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A Project on

INDIAS MIXED ECONOMY

Submitted To

University o Mumb!i

In t"e #!rti!$ u$i$$ment o t"e M%COM PA&T' ( ) MANA*EMENT

+y

S,AI-, ,UMA MANSOO&

&o$$ No' ..

Under T"e *uid!nce o Pro% /!0ir

Studyin1 !t

&i2vi Educ!tion Society

&i2vi Co$$e1e o Arts3 Science 4 Commerce

&i2vi Educ!tion!$ Com#$e53 +!ndr! 6783 Mumb!i

Ac!demic Ye!r' 9:(; ' 9:(

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Declaration

I SHAIKH HUMA MANSOORa student ofM.COM PART- 1-

MANAGEMENT, Roll No- 66 of the academic year

2014- 15 studying

at Rizi !ollege of "rts, #cience $ !ommerce, here%y

declare that

the &or' done on the (ro)ect entitled INDIAS MIXED

ECONOMY is

true and original to the %est of my 'no&ledge and any

reference used

in the *ro)ect is duly ac'no&ledged+

Date

#ignature of #tudent#."I/. ." "N#R

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!erti3cate

his is to certify that SHAIKH HUMA MANSOORa

student ofM.com

PART -1- MANAGEMENT, Roll No- 66 of the academic year

2014-2015

studying at Rizi !ollege of "rts, #cience $ !ommerce, has

successfully

com*leted the *ro)ect entitled INDIAS MIXED ECONOMY.

(rof+ a'ir(ro)ect 7uide8

!o- ordinator8

9:ternal 9:aminer Dr+++ ;aroo

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"c'no&ledgement

I3 S,AI-, ,UMA MANSOO& 6 &o$$ No% .. 8 student o C$!ss M%COM '(%

du$y !c0no=$ed1e my res#ected Pro% /!0ir or "is unendin1 su##ort !nd

1uid!nce is "e$#in1 me out in com#$etin1 my #roject or t"e subject o INDIAS

MIXED ECONOMY%

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INDI"=#

I>9D

9!N?

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Index

Sr%No Tit$e

( Introduction

9 Me!nin1

> &o$e o Mi5ed Economy

; Po$icy o Mi5ed Economy

< Trends o Mi5ed Economy

. Current Scen!rio

? Ar1uments

@ A1!inst

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INTRODUCTION

T"e conce#t o ! mi5ed economy is not e5c$usive to c!#it!$ist economies 6economies

structured u#on c!#it!$ !ccumu$!tion!nd #riv!te$y o=ned3 #roit'see0in1 enter#rises83 !nd t"e

#"r!se "!s been used to c"!r!cterise some soci!$ist economic systems% A number o #ro#os!$s

or soci!$ist systems c!$$ or ! mi5ture o dierent orms o enter#rise o=ners"i#% or

e5!m#$e3 A$ec NoveBsconce#tion ofeasible socialism#rovides !n out$ine or !n economic

system b!sed on ! combin!tion o st!te'enter#rises or $!r1e industries3 =or0er !nd consumer

coo#er!tives3 #riv!te enter#rises or sm!$$'sc!$e o#er!tions3 !nd individu!$$y o=ned

enter#rises%

T"e soci!$ democr!tic t"eorist Edu!rd +ernstein!dvoc!ted ! orm o mi5ed economy3

be$ievin1 t"!t ! mi5ed system o#ub$ic3 coo#er!tive!nd#riv!te enter#rise =ou$d be

necess!ry or ! $on1 #eriod o time beore c!#it!$ism =ou$d evo$ve o its o=n !ccord into

soci!$ism%

In 1ener!$ t"e mi5ed economy is c"!r!cterised by t"e#riv!te o=ners"i#o t"e me!ns o

