'A mixed economy consists of both private companies and government/state-owned entities. Both have control of owning, making, selling, and exchanging goods in the country. We learned what planned and market economies are; let's just think of a mixed economy as containing features of both planned and market economies.

Merits of Mixed Ecoiioiny: A mixed economy possesses certain merits which are as under: (i) Best Allocation of Resources: Since a mixed economy incorporates the good features of both capitalism and socialism, the resources of the economy are utilised in the best possible manner. The price mechanism, the profit motive, and the freedoms of consumption, production, and occupation lead to the efficient allocation of resources within the economy. But where the possibility of mal-allocation of resources appears, the state regulation and control rectifies it. Thus shortages are avoided, productive efficiency increases, and cyclical fluctuations are eliminated.

(2) General Balance: A mixed economy maintains a general balance between the public sector and the private sector. There is competition as well as cooperation between the two sectors which are conducive for achieving a high rate of capital accumulation and economic growth. Further, an estimate of the successes and failures of the two sectors can be made by comparing their respective performances, and corrective measures are adopted accordingly. Thus the inconsistencies of the private enterprise economy and the ‘paper guesses’ of the planned economy are avoided in a mixed economy. By maintaining a higher level of production in the two sectors, the state is able to achieve the targets laid down in the plan.

Social security is also provided to workers in the event of unemployment. disablement, death. ifiness, etc. The production and sale of noxious articles are banned, while those of essentials are increased for the benefit of the people at large. Legislative measures are adopted to remove the concentration of economic power in the hands of the few rich, and to lessen inequalities of income and wealth. Demerits of Mixed Economy: A mixed economy has also certain defects which are discussed below: (i) Non-Cooperation between the Two Sectors: The experience of the working of mixed economies reveals that the public sector and the private sector do not see eye to eye with one another. The private sector is treated like a step-child and groans under the various restrictions imposed upon it by the state. The private sector is taxed heavily, while the public sector is given subsidies and preference over the former in the supplies of inputs. Thus a sense of bitterness and non-cooperation develops between the two sectors.

(3) Welfare State: A mixed economy contains all the features of a welfare state. There is no exploitation either by the capitalists as under a free