What Are the Advantages and Disadvantages of Mixed Economies?

Mixed economies essentially create a balancing act between the private sector and government: these economies allow governments the opportunity to step in to correct market failures, but sometimes draw criticism for enabling too much governmental control. Mixed economies require participation and cooperation between the private sector (such as individual corporations and businesses) and the government. Ideally, these economies create strong, stable economies with minimal governmental interference. However, when the balance tips too far one way or the other, problems arise.

Mixed economies may reduce the amount of governmental interference and regulation found in command economies, which are defined as economies operated entirely under governmental control. Under systems of mixed economies, private firms and businesses are often free to create their own products and establish market prices, which increases their levels of productivity. In times of economic trouble, the government may lend a helping hand by implementing policies and procedures to correct and right the economy. These economies may also encourage social mobility and provide economic opportunities for those historically underprivileged. However, mixed economies may invite rigid governmental control, and governments may face challenges deciding when, and to what extent, to intervene. Lastly, critics of mixed economies contend that governments have no right to interfere with markets, as they are influenced by short-term factors and politicians.