4 ms·

I think you're referring to cronyism (aka crony capitalism), which is often conflated with free-market capitalism here on hn.

emodendroket 10y ago
It's a distinction without a difference.
ska 10y ago
Iirc correctly there is theoretical work supporting the former (i.e. capitalism leading to wealth accumulation) but not the stability of that wealth over longer terms. That is, there is inequality in distribution, but also churn. Of course this has the same fundamental issues as all economic modeling when employed in practice.
dragonwriter 10y ago
"Crony capitalism" is the only kind that has ever existed and the one for which its critics coined the name "capitalism". "Free market capitalism" is a not particularly coherent utopian aspirational vision which defenders of real-world crony capitalism invented as a distraction.
- anigbrowl 10y ago
  I think that's a little harsh. The game of Monopoly exists to show that structural factors can inevitably lead to an outcome an outcome where one player has all the money even if players behave completely fairly towards each other. BTW if you've never heard of it, I think you'd be extremely interested in Nomic, a game whose play revolves around the reconstruction of its own rules.
dagss 10y ago
Sources? Piketty's "Capital in the 21th century" can serve as a source on how wealth has been getting concentrated in the real world (interrupted by WW2 which spread it out again). He also argues well for why this is an intrinsic feature of our economies. You may oppose him and say "that was just because the market isn't free enough", but it is an extraordinary claim and I would say the burden of actual proof is on you then.
- clock_tower 10y ago
  I'd refer you to Peter Turchin, War and Peace and War. He argues that it's not capitalism that leads to wealth concentration, it's peace, stability, and prosperity -- since we can see this problem worldwide, and very far back in history. Since peace breeds wealth concentration, it eventually ends in a crisis (normally a period of major wars); the crisis mostly kills people and ruins lives, but it also disrupts concentrations of wealth as a side-effect. Eventually the wars end in a peace of exhaustion, with wealth a little more equitably distributed (or at least enough wreckage that everyone can make money by rebuilding), and a period of peace and wealth concentration begins again. Solutions to this problem that have been tried and failed include: * Endless war. This doesn't do much the problem of concentration of wealth (warlords as well as capitalists have high wealth concentration), and it creates sociological problems; for details in a familiar context, read Albion's Seed, specifically the section on the Borderers/hillbillies/Scotch-Irish. * State ownership of some productive capital (Britain after WWII) or basically all productive capital (the USSR). This works well for a while (see How Asia Works), but if kept around for too long it breaks down, producing complacency, mismanagement, and an inevitable fiscal crisis. Thatcher and Gorbachev did pretty much the same thing, for pretty much the same reasons. * Wage controls, price controls, tariff walls, heavy internal regulation. The New Deal, Ireland under De Valera, all European governments before the 1700s (see Braudel, The Structures of Everyday Life), and the Tokugawa Shogunate did this. For as long as the will to enforce everything exists, this approach sort of works, and it slows down wealth concentration and the development of crises; but it doesn't stop them entirely, and the crises are likely to be really explosive when they hit. (See also the 1700s, 1968, and the fall of the Tokugawas.) It also leads to technological stagnation, which has other obvious problems. * Letting the market work its magic. See Upton Sinclair, The Jungle, for why this is intolerable in practice. Don't ask me for a magic bullet, none of the ones above work and I don't know what others there could be. Perhaps the solution is to just be aware of the problem and try to manage it...
  - jack9 10y ago
    > it's peace, stability, and prosperity In the absence of other factors, it's every known system itself. This is not the same as them being causes. The observation is that humans have not found a suitable system.
anigbrowl 10y ago
I'm afraid I think that's a basic structural flaw of capitalism (notwithstanding its many structural goods). When I hear this argument I feel it's a bit like proponents of socialism saying 'ok communism actually does suck but that's because it's a departure from the beautiful socialist ideal.' The basic problem is this: no matter how good your system, it's not going to be used solely by angels, but by a distribution of people. A few of those will be very ethical and unselfish and operate completely within the rules and the spirit of the system. A few others will be total assholes and just exploit every weakness they can find to advance their own interests, regardless of the damage inflicted on others. And a lot of people in the middle will just go in the same direction as everyone else - when there are more good people around they'll conduct themselves ethically, when there are more bad people