#roduction3 t"e domin!nce o m!r0ets or economic coordin!tion3 =it" #roit'see0in1

enter#rise !nd t"e !ccumu$!tion o c!#it!$rem!inin1 t"e und!ment!$ drivin1 orce be"ind

economic !ctivity% +ut un$i0e ! ree'm!r0et economy3 t"e 1overnment =ou$d =ie$d indirect

m!croeconomic in$uence over t"e economy t"rou1"isc!$!ndmonet!ry #o$iciesdesi1ned to

counter!ct economic do=nturns !nd c!#it!$ismBs tendency to=!rd in!nci!$ crises

!ndunem#$oyment3 !$on1 =it" #$!yin1 ! ro$e in interventions t"!t #romotesoci!$

=e$!re% Subseuent$y3 some mi5ed economies "!ve e5#!nded in sco#e to inc$ude ! ro$e

or indic!tive economic #$!nnin1!ndor $!r1e#ub$ic enter#risesectors%

http://en.wikipedia.org/wiki/Capital_accumulationhttp://en.wikipedia.org/wiki/Capital_accumulationhttp://en.wikipedia.org/wiki/Alec_Novehttp://en.wikipedia.org/wiki/Eduard_Bernsteinhttp://en.wikipedia.org/wiki/Public_enterprisehttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Private_enterprisehttp://en.wikipedia.org/wiki/Means_of_productionhttp://en.wikipedia.org/wiki/Means_of_productionhttp://en.wikipedia.org/wiki/Accumulation_of_capitalhttp://en.wikipedia.org/wiki/Fiscal_policyhttp://en.wikipedia.org/wiki/Monetary_policyhttp://en.wikipedia.org/wiki/Monetary_policyhttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Welfarehttp://en.wikipedia.org/wiki/Welfarehttp://en.wikipedia.org/wiki/Welfarehttp://en.wikipedia.org/wiki/Indicative_planninghttp://en.wikipedia.org/wiki/State_enterprisehttp://en.wikipedia.org/wiki/State_enterprisehttp://en.wikipedia.org/wiki/Alec_Novehttp://en.wikipedia.org/wiki/Eduard_Bernsteinhttp://en.wikipedia.org/wiki/Public_enterprisehttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Private_enterprisehttp://en.wikipedia.org/wiki/Means_of_productionhttp://en.wikipedia.org/wiki/Means_of_productionhttp://en.wikipedia.org/wiki/Accumulation_of_capitalhttp://en.wikipedia.org/wiki/Fiscal_policyhttp://en.wikipedia.org/wiki/Monetary_policyhttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Welfarehttp://en.wikipedia.org/wiki/Welfarehttp://en.wikipedia.org/wiki/Indicative_planninghttp://en.wikipedia.org/wiki/State_enterprisehttp://en.wikipedia.org/wiki/Capital_accumulation

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T"ere is not one sin1$e deinition or ! mi5ed economy3 =it" it deined v!rious$y !s ! mi5ture

o ree m!r0ets =it"st!te interventionism3or !s ! mi5ture o #ub$ic !nd #riv!te enter#rise3 or

!s ! mi5ture bet=een m!r0ets !nd economic #$!nnin1% T"e re$!tive stren1t" or =e!0ness o

e!c" com#onent in t"e n!tion!$ economy c!n v!ry 1re!t$y bet=een countries% Economies

r!n1in1 rom t"eUnited St!testo Cub! "!ve been termed mi5ed economies% T"e term is !$so

used to describe t"e economies o countries ="ic" !re reerred to !s =e$!re st!tes3suc" !st"eNordic countries% *overnments in mi5ed economies oten #rovideenvironment!$

#rotection3 m!inten!nce o em#$oyment st!nd!rds3 ! st!nd!rdi2ed =e$!resystem3

!ndm!inten!nce o com#etition%

M

EANING

A mixed economyis !neconomic systemv!rious$y deined !s cont!inin1 ! mi5ture

om!r0ets!ndeconomic #$!nnin13 in ="ic" bot" t"e#riv!te sector!nd st!tedirect

t"e economyor !s ! mi5ture o#ub$ic o=ners"i#!nd#riv!te o=ners"i# or !s ! mi5ture

o ree m!r0ets=it" economic interventionism% Most mi5ed economies c!n be described

!s m!r0et economies=it" stron1 re1u$!toryoversi1"t !nd 1overnment!$ #rovision o#ub$ic

1oods% Some mi5ed economies !$so e!ture ! v!riety ost!te'run enter#rises%

As !n economic ide!$3 mi5ed economies !re su##orted by #eo#$e o v!rious #o$itic!$

