How does capitalism differ from crony capitalism?

Submitted ⁨⁨2⁩ ⁨days⁩ ago⁩ by ⁨bridgeenjoyer@sh.itjust.works⁩ to ⁨[deleted]⁩

Im a little confused. Is America actually capitalist, or is it crony capitalist? Would TRUE capitalism have any problems? On the surface, it makes sense: make good product, get money. Someone makes better product, you need to improve yours or you go out of business. The issue is when we get monopolies and regulations that then restrict actual good products from being able to exist. But thats not a thing in true capitalism (so they say)

Is the best thing a mix of socialism and capitalism? I dont think we could abolish government, as someone has to lead. Certainly government needs to have actual checks and balances in place.

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Steve@communick.news ⁨2⁩ ⁨days⁩ ago
This video from Barry’s Economics is a fantastic explanation of exactly what you’re asking.

The whole channel is probably of interest to you.

But in short, yes. What we currently have in the US is a mutated bastardization of capitalism. The wealthy have spent the last ~50 years bending capitalism tward something like a kind neo-feudalism.

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eatCasserole@lemmy.world ⁨2⁩ ⁨days⁩ ago
“Crony capitalism” is a term invented by defenders of capitalism so that they can put all the bad parts of capitalism in a separate bucket and say “that’s not real capitalism.” It’s a “no true Scotsman” fallacy.

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- bridgeenjoyer@sh.itjust.works ⁨1⁩ ⁨day⁩ ago
  Thats exactly what it sounds like.
  
  For reference, one of my friends defends capitalism to the death (the best part, hes dirt poor) and always thinks hes right. I just wanted to make sure I wasn’t losing my mind…
  
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  - eatCasserole@lemmy.world ⁨1⁩ ⁨day⁩ ago
    Ah no, definitely not losing your mind! I wish you luck (and infinite patience) in talking some sense into your friend.
    
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  - db2@lemmy.world ⁨1⁩ ⁨day⁩ ago
    You need smarter friends.
    
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Archangel1313@lemmy.ca ⁨2⁩ ⁨days⁩ ago
Capitalism by itself, doesn’t necessarily involve direct government coordination. You have shareholders who invest capital in a business, and collect dividends from that investment, and the government has almost nothing to do with it, aside from having passive (systemic) protections in place that legitimize the exploitation of the working class.

Crony Capitalism is when Capitalists are directly coordinating with government officials in order to maximize their exploitation of the working class. It’s less passively “systemic” and more actively aggressive.

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- IAmNorRealTakeYourMeds@lemmy.world ⁨1⁩ ⁨day⁩ ago
  the big question. is capitalism without crony capitalism possible and sustainable? given that rich people always will have more power to affect policies than poor people
  
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  - Archangel1313@lemmy.ca ⁨1⁩ ⁨day⁩ ago
    Short answer…no. Capitalism is never sustainable. It’s the equivalent of economic cancer.
    
    As wealth is accumulated into fewer and fewer hands, monopolies will always emerge, effectively undermining anything resembling a “free market”. And once all that capital is concentrated into the hands of a few ultra wealthy oligarchs, they will have all the power they need to effectively capture the state…and all the rest of us with it.
    
    The only way to prevent that system from inevitably emerging, is to prevent the accumulation of wealth in the first place. It’s fine to make money. It’s even fine to make a lot of money. But no one needs so much money, that they can effectively buy the entire government.
    
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stepan@lemmy.cafe ⁨2⁩ ⁨days⁩ ago
The main problem I see is that earth is not infinite. You have finite resources that are “owned by everyone” by their nature, and capitalism’s competitivness incentivizes their destruction.

World’s countries are allowing companies to destroy the climate, forests, and oceans. They (mostly) know it’s bad, but if they stopped, they would fall behind. And it doesn’t really matter whether the countries are capitalist inside or not - they are competing against each other.

I don’t see why it would be different if instead of countries it would be companies competing. If you have two giant companies fishing in ocean, how would you convince one of them to fish less so it doesn’t destroy the whole fish population? Any fish it doesn’t catch is a gift for the competing company. And sure, two companies can make an agreement, but what if there are hundreds of them? You would think it’s logical for all of them to agree on limits so they don’t kill all the fish - that would be the end every single fishing company. But how is that different from what’s happening with climate change right now?

I’ve seen a video where someone asked a Czech anarcho-capitalist how would the law in ancap work. He responded that the international law is an ancap law. You don’t have a Global State enforcing law on the world’s countries. They do whatever they want on their own property (land), and they form coalitions by free agreement to maintain peace and order and to deal with stuff like climate change.

