Mixed economy

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A mixed economy is an economy that includes a variety of private and government control; reflecting characteristics of both capitalism and socialism.[1]

There is not one single definition for a mixed economy,[2] but the definitions always involve a degree of private economic freedom mixed with a degree of government regulation of markets. The relative strength or weakness of each component in the national economy can vary greatly between countries. For some states, there is not a consensus on whether they are capitalist, socialist, or mixed economies. Economies ranging from the United States[3] to Cuba[4] have been termed mixed economies.

The economic freedom side includes privately owned industry for reasons including individual freedom, economic efficiency (most especially the allocative efficiency provided by the invisible hand of markets), and the incentive to innovate provided by competition. The government regulation side addresses concerns that the private sector cannot be (or at least has never yet been) well equipped to address, such as environmental protection, maintenance of employment standards, and maintenance of competition. In some mixed economies, it even includes various degrees of centralized economic planning, that is, state ownership of some of the means of production for national or social objectives.

Mixed economies as an economic ideal are supported by people of various political persuasions, typically centre-left and centre-right, such as social democrats[5] or Christian democrats. Supporters view mixed economies as a compromise between classic socialism and pure laissez-faire capitalism that is functionally superior to either one.

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