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Definition

Mixed capitalism is an economic system which combines elements of capitalism and socialism. This means that consumers are given a significant amount of freedom in the labour market and the retail market, but that the government taxes them to provide some socialist services such as a level of medical cover, basic schooling and some type of unemployment remuneration. The more the country leans towards socialism the higher its taxes will be and the less room there will be for entrepreneurs. The opposite is also true. As an economy becomes more capitalist more and more functions are relegated to private enterprise and the government assumes a smaller and smaller role. The famous economist, Adam Smith, proposed that the least government is the best government on the basis that private enterprise is always more efficient than government. In South Africa our economy is a mixed capitalist system which leans towards socialism. The government pension system absorbs a large part of government revenue to provide children and people over the age of 60 with a basic income. Many of the state-owned enterprises in South Africa do not need to be government-owned and controlled. Perhaps the best example is SAA which has cost taxpayers a great deal of money and has been very inefficiently run.

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