Crony capitalism describes two situations: the situation in which different capitalists co-operate to distort the market and maximise their profits, and the situation in which people in government either support, or are bought by, corporations to make laws that favour those corporations, or offer some other kind of subsidy, protection or help. More generally, the second half of the definition describes the case in which the State largely governs on behalf of big business, because business is defined as possessing all the virtues and abilities that matter to the society, and many businesses collaborate to maintain the general dominance of business and crush resistance.
In crony capitalism risks of business and costs of business are usually diffused onto the general taxpayers (with the wealthy often paying little tax). For example, in crony capitalism, pollution and environmental destruction is encouraged as it lowers costs to business, and usually just poisons the poorer sections of the population, who don’t count. Any regulations which try to enforce business responsibility for their actions are usually seen as ‘red-tape’ and repealed. Laws are generally designed to help maintain business benefits, and the courts arranged so that non-wealthy people have relatively little chance of success in using the law against business power.
Crony capitalism encourages situations in which ‘workers’ organising to protect their rights, conditions and wages, are frowned upon or prosecuted because they disrupt business, while federations of business organisations are considered normal and acceptable.
Crony capitalism is driven by, and results in, plutocracy.
Crony Capitalism is the normal form of capitalism, and power plays are a normal part of competition in markets.
Tags: economics, free markets
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