#ersu!sions3 ty#ic!$$y centre'$et!ndcentre'ri1"t3 suc" !ssoci!$ democr!tsor C"risti!n

democr!ts%Su##orters vie= mi5ed economies !s ! com#romise bet=eenst!te soci!$ism!nd

ree'm!r0et c!#it!$ism t"!t is su#erior in net eect to eit"er o t"ose% Around t"e =or$d3 t"e

most #ros#erous countries =it" t"e "i1"est !ver!1e st!nd!rd o $ivin1tend to "!ve mi5ed

economic systems =it" democr!tic!$$y e$ected 1overnments%

http://en.wikipedia.org/wiki/State_interventionismhttp://en.wikipedia.org/wiki/State_interventionismhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Cubahttp://en.wikipedia.org/wiki/Welfare_statehttp://en.wikipedia.org/wiki/Nordic_countrieshttp://en.wikipedia.org/wiki/Environmental_protectionhttp://en.wikipedia.org/wiki/Environmental_protectionhttp://en.wikipedia.org/wiki/Employment_standardshttp://en.wikipedia.org/wiki/Welfarehttp://en.wikipedia.org/wiki/Competition_lawhttp://en.wikipedia.org/wiki/Competition_lawhttp://en.wikipedia.org/wiki/Competition_lawhttp://en.wikipedia.org/wiki/Economic_systemhttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Economic_planninghttp://en.wikipedia.org/wiki/Economic_planninghttp://en.wikipedia.org/wiki/Economic_planninghttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/State_(polity)http://en.wikipedia.org/wiki/State_(polity)http://en.wikipedia.org/wiki/Economyhttp://en.wikipedia.org/wiki/Public_ownershiphttp://en.wikipedia.org/wiki/Public_ownershiphttp://en.wikipedia.org/wiki/Private_ownershiphttp://en.wikipedia.org/wiki/Private_ownershiphttp://en.wikipedia.org/wiki/Private_ownershiphttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Economic_interventionismhttp://en.wikipedia.org/wiki/Market_economyhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Public_goodhttp://en.wikipedia.org/wiki/Public_goodhttp://en.wikipedia.org/wiki/Public_goodhttp://en.wikipedia.org/wiki/State_enterprisehttp://en.wikipedia.org/wiki/State_enterprisehttp://en.wikipedia.org/wiki/Political_ideologyhttp://en.wikipedia.org/wiki/Centre-lefthttp://en.wikipedia.org/wiki/Centre-lefthttp://en.wikipedia.org/wiki/Centre-righthttp://en.wikipedia.org/wiki/Centre-righthttp://en.wikipedia.org/wiki/Social_democracyhttp://en.wikipedia.org/wiki/Social_democracyhttp://en.wikipedia.org/wiki/Christian_democracyhttp://en.wikipedia.org/wiki/Christian_democracyhttp://en.wikipedia.org/wiki/Christian_democracyhttp://en.wikipedia.org/wiki/Christian_democracyhttp://en.wikipedia.org/wiki/State_socialismhttp://en.wikipedia.org/wiki/State_socialismhttp://en.wikipedia.org/wiki/Standard_of_livinghttp://en.wikipedia.org/wiki/State_interventionismhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Cubahttp://en.wikipedia.org/wiki/Welfare_statehttp://en.wikipedia.org/wiki/Nordic_countrieshttp://en.wikipedia.org/wiki/Environmental_protectionhttp://en.wikipedia.org/wiki/Environmental_protectionhttp://en.wikipedia.org/wiki/Employment_standardshttp://en.wikipedia.org/wiki/Welfarehttp://en.wikipedia.org/wiki/Competition_lawhttp://en.wikipedia.org/wiki/Economic_systemhttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Economic_planninghttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/State_(polity)http://en.wikipedia.org/wiki/Economyhttp://en.wikipedia.org/wiki/Public_ownershiphttp://en.wikipedia.org/wiki/Private_ownershiphttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Economic_interventionismhttp://en.wikipedia.org/wiki/Market_economyhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Public_goodhttp://en.wikipedia.org/wiki/Public_goodhttp://en.wikipedia.org/wiki/State_enterprisehttp://en.wikipedia.org/wiki/Political_ideologyhttp://en.wikipedia.org/wiki/Centre-lefthttp://en.wikipedia.org/wiki/Centre-righthttp://en.wikipedia.org/wiki/Social_democracyhttp://en.wikipedia.org/wiki/Christian_democracyhttp://en.wikipedia.org/wiki/Christian_democracyhttp://en.wikipedia.org/wiki/State_socialismhttp://en.wikipedia.org/wiki/Standard_of_living

