does not avoid the market distorting effects of government intervention 
may succumb to regulatory capture as business interests campaign for favorable regulations higher taxes to pay for welfare state policies history and criticism of the mixed economythe term mixed economy gained prominence in the united kingdom after world war ii even though many of the policies associated with it at the time were first proposed in the 1930s many of the supporters were associated with the british labour party critics argued that there could be no middle ground between economic planning and a market economy and many even today question its validity when they believe it to be a combination of socialism and capitalism those who believe the two concepts don t belong together say either market logic or economic planning must be prevalent in an economy 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 4 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 policymakers 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 5not 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 real world examplestechnically almost every country can be considered a mixed economy since it is difficult for a country to sustain economic activity without some degree of government intervention or free market activity even north korea allows a limited number of private markets but the best examples of mixed economies are those countries where the government takes a significant role in directing the course of the market economy many countries in western europe are considered mixed economies because the government offers generous welfare programs and tight regulations on business activity the united states for example has many social programs to benefit the poor as well as several government owned enterprises conversely many socialist oriented countries can be considered mixed economies because of their large private sectors both china and vietnam have successfully privatized many of their state owned enterprises while retaining a leading role for the government in economic affairs 