Crony Capitalism IS Capitalism


It is the only sort of capitalism that has ever existed anywhere. The people who chant, "But that's not real capitalism, that's crony capitalism!" should really be saying, "But that is not the fantasy capitalism that exists only in my head, that's real capitalism!"



[Inspired by Matt Bruenig: "Under 'crony capitalism' (more commonly referred to as 'capitalism')..."]


16 comments:

  1. The best to explain it, I think, is that it is capitalism with corruption. A few grants of privilege here and there is what's part of an imperfect world.

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  2. There is a difference between a society where favours are granted to a very small elite and a society where opportunities exist much more widely. Crony capitalism is certainly a variant of capitalism, but it not the only variant.

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    1. Can you point to any existing variant?

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    2. Existing variant of what? The point is surely not that political favours never matter, but the scale at which they do. Government-commercial relations operated somewhat differently in say, the Philippines under Marcos and Indonesia under Suharto compared to C19th US or UK. I would distinguish between a situation where there is a very tight commercial-political elite where individual political favours are crucial to any serious commercial success; social mercantilism, where regulatory and other structures favour a narrow elite in a somewhat more systematic fashion (e.g. most of Latin America) and more open societies where elements of the above may be present, but are not dominant.

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  3. It's a fair point when directed at those who believe fantasy capitalism can be actualized. But it's misleading if we think about it as some do, that cronyism is a "downside" of capitalism.

    Cronyism is an unavoidable feature of real-world social systems.

    Cronyism is not an essential feature of capitalism specifically.

    It's like saying "buggy software IS software" (at least for 99% of software).

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  4. Even if every "actually existing" capitalist system has been "cronyist" to some degree, there a varying degrees of cronyism and it is constructive to argue that the level of cronyism should be reduced or at least not allowed to rise. The current regime in Washington seems to aspire to a higher level of cronyism than has been seriously suggested since FDR's first term, under the NRA (which the Supreme Court struck down).

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    1. Ian, you have my full support here! I completely support reducing the incidence of cronyism. For instance, shop local stores, that are not getting big favors from the federal government, when you can, and avoid the large chains, when you can.

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  5. A perfect circle has never existed anywhere. That doesn't mean it isn't a useful concept, or that existing objects can't be more or less circular.

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    1. See my remark to Ian: I am totally down with this. And I don't to stain the use of the theoretical concept. But I like the way Mises phrased it: The *imaginary* construction of the pure market economy.

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  6. As I understand it the term refers to things like no bid public contracts etc. Specifically the peculation of public funds, or abuse of government powers to a similar end. This is a useful phrase. Likewise, some churches are more simoniacal than others.

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    1. Again, I am all in favor of reducing this sort of nonsense as much as we can. But since I think complete egalitarianism is destructive, I accept that any market distribution is going to leave some people more rich and powerful, and they will work to game the system in their favor.

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    2. Gene: I am totally with you with regards to egalitarianism being destructive.

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  7. Gene, you say you are "totally down" with Josiah's comment, without really explaining why it doesn't blow up the whole point of your post. That's why Josiah wrote it, after all--prima facie it challenges your rhetorical point.

    E.g. would a Euclidean be embarrassed by this?

    Imperfect Circles ARE Circles

    It is the only sort of circles that have ever existed anywhere. The people who chant, "But our proofs refer to *real* circles!" should really be saying, "But the circles you are pointing to are not the fantasy circles that exist only in my head, those are real-world circles!"

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    1. All real circles are imperfect, Bob: it is only ideal circles that are perfect.

      Now, if you wish to claim that anarcho- capitalists are just doing the equivalent of exercises in geometry, and that every real version of capitalism will always be crony capitalism, just like every real circle will always be imperfect, then I applaud the sentiment.

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