixed
Economies
• Mixed economies can
so many different
characteristics it is hard
to describe them BUT
here are some
combinations
Examples
• Communist Economies
• Communism was
thought of by Karl Marx
• He said all of history has
been a struggle
between the workers
and the owners.
• He felt the working
class would rise up and
overthrow the owners
Examples of Mixed Economies
• So he came up with the
idea of Communism=
– Everyone would
contribute according to
his or her abilities
– Everyone would only
consume what they
NEEDED
Examples of Mixed Economies
• Marx felt that NO
government would be
needed BUT in order to
eliminate government
you would need a
STRONG leader for
awhile.
• This leader would serve
the needs of the people
until they were ok to
run the country alone.
• This is where ALL
communist countries
STOP.
• They never get past the
STRONG government
• The strong government
usually creates
socialism and hopes to
one day step down but
never does.
Think of it like teaching someone to
ride a bike
Examples of Mixed Economies
• It is this reason that
there is not a TRUE
Communist government
in the world now, nor
has their ever been.
They are mixed
Communist and
Socialist
Socialism
• Government controls
and owns some things
but not all.
• Government provides
basic needs of the
people like education,
jobs, transportation,
health care.
• Cuba and North Korea
• Socialism can be the
government controlling
A LOT or A LITTLE
• And providing A LOT or
A LITTLE
Examples of Mixed Economies
• There are many mixed market
economies especially in
Democratic countries.
• These are countries in which
the people can influence the
economy a great deal.
• Sometimes the government in
market economies will control
one aspect of the economy
(like revenue from oil) and use
the money to provide
education, welfare, etc. to its
people.
• THUS making it a mixed
market economy
• Mixed market economies are
usually market economies
with some elements of
socialism
• In these economies the more
things the government
provides the more taxes
(revenue) it needs from the
people.
• USA is a mixed market
economy
Advantages of Mixed Economies
• China adopted a mixed
economy of command
(socialism) an capitalism
causing extreme
economic growth
• Market economies of
Europe have adopted
socialist programs to
provide generously for
its people: education,
etc.
Disadvantages of Mixed Economies
• Mixed economies with a
strong component of
socialism (excluding
command economies)
need to find a way to
fund these socialist
programs usually through
high taxes as a result
European countries have
higher taxes than America
but provide more for its
people