A system that has combined aspects of both socialism and capitalism is called Mixed Economy system. This type of system aims to protect private properties and it also allows the level of economic freedom in the use of capital. Similarly, it also allows government interference in all the activities related to the economy for the purpose of achieving the social aims. The neoclassical theory suggests that mixed economies are not as efficient as pure free markets, but according to some proponents of government interventions the basic conditions which are required for efficient operations in the free market. An example is equality in information and participants of the rational market are not achievable in practical application.
Introduction to Mixed Economic System
Most of the modern economies are comprised of a synthesis of more than two economic systems with the economies along the continuum falling at some point. The public sector and private sector work alongside each other. However, both may still have to compete for the same resources which are limited. One of the very important features of mixed economy systems is that the private sector is not blocked from profit-seeking. However, the businesses are well-regulated and the industries which provide a public good might get nationalized.