Jeb Bush has recently taken to criticizing crony capitalism in his speeches, but his record belies his rhetoric. For example, Bush joins Governor Walker in supporting taxpayer-financed sports stadiums. Bush flip-flopped, first opposing but later supporting a new ballpark for the Miami Marlins baseball team. Moreover, as governor, Bush regularly used taxpayer money to provide special benefits to favored businesses or industries. For example, he set up an “Innovation Incentive Fund,” which spent $456 million to lure biotech and life-science businesses to Florida. If you count local funding as well as this state funding, taxpayers ended up spending nearly $1 million for every job generated, and even the state was forced to admit that the fund “does not break even.” That’s just one example of Bush’s willingness to pick corporate winners and losers at taxpayer expense.
Now some in this parish dislike the term ‘crony capitalism’ as much as I dislike the loaded term ‘austerity’. So in the interests of collegiality and calm, let me say… tough shit. ‘Crony capitalism’ is an awesome term as it is a presupposition of something good made bad by the modifier ‘crony’, which is indeed correct. If you want to debate the use of the term, arguing crony capitalism is not capitalism at all, well yeah but so what? Tell someone who cares as I will keep using this spiffing term, as will Carly Fiorina apparently.
So called “crony capitalism” or “corporate welfare” makes up a tiny percentage of the budget – the proportion is very small indeed.
However, it is a bad thing.
And, yes, if one is truly against “crony capitalism” or “corporate welfare” then Mr J.E. “Common Core” Bush is just about the last person one would vote for.
Crony capitalism a small part of the budget? Every single (that may be an exaggeration) solar and wind project is given to cronies. Who will lobby for more.
“Crony capitalism” differs from true capitalism in one significant way.
Decisions made pursuant to capitalism are made in service to capitalist, market-driven theory. Need trains? Research trainmakers, choose to spend your money – private or public – based on which trainmaker will deliver the most desired result from the viewpoint of the true “owner” of the money spent. For public spending, this means delivering the highest benefit to the public.
“Crony capitalism” is a bastardization of this concept. Instead of spending your money for the highest benefit of the true “owner” of the money (the public), the agent acts ultra vires – outside of its proper powers – and spends the public’s money in a manner that delivers at least part of the benefit to the spender – or a friend of the spender – and deprives the public of that portion of the resulting benefit.
“Crony capitalism” is theft from the public. There is a difference.
In the Republican House of Freedom, the Bushes are the cowpats in the wattle and daub walls.
https://en.m.wikipedia.org/wiki/Wattle_and_daub
“Capitalism” is itself a weaselly word: it means both (a) a free market, and (b) a society in which a small minority owns a vastly disproportionate amount of capital.
Some people (not necessarily including Marx himself) seem to assume that the 2 things necessarily go together, but that is not the case. The “ideal”, “Platonic” crony capitalism could be defined as a society in which (a) is false and (b) is true.
A shorter word that has been suggested by many is “capitolism,” but it’s maybe too subtle for most people and, anyway, lacks the punch of “crony.”
The real disgrace is that politicians have come to accept corruption as ‘politics as usual’, and will openly ‘correct’ those who call it by its real name.
The idea behind “crony capitalism” is to apply a taint to capitalism/business/markets. The market at hand is of course the market of government corruption and abuse of power. Nice game, for those who play it.
I first heard the term ‘crony capitalism’ applied to the system Ferdinand Marcos ran in the Philippines.
We’ve always had elements of it in the US and elsewhere. La Republique des Copains for example.
It’s as good a term as any for the kind of corruption caused by too much government power afflicting a relatively free society.
Solar and wind power may garner more curses, but the one I hate with a burning passion is the stadium. Sports teams (in their larger definition including owners and strong advocates) seem to need a new stadium every decade or so. And they want their own stadium, not one they have to share. So every decade or so we have to live through several years of whining, several years of legislative blather, several years of tearing down the old stadium, and several more years of building the new one. I’ve been in this town 50 years, and I’m watching the third football stadium being built — four if you count the University. The baseball team shared the first, and perhaps second, of those stadiums with the football teams, but now they have their own. And there’s a hockey arena.
The legislature votes maybe half a billion dollars subsidy (to be “recovered” by economic improvements). Streets are blocked during demolition and construction, and double-blocked once the thing starts having games. Parking is disrupted, the local sales tax district gets larger, so does the sales tax percentage, and the tickets cost $35 a game on up.
