MIXED ECONOMIES Mixed economies – some combination of market, command, and even traditional – are the norm throughout the modern world → mixed economies can take many forms, but a basic classification of an economic system is based on the amount and degree of government control vs. individual freedom

MIXED MARKET ECONOMIES Though they have many advantages, markets can’t always meet the needs of the population → for example, during the Great Depression the USA created unemployment insurance, minimum wage, Social Security, and the FDIC, all government programs, thus becoming a mixed market economy

MIXED MARKET ECONOMIES → when a country moves from a socialist model in the direction of the market, it is said to be in transition (this is done by privatizing: turning government ownership over to the private sector) * Beginning in the late 1970s China began a transition (“capitalism with Chinese characteristics), but as we’ll see, still has a large degree of gov’t control

MIXED MARKET ECONOMIES ** Like China, many countries today such as North Korea and Cuba have begun to allow elements of capitalism because it generates wealth, satisfies the population, secures their leadership

MIXED SOCIALIST ECONOMIES Many countries have adopted elements of capitalism, but the government still owns and controls most of the resources → China is controlled by the communist party and its gov’t owns the factors of production, but it has also embraced markets, competition, profit and international trade

MIXED SOCIALIST ECONOMIES → when a country moves from a market model towards a socialist one, it does so by nationalizing (the gov’t takes over) private industry * See Cuba under Castro and Venezuela under Chavez

ECONOMIC TRANSITIONS The dominant trend in modern times has been the transition from communist/socialist economies towards capitalism → many different forms of capitalism exist because countries have different social and cultural values

ECONOMIC TRANSITIONS Countries such as those from the former Soviet Union have had a long, difficult transitioning process, but have come a long way → when a country transitions, the population is not used to competition and many lose formerly secure jobs

ECONOMIC TRANSITIONS → compared to command economies, these countries have a higher GDP per capita, but not as high as those of market-based economies such as the U.S. * GDP per capita refers to GDP per person; GDP measures a country’s economic size and dividing its population into its GDP gives you its GDP per capita