‘Crony Capitalism’? No Such Thing!

A customer counts his cash at the register while purchasing an item at a store in Flushing, N.Y., in this file photo. Reuters/Jessica Rinaldi

Commentary

Relax, folks. I’m not denying the existence of business–government cronyism. That obnoxious practice is rampant; indeed, it’s endemic. I find such cronyism repugnant and have no intention of defending it.

When I assert that there’s no such thing as “crony capitalism,” I’m referring to the terminology and not the practice. To attach the label “crony capitalism” to the various subsidies and favors that government bestows on politically connected business (i.e., businesses whose lobbyists donate campaign funds to politicians in exchange for favors) is an outrageous abuse of language. The phrase “crony capitalism” is a glaring solecism, a complete oxymoron. By definition, there is, there can be, no such thing as “crony capitalism” any more than there can be liquid ice.

I understand why people on the left are so ready to employ the phrase “crony capitalism.” To them, capitalism is a catch-all pejorative term. The left hates capitalism. They believe that capitalism is responsible for all that’s wrong in the economic affairs of humankind. Capitalism, to their flawed and ideologically warped understanding, is unfair, unjust; it creates cruel inequalities; it makes the rich richer and the poor poorer (or so they say). Capitalism, for them, is the source of all evil. As an example of their fevered imaginations, I just read this morning the hallucinatory statement “climate extinction is due to capitalism.”

Excuse me, but for those of you who mistakenly believe that carbon dioxide is destroying our world, you should at least recognize that by far the largest emitter of CO2 is China—a decidedly communist, not capitalist, regime. Furthermore, the leftist greenies who bash capitalism are totally hypocritical, for they simultaneously denounce “crony capitalism” yet advocate government funding of every green boondoggle that comes down the pike, the financial benefits of which will accrue to politically connected green cronies. They enthusiastically support green cronyism while denouncing a mythical “crony capitalism.” How cleverly Orwellian.

What concerns me most, though, is when I encounter the phrase “crony capitalism” in the writings of conservative writers—people who should know better. We need to be clear on what capitalism means: Capitalism is a synonym for a free-market economy, private enterprise, the private property order, and an economic system based on the principle of consumer sovereignty.

In a capitalistic system, the role of government in the economy is to be an impartial referee or a night-watchman, intervening only when some person or company in the private marketplace commits a fraud, breaks a contract, or in some other way infringes on the rights of someone else. Under capitalism, it’s most decidedly not the government’s role to take sides or to pick economic winners and losers. When government does those things, you no longer have a free market (capitalism), but a tampered, rigged market. Free enterprise has been suppressed and supplanted by government-controlled enterprise. Under those circumstances, the state no longer upholds the property rights of every economic actor impartially; it helps some at the expense of others. That’s cronyism. Cronyism usurps the sovereignty of the consumer, whereby consumers pick which businesses succeed, and replaces it with political machinations so that government actors tilt the table to the financial benefit of their political allies—their cronies.

Cronyism isn’t the practice of capitalism; it’s a direct repudiation of capitalism. Actually, in spirit and in tendency, cronyism is a device of socialism, not capitalism. Under socialism, the state controls production and decides which factories produce which products and which producers get which resources; the government picks all the winners and losers.

You might think that “winners and losers” isn’t quite correct terminology, since the phrase implies competition, and competition is a hallmark of free markets—capitalism—whereas socialism is a state-run monopoly. There is, however, competition in a socialist society, but it’s competition of a different character. Under socialism, you don’t have competition between businesses striving to do a better job than other businesses at supplying consumers with what they want most. Instead, there’s competition between bureaucrats to see who has the most “pull” with the commissars—their political masters—to obtain from them the desired quantities of various inputs they need to produce what they’ve been assigned to produce.

Under capitalism, businesses are dependent on satisfying consumers, and this redounds to the benefit of consumers. Under socialism, by contrast, factories, shops, and other entities employed in production are dependent on their political bosses, and consumers have to settle for whatever their political masters permit to be produced for them.

The widespread cronyism we have in the United States today is a foretaste of socialism in which the state supplants the consumer as the dominant force in the economy. Do we really want to continue in that direction? I don’t think so. Capitalism, sí, cronyism, no!

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.