Then, after the baseball stadium is finished, it’s time to go through it all over again for the football stadium. It’s as bad and enduring as mosquitoes, except you can’t slap it or spray for it. Gahdamn Edifice Complex!
Not that the other examples of crony capitalism aren’t just as bad. Take away the legislative subsidy, and a lot of the foolishness would collapse under the costs. This is simply the one that’s personally annoyed me.
I disagree.
Cronyism is one thing and capitalism is quite another, indeed, capitalism is the very thing that prevents cronyism.
“Crony capitalism” is an anti-concept that disguises the causal relationship between cronyism and government. And it implies that all types of government are vulnerable to cronyism’s attraction because…because…why??
Are all men and all governments flawed?
It is not unlike the term “market-socialism” – when all hell break loose who gets the blame? Not socialism because socialism is always good unlike wicked men and wicked capitalism.
The lobbyist groups in Washington pay a lot of money to the politicians. Big business employs thousands of these people. Lose an election and Goldman Sachs will make you a managing director. Walk out of the Clinton administration, become CEO of Fannie Mae, make $110 million in a few years, run the company into bankruptcy while cooking the books and you serve no time in jail: Franklin Raines.
Big business, as opposed to companies employing tens or hundreds, are part of
Washington bureaucracy mentality. I have worked for (3) Fortune 500 companies. Their HR departments just run whatever lefty policies the bureaucracies in Wash DC come up with. Talking to them is like talking to Obama. He won’t listen and does what he wants. The HR department are full of people who couldn’t get a job at the postal service. They don’t listen and do what they are told.
Crony capitalism is Obama giving billions to donors in the solar and wind industries and watching them burn through the money with ZERO accountability.
Crony capitalism: Try the law against insider trading. You get caught as a civilian and you get 10 or 20 years in the slammer. Want to know the only 535 Americans 100% exempt from insider trading: our 100 Senators and 435 representatives. That’s crony capitalism folks.
JohnW
August 13, 2015 at 10:33 pm
Capitalism does not prevent cronyism. Small LIMITED government reduces it. Nothing can prevent it.
Exactly correct. Capitalism is not a form of government. It flourishes under limited government and becomes steadily more corrupt ‘crony capitalism’ the more the state is distorts markets for political reasons.
Capitalism does prevent cronyism because the economics of capitalism explain the origin, distribution and function of wealth – i.e. why cronyism is counter-productive.
Unfortunately, the economics of capitalism was rejected in 1848 by its most important defender – who then declared himself a socialist.
If capitalism’s greatest defender cannot defend his own theory who are you gonna call? Ghostbusters?
Crony capitalism is an awful, counterproductive compound noun – crony is not even being used as a noun but as an adjective synonymous with “dirty.” Is “dirty capitalism” a term we ought to embrace? Of course not!
Capitalism is one thing and cronyism is its opposite.
‘Nepotism’ would do just as well! The ‘Crony’ part means that you favour your longterm (chronic) friends, but nepotism is shorter and carries a similar meaning of corruption.
I’ve always favoured the term ‘Free Enterprise Society’, since Capitalism does not fully describe how free societies really function.
Always has been and will be:one hand washes the other and both wash the face.
FWIW, I don’t like the term “capitalism” at all. The emphasis on the capital really misses the point. What we all love about it is not some mechanism for gathering resources for making things, no rather what we care about is freedom. Freedom to trade. Freedom to deal. Freedom to associate and speak and make contracts, and buy and sell at unmolested prices.
I think calling it “capitalism” distracts us from the key feature, “freedom”, which is why I vastly prefer the term “free market.”
I don’t much like “lassiez faire” either because to the non French speaker it sounds like some techincal term like Keynsianism, and so just one more choice on the list of options.
Everyone knows what “leave me the hell alone” means.
So I suppose if you crony up with the government it is in a sense manipulation of capital resources, some acquired through taxation, and so to me “crony capitalism” isn’t quite so dissonant.
But “crony free markets” is just plain silly and self contradictory.
We must not lose sight of the fact that 99% of crony capitalism has nothing to do with corrupt politicians, and everything to with corrupt bureaucrats.