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Role of Mixed Economy

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>

POLICIES OF MIXED ECONOMY

FISCAL POLICY

*overnment !ttem#ts to m!ni#u$!te its bud1et deicit or sur#$us to !c"ieve

economic 1o!$s !re c!$$ed

isc!$ #o$icy% It is 1ener!$$y !ny 1ov% decision !bout s#endin13 t!5es !nd

borro=in1% Usin1 t"is #o$icy

1overnment c!n e!si$y in$uence !11re1!te dem!nd%

T"ere !re 9 ty#es o instruments o isc!$ #o$icyF

6!8 !utom!tic 6bui$t in 8st!bi$i2ers ' !re e5#enditures t"!t !utom!tic!$$y

incre!se ="en t"e economy is 1oin1 into ! recession% Converse$y3 t"ey

!utom!tic!$$y !$$ ="en t"e economy booms% Autom!tic st!bi$i2ersinc$udeF ' #ro1ressive income t!5

unem#$oyment insur!nce

subsidies to !1ricu$tur!$ #roducts

1overnment #urc"!se o e5cessive !1ricu$tur!$ #roducts

6b8!ctive ' discretion!ry isc!$ #o$icy ' it is t"e de$iber!te m!ni#u$!tion o t"e

1overnment s#endin1 !nd t!5es to in$uence t"e economy3 or e5!m#$e c"!n1es

in t!5 r!tes3 c"!n1es in 1overnment e5#enditure structure%

Cro=din1'out eect ' is t"e ne1!tive eect o t"e isc!$ #o$icy3 ="en money

rom #riv!te sector o t"e economy is cro=ded out to t"e #ub$ic sector 6or

e5!m#$e by se$$in1 st!te bonds or tre!sury bi$$s8%

T"ereor !mount o money in #riv!te sector decre!ses !nd interest r!tes incre!se%

&esu$t ) $ess investment in #riv!te sector%

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MONETARY POLICY

Monet!ry #o$icy is t"e !ttem#t by 1overnment or ! centr!$ b!n0 to m!ni#u$!te

t"e money su##$y3 t"e su##$y o credit3 interest r!tes3 or !ny ot"er monet!ry

v!ri!b$es3 to !c"ieve t"e u$i$ment o #o$icy 1o!$s suc" !s #rice st!bi$ity%

T"ere !re v!rious deinitions o t"e money su##$y r!n1in1 rom M: to M;% T"e

centr!$ b!n0 "!s t"e tot!$ contro$ over M:% ,o=ever3 $ess t"!n (G o M; is

m!de u# o notes !nd coins% So ="en t"e 1overnment =is"es to contro$ !nyt"in1

ot"er t"!n M:3 it "!s to contro$ t"e !mount o money in t"e b!n0in1 system !nd

in t"e =ider in!nci!$ system3 too T"ere !re t=o ty#es o too$s 6instruments8 o

monet!ry #o$icyF

6!8direct ' re1u$!tion o $o!ns by t"e 1overnment institutions3 re1u$!tion o t"e

credits on consumer 1oods

6b8indirect ' t"ere !re > m!in too$sF

reserve r!tio ' determined by t"e centr!$ b!n0% It is t"e #ercent!1e

o tot!$ de#osits o ! b!n0 t"!t "!s to be 0e#t in t"e orm o c!s"% I

t"e centr!$ b!n0 !$ters t"e v!$ue o t"e reserve r!tio3 it =i$$ !ctu!$$y

in$uence t"e si2e o money su##$y% T"e "i1"er t"e reserve r!tio3 t"e

$o=er t"e si2e o money su##$y%

discount r!te ' it is t"e r!te !t ="ic" t"e centr!$ b!n0 $end money tot"e commerci!$ b!n0s in need% It direct$y in$uences interest r!tes o

