Econ: Mixed Economies


Pure forms of traditional, market, and command economic systems do not exist today. They are theoretical extremes. In the real world, most countries have mixed economies that fall somewhere in between those extremes. A mixed economy blends private ownership of property and individual decision making with government intervention and regulations. Every nation with a mixed economy forges its own balance between market freedom and government involvement. The degree of that involvement varies from country to country.

The United States has historically had a free market economy. Yet government plays a vital role in economic affairs. For example, government protects private property rights. It regulates the marketplace to protect both consumers and producers from unfair business practices. It also redistributes wealth to those in need through its social welfare policies.

China has had a command economy since the Communist Party took control of its government in 1949. For years, the communist government controlled every aspect of the Chinese economy. The result was economic stagnation. In the late 70s, the Chinese government moved from a strict command economy to a system called market socialism. This system mixes public and private ownership of businesses. It also encourages competition in the marketplace. At the same time, the Communist Party has remained in overall control of the economy.



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