In a Facebook group run by my friend, Dov Baron, he posed the following question:
Capitalism…Do you see a difference between Capitalism and Corporate Capitalism? Should we keep either, both, and if so how do you see us repairing the system?
Many responded. One I found to be particularly interesting was from someone we’ll call Steve who replied:
“The ‘elephant in the room’ difference is that Capitalism can use guns to enforce their will.”
Since that, by definition, is actually the very opposite of Capitalism, and I feel that understanding this concept is so vital to our future as a country, I responded to Dov’s question and “Steve’s” comment with the following:
“Corporate Capitalism” (a/k/a “Corporatism” or “Crony Capitalism”) is a misnomer and is actually not Capitalism at all. As I often say, “Crony Capitalism is to Capitalism what Chinese Checkers is to Checkers…nothing!”
That’s why I don’t even use that term “Crony Capitalism” and simply call it “Cronyism.”
The entire premise of Capitalism — aside from private ownership — is that it is the exchange of products/services between two or more willing parties with both sides coming away from the exchange better off than they were before the exchange. Otherwise, neither party would willingly participate.
Cronyism, on the other hand, is where corporations or other special interests purchase special favors, rules and regulations from politicians (usually via lobbyists and through campaign contributions and other goodies) in order to provide themselves with an unfair advantage over the competition.
This ultimately hurts the consumer in many ways as well as the country as a whole.
Freedom vs. Force
Responding to Steve, I must respectfully disagree and say that the difference is not that Capitalists can use guns to enforce their will; it’s Cronyism that employs “the guns of government” through the buying of politic favors from politicians.
Key Point: With true Capitalism, companies can only get people to buy from them by providing value in such a way that a consumer chooses to do so. In a truly free-market environment the consumer is the ultimate boss and votes with their dollars.
In other words, Capitalism is based on freedom of choice. Cronyism is based on manipulation, politics, and ultimately, force.
Capitalism — while not utopian or perfect — has been the driving force in an increase in the standard of living for everyone living under that system. The more economically free a country is, the higher standard of living for the masses (including the poor). The less free, the lower the standard of living.
In answer to Dov’s question about how to repair this situation, the citizenry must insist its elected representatives do not participate in Cronyism or they will be voted out of office.
Of course, for this to happen, the citizenry must first understand the difference between Cronyism and Capitalism. I’m afraid that at this point most people think they are the same. And, that is a huge problem.
We cannot repair what we don’t understand.
Want to weigh in? Feel…free! 🙂