The mixed economy

There are no examples in the world today of a completely free market or a completely controlled economy. Every country operates a mixture of the two systems.

Economies mix government control and free market values in different ways. One way is to let privately owned businesses exist alongside state run industries. The economy becomes divided between the state sector and the private sector. The state sector often includes industries that the government thinks are important and need protection from the risks of the free market, for example, public transport, hospitals, schools and the postal service, large industries, such as oil, steel or agriculture.

However, many countries have recently started a process called deregulation.

Deregulation means freeing up the economy to allow private businesses to compete with state-run industries. Deregulation of services like telecommunications, transport and banking has happened in many countries in recent years.

Another way in which economies today are mixed is that governments put limits on free enterprise. For example, governments may decide to ban trade in certain goods if they are dangerous. Governments may also regulate methods of production.

Many economists would argue that the mixed economy is the best system for consumers. This is because consumers have two ways to control the economy: by choosing to buy a company’s goods or services and by choosing to give political parties their votes.