around they'll help themselves. But the middle group is generally passive and doesn't make any particular effort to either support or subvert the system within which they find themselves. So in the context of capitalism you'll have some very high-minded entrepreneurial people and some corrupt cronyist types, in the context of socialism you'll have some very selfless individuals and some authoritarian thugs, in a religious context you'll have some saintly types and some hypocrites who prey on the naive and use fear of divine retribution to silence their victims, and so on. When we design or experiment with social technologies, we have to be on our guard against two extremely risky assumptions: one, that our proposed system would work great if only everyone adopted it, and two, that our proposed system will be used by people like ourselves who share our basic assumptions about right and wrong. In sum, you're right to point to cronyism but you're wrong to ignore cronyism given the fact of its widespread popularity. there are bad as well as good people int he world, and so we should consider what the possible negative outcomes of our technology would be if such people gained control of it.
- rtfsgdfarea 10y ago
  >A few of those will be very ethical and unselfish and operate completely within the rules and the spirit of the system. A few others will be total assholes and just exploit every weakness they can find to advance their own interests, regardless of the damage inflicted on others This seems far from the general consensus in social psychology, which is that the context we exist in determines the majority of our actions. The Milgram and Asche lines of research are the most prototypical, but Zimbardo has spent his whole career on basically this question. True sociopaths are incredibly rare (less than 1% of the population). People find it very difficult to betray or hurt other people, and this comes from genetics, not context, and we know this because it is a human universal. In similar experiments measuring trusting behaviors and betrayal vs. reward responses to those behaviors, 90% of people engage in a trust behavior (giving money to another research participant, over a computer game, never seeing this other person), and 95% of people who are trusted reward, rather than betray, their partner. This sort of human-naturism is just defeatist propaganda meant to maintain the existing system of total hierarchical dominance of elites (the capitalist class, men, whites, cisgenderds) over the oppressed. You can choose to stop being a shitty person, and your doing that will create a context where other people are pressured to do the same, and will likely concede to that pressure. (It's not surprising that this didn't exactly take on in an environment like the Soviet Union, where trust was intentionally minimized by the state, which itself didn't trust its citizenry because it was the active target of an espionage and proxy war for its entire existence. It's also not surprising that people in an environment that values capital accumulation over all else are quick to betray each other. However, there are a lot of examples of libertarian socialist territories, brief though they may have been, that contradict the notion that communism (which is the same thing as socialism, there is no difference at all) inevitably leads to totalitarianism. Since these societies were attacked both by capitalists and authoritarian communists, it's not surprising that they didn't last very long either.)
Trundle 10y ago
Owning income producing assets increases income, allowing for the purchase of more income producing assets. I don't see how crony capitalism vs free market needs to come in to it.
- emodendroket 10y ago
  Right, exactly. And besides that, it's not exactly surprising that you'd end up with disparities in a system whose distinguishing characteristic is the ability of a small class of owners to capture the lion's share of excess value.
ue_ 10y ago
What is 'Crony capitalism', and what evidence is there for it? This "It's not capitalism, it's crony capitalism" is Capitalism by a different name. You need someone to defend your private property, which usually entails a state or state-like institution (and of course the class system inherent in capitalism). Rather than linking you to a particular source of information, there are plenty of good sources here on this 'cronyism': https://www.reddit.com/r/socialism/search?q=crony&restrict_sr=on&sort=relevance&t=all https://www.reddit.com/r/socialism/search?q=crony&restrict_s... Also, capitalism without government intervention is still as flawed because it is capitalism. And either way, wealth accumulation is a feature of capitalism, 'crony' or not. So is wage labour, the two-class society of the proletariat and bourgeois, maximising exchange value over use value and the biggest teller of them all, private ownership of the means of production. Recommended reading is Marx's 'Wage Labour and Capital', and I'm making my way through 'The Ragged Trousered Philanthropists' by Robert Tressell if you want to get to the nitty gritty of what Capitalism was like and how it still persists in its exploitative global form.

