It's Crony STATISM

Reader comment on: Jamie Dimon, Obama, and the London Whale

Submitted by Ed Thompson (United States), May 11, 2012 19:32

Let's stamp out the term "crony capitalism." It is a misnomer; it reverses cause and effect. Government and not business is the source of favoritism. The phenomenon referred to by that term should properly be labelled "crony statism."

Capitalism, in Ayn Rand's words, "is a social system based on the recognition of individual rights, including property rights." It is a system of voluntary trade that bans the initiation of force. The Declaration of Independence recognized that man has rights and "That to secure these rights, governments are instituted among men." That is, the proper role of government is to protect us from predation—not to violate our rights by dispensing favors to special interests at taxpayer expense; it precludes the bestowing of favors.

Crony statism consists of agents of government, e.g., Congress, providing favors to business, which they have no right to grant. The improper use of power by government to promise and grant favors—alternating with its equally wrong use of power to threaten and impose business-killing regulations—is the reason that businesses (think General Electric, Solyndra, et al.) seek special privileges. If government followed its proper function as provided in the U.S. Constitution, government officials would be forbidden from granting special treatment to, or by the same token, from imposing special limits on, any individual or business. That would put an end to cronyism.

The term crony capitalism gives honest businessmen a bum rap.

If a detailed, factual study were made of all those instances in the history of American industry which have been used by the statists as an indictment of free enterprise and as an argument in favor of a government-controlled economy, it would be found that the actions blamed on businessmen were caused, necessitated, and made possible only by government intervention in business. The evils, popularly ascribed to big industrialists, were not the result of an unregulated industry, but of government power over industry. The villain in the picture was not the businessman, but the legislator, not free enterprise, but government controls. "Notes on the History of American Free Enterprise," Capitalism: The Unknown Ideal, p. 102

The earlier quotation from the Declaration, properly understood, describes pure laissez faire capitalism, i.e., absolute separation of state and economics. Crony statism is rampant in the U.S., but that is not capitalism. Cronyism is not consistent with capitalism. For more on the subject, see

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Other reader comments on this item

Title By Date
⇒ It's Crony STATISM [393 words]Ed ThompsonMay 11, 2012 19:32
Bizarro world [134 words]Jerry SkurnikMay 11, 2012 17:09
More Dimon arrogance at work... [72 words]Fast EddieMay 11, 2012 09:18

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