{"id":117,"date":"2014-09-04T05:48:51","date_gmt":"2014-09-04T05:48:51","guid":{"rendered":"https:\/\/courses.candelalearning.com\/internationalbusiness1xmaster\/?post_type=chapter&p=117"},"modified":"2015-02-17T19:56:42","modified_gmt":"2015-02-17T19:56:42","slug":"reading-the-disadvantages-of-mixed-economies","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-fmcc-internationalbusiness\/chapter\/reading-the-disadvantages-of-mixed-economies\/","title":{"raw":"Reading: The Disadvantages of Mixed Economies","rendered":"Reading: The Disadvantages of Mixed Economies"},"content":{"raw":"
\r\n
\r\n

The disadvantages of mixed economies can be understood through examining criticisms of social democracy.<\/h2>\r\n<\/div>\r\n
\r\n
\r\n

KEY\u00a0points<\/h3>\r\n
\r\n
\r\n
    \r\n\t
  • One disadvantage of mixed\u00a0economies\u00a0is that they tend to lean more toward government control and less toward individual freedoms.<\/li>\r\n\t
  • While most modern forms of government are consistent with some form of mixed economy, the mixed economy is most commonly associated with social democratic parties or nations run by social democratic governments.<\/li>\r\n\t
  • Some critics of contemporary\u00a0social democracy\u00a0argue that when social democracy abandoned Marxism it also abandoned\u00a0socialism\u00a0and has become, in effect, a liberal capitalist movement.<\/li>\r\n\t
  • Marxian socialists argue that because social democratic programs retain the capitalist mode of production they also retain the fundamental issues of capitalism, including cyclical\u00a0fluctuations, exploitation and alienation.<\/li>\r\n\t
  • The democratic socialist critique of social democracy states that capitalism could never be sufficiently \"humanized\" and any attempt to suppress the economic contradictions of capitalism would only cause them to emerge elsewhere.<\/li>\r\n\t
  • Market socialists criticize social democracy for maintaining a property-owning capitalist class, which has an\u00a0active\u00a0interest\u00a0in reversing social democratic policies and a disproportionate amount of power over society to influence governmental policy as a class.<\/li>\r\n<\/ul>\r\n<\/div>\r\n<\/section><\/div>\r\n<\/div>\r\n<\/div>\r\n
    <\/div>\r\n
    \r\n
    \r\n

    Terms<\/strong><\/h4>\r\n
      \r\n\t
    • Social democracy<\/em>:\u00a0 a moderate political philosophy or ideology that aims to achieve socialistic\u00a0goalswithin capitalist society such as by means of a strong welfare state and regulation\u00a0of private industry.<\/li>\r\n\t
    • Regulation<\/em>:\u00a0 A law or administrative rule, issued by an organization, used to guide or prescribe the conduct of members of that organization.<\/li>\r\n\t
    • Mixed economy<\/em>:\u00a0 Mixed economy is an\u00a0economic system\u00a0in which both the state and private sector direct the economy, reflecting characteristics of both\u00a0market\u00a0economies and planned economies.<\/li>\r\n<\/ul>\r\n
      \r\n

      Examples<\/strong><\/h4>\r\n
        \r\n\t
      • Many pubs in Britain are suffering due to drinking and smoking regulations imposed by the government for the\u00a0good\u00a0of society. As a result, many question whether pubs have a future.<\/li>\r\n<\/ul>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n
        <\/div>\r\n
        \r\n
        \r\n

        Disadvantages of Social Democratic Policy In a\u00a0Mixed Economy<\/strong><\/h3>\r\nWhile most modern forms of government are consistent with some form of mixed economy, given the broad range of economic\u00a0systems\u00a0that can be described by the term, the mixed economy is most commonly associated with social democratic parties or nations run by social democratic governments. In contemporary terms,\u00a0\"social democracy\" usually refers to a social corporatist\u00a0arrangement and a welfare state\u00a0in developed capitalist economies.\r\n\r\nCritics of contemporary social democracy argue that when social democracy abandoned Marxism it also abandoned socialism and has become, in effect, a liberal capitalist movement. They argue that this has made social democrats similar to center-left, but pro-capitalist groups, such as the U.S. Democratic Party .\r\n\r\n
        \"\"\r\n
        The Democratic Party Logo<\/div>\r\n
        The Democratic party in the United States is seen by some critics of contemporary social democracy (and mixed economies) as a watered-down, pro-capitalist movement.<\/figcaption><\/figure> \r\n\r\nMarxian socialists argue that because social democratic programs retain the capitalist mode of production they also retain the fundamental issues of capitalism, including cyclical fluctuations, exploitation and alienation. Social democratic programs intended to ameliorate capitalism, such as unemployment benefits\u00a0or taxation on profits and the wealthy, create contradictions of their own through limiting the\u00a0efficiency\u00a0of the capitalist system by reducing\u00a0incentives\u00a0for capitalists to invest in production.\r\n\r\nOthers contrast social democracy with democratic socialism by defining the former as an attempt to strengthen the welfare state and the latter as an alternative socialist economic system to capitalism. The democratic socialist critique of social democracy states that capitalism could never be sufficiently \"humanized\" and any attempt to suppress the economic contradictions of capitalism would only cause them to emerge elsewhere.\u00a0For example, attempts to reduce unemployment too much would result in\u00a0inflation, and too much job security would erode labor discipline.\u00a0In contrast to social democracy, democratic socialists advocate a post-capitalist economic system based either on market socialism combined with workers self-management, or on some form of participatory-economic\u00a0planning.\r\n\r\nSocial democracy can also be contrasted with market socialism.\u00a0While a common goal of both systems is to achieve greater social and economic equality, market socialism does so by changes in\u00a0enterprise\u00a0ownership and management, whereas social democracy attempts to do so by government-imposed taxes and subsidies on privately owned enterprises. Market socialists\u00a0criticize social democracy for maintaining a property-owning capitalist class, which has an active interest in reversing social democratic policies and a disproportionate amount of power over society to influence governmental policy as a class.\r\n\r\n<\/div>\r\n<\/div>\r\n
        \r\n