emodendroket 10y ago

It's a distinction without a difference.

ska 10y ago

Iirc correctly there is theoretical work supporting the former (i.e. capitalism leading to wealth accumulation) but not the stability of that wealth over longer terms. That is, there is inequality in distribution, but also churn. Of course this has the same fundamental issues as all economic modeling when employed in practice.

dragonwriter 10y ago

"Crony capitalism" is the only kind that has ever existed and the one for which its critics coined the name "capitalism". "Free market capitalism" is a not particularly coherent utopian aspirational vision which defenders of real-world crony capitalism invented as a distraction.

anigbrowl 10y ago
I think that's a little harsh. The game of Monopoly exists to show that structural factors can inevitably lead to an outcome an outcome where one player has all the money even if players behave completely fairly towards each other. BTW if you've never heard of it, I think you'd be extremely interested in Nomic, a game whose play revolves around the reconstruction of its own rules.

dagss 10y ago

Sources? Piketty's "Capital in the 21th century" can serve as a source on how wealth has been getting concentrated in the real world (interrupted by WW2 which spread it out again). He also argues well for why this is an intrinsic feature of our economies. You may oppose him and say "that was just because the market isn't free enough", but it is an extraordinary claim and I would say the burden of actual proof is on you then.

clock_tower 10y ago
I'd refer you to Peter Turchin, War and Peace and War. He argues that it's not capitalism that leads to wealth concentration, it's peace, stability, and prosperity -- since we can see this problem worldwide, and very far back in history. Since peace breeds wealth concentration, it eventually ends in a crisis (normally a period of major wars); the crisis mostly kills people and ruins lives, but it also disrupts concentrations of wealth as a side-effect. Eventually the wars end in a peace of exhaustion, with wealth a little more equitably distributed (or at least enough wreckage that everyone can make money by rebuilding), and a period of peace and wealth concentration begins again. Solutions to this problem that have been tried and failed include: * Endless war. This doesn't do much the problem of concentration of wealth (warlords as well as capitalists have high wealth concentration), and it creates sociological problems; for details in a familiar context, read Albion's Seed, specifically the section on the Borderers/hillbillies/Scotch-Irish. * State ownership of some productive capital (Britain after WWII) or basically all productive capital (the USSR). This works well for a while (see How Asia Works), but if kept around for too long it breaks down, producing complacency, mismanagement, and an inevitable fiscal crisis. Thatcher and Gorbachev did pretty much the same thing, for pretty much the same reasons. * Wage controls, price controls, tariff walls, heavy internal regulation. The New Deal, Ireland under De Valera, all European governments before the 1700s (see Braudel, The Structures of Everyday Life), and the Tokugawa Shogunate did this. For as long as the will to enforce everything exists, this approach sort of works, and it slows down wealth concentration and the development of crises; but it doesn't stop them entirely, and the crises are likely to be really explosive when they hit. (See also the 1700s, 1968, and the fall of the Tokugawas.) It also leads to technological stagnation, which has other obvious problems. * Letting the market work its magic. See Upton Sinclair, The Jungle, for why this is intolerable in practice. Don't ask me for a magic bullet, none of the ones above work and I don't know what others there could be. Perhaps the solution is to just be aware of the problem and try to manage it...
- jack9 10y ago
  > it's peace, stability, and prosperity In the absence of other factors, it's every known system itself. This is not the same as them being causes. The observation is that humans have not found a suitable system.

