Crony capitalism comes about when the playing field is tilted to those in power, or those experiencing the favor of those in power. Modern China is an example of how it works. Members of the Communist Party and generals in the Chinese military own different enterprises, and Chinese industrial policy is tilted to favor them.
The economist James Dale Davidson likes to tell of the first development of capitalism in China. In the 9th century AD, some Chinese businessmen developed a primitive process for making steel. They quickly made a lot of money due to the demand for their product. Courtiers around the emporer pointed out that these men had achieved success without receiving a mandate for that success from the emporer. They were independent of the emporer's power. They lacked the Mandate of Heaven. Disharmony had entered the Middle Kingdom.
The emporer solved the problem by sending in the army to break up the steel foundries and behead the owners. Thus genuine capitalism rose and fell in 9th century China.
The Chinese prefer the crony version so that power can be maintained from the proper places. Unforunately, we have become like them.
LOL, I was just talking about the Middle Kingdom to my mentor in an email this morning.
I see what you mean, it is something of a monopoly. No, that is not good.
I don’t think we’re at 9th century China yet, but one day we will be if things don’t change.
I was reading Mommsen’s History of Rome a couple years back. I was trying to find info on the Phyrric War, of which there is a dearth. One thing Mommsen said to me stuck though.
Pyrrus was Alexander the Great’s cousin and dreamed of starting a great Western Empire to match Alexander’s Eastern one. The man was a brilliant general, but Rome and Carthage formed an alliance that drove him off.
During the days of the Roman Empire, Greeks imagined what would have happened if either Pyrrus had won or if Alexander had lived to march West. Mommsen said that even if the Greeks had won their war against Rome, they could not have turned the Romans and other warlike Italian tribes in fellahin (peasants totally obedient to their absolutist ruler with no means of self-defense). And then I thought of the Romans a thousand years after the Pyrric War, how they were serfs of Gothic thanes. The only people who could turn them into fellahin were themselves. And we can have revival here in America, or we can turn ourselves into fellahin too.