Acton’s Director of Research, Sam Gregg, discusses crony capitalism in today’s issue of The American Spectator. Gregg says 2014 looks to be the year of “inequality” economically-speaking, and that we must not forget the threat of crony capitalism.
Crony capitalism is an expression that’s used a great deal these days, so let’s be clear what it means. Crony capitalism is not criminal activity or outright corruption — though it verges on, and often enters, these spheres. Crony capitalism is about hollowing-out market economies and replacing them with what may be described as political markets.
In political markets, the focus is no longer upon prospering through creating, refining, and offering products and services at competitive prices. Instead economic success depends upon people’s ability to harness government power to stack the economic deck in their favor.
And who are the crony capitalists?
Obviously it includes businesses who lobby governments and legislators for exemptions, monopolies, subsidies, access to “no-bid” contracts, price-controls, bailouts, tariff-protection, preferential tax-treatment, and access to government-provided credit at below-market interest-rates.
Crony capitalism isn’t simply about people trying to “stack the deck,” Gregg says. It’s about true inequality:
Crony capitalist arrangements create distinct groups of insiders and outsiders that have nothing to do with classic criteria of justice such as need, merit, and willingness to take on risk and responsibility. All that matters in a crony capitalist world is closeness to state power.