Crony Capitalism

This is sub-chapter #16, of Chapter #4, Economics, of my ongoing rewrite and open editing process Random Rationality: A Rational Guide to an Irrational World. Would greatly appreciate any feedback, corrections, criticisms, and comments. If you want the full PDF of the book, then you can download it by clicking here—if you provide constructive criticisms in return, and live in the US, UK, or EU, then I’ll ship you a paperback copy of the book free of charge when it’s published. If you wish to read the previous chapters in one convenient place online, follow this link.


Getting depressed yet? Hold it in; we are almost at the positive chapter. Let’s talk socioeconomics. The social system that we live in today is not the free market, otherwise referred to by its derogatory term of capitalism, given it by Karl Marx, father of communism.

So what are we living in? To determine that answer, let us go through the options one by one and see if we can find out.

The free-market is an anarchic system where capital is deployed with the intention of producing more capital. Individual liberties regarding to purchasing, selling, and trading are all legal, with individuals taking responsibility for their own actions with their capital, and economic decision-making decentralized with government ensuring rule of law, enforcement of contractual obligations, and foreign policy.

In socialism, there is a belief in equality via redistribution. The people (government) own or heavily influence the means of production, but individuals are allowed to own property.

Then there’s communism, where the people (government) own both the means of production and everything else too.

Finally, we have fascism. An extreme right-wing form of nationalism, predominantly militaristic in nature, and with industry and government in collusion, with preferential treatment given to a military-industry complex at the expense of the citizenry served with a cherry of forced national identity on top.

Now, before some get their knickers in a twist. What I am referencing above are not the textbook description of these ideologies, of which none have ever existed in the entirety of our history. There never has been a government-less communist state, nor a perfect socialist state, and we inch ever further away from the free market day by day (though the fascist governments seem to be the closest). Rather what is referenced is the layman’s viewpoint, the distorted ideals that are alive today in the minds of billions around the world, including myself. I do this because very few people actually know what Communism is, likening it to the USSR, ditto for Socialism, likening it to Europe, and likewise for the Free Market, thinking it is America. Of course, the above descriptions are also drastic oversimplifications, but given one line to describe them, I believe they are apt.

So to bring it full circle, and as is plainly obvious, we live in the stepchild of all four of the above models:

  • Communism for the bankers in the form of the free $7.7 trillion dollars they received
  • Socialism for a few corporations (e.g. auto companies) and the poor via redistribution of wealth
  • Fascism for the military industrial complex using deceit and obfuscation to justify, or prolong ongoing wars
  • Free market for the middle class

Before continuing, I want to say I’m not complaining about the poor’s social net. They need help, most of them are there through no fault of their own, and most of them are kept there by the policies of the political class exacerbating and the extenuating economic hardship bought about resultantly. Society essentially functions as a singular super-organism, with each cell dependent on other cells. That is, there is no such thing as an individual doing everything on their own, so keeping everyone in health is beneficial to the super-organism overall (humanity). Now back to my main point, it’s the rest that is problematic, save for that last one—but first, let us go on a separate but related tangent.

Death is a very crucial part of life, as it is also in the free market. Quite fitting that the best economic model we have created mimics the nature we live in. With death comes the opportunity for change, to evolve, to update, and to attempt to cross the Rubicon that perhaps once was impassable, with the tips, tools, and tricks that we learned from our forefathers trying, and dying.

The role that death plays in evolution and the free market cannot be overemphasized, and this may not do it justice.

Without death, evolution is meaningless, and, therefore, single-celled life would not have evolved into multi-cellular life and everything else here today. So if we have a system that favors a select few, such as the bankers, the military industrial complex, etc., which prevents them from dying or instigates growth beyond what would be naturally possible; it creates rot, distortions, impedes natural progress, and consolidates money where it wouldn’t ordinarily go, thereby preventing access to it via honorable means, exacerbating poverty, joblessness, and wastes resources on problems that don’t exist. As such, lessons aren’t learned that need to be learned, and progress isn’t made that would ordinarily be made.

We are experiential creatures; we learn through the act of experience. This has always been the case, and will be for a very long time; there’s no going around it, and there is very little difference between that fundamental truth on an individual level, or at the level of an economy full of many millions of people.

The invisible hand of the free market is not perfect, but neither are we; and it is damn sure better than the central hand of bureaucrats who think they know better, but invariably don’t.

The status quo that they perpetuate is very dangerous. Keeping the status quo in place is actually, in real terms (since nothing on this planet exists in isolation), a regression. Much in the same manner that a bank’s savings account might pay one-percent interest, but if inflation is three-percent, then your yield in real terms is −2%. You’re going backwards. That’s the status quo!

The rot of stagnation is the downfall of empires. It begins when access to opportunity depends more on existing wealth and connections than hard work and talent, as economist Daniel Altman writes (though I am putting my conclusion on top of his analysis). Think about the Roman Empire, or the Ottoman Empire, or any other past empire. Think about their beginnings: nimble, fast learning, quick to adapt, and above all, persistent and meritocratic. All qualities responsible for their ascent to greatness, or at least, contextualized superiority.

Think about where they were at the end of their reigns: gigantic governments with bloated bureaucracies preying upon the lower classes, viewing them as inferior, and stifling the innovative, free forming of ideas and inventions, and penalizing criticism for fear of losing their momentary hold on power.

Not a single empire in the history of civilization has stood the test of time. What is the single factor present in all of them? People, many of whom relish the status quo—whether the empire is religious, communist, socialist, royal, feudal, or republic in nature, it has been bound for failure as soon as one individual successfully makes the case that static (stagnation) is preferable to dynamism!

It’s this pathological need to control (and corrupt) the normal, changing environment. It’s the existential threat with our constant desire to meddle (meddling involves both stopping change or changing stability, though here I am referring to the former), which carries with it both positive and negative consequences. Positive in that we build civilizations, technology, medicines, and everything else that makes life easier to live now than was the case 100, 1,000, or 10,000 years ago.

Yet be that as it may, we are, and always have been, easily corruptible beasts, and you need only look to our seven-thousand year civilized history to see that every governmental model ever tried has failed with disastrous consequences for all involved, with the brunt of the pain upon the lower classes, due to the self-serving nature of the upper classes, the so-called educated class, due to their futile  efforts to elongate their momentary ascension, and of course, also hurt themselves in the act, yet, our politics has scarcely changed in thousands of years. Does not Einstein’s quip ring true?

“Insanity: doing the same thing over and over again and expecting different results.” ~ Albert Einstein (Physicist)

Quick note: our democracies have evolved, however the role of the politician has not. We like to think that we are smarter than those who came before us, and in some regards we are, but we remain just as greedy, ignorant, and oblivious as our predecessors concerning the singular issue that affects us all the most and by which a society lives or dies; government (more specifically, political control of), its responsibility, and the status quo it futilely holds onto.

This is why we live in this crony capitalist society, moving ever further away from the free market, the one thing responsible for our quality of life, undergoing a slow death as we move ever closer to the distorted reincarnations of socialist/communist models, and why a movement akin to Occupy Wall St is long overdue by several decades, though some of their ideals are a bit distorted. We shouldn’t move to overthrow the free market; we should aim to re-instigate it, with social policies rooted in empirical study and objective analysis, as opposed to bias and pandering (following on from the social sciences and AI component in Fixing Politics).

The more numerous the laws, the more corrupt the government.” ~ Gaius Cornelius Tacitus (Historian)