Is there a middle ground between the two ideal-type political economics (a market economy and a command economy)? If a middle ground exists, give examples of countries with that type of economic system.
What will be an ideal response?
The ideal answer should include:
1. We can distinguish two ideal-type political economies: market economy and command economy. These can be thought of as two ends of a spectrum. There exists a middle ground between the two - a mixed or hybrid economic system.
2. A mixed system features the following: a) both state and private actors control factors of production, b) the system is mainly demand -oriented, but some sectors are state-controlled, c) the market sets the value of goods, but the state can engage in regulation of key sectors, d) the market is the main decision-maker, but the state may intervene in some cases to ensure that certain actors have access to particular goods, and e) the state attempts to strike balance between market economy and command economy.
3. Examples of a mixed or hybrid economic system: Sweden, Finland, and France.
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