Title: Mixed Economic System Definition
Headings: Mixed Economic System
Mixed Economic System
What is a Mixed Economic System?
Key Takeaways
Mixed Economic System
Understanding Mixed Economic Systems
What Is the Difference Between a Mixed Economy and Free Markets?
Difference From Socialism
History and Criticism of the Mixed Economy

Content: Classical and Marxist theorists say that either the law of value or the accumulation of capital is what drives the economy, or that non-monetary forms of valuation (i.e. transactions without cash) are what ultimately propel the economy. These theorists believe that Western economies are still primarily based on capitalism because of the continued cycle of accumulation of capital. Austrian economists starting with Ludwig von Mises have argued that a mixed economy is not sustainable because the unintended consequences of government intervention into the economy, such as the shortages that routinely result from price controls, will consistently lead to further calls for ever increasing intervention to offset their effects. This suggests that the mixed economy is inherently unstable and will always tend toward a more socialistic state over time. Beginning in the mid 20th century, economists of the Public Choice school have described how the interaction of government policy makers, economic interest groups, and markets can guide policy in a mixed economy away from the public interest. Economic policy in the mixed economy unavoidably diverts the flow of economic activity, trade, and income away from some individuals, firms, industries, and regions and toward others. Not only can this create harmful distortions in the economy by itself, but it always creates winners and losers. This sets up powerful incentives for interested parties to take some resources away from productive activities to use instead for the purpose of lobbying or otherwise seeking to influence economic policy in their own favor. This non-productive activity is known as rent-seeking .