Merits of Mixed Economy:
1. Rapid Economic Growth: The best advantage of mixed economy is that it promotes rapid economic growth. Thus, both public requirements and private needs are taken care of.
2. Balanced Economic Growth: Mixedism promotes balanced growth of the economy. It promotes balanced growth between agriculture and industry, consumer goods and capital goods, rural and urban etc.
3. Proper Utilization of Resources: In a mixed economy, the government can ensure proper utilization of resources. The government controls most of the important activities directly and the private sector indirectly.
4. Economic Equality: The government uses progressive rates of taxation for levying income tax to bring about economic equality.
5. Special Advantages to the Society: The government safeguards the interest of the workers and weaker sections by legislating on minimum wages, and rationing, establishing fair price shops and formulating social welfare measures.
Demerits of Mixed Economy
1. Lack of Coordination: The greatest drawback of mixedism is lack of coordination between public sector and private sector. As both work with divergent motives, it creates many coordination related problems.
2. Competitive Attitude: It is expected that both government and private should work with a complementary spirit towards the welfare of the society, but in reality they are competitive in their activities.
3. Inefficiency: Most of the public sector enterprises remain inefficient due to lethargic bureaucracy, red tapism and lack of motivation.
4. Fear of Nationalization: In a mixed economy, the fear of nationalization discourages the private entrepreneurs in their business operations and innovative initiatives.
5. Widening Inequality: Ownership of resources, laws of inheritance and profit motive of people widens the gap between rich and poor. Ultimately the inequality of capitalism and inefficiency of socialism are found in mixed economies.