There were many individuals, economists, and countries not favoring either capitalism or socialism. They were of the view that both the economic systems are on the extremes, would bring no good to the masses, or fail in the long run. They kept in view the evils of both the systems, and consequently, they evolved an economic system that contain good points of both capitalism and socialism. Hence, the system became popular as mixed economy emphasizing the nationalization of basic and large industries.
It is the economic system that carries the characteristics of both capitalism and socialism. The system works welt when the evils of both systems are excluded. It was gradually introduced by those who were against socialism, capitalism, or both.
CHARACTERISTICS OF MIXED ECONOMY
Under the system key and basic industries are nationalized, in addition, public utility companies as electricity, gas, and phone remain in the public (government) sector.
Long- Range Planning
Mixed economy follows socialism in that the former adopts the system of long-range planning. In formerly U.S.S.R., seven-year plans were made. InPakistan, five-year plans were devised.) Now this practice has come to an end.
This blended economic system is divided into two parts.
a) Public/government sector
b) Private sector
Public sector does not allow the interference of the private sector but the government can enter the private segment of the society. It is a common practice of the government to allocate separate sectors for private investment.
Better Economy System
The system can become ideal if all the good attributes of both socialism and capitalism are adopted and evils dropped.
Middle of Road Policy
Capitalism and socialism are extremely opposite to each other. Mixed economy offers a mild system abandoning the extremities of both capitalist and socialist economies.
Possibilities of Evils
Rulers and bureaucrats may infect the system in their personal interest. Such case is common in most of the developing countries.
Democracy or Dictatorship
Mixed economy flourishes under democratic setup of the government. Countries with long history of dictatorship cannot progress under the mixed economic system as the success of the economy depends on democracy.
Government resources are increased under capitalism. The government generates its income from taxes from the private sector. It also owns a substantial part of the economy. Thesc two sources, added together, bring more money to the government.