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What is a “Mixed Economy”?
Most say that the US has one, and that “pure economies” don’t exist anymore, but what does that mean?
What is this thing we have which is used to justify both reform & the status quo?
#ResistanceEducation
👇LONG THREAD👇
Most say that the US has one, and that “pure economies” don’t exist anymore, but what does that mean?
What is this thing we have which is used to justify both reform & the status quo?
#ResistanceEducation
👇LONG THREAD👇
This won’t be a discussion supporting any candidate/platform, but it will contain criticisms of theories that some support.
It will be a frank discussion about this curious concept which is so amorphous it’s used to justify opposite positions simultaneously.
It will be a frank discussion about this curious concept which is so amorphous it’s used to justify opposite positions simultaneously.
One of the issues with this term is that it has 2 commonly used meanings: one purely economic, the other more politically/philosophically prescriptive.
Most of the common (mis)uses stem from conflating these two notions.
Most of the common (mis)uses stem from conflating these two notions.
The economic definition is simply that a given economy has some mixture of private & public (government) enterprises.
You’d be hard pressed to find any civilization that doesn’t fit this definition.
Only in theoretical tools (fantasies) does it not exist.
You’d be hard pressed to find any civilization that doesn’t fit this definition.
Only in theoretical tools (fantasies) does it not exist.
This simple definition hides an important dichotomy however, between planned & unplanned (market) economies.
The topic of planned economies is so important that it deserves it’s own thread, but I haven’t made one (or found a good one) yet.
Mea culpa😅
The topic of planned economies is so important that it deserves it’s own thread, but I haven’t made one (or found a good one) yet.
Mea culpa😅
The simple conception of economic planning is that an economy can be directed in some manner to yield specific results.
How it’s directed & who decides what’s desirable is dependent on the specific theory.
It ranges from left to right.
Communism to fascism.
How it’s directed & who decides what’s desirable is dependent on the specific theory.
It ranges from left to right.
Communism to fascism.
Though economic planning can occur via a centralized state, decentralized municipalities, or anything in between, the former has become the dominant means in recent history.
In this conception it is state enterprises that are used to direct an economy.
In this conception it is state enterprises that are used to direct an economy.
So a mixed economy has elements of a centrally planed economy (state enterprises) & an unplanned market economy (private enterprises as part of liberal economic theory).
But there are other methods of planning that have crept into modern mixed economies.
But there are other methods of planning that have crept into modern mixed economies.
Regulations, availability of credit, interest rates, & government contracts are all methods that can be used to exert pressure on an economy.
As are the very laws which protect private property, which are essential for a capitalist economic system.
As are the very laws which protect private property, which are essential for a capitalist economic system.
This brings us to the second definition of a “mixed economy”: a mix of markets with state/government interventionism.
This view adopts liberal economic theories that say markets are fundamentally beneficial to society but may require guidance.
This view adopts liberal economic theories that say markets are fundamentally beneficial to society but may require guidance.
What is the goal of this guidance?
How should it be enacted?
These are fundamentally political/philosophical questions, and there are many options to choose from.
Very few ideologies advocate zero intervention, with even right-libertarians agreeing to some.
How should it be enacted?
These are fundamentally political/philosophical questions, and there are many options to choose from.
Very few ideologies advocate zero intervention, with even right-libertarians agreeing to some.
It’s important to note that this second definition can use state owned enterprises as a tool.
So there is no clear line between the 2 definitions; rather, they just take different points of view.
But this is not the only point of confusion.
So there is no clear line between the 2 definitions; rather, they just take different points of view.
But this is not the only point of confusion.
Because centralized planning (more accurately, a command economy) has been associated with the USSR, it is often said that “mixed economies” are a mix of socialism & capitalism.
This is often parroted by both US liberals & conservatives.
This is often parroted by both US liberals & conservatives.
As I’m sure everyone’s read my “socialist theories” thread (😉), this makes no sense.
Because there is still accumulation of capital, & the system is mediated by exchange prices (see Marx’s law of value), it is completely capitalist.
Because there is still accumulation of capital, & the system is mediated by exchange prices (see Marx’s law of value), it is completely capitalist.
Interestingly, this is one instance where neoclassical & Marxist economists agree: either an economy is predominantly planned or unplanned, there is no middle ground.
