The economic system in a country is usually determined by the policies of government. The economic system influences the economic concepts and policies adopted by a country so that people may get prosperous and prosperous.
One economic system adopted by many countries is a mixed economic system. Major countries that adopt a mixed economic system are Indonesia, Malaysia, India, the Philippines, and many more. Check out the discussion about this economic system in order to understand deeply.
What is the Definition of a Mixed Economic System?
What is mixed economic system? In general, the mixed economic system is a system in the form of a mixture of cooperation between the government and the private sector to carry out economic activities in a country.
Absolute command of government
As the name implies, this economic system is a mixture or combination of a liberal economic system with a capitalist style and a centralized economic system with the absolute command of the government.
This economic system gives flexibility to the private sector to carry out economic activities, but government intervention still exists for matters or important decisions related to the lives of many people. Government intervention is carried out to regulate economic activities so that they will have an impact or have real benefits for the general prosperity of the people.
The Characteristics of a Mixed Economic System
The mixed economic system has the following characteristics.
- Government and private sector play an active role and continue to work together in carrying out economic activities.
- The government gives freedom to the private sector to carry out economic activities, but gives restrictions and interventions if needed.
- The government carries out plans, regulations and policies relating to the economy.
- Competition in the market remains within reasonable and clean limits because the government is involved in monitoring and intervening.
- Market mechanisms can determine the type, quantity of goods produced, and selling prices.
- The government manages all vital resources that concern the lives of many people.
- Government and private sector have the same role in economic activities.
Pros of a Mixed Economic System
All economic systems including mixed economic systems have advantages. The advantages of a mixed economic system are as follows.
- The government recognizes individual rights.
- The government can control the prices of goods and services in the market.
- The government makes the interests and prosperity of citizens as the main goal.
- The private sector must not exploit resources without permission or as they wish.
- Economic conditions tend to be stable because there is no excessive activity or interfere with community rights.
The Cons of the Mixed Economic System
In addition to advantages, a mixed economic system also has the following disadvantages which must be considered if you are reading about mixed economic system.
- The government has greater responsibility and authority than the private sector.
- The government is actively regulating the economy, but economic problems such as inflation, unemployment, social inequality still occur.
- Equitable distribution of income is difficult because of competition in the community.