We Cannot Let Cronyism Overrun Our Economic Garden.

• Author: Sorrentino, Nicholaus D.
• Position: Essay

In "The Road to Crony Capitalism," Michael Munger and Mario Villarreal-Diaz tackle whether cronyism (crony capitalism) is "intrinsic to" capitalism. Is capitalism "sustainable," or does capitalism in a democracy always devolve into "corporatist cronyism"?

Capitalism as defined by Munger and Villarreal-Diaz is sustainable in theory. But we must first acknowledge that crony capitalism and not "real capitalism" (as Munger and Villarreal-Diaz put it) is the default setting for any reasonably ordered, relatively free society (and for other types of societies). Since the time of Hammurabi, and no doubt before then, interest groups have lobbied the king, chieftain, warlord, or other power figure for riches plundered via the state from the populace. They have always sought special favors and licenses and access. That's pretty much the point of a court. Favors and riches are handed out to cronies, and wealth and power are aggregated in the political class, which reinforces the power of the powers that be. This in many respects is the story of government.

So we must understand that "real capitalism" is only an ideal. There was no magic moment when "real capitalism" was birthed devoid of blemish and crony parasites. The blemishes and parasites have been there since the beginning. The current expansion of cronyism does not represent some "evolution" or alternatively a devolution to a post-"real capitalist" society. No, it reflects a flare up of one of the greatest challenges of humanity. Society tends to be cronyist, and it always has.

The road to crony capitalism does not lead through "real capitalism." In actuality, crony capitalism is always right around us. Cronyism is not a destination. It is, in fact, the landscape. Sometimes the crony weeds grow so high as to block the sun. Occasionally the crony weeds are few and relatively sparse. But cronyism in any reasonably organized society is always there. The question is whether we tend to the garden around us and make sure to reduce the "nutrients" this crony growth needs to thrive or choose to put the pruning shears away and unwisely construct institutions that create conditions that enable the growth of cronyism, which eventually will choke out human progress.

Cronyism grows in certain conditions better than others. Society should seek to make conditions as suboptimal as possible for cronyism. It would be all too easy to continue with this garden analogy, but for the moment I'll put it aside.

Cronyism Is a Treatable Disease

I will instead introduce another analogy--cronyism as a disease, a treatable disease. Many modern human ailments, we are told, might not be curable but are treatable. Asthma, diabetes, and hypertension are among such ailments. We might not be able to banish them altogether, but we can with effort manage them into the background of life. Of course, without effort these diseases can ravage our bodies, just as cronyism can ravage a free society.

A key ongoing conflict at my website, AC2News.com (the main news outlet for Against Crony Capitalism), is between the opponents of crony capitalism who favor small government and the (often well-meaning though sadly mistaken) enemies of crony capitalism who think that crony capitalism can be regulated away with the "help" of the state.

But the state is the great enabler of cronyism. Crony capitalism...