commerci!$ b!n0s% I it incre!ses3 t"e interest r!tes incre!se3 too%

o#en m!r0et o#er!tions ' se$$in1 t"e bonds or tre!sury bi$$s

decre!ses t"e !mount o money in t"e circu$!r $o=3 buyin1 t"em

incre!ses t"e si2e o money su##$y in t"e economy%

INCOME POLICY

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Income #o$icy is t"e #o$icy desi1ned to $imit t"e 1ro=t" o incomes direct$y% It

c!n "e$# to redice in$!tion c!used by su##$y'side !ctors% +y im#osin1

m!5imum #!y incre!ses3 t"e 1overnment bre!0s in$!tion!ry e5#ect!tions !nd

"ence t"e cost #us" s#ir!$ !nd "e$#s t"e economy return to #rice $eve$ st!bi$ity%

SOCIAL POLICY

It is ! #o$icy ="ose m!in !im is to !c"ieve cert!in soci!$ 1o!$s% T"ere is no

s#eciic soci!$ #o$icy% It is usu!$$y some 0ind o monet!ry or isc!$ #o$icy%

T!5!tion is !n e5!m#$e% Su##ose t"e distribution o income is ineuit!b$e% To

redistribute t"e income3 t"e 1overnment c!n im#ose t"e t!5es ="ic" reduce t"e

income !nd =e!$t" o ric"er 1rou#s in t"e society !nd use t"e money co$$ected to

incre!se t"e income !nd =e!$t" o #oorer 1rou#s%

7"en t"e 1overnment =!nts to im#rove t"e $eve$ o educ!tion3 it c!n incre!se its

s#endin1 on it !nd 7"en it =!nts to im#rove t"e $ivin1 st!nd!rd o $o= #!id

=or0ers3 it c!n im#ose minimum =!1e% T"ese !re considered to be soci!$

#o$icies but in ori1in t"ey !re isc!$%

FOREIGN TRADE POLICY

It is ! #o$icy t"!t c!n in$uence t"e =or0in1s o intern!tion!$ tr!de% A$$ countries

c"oose to !do#t

#rotectionist #o$icies to some e5tent bec!use t"ey =!nt to #rotect t"eir

economies rom destruction by "u1e im#orts or dum#in1% T"ese #rotectionist

#o$icies !re c!$$ed tr!de b!rriers% T"e most im#ort!nt ones !re t!ris !nd uot!s3but t"ere !re some ot"ers !s =e$$% A t!ri is ! t!5 on im#orted 1oods !nd

sometimes c!$$ed !n im#ort duty or ! customs duty% It is used to restrict im#orts

so t"!t it r!ises t"e in!$ #rice o im#orted 1oods3 t"us $o=erin1 t"e dem!nd o

t"em% A uot! is ! #"ysic!$ $imit on t"e u!ntity o t"e 1ood im#orted% It is !n

e5!m#$e o ! #"ysic!$ contro$%

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TRENDS OF MIXED ECONOMY

T"e n!tions o t"e =or$d "!ve $!r1e$y been divided bet=een t"ose t"!t o$$o=ed t"e conce#ts

o c!#it!$ism !nd t"ose t"!t !do#ted t"e conce#ts o communism or soci!$ism% T"us3 to sum

u# t"e #recedin1 discussion3 t"e t=o m!jor economic systems vyin1 or domin!nce in t"e

=or$d tod!y c!n be deined !s o$$o=sF

(% ree'm!r0et economies e5ist ="en t"e m!r0et $!r1e$y determines ="!t 1oods !nd

services 1et #roduced3 ="o 1ets t"em3 !nd "o= t"e economy 1ro=s% C!#it!$ism is t"e

#o#u$!r term used to describe t"is economic system%

9% Comm!nd economies e5ist ="en t"e 1overnment $!r1e$y decides ="!t 1oods !nd

services =i$$ be #roduced3 ="o =i$$ 1et t"em3 !nd "o= t"e economy =i$$ 1ro=%

Soci!$ism !nd communism !re t"e #o#u$!r terms used to describe v!ri!tions o t"is

economic system%

T"e e5#erience o t"e =or$d "!s been t"!t neit"er ree'm!r0et nor comm!nd economies "!ve

resu$ted in o#timum economic conditions% ree'm!r0et mec"!nisms "!vent been res#onsive

enou1" to t"e needs o t"e #oor3 t"e o$d3 or t"e dis!b$ed% Some #eo#$e !$so be$ieve t"!t

businesses in ree'm!r0et economies "!ve not done enou1" to #rotect t"e environment% Over

time3 voters in ree'm!r0et countries3 suc" !s t"e United St!tes3 "!ve t"ereore e$ected

oici!$s ="o "!ve !do#ted m!ny soci!$ !nd environment!$ #ro1r!ms suc" !s Soci!$ Security3