Well, when I look at the world right now, I feel like that’s the ultimate argument against ancap. We don’t have anything resembling forever global peace, like some people belived after the cold war. The planet is getting warmer and warmer, despite all the global organizations and agreements. Competion is a competition. I don’t really see a way out other than a global state or global anarchy - the leftist kind of one.

And I don’t want to start on why I think a global state is a terrible idea - that’s not what you asked - but I’m obviously for the latter.

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- bridgeenjoyer@sh.itjust.works ⁨1⁩ ⁨day⁩ ago
  I can see this take but if thats your view the solution is stop having kids (especially if you’re an uneducated redneck) which i agree with. But many people get angry at that.
  
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  - GregorGizeh@lemmy.zip ⁨1⁩ ⁨day⁩ ago
    Personally i hate that narrative because the ONLY people who would listen to such advice are the very people you need more of, not less. Educated, morally steadfast in the best sense and willing to make a sacrifice on behalf of everyone.
    
    The people voting against their own interests, perpetuating ignorance and hate, love having kids.
    
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AbouBenAdhem@lemmy.world ⁨2⁩ ⁨days⁩ ago
What you’re describing isn’t capitalism per se, but a free market. They tend to be correlated, but you can have either one without the other. Capitalism strictly speaking is about private ownership of production—when private investors control industry and reap all the profits after wages and taxes.

Crony capitalism is when investors influence the state to reduce wages and taxes, and to manipulate the market at the expense of rival investors.

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TheFogan@programming.dev ⁨2⁩ ⁨days⁩ ago

Would TRUE capitalism have any problems?

Well only a TRUE Scottsman could tell you how TRUE capitalism works.

But OK so in short the gist of theory in capitalism.

Free market ideas - IE capitalism with no government oversite. If a company makes shitty products, someone else will make a less shitty product and all consumers will switch, or if a company starts dumping toxic waste into the drinking water, people would figure it out and stop buying that product… Parts of it are kind of a pipe dream because, some products are inherantly expensive to get started in. Lets face it, Facebook, Windows etc… aren’t dominant because their products are the best, pretty sure you could poll their userbase and find abysmal satisfaction among them. Yet even a giant as big as google, can’t accomplish the resources needed to compete in those markets… let alone a startup out of nowhere.

Now regulations obviously that’s where crony vs regulated comes up in discussion.

Obviously to me the big part is, safety matters. First off the bat, information, consumers can’t even make decisions if they don’t know. If you are putting poison in food, or calling something healthy when it’s loaded with crap, consumers have to know that.

Environmental is a bigger problem. Obviously requiring you to shield and not leak toxins into the drinking water… is a big problem, and it creates a huge problem, as the companys selling gas, or manufacturing chemicals etc… that spend less on safety are at a huge advantage in pricing to the consumer, who can’t tell why the more ethical companies are so expensive, only that they are more expensive. But the more safety that’s required, the higher the bar to entry is…

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Foni@lemmy.zip ⁨2⁩ ⁨days⁩ ago
There are two effects you’re not considering.

First, if you make the best product, everyone else will leave the business, so you become a monopoly. But almost everything has what are called barriers to entry. I can’t open a microchip factory; the investment is absurd. That’s why large companies can easily buy out startups, and that’s why we constantly see market concentration. It didn’t happen before because until the 1970s, antitrust laws were serious; now they’re a joke.

There’s another important issue: in a 100% free capitalist system, it’s assumed that initial bargaining power isn’t equal, so those with more can pressure those with less, making wealth concentration more and more concentrated. Adequate government regulation can help level the playing field between employer and employee, but that’s another thing that hasn’t been improving in recent decades.

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litchralee@sh.itjust.works ⁨2⁩ ⁨days⁩ ago

as someone has to lead

At this particular moment, the people of Minnesota are self-organizing the resistance against the invasion of their state, with no unified leadership structure in place. So I wouldn’t say it’s always mandatory.

Long live l’etoile du nord.

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MolochAlter@lemmy.world ⁨1⁩ ⁨day⁩ ago
Ok, I know this will be a bit of a read, but:

Capitalism vs Croney Capitalism

In an ideal scenario, a “free market” is a market that may be regulated but not in such a way that the state uses its institutional powers to play favourites.

Either a good or service can be provided on the market, which means that within the limits of the law any group or individual can provide that service, or the service is banned, meaning it won’t be allowed for anyone to provide.

Depending on who you ask, even simple barriers such as licenses to operate and OSHA guidelines are forms of interference with the free market; the reality is that in practice perfect information does not exist and society at large prefers limiting the ability of the incompetent to do harm accidentally or through negligence, rather than having them punished after the fact.

