Crony capitalism arises when political cronyism extends into the business domain. Crony capitalism is an economy in which businesses thrive through a nexus between a business class and the political class. In crony capitalism friendships between businessmen and the government and government officials influence the economy. Crony capitalism is favoritism in the distribution of legal permits, special tax breaks and government grants. Crony capitalism made a significant impact in the public mind as an explanation of the Asian financial Crisis. Kang, David C. (2002). Crony capitalism has also been called Corporatism, Corporatocracy, Mercantilism, Fascism, and also Communism.
Crony capitalism corrupts economic and political ideals. The term 'crony capitalism' was initially applied to states involved in the 1997 Asian financial crisis such as Thailand and Indonesia. In these cases, the term was used to point out how family members of the ruling leaders become extremely wealthy with no non-political justification. Crony capitalism led to the East Asian Currency and Financial Crises.
Crony capitalism spills over into the government, the politics, and the media, when this crony capitalism nexus distorts the economy and affects society, it corrupts public-serving economic, political, and social ideals. Crony capitalism consists of collusion among market players which is officially tolerated or encouraged by the government. Crony capitalism is the marriage of the state and private special interests. Crony capitalism and capitalism are fundamentally opposed.
The first extensive use of the term "crony capitalism" came about in the 1980s, to characterize the Philippine economy under the dictatorship of Ferdinand Marcos. - Hau, Caroline S. What is Crony Capitalism?
Crony capitalism is a problem at the federal, state and also local level. We've seen this happen in South Africa and Malaysia. Identity-based politics eventually go towards crony capitalism. - Raghuram Rajan, a professor of finance at the University of Chicago Booth School of Business.
Michael Gove argued that capitalism is failing to deliver. He placed the blame on crony capitalism stating: “Economic power has been concentrated in the hands of a few and crony capitalists have rigged the system in their favour and against the rest of us.”
Crony Capitalism: Corruption and Development in South Korea and the Philippines. Focused only on explaining successful outcomes, the conventional model provided no analytic way to explain the 1997 crisis. Countries previously regarded as miracles now were nothing more than havens for crony capitalists.
World Bank research has focused on identifying the impact of crony capitalism on Ukraine’s economic performance. Ukraine has struggled with corruption and state capture. Oligarchs dominate large sectors of the Ukrainian economy. In Ukraine 2 percent of firms are politically connected, but they control over 20 percent of the total turnover and over a quarter of the assets of all Ukrainian companies. An engaged and vocal citizenry is Ukraine’s best bet at breaking the vicious cycle of crony capitalism.
Crony Capitalism: Corruption and Development in South Korea and the Philippines. Why has the literature on Asian development not addressed the issue of money politics in Korea?
The Great Deformation: The Corruption of Capitalism in America - revisionist history of how the American state, especially the Federal Reserve, has fallen prey to the politics of crony capitalism and the ideologies of fiscal stimulus, monetary central planning, and financial bailouts. It explains why these warped, crony capitalist policies are an epochal threat to free market prosperity and American political democracy. - A New York Times bestseller.
In Crony Capitalists in Our Backyards: Who They Are, What They Do and How to Fight Back (Voices of the Tea Party) - Amy Handlin demonstrates that crony capitalism is also a problem at the state and local level. Ms. Handlin concludes with a set of practical recommendations that average citizens can undertake to fight crony capitalism in their own back yards.
Crony Capitalists in Our Backyards: Who They Are, What They Do and How to Fight Back (Voices of the Tea Party).
Crony Capitalism: Corruption and Development in South Korea and the Philippines (Cambridge Studies in Comparative Politics).