Discuss the objective and rational planning in mixed economy
Answers
Explanation:
Meaning:
It is a golden mixture of capitalism and socialism. Under this system there is freedom of economic activities and government interferences for the social welfare. Hence it is a blend of both the economies. The concept of mixed economy is of recent origin.
The developing countries like India have adopted mixed economy to accelerate the pace of economic development. Even the developed countries like UK, USA, etc. have also adopted ‘Mixed Capitalist System’. According to Prof. Samuelson, “Mixed economy is that economy in which both public and private sectors cooperate.” According to Murad, “Mixed economy is that economy in which both government and private individuals exercise economic control.”
Coexistence of All Sectors: In a mixed economy all three sectors coexist in harmony, i.e. private sector, public sector, and joint sector. The joint sector is jointly run by the government and private companies, with at least 51% ownership belonging to the state.
Cooperative Sector: In a mixed economy another sector exists, the cooperative sector. The main aim of the formation of this sector is so that the government can provide financial assistance to cooperative societies involved in warehousing, agricultural, dairy industry, etc.
Freedom and Control: Here all individuals have the freedom to produce goods and products, hold property, choose their occupation and choose or demand products/services they want. But to keep a check on monopolistic practices and discrimination of the lower sectors of society the state maintains some control.
Economic Planning: In a mixed economy we have a central planning authority. All sectors of the economy follow the economic plan of the state to achieve various targets and goals. The plan is not rigid but more of a general guideline for economic growth and prosperity of the nation.
Social Welfare: One of the main aims of a mixed economy is social welfare. It aims to reduce the wealth gap in the country and fight the inequalities of our society. The aim is to reduce poverty and unemployment. And at the same time also improve social security, public health care, public education system, etc.
Merits of a Mixed Economy
Freedom the citizens enjoy. Especially the economic freedom to ownership of property and choice of goods and services.
Ownership and existence of private producers also increase capital formation in the country. There is an incentive to do better and innovate as well.
Price mechanism prevails. So the allocation of resources is more scientific and beneficial to the economy.
Also enjoys the advantages of central economic planning. This will help the economy grow rapidly and in the correct direction.
There is healthy competition in the market. There is no cut-throat competition and adverse tactics due to government oversight. Also, there is no absolute lack of competition which is disadvantageous,
Explanation:
A mixed economic system is an arrangement that integrates features of both capitalism and socialism. A mixed economic system defends private property and permits a level of economic autonomy in the use of capital, but also ensures permission for governments to interfere in economic doings in order to attain certain social aims. Economic planning is an indispensable aspect in this system.