And not usually corrupt in any bribe taking sense, but corrupt in the power mad sense.
I cannot count the meetings I have had with bureaucrats greasily telling me that all of their insane requirements were to ‘protect the public’. When I asked, ‘why not just take a bond or deposit’ they could not even fathom what I was talking about.
Whenever I watch ‘Yes, [Prime] Minister’ I drink to excess and laugh senselessly.
Whilst I describe myself as a free-enterpriser, I have finally come up with a name for my concept of time-share governments- Participism. I think that all who choose to be citizens should participate in one, some or all of the functions of local governments, doing part-time services in exchange for being able to directly participate in local governments. For 11 months of the year, you would do volunteer work, and for one month of the year you, and others who enrolled in the same month as you, would be the local county. No parties needed, no professional politicians, and crony capitalism would have a harder time getting established.
The graphic make me LOL and I agree. People will not stop using the terminology Crony Capitalism, and that’s because it fits. Debating why its a bad idea is a theological discussion about how many angels can dance on the head of a pin. Between free trade and the complete lack of trade that is socialism lies crony capitalism, which is capitalism being pulled in the direction of fascism.
That’s the truth but it is also about co opting business with perverse incentives.
“Crony Statism” is a much better and accurate term.
Of course, all Statism is crony so this is a redundancy. Still useful.
Only in Utopia the state serves only the interests of “The People”.
I agree with Bell Curve: the term “crony capitalism” is reasonably descriptive and is here to stay. Deal with it.
(Nicholas, “nepotism” is not a synonym. Nepotism means showing favoritism to your relatives. “Crony capitalism” is far broader than that.)
To the article cited (which is worth reading in its entirety; it’s not long), at least Jeb Bush has heard the term, even if he either doesn’t understand it or is simply lying (he’s a Bush, so my bet is on the former). Scott Walker, who I initially found interesting, is turning into a disappointment in part because of his crony capitalistic history. (His performance in the recent debate didn’t help him any, either.) Trump is, of course, the epitome of a crony capitalist, and he flat-out admits it.
But whether crony capitalism is attributable to venal politicians or power-mad bureaucrats (it’s both, actually), the fact remains that it exists solely because of the aggregation of power in the hands of government. If government weren’t powerful no one would be trying to buy it. The big power (and dollars) is in Washington because it has usurped so many of the powers properly belonging to the states; devolving that power back where it belongs would help reduce the problem. But it certainly wouldn’t eliminate it: states and municipalities are also chronic dispensers of favors to their cronies, notably in the areas of sports arena construction and eminent domain generally. There is no real way to eliminate it; all we can do is make the abuses smaller and more transparent (and, if they are egregious enough, galvanize the electorate into voting out the malefactors). Centralized political power doesn’t cause the problem, but does greatly exacerbate it.
An early US politician, Willie P. Mangum, captured the problem perfectly in a speech on the Senate floor in 1836:
@Fred Z
> When I asked, ‘why not just take a bond or deposit’ they could not even fathom what I was talking about.
That is because what you were actually saying is “your job is pointless and you should be fired” which is often a sentiment that people find hard to grasp.
> Whenever I watch ‘Yes, [Prime] Minister’ I drink to excess and laugh senselessly.
I just rewatched the whole series. My favorite part is where Sir Arnold, previous cabinet secretary becomes chairman of the “Campaign for Freedom of Information.” The irony is so delicious.
If you reject the term “capitalism” then you are simply abandoning the field to capitalism’s many enemies and inadvertently consigning capitalism to remain an unknown ideal.
It is not capitalism that has failed. That would be an ill day for all men. What has failed is the courage and intelligence to see what is true and speak it to the people, to point to the nature and origin of wealth, and to identify the many obstacles its creation.
Au contraire. “Crony capitalism” is an utterly delightful term, because once you remove “crony” (bad), you get “capitalism” (good). When the enemy uses the term, they are as unwise as pro-limited government people blithely accepting the term “austerity”, as it implies less spending by the state is austere and therefore ‘bad’. Once a leftie accept the term “crony capitalism”, they accept the problem is “cronyism” not “capitalism”.
Very good comment by Laird.
JohnW’s mention of the (meta-)concept of anti-concept reminded me of an essay by Roderick Long, which, as i discovered googling for it, is also available as a lecture on YouTube.
