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Comment by Miner49er | Hacker News Reader

Cronyism is the logical conclusion of capitalism.

And every other system with regularors..

Could you elaborate how? Is this specific to capitalism? or is cronyism the logical conclusion of any societal system that lasts for a while? For example, and just to choose an example that is obviously not capitalist, would you say cronyism wouldn't happen in a communist society? As far as I understand, it very much happened in the URSS. I'm not bashing on communism, just trying to understand your statement.

Capitalism rewards owning capital heavily, so it naturally trends towards wealth concentrating. The argument against this is to regulate it, but overtime, you'll always end up trending towards capital becoming more powerful then the regulators. You'll always have Capital just buying the regulators, basically. You can have "resets" (like the Great Depression and WWII) that maybe fix this a little bit temporarily, but it'll end up going back to cronyism again as power (i.e. Capital) starts concentrating again.

Cronyism can exist in an economic system where there are positions of power. However, if you were to limit position of power, I believe you could make an economic system more resilient to cronyism. Obviously systems like the USSR had positions of extreme power so it was very prone to cronyism.

How do you create a society that limits positions of power?

The US Constitution tries to do that by pitting different groups in power against each other, diffusing their power and forcing them to cooperate to achieve anything. And then adding a Bill of Rights specifically limiting the power government has over the individual.

Do you have a better idea?

The US system isn't too bad, the main problem with it is capitalism. Under capitalism, you can't have a true democracy. The rich can always influence the public (Manufacturing Consent) or outright buy representatives. You have to keep wealth more distributed to avoid this, which means we need a system that doesn't so heavily reward and enable accumulation of wealth. I like many of the ideas of Mutualism [0]. Primarily the emphasis on credit unions, the limits on private property, and worker democracy.

[0] https://en.wikipedia.org/wiki/Mutualism_(economic_theory)

And every other form of government. What's the point?

> Cronyism can plague any economic system, Klein explained, across the spectrum of free-market economies to governmentally controlled environments.

Try reading the article?

Yeah, I agree, but I think there probably exists economic systems that are far more resilient to cronyism then capitalism. Whereas I think capitalism will always result in cronyism.

What are those systems? And where is the real world evidence they are more resilient to cronyism?

Such as?

Really anything that tries to democratize or distribute the control of Capital better. I wrote in another comment that I like parts of Mutualism [0]. I think the emphasis on credit unions, the limits to private property, and the emphasis on workplace democracy would help limit wealth from becoming too concentrated while still enabling economic development, arguably even enabling it better then Capitalism.

[0] https://en.wikipedia.org/wiki/Mutualism_(economic_theory)

As someone who lived in a communist system…no, cronyism is how you survive in a communist system. Otherwise you starve.

So you lived in a communist system with cronyism. That doesn’t invalidate OP statement. Cronyism is going to negatively affect all governments.

OP said capitalism.

Market forces are objective, real, external. They eliminate weak competitors, and cronyism weakens companies. So if capitalism is defined by existence of the market forces... than you are wrong. If you define capitalism as market + capital and the your claim is that market in combination of other (than private property) ways of allocating capital would work better... I still disagree.

Capitalism is not "markets", people have had markets at least as long as we've had agriculture. Capitalism is markets in pieces of paper such as government bonds, tulip futures, corporate stock, etc.

Capitalism is a great platform for cronyism because it accumulates huge amounts of wealth in one place. Without capitalism the wages of corruption would be much less.

Yes, people have had capitalism since Homo Sapiens emerged. It just became more sophisticated, enabling higher levels of productivity.

Institutions like contract law and constitutionally limited government helped the reign in corruption to some extent. If corruption is to mean deceit, abuse and exploitation, corruption has existed since as long as humans have existed. That is why homicide rates in prehistory were 30%.

One colleague once told me capitalism is the natural state of world and that her dog was capitalist, because it picked up a stick and refused to let it go - and that is why socialism and communism (same thing for her) will never work.

When people consider your ideology "natural state of the world", you know your propaganda succeeded.

> Capitalism is markets in pieces of paper such as government bonds, tulip futures, corporate stock, etc.

Capitalism is private ownership of (and thus control, and benefit from) the means of production. Of these things you've listed, only corporate stock is—at some remove—a means of production. The stockholder owns part of the corporation which in turn owns capital goods.

Anyone can save and invest and become an owner of capital. The only thing leading to concentration of wealth (under any economic system, really, not just capitalism) is that most people don't care to sacrifice present consumption for a larger future gain. Fortunately there are some who do.

Cronyism is essential part of Big Government, something that is not necessary for Capitalism but completely necessary for Socialism.

The entire basis of modern public administration (and one of the reasons it can be more bureaucratic than market mechanisms for delivering services) is that it attempts to rigorously exclude cronyism. The reason for civil service tenure, for example, was to stop politicians selling public service jobs to the highest bidder, or handing them over as a quid-pro-quo for favourable decisions. As seen in the late 19th and early 20th Century 'Progressive' movement in the US, for example, the idea was for a government of the highest possible rectitude.

Now, that obviously doesn't happen in all areas all of the time. And we have moved away from that kind of rules-structured ideal over the last forty years or so in pursuit of greater efficiency (which has re-introduced cronyism in the UK to a greater degree, for example - see the present government) but it's grossly over-simplified to say that cronyism is an 'essential' part of big government, when its original foundations were intended to produce a (big) government of laws and not men.

The existence of all these protections against cronyism in the public sector is evidence that it is an inherent problem. If it wasn't, there would be no need for all the protections.

Edit: the problem is kind of moral hazard. Much like a chemical plant or nuclear reactor needs a range of protection systems to prevent the dangerous chemicals from going out of control, public administration needs a range of systems to prevent corruption getting too out of hand.

Yes indeed (and, even more so, the culture of non-corruption which reformers tried to put in place at the same time). But, like in the chemical plant, it is possible to run a government with minimal levels of corruption and many (better-governed) countries do it.

It's not just a public admin problem, either - corruption and self-dealing are potentially endemic in the private sector, too. The concern has traditionally been higher for the public sector, both because of the potential for abuse of state power and because it is/was seen to be corrosive to public trust and self-government. A private company is more likely to trade off the cost of controls versus the dollar value of the future loss (or the controller is the one running the firm strictly for their own benefit, in which case they're likely to get away with it without intervention by the legal system). And the largest companies have had actual public power greater than the smallest countries for centuries by this point, so the two concerns are not completely disjoint.

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