=e$!re3 unem#$oyment com#ens!tion3 !nd v!rious c$e!n !ir !nd =!ter !cts%

Soci!$ism !nd communism3 or t"eir #!rt3 "!vent !$=!ys cre!ted enou1" jobs or =e!$t" to

0ee# economies 1ro=in1 !st enou1"% As ! conseuence3 communist 1overnments !re

dis!##e!rin1 !nd soci!$ist 1overnments "!ve been cuttin1 b!c0 on soci!$ #ro1r!ms !nd

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$o=erin1 t!5es on businesses !nd =or0ers% T"e ide! is to 1ener!te more business 1ro=t" !nd

t"us 1ener!te more revenue%

T"e trend3 t"en3 "!s been or so'c!$$ed c!#it!$ist countries to move to=!rd more soci!$ism !nd

or so'c!$$ed soci!$ist countries to move to=!rd more c!#it!$ism% 7e s!y Hso'c!$$ed bec!use

no country in t"e =or$d is #ure$y c!#it!$ist or #ure$y soci!$ist% A$$ countries "!ve some mi5 o

t"e t=o systems% T"us3 t"e $on1'term 1$ob!$ trend is to=!rd ! b$end o c!#it!$ism !nd

soci!$ism% T"is trend $i0e$y =i$$ incre!se =it" t"e o#enin1 o 1$ob!$ m!r0ets c!used by t"e

Internet% T"e net eect o c!#it!$ist systems movin1 to=!rd soci!$ism !nd soci!$ist systems

movin1 to=!rd c!#it!$ism is t"e emer1ence t"rou1"out t"e =or$d o mi5ed economies%

Mi5ed economies e5ist ="ere some !$$oc!tion o resources is m!de by t"e m!r0et !nd some

by t"e 1overnment% Most countries dont "!ve ! n!me or suc" ! system% I t"e domin!nt =!y

o !$$oc!tin1 resources is by ree'm!r0et mec"!nisms3 t"en t"e $e!ders o suc" countries sti$$

c!$$ t"eir system c!#it!$ism% I t"e domin!nt =!y o !$$oc!tin1 resources is by t"e 1overnment3

t"en t"e $e!ders c!$$ t"eir system soci!$ism% i1ure 9%; com#!res t"e v!rious economic

systems%

Ji0e most ot"er n!tions o t"e =or$d3 t"e United St!tes "!s ! mi5ed economy% T"e de1ree o

1overnment invo$vement in t"e economy tod!y is ! m!tter o some deb!te3 !s it "!s been !t

v!rious times in t"e #!st%(@ T"e 1overnment "!s no= become t"e $!r1est em#$oyer in t"e

United St!tes3 ="ic" me!ns t"!t t"e number o =or0ers in t"e #ub$ic sector is more t"!n t"e

number in t"e entire m!nu!cturin1 sector% T"eres muc" deb!te !bout t"e ro$e o 1overnment

in "e!$t" c!re3 educ!tion3 business re1u$!tion3 !nd ot"er #!rts o t"e economy% T"e

1overnments #erceived 1o!$ is to 1ro= t"e economy ="i$e m!int!inin1 some me!sure o

soci!$ eu!$ity% T"!t 1o!$ is very "!rd to !tt!in% Nonet"e$ess3 t"e b!sic #rinci#$es o reedom

!nd o##ortunity s"ou$d $e!d to economic 1ro=t" t"!t is sust!in!b$e%

*overnments "!ve ! 1re!t eect on businesses in t"e United St!tes !nd t"rou1"out t"e =or$d%

J!ter in t"e c"!#ter3 =e$$ e5#$ore sever!$ issues "!vin1 to do =it" t"e U%S% 1overnment !nd

t"e economy% -ee# in mind !s you re!d t"is m!teri!$ t"!t t"e ound!tion o t"e U%S% economy

is c!#it!$ism% T"e 1overnment serves !s ! me!ns to su##$ement t"!t b!sic system !s it tries to