anigbrowl 10y ago

I'm afraid I think that's a basic structural flaw of capitalism (notwithstanding its many structural goods). When I hear this argument I feel it's a bit like proponents of socialism saying 'ok communism actually does suck but that's because it's a departure from the beautiful socialist ideal.' The basic problem is this: no matter how good your system, it's not going to be used solely by angels, but by a distribution of people. A few of those will be very ethical and unselfish and operate completely within the rules and the spirit of the system. A few others will be total assholes and just exploit every weakness they can find to advance their own interests, regardless of the damage inflicted on others. And a lot of people in the middle will just go in the same direction as everyone else - when there are more good people around they'll conduct themselves ethically, when there are more bad people around they'll help themselves. But the middle group is generally passive and doesn't make any particular effort to either support or subvert the system within which they find themselves. So in the context of capitalism you'll have some very high-minded entrepreneurial people and some corrupt cronyist types, in the context of socialism you'll have some very selfless individuals and some authoritarian thugs, in a religious context you'll have some saintly types and some hypocrites who prey on the naive and use fear of divine retribution to silence their victims, and so on. When we design or experiment with social technologies, we have to be on our guard against two extremely risky assumptions: one, that our proposed system would work great if only everyone adopted it, and two, that our proposed system will be used by people like ourselves who share our basic assumptions about right and wrong. In sum, you're right to point to cronyism but you're wrong to ignore cronyism given the fact of its widespread popularity. there are bad as well as good people int he world, and so we should consider what the possible negative outcomes of our technology would be if such people gained control of it.

rtfsgdfarea 10y ago
>A few of those will be very ethical and unselfish and operate completely within the rules and the spirit of the system. A few others will be total assholes and just exploit every weakness they can find to advance their own interests, regardless of the damage inflicted on others This seems far from the general consensus in social psychology, which is that the context we exist in determines the majority of our actions. The Milgram and Asche lines of research are the most prototypical, but Zimbardo has spent his whole career on basically this question. True sociopaths are incredibly rare (less than 1% of the population). People find it very difficult to betray or hurt other people, and this comes from genetics, not context, and we know this because it is a human universal. In similar experiments measuring trusting behaviors and betrayal vs. reward responses to those behaviors, 90% of people engage in a trust behavior (giving money to another research participant, over a computer game, never seeing this other person), and 95% of people who are trusted reward, rather than betray, their partner. This sort of human-naturism is just defeatist propaganda meant to maintain the existing system of total hierarchical dominance of elites (the capitalist class, men, whites, cisgenderds) over the oppressed. You can choose to stop being a shitty person, and your doing that will create a context where other people are pressured to do the same, and will likely concede to that pressure. (It's not surprising that this didn't exactly take on in an environment like the Soviet Union, where trust was intentionally minimized by the state, which itself didn't trust its citizenry because it was the active target of an espionage and proxy war for its entire existence. It's also not surprising that people in an environment that values capital accumulation over all else are quick to betray each other. However, there are a lot of examples of libertarian socialist territories, brief though they may have been, that contradict the notion that communism (which is the same thing as socialism, there is no difference at all) inevitably leads to totalitarianism. Since these societies were attacked both by capitalists and authoritarian communists, it's not surprising that they didn't last very long either.)

Trundle 10y ago

Owning income producing assets increases income, allowing for the purchase of more income producing assets. I don't see how crony capitalism vs free market needs to come in to it.

emodendroket 10y ago
Right, exactly. And besides that, it's not exactly surprising that you'd end up with disparities in a system whose distinguishing characteristic is the ability of a small class of owners to capture the lion's share of excess value.

ue_ 10y ago

What is 'Crony capitalism', and what evidence is there for it? This "It's not capitalism, it's crony capitalism" is Capitalism by a different name. You need someone to defend your private property, which usually entails a state or state-like institution (and of course the class system inherent in capitalism). Rather than linking you to a particular source of information, there are plenty of good sources here on this 'cronyism': https://www.reddit.com/r/socialism/search?q=crony&restrict_sr=on&sort=relevance&t=all https://www.reddit.com/r/socialism/search?q=crony&restrict_s... Also, capitalism without government intervention is still as flawed because it is capitalism. And either way, wealth accumulation is a feature of capitalism, 'crony' or not. So is wage labour, the two-class society of the proletariat and bourgeois, maximising exchange value over use value and the biggest teller of them all, private ownership of the means of production. Recommended reading is Marx's 'Wage Labour and Capital', and I'm making my way through 'The Ragged Trousered Philanthropists' by Robert Tressell if you want to get to the nitty gritty of what Capitalism was like and how it still persists in its exploitative global form.