Either the surplus is controlled by those who make it, or those who appropriate it.
Either the surplus is controlled by those who make it, or those who appropriate it.
There are examples of socialist production in capitalism in many countries (large co-op sectors).
There are even political parties that advocate more socialist production (eg, UK Labour Party), but ALL of these nations have fundamentally capitalist economies
There are even political parties that advocate more socialist production (eg, UK Labour Party), but ALL of these nations have fundamentally capitalist economies
Multiple modes of production have always coexisted though.
During European feudalism there were many examples of markets (capitalist production) that came & went before becoming dominant.
These were also often mixed economies according to the 1st definition
During European feudalism there were many examples of markets (capitalist production) that came & went before becoming dominant.
These were also often mixed economies according to the 1st definition
It’s clear that all economies are a mix of private & public ownership, and most modern ones are a mix of liberal markets and state interventionism.
There is also a mix of modes of production (primitive, feudal, capitalist, & socialist) in most.
There is also a mix of modes of production (primitive, feudal, capitalist, & socialist) in most.
What does this tell us about our economy?
What does it say about the use of this term?
Our economy is clearly a mixed one in every sense, but so is almost every other nation’s. Most always have been.
The term “mixed economy” seems to be of no use.
What does it say about the use of this term?
Our economy is clearly a mixed one in every sense, but so is almost every other nation’s. Most always have been.
The term “mixed economy” seems to be of no use.
Maybe a better metric would be to talk about the percentage of state ownership.
Luckily, the @ilo keeps track of public sector employment which can act as a close proxy.
The US is 16%, China is 50%.
Luckily, the @ilo keeps track of public sector employment which can act as a close proxy.
The US is 16%, China is 50%.
Self proclaimed “Socialist” nations (%):
Cuba-77
India-55
Venezuela-29
Vietnam-20
Nations that conservatives call “socialist”:
Norway-38
Denmark-31
Sweden-26
France-25
Nations conservatives support:
Saudi Arabia-35
Brazil-20
Israel-19
Seems arbitrary.
Cuba-77
India-55
Venezuela-29
Vietnam-20
Nations that conservatives call “socialist”:
Norway-38
Denmark-31
Sweden-26
France-25
Nations conservatives support:
Saudi Arabia-35
Brazil-20
Israel-19
Seems arbitrary.
Maybe another metric could be the degree of regulation (state intervention).
The ‘Index of Economic Freedom’ is published by The Heritage Foundation & The Wall Street Journal and scores nations based on free market ideals.
The US scored a 76/100 in 2018.
The ‘Index of Economic Freedom’ is published by The Heritage Foundation & The Wall Street Journal and scores nations based on free market ideals.
The US scored a 76/100 in 2018.
The “Economic Freedom” scores of the nations above:
Denmark-77
Sweden-76
Norway-74
Israel-72
France-64
Saudi Arabia-60
India-55
Vietnam-53
Brazil-51
Cuba-32
Venezuela-25
🇻🇪& 🇩🇰 have a similar % of public ownership, but nowhere near equal “freedom” scores.
Denmark-77
Sweden-76
Norway-74
Israel-72
France-64
Saudi Arabia-60
India-55
Vietnam-53
Brazil-51
Cuba-32
Venezuela-25
🇻🇪& 🇩🇰 have a similar % of public ownership, but nowhere near equal “freedom” scores.
Maybe this means that a simple measure of private to public ownership (or how “free” an economy is) isn’t a conclusive measure of anything, that there are other factors involved.
Maybe we need to be more careful in comparisons when deciding policies.
Maybe we need to be more careful in comparisons when deciding policies.
Maybe this also means we need to stop saying we already have socialism.
We need to stop deflecting and actually consider the criticisms of capitalism as a system.
We need to actively think about alternatives & what we want/need.
We need to stop deflecting and actually consider the criticisms of capitalism as a system.
We need to actively think about alternatives & what we want/need.
PS
Feel free to post this ANYWHERE someone uses the term “mixed economy”.
Also feel free to ask questions, as long as they’re coherent to some degree😉
Feel free to post this ANYWHERE someone uses the term “mixed economy”.
Also feel free to ask questions, as long as they’re coherent to some degree😉
