Development Planning in a Mixed Economy

Abstract

The term ‘mixed economy’ can be defined in several different ways, depending on the criterion used: organisation of production, resource allocation or ownership of means of production. Thus an economy in which production activity is carried on in both private and public units is a ‘mixed’ economy. However, once we admit the provision of services in the set of production activities, every economy in the world where there is a government becomes a mixed economy by this definition, though the extent of public production (say, as measured by the share of value added by public sector in national income) varies between economies. Henry Tulkens (1976) defines a mixed economy as an organisation of society in which the resource allocation decisions belong in part to the private domain and are determined by personal tastes and opportunities and in part to the public domain in which groups of individuals take decisions that affect other individuals who are nevertheless bound by these decisions.2 This too, is not altogether satisfactory since a class of decisions which are private in everyday usage, such as decisions in a household or a family, become similar to public decisions according to this definition, since these are taken either by groups of elders of the household or by the household head and all members of the household are bound by them. ownership of means of production, a mixed economy is one in which there are substantial amounts of both private and public ownership (Grossman, 1974).