MIXED ECONOMY

May 21

It is a system which consists of the elements of capitalism and socialism. In this context the mixture is treated not as an analytical one, but as a real one. In the mixed economy there is a capitalist sector and a socialist sector. Hence, analytically the mixed economy concept is closer to the dual economy version which points to the parallel existence of two separate components in the economy, one based on the private enterprise principle of capitalism and the other on the public or social principle of socialism. The most important aspect of the mixed economy was the explicit recognition that it was to be only a temporary and transitional phase, and that the transition was geared to the socialist transformation and integration of the entire economy.

The tendency to make the mixed economy a permanent feature and give it the status of an economic system along with other systems such as feudalism, capitalism, socialism etc. is of recent origin. Analytically, it has emerged from the recognition that the real is never pure. While this is a valid claim up to a point, it is not right to say that the real is, therefore, the mixture of two analytically pure types that exist side by side without interactions. That it never is. But the mixed economy concept as it is used today is not an analytical category. It has arisen from the recognition that today the essence of capitalism, i.e. private accumulation, can be preserved only through making some notional concessions’ to socialist urges.

One of the characteristics of socialism is the public or social ownership of resources. Hence, it is easy to introduce some socialist elements into an essentially capitalist system by having some resources or enterprises socially owned, thereby producing the semblance of a mixture. But in practice, it is not difficult to convert the socialist sector into one more means to support and encourage private accumulation. An economic system must be evaluated primarily in terms of what it seeks to achieve and what it in fact achieves, rather than in terms of what its structural characteristics are said to be. The structure of an economy is one of its important aspects, but what is even more important is the interaction of the structure and working because that is what enables one to see where it is going. If private accumulation is the essence of capitalism, in the dynamic sense the mixed economy has only facilitated the growth and spread of capitalism.

The manner in which an actual economy is conceptualised is crucial, not only to comprehend it, but also to decide how to tackle its problems.

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