        <\/h3>\r\n
        \r\n

        GLOSSARY<\/h3>\r\n
        \r\n
        \r\n\r\nActive<\/strong>\r\n\r\nHaving the power or quality of acting; causing change; communicating action or motion; acting.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nBenefit<\/strong>\r\n\r\nAn advantage, help or aid from something. Employee benefits and (especially in British English) benefits in kind (also called fringe benefits, perquisites, perqs or perks) are various non-wage compensations provided to employees in addition to their normal wages or salaries.\r\n
        <\/div>\r\n
        \r\n\r\nCapitalism<\/strong>\r\n\r\nA socio-economic system based on the abstraction of resources into the form of privately-owned money, wealth, and goods, with economic decisions made largely through the operation of a market unregulated by the state.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nEconomic system<\/strong>\r\n\r\nAn economic system is the combination of the various agencies, entities (or even sectors as described by some authors) that provide the economic structure that defines the social community.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nEconomy<\/strong>\r\n\r\nCollective focus of the study of money, currency and trade, and the efficient use of resources.\u00a0The system of production and distribution and consumption. The overall measure of a currency system; as the national economy.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nEfficiency<\/strong>\r\n\r\nThe extent to which a resource, such as electricity, is used for the intended purpose; the ratio of useful work to energy expended.\u00a0The extent to which time is well used for the intended task. Improved efficiency was a principle goal of progressives, one they thought attainable by the application of scientific and rational thought to social problems.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nEnterprise<\/strong>\r\n\r\nA company, business, organization, or other purposeful endeavor.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nFluctuation<\/strong>\r\n\r\nA motion like that of waves; a moving in this and that direction.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nGoal<\/strong>\r\n\r\nA desired result that one works to achieve.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nGood<\/strong>\r\n\r\nAn object produced for market.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nIncentive<\/strong>\r\n\r\nSomething that motivates, rouses, or encourages.\u00a0It is used to motivate individuals (often, employees) for better performance by providing financial or other types of rewards.\u00a0An anticipated reward or aversive event available in the environment.\u00a0Something that motivates an individual to perform an action.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nInflation<\/strong>\r\n\r\nIn economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.\u00a0An increase in the general level of prices or in the cost of living.\u00a0An increase in the quantity of money, leading to a devaluation of existing money.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nInterest<\/strong>\r\n\r\nThe price paid for obtaining, or price received for providing, money or goods in a credit transaction, calculated as a fraction of the amount or value of what was borrowed. A great attention and concern from someone or something; intellectual curiosity.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nLead<\/strong>\r\n\r\nPotential opportunity for a sale or transaction, a potential customer.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nManagement<\/strong>\r\n\r\nThe act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively.\u00a0Administration; the process or practice of managing\u00a0administration; the process or practice of managing.\u00a0Administration; the process or practice of managing.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nMarket<\/strong>\r\n\r\nA group of potential customers for one's product.\u00a0One of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nMixed economies<\/strong>\r\n\r\nA system in which both the state and private sector direct the way goods and services are bought and sold.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nPlanning<\/strong>\r\n\r\nThe act of formulating a course of action, or of drawing up plans.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nPrice<\/strong>\r\n\r\nThe price is the amount a customer pays for the product.\u00a0The quantity of payment or compensation given by one party to another in return for goods or services.\u00a0The cost required to gain possession of something.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nProduct<\/strong>\r\n\r\nAny tangible or intangible good or service that is a result of a process and that is intended for delivery to a customer or end user. Anything, either tangible or intangible, offered by the firm as a solution to the needs and wants of the consumer; something that is profitable or potentially profitable; goods or a service that meets the requirements of the various governing offices or society.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nProfits<\/strong>\r\n\r\nCollective form of profit.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nRecession<\/strong>\r\n\r\nA period of reduced economic activity.\u00a0A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, and industrial production.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nSecurity<\/strong>\r\n\r\nProof of ownership of stocks, bonds, or other investment instruments. The condition of not being threatened, especially physically, psychologically, emotionally, or financially.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nSocialism<\/strong>\r\n\r\nAny of various economic and political philosophies that support social equality, collective decision-making, distribution of income based on contribution and public ownership of productive capital and natural resources, as advocated by socialists.\u00a0A political philosophy based on principles of community decision making, social equality, and the avoidance of economic and social exclusion, with preference to community goals over individual ones.\u00a0The intermediate phase of social development between capitalism and full communism. This is a strategy whereby the state has control of all key resource-producing industries and manages most aspects of the economy, in contrast to laissez-faire capitalism.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nSystem<\/strong>\r\n\r\nA whole composed of relationships among the members.\u00a0The part of the universe being studied, arbitrarily defined to any size desired.\r\n
        <\/div>\r\n<\/div>\r\n
        \r\n\r\nWelfare state<\/strong>\r\n\r\nA social system in which the state takes overall responsibility for the welfare of its citizens, providing health care, education, unemployment compensation, and social security.\r\n\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/section><\/div>\r\n<\/div>","rendered":"
        \n
        \n

        The disadvantages of mixed economies can be understood through examining criticisms of social democracy.<\/h2>\n<\/div>\n
        \n
        \n

        KEY\u00a0points<\/h3>\n
        \n
        \n