#romote bot" economic 1ro=t" !nd soci!$ eu!$ity%

T"is is !n interestin1 time to monitor t"e re$!tions"i# bet=een business !nd 1overnment in t"e

United St!tes% T"is is !$so !n interestin1 time to =!tc" "o= t"e Internet !ects ot"er suc"

re$!tions"i#s =or$d=ide% T"e Internet is e5#ected to unite businesses !round t"e =or$d in one

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e$ectronic m!$$ in ="ic" t"e economic systems o t"e individu!$ countries invo$ved =i$$ be

$ess critic!$ to business success t"!n t"ey ever "!ve been beore% T"e De!$in1 =it" C"!n1e

bo5 on e5#$ores t"!t deve$o#ment urt"er%

CURRENT SCENARIO

Ater ! #romisin1 st!rt to t"e dec!de in 9:(:'(( =it" !c"ievement $i0e *DP 1ro=t" o @%; #er

cent3 brin1in1 do=n isc!$ deicit to ;%? #er cent rom .%; o *DP in 9::K'(:3 !s =e$$ !s

cont!inin1 current !ccount deicit to 9%. #er cent rom 9%@ #er cent in 9::K'(:% *DP 1ro=t"

dece$er!ted s"!r#$y to ! nine ye!r $o= o .%< #er cent durin1 9:(('(9%

T"e s$o= do=n =!s re$ected in !$$ sectors o t"e economy but t"e industri!$ sector suered

t"e s"!r#est dece$er!tion ="ic" dece$er!ted to 9%K #er cent durin1 9:(('(9 rom @%9 #er cent

in 9:(:'((% T"e centre s in!nces or 9:(('(9 e5#erienced consider!b$e s$i##!1e !s 0ey

deicit indic!tors turned out to be muc" "i1"er t"!n bud1eted due to s"ort!$$ in t!5 revenues

!nd overs"ootin1 o e5#enditure% T"e 1ross isc!$ deicit 6*D8'*DP r!tio moved u# to 3

on t"e b!c0 o dism!$ #erorm!nce by t"e !rm3 m!nu!cturin1 !nd services sectors3 T"e

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estim!te is $o=er t"!n t"e .%9 #er cent 1ro=t" c$oc0ed in 9:(('(9 !nd is t"e $o=est since

9::9':>3 ="en t"e economy 1re= by ; #er cent on$y%

Accordin1 to t"e CSO s !dv!nce estim!tes3 t"e 1ro=t" in !1ricu$ture !nd !$$ied

!ctivities !re $i0e$y to $o=ered to (%@ #er cent in 9:(9'(>3 com#!red to >%. #er cent in

9:(('(9 !nd m!nu!cturin1 1ro=t" is !$so e5#ected to dro# to (%K #er cent in t"is isc!$3

rom 9%? #er cent !c"ieved durin1 t"e $!st ye!r% Services sector3 inc$udin1 in!nce3

insur!nce3 re!$ est!te !nd business services !re $i0e$y to 1ro= by @%. #er cent durin1

t"is isc!$3 !1!inst ((%? #er cent in t"e $!st isc!$% Me!n="i$e3 minin1 !nd u!rryin1 is

$i0e$y to be s$i1"t$y better !t :%; #er cent3 com#!red to ! ne1!tive 1ro=t" o :%. #er cent

! ye!r !1o% *ro=t" in construction is !$so $i0e$y to be

Per C!#it! Income

T"e #er c!#it! income !t current #rice durin1 9:(9'(> is estim!ted to be

&s% .@3?;? !s com#!red to &s% .(3'1!u1e or me!surin1 $ivin1 st!nd!rd3 is estim!ted to "!ve 1one u# by ((%?

