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COMMAND ECONOMY: An economy in which the government uses its coercive powers (such as command and control) to answer the three questions of allocation. This is the real world version of the idealized theoretical pure command economy. While in this real world version some allocation decisions are undertaken by markets, the vast majority are made through central planning. The two most notable command economies of the 20th century were the communist/socialist economic systems of China and the Soviet Union.
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                           MIXED ECONOMY: An economy, or economic system, that relies on both markets and governments to allocate resources. Every economy in the real world regardless of their common designation (such as capitalism, socialism, or communism) make use of both markets and governments and is technically a mixed economy. While, in theory, resource allocation could be undertaken exclusively through markets or exclusively through governments, in the real world all economies rely on a mix of both markets and governments for allocation decisions. Markets allocate resources through voluntary choices made by living, breathing people. Governments force allocation through involuntary taxes, laws, restrictions, and regulations. While everyone likely has their own personal favorite when it comes to using of markets or government to do the deed of allocation, both institutions play vital roles in a mixed economy.MarketsThe key term for markets is voluntary. Markets are the voluntary exchange of goods. No one forces a person to buy a hot fudge sundae for breakfast or work as a sales clerk at the jogging shoe boutique. People do a market exchange because they choose to.An economy that uses nothing but markets to allocate resources is called a pure market economy. This is a theoretical ideal that does not actually exist in the real world. But it provides an excellent benchmark for comparison with real world economies. Economists love benchmarks such as this, especially when practicing normative economics. GovernmentsThe key term for government allocation is involuntary. Governments set forth the laws and rules. If people do not follow the rules, then they are punished. Governments can punish those who do not follow the rules because... well... because that is what they do. Given a choice, people probably would rather NOT pay taxes or have their cars safety inspected. They follow government rules because they have to, because it is the law.An economy that uses nothing but government to allocate resources is called a pure command economy. This is also a theoretical extreme that does not actually exist in the real world. But like a pure market economy, it provides a benchmark for comparison with real world economies. A Real World Continuum| Mixed Economies |  |
If pure market economies and pure command economies are theoretical ideals that do not actually exist in the real world, where does that leave real world economies? Somewhere in the middle. Real world economies form a continuum bounded by these two theoretical extremes.However, noting that real world economies are real and not theoretical ideals does not say much. While all real world economies are mixed, some mixed economies tend to use markets more than governments and others rely more on governments than markets. For example, capitalism is the popular term for a market-oriented economy that leans heavily to the market end. Socialism and communism are mixed economies that lean more (often a lot more) toward government control. Goals and PoliciesAn inherent dimension of a mixed economy is the pursuit of economic goals using assorted government policies. The five basic goals that are generally desired by society are: (1) full employment, (2) stability, (3) economic growth, (4) efficiency, and (5) equity. Governments take primary responsibility in the pursuit of these five goals with a wide variety of economic policies that assist, guide, control, and regulate voluntary market exchanges. Such policies take the form of: (1) laws passed by legislatures, (2) administrative actions taken by elected executives, (3) rules set forth by government agencies, and (4) decisions made through the courts.
Recommended Citation:MIXED ECONOMY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: September 25, 2023].
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RED AGGRESSERINE
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Today, you are likely to spend a great deal of time at a crowded estate auction seeking to buy either a flower arrangement for that special day for your mother or a New York Yankees baseball cap. Be on the lookout for the happiest person in the room.
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The first "Black Friday" on record, a friday marked by a major financial catastrophe, occurred on September 24, 1869 -- A FRIDAY -- when an attempted cornering of the gold market induced a financial crises and economy-wide depression.
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"If I'm selecting a group, the first thing I look for is a record of achievement . . . If (candidates achieve) in small things, there's a very good chance they'll perform well in big things. " -- Edmund Hillary, explorer
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DCF
Discounted Cash Flow
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