Capitalism, Crony-Cap, and Confusion

I read various ‘leftists’ who decry the use of government power by private firms in order to benefit themselves and call that phenomenon an example of  “free market Capitalism” at work. How wrong can these people get? Worse, they often accuse libertarians of supporting this use of government power by large business for their own ends. So where are these libertarians who support the use of government force by large business to enrich themselves? I can’t find any such “libertarians”.

Is it a mark against the free market that business firms do try to use the force of government to benefit themselves? No, it is the natural incentive of the situation that leads to that use of government by large corporations. Libertarians argue that we should eliminate the source of the incentive. We argue that we should eliminate the state: or at the very least reduce the state to such a small and weak condition so that it can not be used to further any corporate ends.

Libertarians, especially market anarchists, claim that the option of using government force to advance the ends of business would not be available in a libertarian society as it is the state that makes possible all manner of plunder that is impossible without the state. The leftists mistake the present crony-capitalism (corporatism) for a laissez-faire free market. I suppose they do that on purpose since it would take an idiot to mistake coercion for liberty.

It is fair to point out that the alliance that exists between government and special interests is morally abhorrent and runs against the economic interests of the masses. It is fair to rail against the present system of corporatism. But since the present system runs completely counter to libertarianism and it could not exist in a libertarian society, it is totally unfair to blame libertarianism for the very thing we have always fought against!

The special interests invest in political campaigns as a cost of doing business. It is natural that they also expect a handsome return on their investments. It is also a fact that they believe there are rewards to those who invest money in politics or they would not do so. Corporations, cartels, unions, and the various industries get back pet legislation, subsidies, tax breaks, limitations on liability, preferential treatment, barriers to entry into their market, and on and on. And of course politicians take money to sell these favors and protections; it is human nature after all.

Rather than a “laissez-faire free market” we have a not-so-free-market that is stymied and is really not a free market at all. Instead, we have the state corporatism of Benito Mussolini who helped pioneer the concept in Italy in the 20s and 30s. We need to free the market to be laissez-faire. If we were to do so then the laissez-faire market would do what it does naturally. It would sort good companies from bad ones and reward the efficient while punishing the inefficient. Innovation would be rewarded and consumers would have authentic choices in the marketplace.


What the “leftists” don’t see, or pretend they don’t see, is that in effect crony capitalism is central planning. The central planning that the great von Mises showed in the 20s was vastly inferior is what some of our leftist critics call “free market capitalism”. What these leftist critics don’t seem to understand is that Capitalism involves nothing more than free contract and exchange, bounded by private-property rights. That is not the same as getting politicians and their goons involved in the economic lives of the citizens!

The planner is a potential dictator who wants to deprive all other people of the power to plan and act according to their own plans. He aims at one thing only: the exclusive absolute preeminence of his own plan. ~von Mises

Leftists seem to expect justice to come from government and its regulatory agencies. Hundreds of years of data showing that justice never comes from the force of government seems to be over the heads of our leftist friends.

The writings of the socialists are full of such utopian fancies. Whether they call themselves Marxian or non-Marxian socialists, technocrats, or simply planners, they are all eager to show how foolishly things are arranged in reality and how happily men could live if they were to invest the reformers with dictatorial powers. ~von Mises

I don’t know what it will take to make our leftist friends understand the difference between crony-cap and laissez-faire capitalism, but we need to find a way to show the honest ones the difference.


4 thoughts on “Capitalism, Crony-Cap, and Confusion

  1. Pingback: 40 frases venenosas | SCOMBROS

  2. Excellent post! It is such a frustrating topic. In talking with others about topics like Obamacare I hear things like “youre free markets have destroyed the health industry”. No matter how much I try to explain the difference between Corporatism and free-markets the message rarely is received. Too many have bought the hype that the health care industry is a free-market anarchy and will not hear opposing views. (the anarchy point is another issue, the mainstream media and others have destroyed that word, it doesn’t mean what they think it means.).

    Good Post!

    • Thanks for the kind words.

      Yes, the first objective of the state worshipers is to destroy the meaning of words to confuse communication. They have made the word “anarchy” mean “chaos” in most people’s minds. I heard a Ph.D call a crazy, loud and chaotic classroom “anarchy” just the other day. Sad really.

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