Capitalism and Crony Capitalism are not the Same Thing

Posted by PITHOCRATES - January 14th, 2012

Week in Review

A lot of people condemn capitalism.  But the thing they attack isn’t capitalism.  It’s crony capitalism.  Where some in business buy favors from their friends in government (see Crony Capitalism? Blame the Progressives by Warren Meyer posted 1/5/2012 on Forbes).

The core of capitalism has nothing to do with, and is in fact inherently corrupted by, the exercise of state power.  At its heart, capitalism is one simple proposition — free exchange between individuals based on mutual self-interest.  There is no room in this definition for subsidies or special government preferences or bailouts.  The meat and potatoes activities of crony capitalism are corruptions rather than features of free markets.  Where state power to intervene in economic activity does not exist, neither does cronyism.

Meyer discusses this in specific areas: antitrust, licensing, protectionism, economic management, picking winners, green energy, consumer protection, employee protection and Obamacare.  Please follow the link to Forbes and read the full piece.

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