Croney capitalism is when these barriers are not only present but erected (typically by the government, but it could also be done by other regulatory bodies) in such a way that they deliberately privilege certain preferred entities (the aforementioned cronies) over others.

This, much like redlining was discriminatory to black people despite mentioning them explicitly, does not have to be an explicit bias, it can be as simple as tuning requirements to make them prohibitive to companies not already established in the market to prevent new competition from coming into existence.

The US definitely has a big issue with this at multiple scales.

What is the best solution

I find the best approach to markets is to look at their elasticity.

An example of a highly elastic market could be videogames. Nobody needs videogames to survive, nobody needs a specific videogame to exist, it’s entirely driven by preference and unnecessary voluntary spending, you have full access to the entire market regardless of where you are provided you can pay the price of admission.

Perfect field to build a market around, the client will naturally gravitate to whatever offer they find provides the best value for money, companies will read the signals and adapt, etc.

A highly inelastic market is, for instance, emergency healthcare. Whenever you are in the market for it, you definitionally have an urgent, time sensitive, geographically limited need for the product. You can’t shop around beyond that range and failure to find the product usually means permanent consequences potentially as severe as death.

In that case, a market is a terrible solution to the problem, as markets have no incentive to capillarise at a loss, and want to price their goods and services based on the value to the client, which in this case would be infinite.

A market handling healthcare without a non-profit option competing with it is a recipe for disaster, while flanked by one it becomes extremely beneficial.

Italy and France, 2 of the best healthcare systems in the world in terms of cost per capita and outcomes, are mixed systems where you can go to the state healthcare system for anything and pay a nominal amount (to deter timewasters) or you can get private insurance or pay out of pocket for private alternatives that have to follow the same standards as the public sector at minimum. This helps treating niche conditions or skipping the line on severe common conditions, meaning those who can afford private treatment will lessen the load on the public sector, reducing queues for those who can’t afford it.

In short: The best approach is looking at each market category and making tailored solutions that best fit the kind of good/service being dealt with.

Some markets, like security, are better left in the hands of a few strictly regulated entities, other are better served by a fully free approach (like luxury goods), most important things fall somewhere in the middle, where some state interference/mediation objectively leads to the best outcomes.

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- HobbitFoot@thelemmy.club ⁨1⁩ ⁨day⁩ ago
  A lot of initial theory was written when the idea of complex markets and how they functioned was a relatively new idea. Compared to previous economic systems that were implemented, capitalism involved a lot less government involvement.
  
  Crony Capitalism came about as an idea when established companies found it was cheaper to buy off the government for a better regulatory environment.
  
  In theory you can have capitalism without crony capitalism, but it generally requires political power to be very diffuse and not concentrated in certain industries.
  
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rezz@lemmy.world ⁨2⁩ ⁨days⁩ ago
The actual problem, from an anarchist-anarcho capitalist sense, is that capitalism is morally incompatible with the state or a government conceptually, because given the nature of capitalism—and moreover people in general—free enterprise will also take hold of this all powerful monopoly that is the state, and then pervert it to its own ends.

Hence, crony capitalism.

Arguably, whether capitalism or socialism, when combined with a State, both break down rapidly.

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- bridgeenjoyer@sh.itjust.works ⁨1⁩ ⁨day⁩ ago
  Can you explain “the state?” I hear it used so many times and I do not get it. They dont mean the actual state one lives in, like the governor of California etc? I just hear everything blamed on “the state” and I have no idea who they mean.
  
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  - rezz@lemmy.world ⁨1⁩ ⁨day⁩ ago
    The state meaning literally the conceptual apparatus or entity that has the legal monopoly to use force in a geographic area. The State can shoot you and not be subject to the same rules as if you shoot another person or agent of the state.
    
    The most basic is example of commingling of the state and free enterprise is Regulatory Capture—a Wall Street firm has employees to join the SEC, which in turn writes rules via the State to benefit that firm asymmetrically. Because there’s a gun in the room, you’re basically one step removed from giving the corporation itself the legal right to use force.
    
    The most egregious example is obviously the military industrial complex.
    
    However, because in their heads most people will abstract away this notion, they will say things like, “we need to make corporate lobbying illegal,” or “we need to block corporations from donating to political campaigns.” The reality is that the revolving door of regulatory capture trumps all that. If the state exists to write rules, free enterprise will capture it because it has to capture it in order to survive.
    
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How does capitalism differ from crony capitalism?

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Capitalism vs Croney Capitalism

What is the best solution