Let me quote from it, because the following quote inspired my comment above:
Since the essay’s title is Rothbard’s “Left and Right”: Forty Years Later, i might as well add that “left” and “right” are themselves anti-concepts as far as i am concerned; though i am not sure that it was always that way.
While my YouTube link is awaiting moderation, let me add to what i wrote yesterday.
The Marxian concept of capitalism, to the best of my understanding, is a system with the following features:
(a) a free market;
(b) ownership a vastly disproportionate amount of capital (means of production, distribution, and exchange) by a small minority;
(c) political power (power of coercion) concentrated in the hands of the same small minority.
To the best of my knowledge, that is a fairly accurate description of Britain at the time Marx was writing the Commie Manifesto.
Crony capitalism has 2 of of the above 3 features, so it is quite reasonable to call it “capitalism”.
Saying that the word “capitalism” should not be used the way people use it, does not strike me as a cogent argument; especially if you think that the word should not be used at all.
The term ‘crony” is a weasel word, which should be understood as negating the concept it prefaces, just as ‘social’ as a prefix negates what it is linked to, be it ‘justice’, ‘security’, ‘conscience’, ‘worker’ and so on.
It is a weasel word for us to take advantage of actually, for any statist using it is tacitly admitting what the problem is: statist cronyism is negating capitalism. It is an argument to be embraced with great enthusiasm and every time you hear a person using it, compliment them for correctly identifying the problem… politicians favouring their cronies and thereby preventing the market from actually working.
Yes indeed Perry, it is a different angle, not clear in my post, the term ‘social’ is used to boost the prestige of the ‘social’ aspect, whereas ‘crony’ is used to deprecate (blameless) capitalism, rather than the statism that taints it.
Perry, my last comment was not addressed to you but to those others [like Fraser and Nicholas] who wish to abandon the word “capitalism” altogether, and presumably along with it, the entire history of its proper usage!
Americans seem more comfortable with the word than Brits, for some reason.
However, I do accept your point that if we could get lefties to recognise the difference between crony-capitalism and capitalism that would indeed be a huge improvement [especially if they used crony as a noun rather than as adjective !] but even so, we would still be stuck with the issue of whether there is something peculiar to capital, and the focus on the use of capital, that makes capitalism, in particular, susceptible to cronyism.
Nothing could be further from the truth – capitalism eliminates cronyism and has a long and noble history of doing exactly that – capitalism’s arguments against cronyism and the systems that facilitate cronyism are some of the most compelling, astounding and glorious achievements in human history!
Why do we not say crony socialism, crony fascism, crony mercantilism, crony physiocracy and crony feudalism – systems that actually do entrench cronyism?
Why make a package deal of one thing and its opposite?
We will have to continue to disagree, I am afraid.
Speaking for myself, *capitalism is one thing and cronyism is another.
[And by *capitalism I mean capitalism and emphatically not anything whatsoever to do with Mr. Carson’s view of capitalism and still less his peculiar opinions on “actually-existing-capitalism”.]
Because socialism, fascism, mercantilism, physiocracy and feudalism are each entirely systems of based on crony relationships and thus tantamount to saying crony cronyism 😀
Crony capitalism on the other hand is an infection of one by the other. An infection of something by something else quite different.
First off, any push to attempt to get yet another bush in the whitehouse shows a mind-boggling lack of insight and lack of self-awareness re: the American voters and the pulse of the nation.
Secondly, Yes, “crony capitalism” is a defunct term because it’s not capitalism at all. Does it involve capital? Sure. But the use of capital does not capitalism make. Capitalism is free enterprise, and what free enterprise is free from is gov attempts to steer the economy via economic interference. The dualistic puppetry of business and politics is fascism.
JohnW, well said.
Crony Capitaism is a two word phrase that contridicts itself and therefore means nothing. It belongs in the same bin along side married bacholors, well fucked virgins and invisible pink unicorns.
So, what’s next guys, crony free markets? ‘Crony laissez faire captalism? We might as well have discussions about an omnipotent god who does physical things yet leaves no physical trace; who can take away inalienable rights, and who can create a rock so heavy that he can’t lift it. A god who is limitless and can do anything including limiting himself and still remaining limitless. Crony capitalism is like saying invisible purple. It’s a meaningless self contradiction.
