Crony Capitalism - Political Viewpoints

Political Viewpoints

Critics of capitalism including socialists and other anti-capitalists often assert that crony capitalism is the inevitable result of any capitalist system. Jane Jacobs described it as a natural consequence of collusion between those managing power and trade, while Noam Chomsky has argued that the word "crony" is superfluous when describing capitalism. Since businesses make money and money leads to political power, business will inevitably use their power to influence governments. Much of the impetus behind campaign finance reform in the United States and in other countries is an attempt to prevent economic power being used to take political power.

Ravi Batra argues that "all official economic measures adopted since 1981...have devastated the middle class" and that the Occupy Wall Street movement should push for their repeal and thus end the influence of the super wealthy in the political process, which he considers a manifestation of crony capitalism.

Socialist economists, such as Robin Hahnel, have criticized the term as an ideologically motivated attempt to cast what is in their view the fundamental problems of capitalism as avoidable irregularities. Socialist economists dismiss the term as an apologetic for failures of neoliberal policy and, more fundamentally, their perception of the weaknesses of market allocation.

Laissez-faire economists oppose crony capitalism as well disparaging governmental favors as incompatible with a true free market. Laissez-faire advocates criticize the term as an ideologically motivated attempt to cast what is in their view the fundamental problem of government intervention or “investments” as an avoidable aberration; free-market advocates refer to governmental favoritism as "crony socialism", "venture socialism" or "corporatism, a modern form of mercantilism" to emphasize that the only way to run a profitable business in such systems is to have help from corrupt government officials. In this view, high levels of interaction between corporations and governments are considered socialist, which is taken to its maximum in the form of nationalization of industries. Even if the initial regulation was well-intentioned (to curb actual abuses), and even if the initial lobbying by corporations was well-intentioned (to reduce illogical regulations), the mixture of business and government stifle competition, a collusive result called regulatory capture. In his book The Myth of the Robber Barons, Burton W. Folsom, Jr. distinguished those that engage in crony capitalism—designated by him "political entrepreneurs"—from those who compete in the marketplace without special aid from government, whom he calls "market entrepreneurs" who succeed "by producing a quality product at a competitive price"