A Mixed Economy

Recipe for a Good Society

Recipe for a Good Society

Ingredients:

1.      People who take actions based on their moral code which is shaped by their history, their beliefs, and there tie to each other as a society.

2.      Institutions which are designed and developed over time by the people in the society to govern their collective actions as a group.  These institutions include:

a.    A system of laws to set rules on how the people in the society interact -  This institution requires a method of collective action and agreement on the rules.  This power is described as the legislative function.  The people in the society must agree on how such “legislative bodies” are established and who represents them in the process.  We describe this institution as “government” even though there may be many levels where such decisions are made.  In addition to their legislative duty, these governments must also represent the people in addressing problems that individuals acting alone cannot resolve.

b.    A judicial system to enforce the rules and punish those who do not comply.

c.     An economic system to determine how the resources of the society are to be used and how the proceeds of productive action are to be distributed -   The fundamental goal of the economic system is to provide a mechanism to provide the opportunity for the members of the society to survive.  As the society progresses, the members of the society may also wish to provide the opportunity for individuals to prosper at some level above subsistence.

When mixing these ingredients it must be remembered that the moral attitudes of the members of the society determine what is acceptable and what is not.  If the economic system does not provide the production of desired output, there must be some adjustment.  This is accomplished through collective action of the people - in their governments and in other institutions of society.  For example, if the behavior of individuals buying and selling in the market does not provide a socially desirable level of a “good” such as education, the society may decide to collectively provide that “good”.  This is an example of a “market failure” because the benefits of educating our populace accrue to society as a whole, not only to those being educated.  Similarly, if there are members of the society who have nothing to sell in the “market” and as a consequence would not survive, the other members may choose to assist these individuals by sharing the fruits of their labor.  This we describe as a “redistribution” of income.   A society is a conglomeration of individuals who must work together to provide for their members, effectively use their resources and provide for the future members of that society.

Elba K. Brown-Collier, Ph.D.

Retired Professor of Economics

Elba has a B.A. and M.A. in economics from Texas Tech University.  She received her Ph.D. from Duke University in 1978.  She has taught economics at Texas Tech University, the University of North Carolina in Greensboro, and the University of Texas at El Paso. She is a past president of the Association for Social Economics and now serves as the Executive Secretary of their Executive Council.  She has published in several economic journals.