That so many libertarians cann’t get why “crony capitalism” is a useful notion, is rooted in why so many libertarians are useless at doing anything other than preaching to the choir. Sorry guys, but you’ve got nothing useful to say to anyone not in your amen chorus, and I’m guess why the OP provided you with the second link 😉
Yes indeed, Perry – but they don’t know that! 😀
Sad but true.
“Because socialism, fascism, mercantilism, physiocracy and feudalism are each entirely systems of based on crony relationships and thus tantamount to saying crony cronyism :D”
In the real word capitalism goes in the list as well.
Capitalism, the abstract concept, may be as pure as you want it to be. It is not so, however, in the real economic arrangement between individuals interacting in a free market. The power is traded like any other good on the market economy. Buying and selling power is the stock-in-trade of politicians. That’s their capital. Many a time the currency used is votes, guaranteed by cronies in exchange for a favorable legislation, for example.
A small government would only make the exchange less conspicuous.
I am with both Fraser and Bell Curve: it’s either ‘free market’, or ‘capitalism’, where the latter is a technical term indicating that capital is being accumulated and being invested or spent. The latter can be “crony” or not, it can and does exist in both free and unfree markets. Free markets, however, cannot be “crony”, it would be an oxymoron.
Indeed.
JohnW, you or I may not like it, but the proper use of the term ‘capitalism’ has been as described by Snorri and Cristina above ever since it was popularized (if not outright coined in that particular sense) by Marx himself. The use of the term as synonymous with ‘free markets’ is and has forever been by a small minority of, well, supporters of free markets. The fact that the good guys want this term to mean something different from what it means to most people does not make the common use incorrect and will not make it go away.
All that said, I do like the term ‘crony capitalism’ for the reasons Perry mentioned, even though he may not agree with my interpretation of the term ‘capitalism’ as above.
Why not just call it “cronyism” and be done with it. In the context of the present day, anybody with any interest in government and business is going to know perfectly well what it means — regardless of whether they’re talking about the U.S.A. or N. Korea.
The combination of both terms allows to deflect the responsibility for the economic failures from the state to the corporations. In reality, the more the state gets involved in the economy the greater the probability of a failed economy. For the small businesses and the common people, that is.
This, as every other coined term of common parlance from assorted pundits, is just smoke and mirrors.
For the last two centuries we have been steadily moving from a society of privileges inherited by blood to a society of privileges passed down through certified parchments. The elite comes from the same schools, moves on the same social circles, and shares the same powers. Some prefer to call that “meritocracy”.
“(b) ownership a vastly disproportionate amount of capital (means of production, distribution, and exchange) by a small minority;”
First: capitalism can only exist in a free society that protects individual rights – especially property rights – the right to accumulate and own capital.
Second: Capital, like talent, beauty or luck is necessarily unevenly distributed in society, i.e. concentrated in a minority (not necessarily very small minority). So I don’t accept the Marxist claim about a **disproportionate** amount being concentrated… etc.
“Crony” is the natural, and correct state of capitalism – every capitalist tends to employ or make business with members of his family and friends – it is a natural matter of selecting persons that you know and trust.
Crony becomes BAD only when politics is involved, it is the politicians that are supposed to act for “The People” and not for themselves, as they usually do. “Cronyism” is a political system, an attribute of politics, not an economic system.
Finally, the value or power of terms or expressions is not derived from their exact meaning, but from fuzzy perceptions and fashions. “Crony capitalism” is a term with staying power, we can’t abolish it. That doesn’t mean I need to love it like Perry. I prefer the term “Crony politics”.
Not so. A smaller government reduces the government’s share of the power market by returning power back to individuals.
The size of government is all about its market share in the allocation of power.
“A smaller government reduces the government’s share of the power market by returning power back to individuals.” Hence, “A small government would only make the exchange less conspicuous.”
No, Midwesterner is quite correct: small government means there is less government for sale, ergo less crony patronage available to be disbursed. You can only ‘sell’ a regulatory advantage if something is being regulated.
And far from making it less conspicuous, it means there is a less politically cluttered environment for crony patronage to hide in. If the state can do far less, it become far harder to hide the things the state does do.
Perry: maybe, by “conspicuous”, Cristina meant something like “sizeable”, rather than “visible”; but i’ll let her speak for herself.
