Economic System of Pakistan
Economic System of Pakistan
In Pakistan, we have neither of the two extreme systems but our economic system is a via media compromise of both the systems of capitalistic and socialistic patterns. It can safely be said that it is a mixed economy.
Concept of Mixed Economy
Mixed Economy is an economic system, which combines in itself the elements of socialism as well as of capitalism. It is an economic system, which is planned and directed partly by the state and by private enterprise. Under the “Mixed Capitalist System” or “Mixed Enterprise System”, both State and private institutions exercise economic control.
Panacea of the Defects of Capitalism and Socialism
A privately owned capitalist system cannot guarantee full employment and elimination of poverty. It may lead to unequal distribution of wealth and air and water pollution. It produces trade cycles. i.e. sometimes depression and at other times an inflationary situation. On the other hand, a government owned business system might stifle innovation and invention. It may not be quickly responsive to public desired for products and services and may even limit the freedom of the people. It is so realized that economic development cannot be achieved at the desired rate of growth without any active government help and guidance. That is why most of the capitalistic and socialistic economics of world have become mixed economics in order to minimize the evils of unadulterated capitalism and socialism to accelerate economic growth.
Salient Features of Economic System of Pakistan
1. Co-Existence of the Public and Private Sectors
In the economy both public sector and the private sector function together. In one part are those industries, the responsibility for the development of which is entrusted to the state and they are owned and managed by the state. Other industries are left under the authority and control of the private entrepreneurs. The private sector is free to develop them and start new enterprises in this sector.
2. Role of Price System And Government Directives
So far as the public sector is concerned, economic decisions relating to production, prices and investment are made by the government or authorities appointed by the government. In industries in the private sector, the decisions regarding investment, production, prices, etc, are made by private entrepreneurs with the object of making maximum profit on the basis of the price system.
3. Government Regulation and Control of Private Sector
In a mixed economy, the government adopts necessary measures to regulate and influence the private sector, so that it may function in the interests of the nation rather than exclusively in the interests of the private entrepreneurs.
4. consumer’s Sovereignty Protected
The consumers are free to buy commodities of their choice and the private entrepreneurs produce commodities according to consumer’s demand or preferences, although the government can control their prices in public interest so that they can be prevented from rising unduly high. Besides, the government can also ration the commodities in short supply so that the limited available quantities can be fairly distributed.
5. Government Protection of Labour
In a mixed economy, Government saves labour from exploitation by the exploitation by the capitalists. Several factory acts have been passed to regulate the working conditions of labour. The government also takes necessary steps to prevent industrial disputes.
6. Reduction of Economic Inequalities
The governments in mixed economics take necessary steps for the reduction of inequalities of income and wealth for promoting social justice and social stability and social welfare, increasing production and for providing equal opportunities for all.
7. Control of Monopoly
A charge against monopolies is that they reduce output and raise prices in order to get maximum profit leading to miss-allocation of productive resources of the community, economic inequalities, and unemployment and hampering of industrial development.
The government tries to control and regulate monopolies in order to remove the above evils and make them function in public interest. Also, when the government considers it necessary in public interest, it takes over monopolies and operates them in public interest.
8. Government Provision of Public Services
The government provides certain indispensable public services without which community life would be unthinkable and which by their nature cannot appropriately be left to private enterprises. Examples are the maintenance of national defence, of internal law and order and the administration of justice etc.