Cronyism

Necessary for the Minimal, Protective State

Originally published in The Independent Review

The provocative lead essay by Michael Munger and Mario Villarreal-Diaz, “The Road to Crony Capitalism,” in this symposium forces readers to wrestle with the oft-neglected but crucial distinction between “ideal” capitalism, which is immune from cronyism by definition, and “real” capitalism, which is not. Our paper is motivated by their claim that “it is at least possible that cronyism is intrinsic to and not separable from capitalism” (emphasis in the original). We make a stronger claim and argue that to the extent that capitalism requires the existence of a state, even a minimal state, it also requires some degree of cronyism. Cronyism is inherent in state activities, so where the state exists, so too does cronyism. The question is not whether cronyism exists or whether there is a tendency for cronyism to emerge but instead the magnitude of cronyism given that the existence of the state is its very cause.

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