Blame Cronyism, Not Capitalism

Capitalism rewards owning capital heavily, so it naturally trends towards wealth concentrating. The argument against this is to regulate it, but overtime, you'll always end up trending towards capital becoming more powerful then the regulators. You'll always have Capital just buying the regulators, basically. You can have "resets" (like the Great Depression and WWII) that maybe fix this a little bit temporarily, but it'll end up going back to cronyism again as power (i.e. Capital) starts concentrating again.

Cronyism can exist in an economic system where there are positions of power. However, if you were to limit position of power, I believe you could make an economic system more resilient to cronyism. Obviously systems like the USSR had positions of extreme power so it was very prone to cronyism.

Except humans, business and politics are far too complex to encapsulate in laws, at least in their current format.

Look at a "simple" case in the news today. Several men who were abused in the 1970s have lost their case against Manchester City Football club who they say were responsible for the "scout" who abused them. If it was really simple, there would be no case. However, the Judge rules that at the time of the abuse, the man (who is currently in prison) was not officially a member of Man City staff so they are not liable vicariously for his actions.

I think something that is lacking in the UK at least, is more like a Charter for Society. What is it that we accept and don't accept. It would be much easier in Court if a ruling is made not just on the letter of a law that might not have thought of the specific scenario, not on common law of something that was close enough to this case but on whether it violates the charter.

Don't know, just a thought.

Which leads to Nassim Taleb's "no skin in the game" problem.

"Government casuses cronyism -- especially anti-cronyism laws". What should the role of government be? I guess the authors would say: Governments should be replaced with financial modeling. I'm not convinced.

There's something fundamentally undemocratic (and perhaps, sadly, realistic) about this take. Will advocating for broad de-regulation and business rule actually reduce cronism? Will it / can it reduce negative externalities?

I just think ... we've tried that. It's been the experiment of the last 40 years. What's next?

One certainly can’t just put a bow on blaming cronyism and assume that capitalism without cronyism would just work (which is what the title implies…. And the article hedges but still kind of implies). Capitalism eventually leads to some pretty unbalanced outcomes as the distribution of profit to the factors of production shift, and it’s not clear that those imbalances would stabilize/correct without extreme intervention (e.g., illegal acts, revolution).

We’re seeing a shift to greater distribution for labor, but that’s after a very long period of favoring capital that doesn’t seem so much to be breaking down as giving way just a tiny bit (like a pressure release valve).

In a fully automated farming, manufacturing, and delivery future, it’s hard to see how capitalism alone would allow for the maintenance of a functioning society. Such conditions would heavily favor engineering/design, raw resources, and (most of all) capital over physical labor.

And, of course, any practical regulation will be imperfect and will lead to functional cronyism as a result of imperfect people working to craft evolving and imperfect laws…