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Investing and Economics Blog

Political and Corporate Cronyism are not Capitalism

Many talking heads and politicians try to sell their policies of allowing large market players to take profits by prevent markets from functioning properly as capitalist. They are not. Unless liaise-fare capitalism throws out the primacy of free markets being used to aid society by allocating economic resources efficiently it isn’t either. If it does, using the word capitalism is just obfuscation, because it isn’t capitalist.

Crony capitalism is a better phrase for what we have been practicing. Though using the word capitalism is misleading. Even better would be politically supported corporate cronyism. We have elected those that pursue this anti-market approach. And we watch them in great numbers on TV based on what is supposedly popular. But I really hope we can turn away the claims of capitalism somehow being consistent with the crazy things people have done.

Pushing a political desire that anti-government and calling it capitalism doesn’t make it so. Capitalism at the core is about a system that allows markets to efficiently allocate resources to provide the greatest societal good. It is based on markets working. Capitalists know market players will try to prevent markets from working to gain themselves. To support capitalism you need to design systems that deal with this weakness otherwise you are not talking about capitalism you are talking about something else. Something that where anti-market forces which undermine the basis for why capitalism is a useful method for societies to gain economically is subverted to a desire to support those that can buy political power.

I have written about this some, as I care about it: Economic Consequences Flow from Failing to Follow Real Capitalist Model and Living Beyond Our Means – A Free Market is not One with Monopolies and Oligopolies – Mis-representing Capitalism

October 20th, 2011 John Hunter | 1 Comment | Tags: Investing

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  1. Long Term Changes in Underlying Stock Market Valuation at Curious Cat Investing and Economics Blog on May 18, 2020 3:34 pm

    […] I agree. Our political parties have aided big business in undermining market through monopolistic market control and that has been consistent (and increasing) for decades now. It makes stocks more valuable. They […]

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