Crony Capitalism

Crony Capitalism is an expression or variant of capitalism in which the opportunity to open or succeed in business is heavily dependent on one's connections. This results in business decisions being powerfully influenced by business friendships and family ties rather than by impersonal Market forces and open competition... Like Fascism, "crony capitalism" often describes a close relationship between government and business, but to a much less obvious extent. Instead of the government directly controlling businesses and giving it orders (as is the case with Fascism), the government gives legislative favors to certain businesses or types of businesses - ease of permits, government grants, specially created tax benefits, etc.

Capitalists are quick to point out that said actions are "not capitalism", but socialists are just as quick to say that said actions are. Some refer to this system as Mercantilism/Mercantilist or as being related to it. Some, like ethicist Jane Jacobs (in Systems Of Survival), just call it Corruption, a natural consequence of letting those managing power and trade collude.

Crony capitalism is partially explainable by using the principles which govern any network. As government and business leaders try to accomplish things they naturally turn to other hubs (powerful people) (Super Node-s) for support in their endeavors. In a developing country those hubs may be very few thus concentrating economic and political power in a small interlocking group. In a fully developed country, wealth may have become concentrated in a small group with the same result, reduction of the number of hubs or influential persons and institutions.

inevitable outcome of State Capitalism?

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