Jacob: my use of the expression “vastly disproportionate” is not loaded with moral implications: all what i meant is that in a capitalist system, by definition, a small minority owns most of the capital*. I did not mean to imply that they do not deserve to own it.
Nor that they do deserve to own it: it depends on how they got it, and to some extent on what they do with it.
* As opposed to systems in which ruling class privilege comes from ownership of most of the real estate, or most of the weaponry, or most of the knowledge of holy texts, or university degrees, or the media.
Maybe your use of “vastly disproportionate” is not loaded with moral implications; Marx’s use is.
In a capitalist system, by definition, SOMEBODY owns the capital, contrasted to, say, a communist system where (in theory) nobody owns capital, except the state. And, those who own capital cannot be the majority, nor can it be evenly distributed.
Marx states that any capital owned by persons is **necessarily** acquired by wrong means (exploitation), and is necessarily wrong – because of inequality.
“Crony capitalism” implies that those wicked capitalists use not only their wicked means of exploitation (capital) to suppress the poor, but also political power, to extract concessions from the (bought) political class, therefore they are double BAD.
I see no good reason to “love” this term.
No, Perry. The amount of crony patronage available does not change with the size of the government. The opportunity for the exchange to occur could be smaller in a controlled, less cluttered political environment. That does not mean the state is less corrupt or less inclined to make favors to its cronies. It would just happen out of the public eye, where the politicians and their cronies are safe from scrutiny.
The regulatory advantage is not the only function for sale. Contracts, endorsements, the sharing of secrets, and the participation in the decision-making process of the government are all for sale to the higher bidder as well.
“If the state can do far less, it become far harder to hide the things the state does do.” Very true.
People often use a disguised form of circular reasoning when they talk about capitalism (and some other charged subjects). For example, if they use capitalism as a pejorative and you ask them what they mean by it you will generally find that they have deliberately defined capitalism it to be (or to include) a host of things that a supporter of capitalism defines as un-capitalist, or even anti-capitalist. (Capitalism is bad because I have defined capitalism to include bad stuff.) So the fact that capitalism on it’s own is so ambiguous makes the modified phrase useful and important.
This is true of many phrases in politics, such as liberal democracy or Burkean conservatism. They cut through the rhetorical bullshit and focus the participants to first agree on terms.
If they understood capitalism, if they could refute the iron law of wages, the labour theory of value, today’s peril of overproduction and under-consumption and all the other smears thrown at capitalism by her enemies [ and a few of her friends] they would speak of capitalism in hushed and reverential terms.
“if they use capitalism as a pejorative… ”
That is the original sense of the word, as coined by Marx.
It is we, the libertarians, who try (unsuccessfully) to give it another, positive, meaning.
Most people are strongly influenced (even if unconsciously) by Marx’s ideology (the prevailing ideology of our time), and use the term as Marx meant it.
“Crony capitalism” is a double pejorative…
On the contrary, it is an opportunity.
If it was only Marx who was the problem: “I knew a young man who threw crystal flasks out the window after he had emptied their contents, on the grounds that it was necessary to encourage manufactures.” J-B.Say, Treatise on Political Economy 1803. [!!!!]
Plus ça change…
JohnW, I do not object to the term ‘Capital’, but I do think that it is more limited than Free Enterprise. People who accumulate money may not be storing it as capital, but using it straight away. The Salvation Army can function in a free market, and does not seek to store capital in a bank, for instance.
A few words on Marx, since his name comes up frequently in this thread. (And rightly so.)
I take the view that Marx was often right (no pun intended) or at least interesting, in his analysis of past and contemporary (to him) societies.
What was perniciously wrong, are his predictions/prescriptions, the 2 things being pretty much indistinguishable from an orthodox Marxist perspective.
About his moral judgments, i could not care less. In fact, we are not supposed to care: it’s supposed to be “scientific” socialism.
My own view of the ruling class is inspired by Marxism mostly by osmosis, by talking to Marxis(an)ts. I’ve read the Commie Manifesto, but i find the Italian “school” of elite theory much more interesting. A good introduction to this “school” can be found in James Burnham’s The Machiavellians, and i wished i had read that before reading Machiavelli, because with hindsight i see that The Prince makes much more sense if one reads it with class divisions in mind.