Mixed economy is an economic system that accommodates two different ideologies: capitalism and socialism. Therefore, it is an economic system where the means of production of goods and services, distribution and exchange are in the hands of both the state (government) and private individuals.


Characteristics or features of mixed Economy

  1. Competition: There are some degree of competition in the production and distribution of goods and services in the system
  2. State and private individuals: They share identical views on issues of national importance and equally contribute towards economic development of the state.
  3. Means of production: The means of production, distribution and exchange of goods and services are in the hands of both the individuals and the state.
  4. Rule of law: The application of the rule of law is guaranteed and respected.
  5. Class system: There is the upper, middle and lower classes in the system. In fact, there is political and economic inequality.
  6. Democracy: Most of the institutions for political and economic developments are democratised.


The difference between Capitalism and Socialism



  1. The economy is in the hands of private individuals.
  2. Political power is highly decentralised.
  3. The economy of the state is not centrally organised.
  4. There is duplication of economic activities and therefore waste is inevitable.
  5. The market is open and competitive.
  6. The system is based on class- upper, middle and lower classes.
  7. Economic power determines political power.
  8. The system is democratic, two or more political parties exist; free and fair elections are conducted and the rule of law is in operation etc.



  1. The state controls the economy.
  2. Political power is highly centralised.
  3. There is central planning of the economy.
  4. Duplication and waste are avoided because of central planning.
  5. The market is not open, it is a state monopoly.
  6. It is a classless society.
  7. Political power is used to control and shape economic power.
  8. The system is with one political party in existence; there is violation of rights of individuals etc.

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