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All capitalism is ‘crony capitalism’

All capitalism is ‘crony capitalism’.

All capitalism is ‘crony capitalism’

A response to libertarian rhetoric

February 16, 2012

Whenever wealth is concentrated in the hands of a tiny minority, they will naturally use that wealth to direct politics.

During the current election cycle, perennial Republican hopeful Ron Paul has garnered significant attention presenting himself as an alternative to the political establishment. Depending on their level of fanaticism, diehard Paul supporters will tell you that he is an opponent of the “new world order,” state-ism or corporatism. One phrase associated with his reactionary libertarian ideology has gained particular traction: “crony capitalism.”

The implication of this outlook is that capitalism in its “natural” state is the solution to society’s problems but has been corrupted by greedy individuals deviating from the ideals of the free market. Instead of fighting for a new system, the libertarians argue, we should eliminate all government handouts and monopolistic entities that infringe on the purity of economic competition. This line of reasoning ignores the fundamental tendencies of capitalism as well as the nature of the state, serving only to derail the growing people’s movement against the 1% and their system of exploitation and oppression.

Monopoly is inevitable under capitalism

One of the basic laws of the capitalist system is the tendency to form monopolies, which arises from what Marxists call the concentration and centralization of capital—an inevitable result of capitalist competition. This process is greatly sped up during crises of overproduction, when companies enjoying the greatest economies of scale and lowest labor costs survive while less profitable companies frequently go bankrupt.

In order to preserve the stability of the capitalist system, the capitalist state has increasingly had to step in to limit this process, especially when the companies going under are judged “too big to fail.” However, this leads to even greater capital consolidation.

There is no going back to

some so-called “golden

age” of capitalism. The

basic laws of the system

are to create monopolies

and increase inequality,

with the rich using their

power to control the


For example, in the middle of the 2008 financial collapse, Bank of America acquired Countrywide Financial and Merrill Lynch, which would have otherwise gone bankrupt, for $2.5 billion and $50 billion, respectively. If we somehow returned to the era of small-scale competition as Ron Paul advocates, the process of capital consolidation would simply restart and lead us back into the exact same situation.

Libertarians are astounded that wealthy bankers and CEOs constantly exert influence on and trade favors with elected officials. This practice, they argue, should be made illegal to take the “crony” out of crony capitalism. The underlying assumption is that the state is an independent entity, standing above the contradictions of the society it governs. In fact, the state is a tool for the rule of one class over another.

Economic inequality means political inequality

Whenever society’s wealth is concentrated in the hands of a tiny minority, an inherent feature of capitalist society, the 1% will naturally use that wealth to direct the political process. For members of the capitalist class, the costs associated with the maintenance of their state—including lobbying and campaign contributions—are worthwhile investments in the stability of their system.

Look forward, not backward

Ron Paul and other libertarians survive on nostalgia for a golden age of capitalism they insist existed sometime in the past. Instead of trying to turn back the wheels of time, we need to adopt a forward-looking perspective and fight for a society free of crises and cut-throat competition leading to more monopoly, more imperialist wars, more inequality and all the other evils of this rotten system. We need to fight for a society based on the power of working people and the abolition of all forms of exploitation.

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