#er cent to &s%

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ARGUMENTS

T"e economists "!ve uestioned t"e v!$idity o t"e entire conce#t o ! Lmi5ed economyL="en understood to be ! mi5ture o soci!$ism !nd c!#it!$ism%

In "is m!1num o#usHuman Action3 Jud=i1 von Mises !r1ued t"!t t"ere c!n be no mi5ture o

c!#it!$ism !nd soci!$ism ' eit"er m!r0et $o1ic or economic #$!nnin1 must domin!te !n

economy% Mises e$!bor!ted on t"is #oint by demonstr!tin1 t"!t3 even i ! c!#it!$ist m!r0et

economy cont!ined numerous st!te'run or n!tion!$i2ed enter#rises3 t"is =ou$d not m!0e t"e

economy Lmi5edL bec!use t"e e5istence o suc" or1!ni2!tions does not !$ter t"e und!ment!$

c"!r!cteristics o t"e m!r0et economy% T"ese #ub$ic$y'o=ned enter#rises =ou$d sti$$ be

subject to m!r0et soverei1nty3 =ou$d "!ve to !cuirec!#it!$ 1oodst"rou1" m!r0ets3 strive to

m!5imi2e #roits 6or !t t"e $e!st try to minimi2e costs83 !nd uti$i2e monet!ry !ccountin1 or

economic c!$cu$!tion%

C$!ssic!$ !nd ort"odo5 M!r5ist t"eorists !$so dis#ute t"e vi!bi$ity o ! mi5ed economy !s !

Lmidd$e 1roundL bet=een soci!$ism !nd c!#it!$ism% rom t"is #ers#ective3 irres#ective o

enter#rise o=ners"i#3 eit"er t"e c!#it!$ist$!= o v!$ue!nd !ccumu$!tion o c!#it!$drives t"e

economy3 or conscious #$!nnin1 !nd non'monet!ry orms o v!$u!tionu$tim!te$y drive t"e

economy% T"ereore3 e5t!nt Lmi5ed economiesL in t"e 7estern =or$d3 rom t"e *re!t

De#ression on=!rds3 !re sti$$ unction!$$y c!#it!$ist bec!use t"ey o#er!te on t"e b!sis o

c!#it!$ !ccumu$!tion%

http://en.wikipedia.org/wiki/Capital_goodhttp://en.wikipedia.org/wiki/Capital_goodhttp://en.wikipedia.org/wiki/Law_of_valuehttp://en.wikipedia.org/wiki/Law_of_valuehttp://en.wikipedia.org/wiki/Accumulation_of_capitalhttp://en.wikipedia.org/wiki/Calculation_in_kindhttp://en.wikipedia.org/wiki/Capital_goodhttp://en.wikipedia.org/wiki/Law_of_valuehttp://en.wikipedia.org/wiki/Accumulation_of_capitalhttp://en.wikipedia.org/wiki/Calculation_in_kind

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AGAINST

One dis!dv!nt!1e o mi5ed economiesis t"!t t"ey tend to $e!n more to=!rd1overnment contro$ !nd $ess to=!rd individu!$ reedoms%

7"i$e most modern orms o 1overnment !re consistent =it" some orm omi5ed

economy3 t"e mi5ed economyis most common$y !ssoci!ted =it" soci!$ democr!tic

#!rties or n!tions run by soci!$ democr!tic 1overnments%

Some critics o contem#or!ry soci!$ democr!cy!r1ue t"!t ="en soci!$ democr!cy

!b!ndoned M!r5ism it !$so !b!ndoned soci!$ism!nd "!s become3 in eect3 ! $iber!$

c!#it!$ist movement%

M!r5i!n soci!$ists !r1ue t"!t bec!use soci!$ democr!tic #ro1r!ms ret!in t"e c!#it!$ist

mode o #roduction t"ey !$so ret!in t"e und!ment!$ issues o c!#it!$ism3inc$udin1

cyc$ic!$ $uctu!tions3 e5#$oit!tion !nd !$ien!tion%

T"e democr!tic soci!$ist critiue o soci!$ democr!cy st!tes t"!t c!#it!$ism cou$d

never be suicient$y L"um!ni2edL !nd !ny !ttem#t to su##ress t"e economic

contr!dictions o c!#it!$ism =ou$d on$y c!use t"em to emer1e e$se="ere%

M!r0etsoci!$ists critici2e soci!$ democr!cy or m!int!inin1 ! #ro#erty'o=nin1

c!#it!$ist c$!ss3 ="ic" "!s !n !ctiveinterestin reversin1 soci!$ democr!tic #o$icies !nd

! dis#ro#ortion!te !mount o #o=er over society to in$uence 1overnment!$ #o$icy !s !c$!ss%

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