A mixed economy is one in which the government does not own all of the means of production, but government interests may legally circumvent, replace, limit or otherwise regulate private economic interests. By contrast, a free private economic system allows voluntary and competing private individuals to plan, produce and trade without coercive public interference.
There are many political and moral connotations wrapped up in the centuries-old, ongoing debate between statist thinkers and free-market thinkers. In real, practical terms, the differences between different types of economic systems are very basic: the rights of individual property owners versus the primacy of government authorities over production and distribution.
Possible Types of Economic Planning
There are three broad methods of economic policies. The first is state ownership of production, or socialism. The second is controlled private ownership, or a mixed economy, in which the state allows varying degrees of freedom between producers and consumers. The last is laissez-faire capitalism, where private property rights and freedom of contract are the dominant framework of production and trade.
Nearly every country in the world has a mixed economy. North Korea, a state-run dictatorship, is an example of a fully socialist system. Even relatively free-market economies, such as Hong Kong or Australia, are still mixed.
The laissez-faire economy evolves out of a system of respected private property rights. Property owners – including the owners of machines, capital and other input resources – may contract and trade with each other as they see fit, irrespective of the wants of government.
A mixed economy places limits on property rights. Property owners are restricted with regards to how they exchange with one another. These restrictions come in many forms, such as minimum wage laws, tariffs, quotas, windfall taxes, license restrictions, prohibited products or contracts, direct public expropriation, anti-trust legislation, legal tender laws, subsidies, and eminent domain.
In Western democratic republics, property rights may be violated if the plurality of elected representatives deem that such violations are in the public's (or their own) best interest.