Never Confuse Capitalism With Corporatism

in #politics6 years ago

There are many people who confuse Capitalism with Corporatism, Crony Capitalism or Mercantilism, whatever you want to call it, and they do so without taking into account the differences between the two, in this post I will explain those differences and why there is not and has not been a "Pure Capitalism".


Source

Capitalism is by definition an economic system in which investment and ownership of the means of production, distribution and exchange of wealth is realized and maintained primarily by private individuals or corporations, especially in contrast to cooperative or state means of wealth. This means, without the government regulating a market that is supposed to be free.

Corporatism is not a "free market", because there are government regulations and cooperation with some companies, which of course translates into cronyism between politicians and businessmen and consequently a great disadvantage for those businesses that have no kind of relationship with the state. You have to understand something, with these regulations that the government can do to the market or the favors that can do for their "friends", what happens is that they complicate the existence of smaller businesses, to the extent that they could eliminate them from the market by doing this, this does not affect the large companies because they are powerful enough to withstand any kind of regulation in addition to being able to receive some other favor that the state can offer them. This violates the principle of free competition and creates the monopolies that we see today, which could not happen in a free market because the larger companies could not in any way prevent a smaller business from emerging and taking away their monopoly, in which case the government should not have the power to intervene in any way and it is something that would benefit society more because, in the absence of monopolies, there would be competition that would force companies to have to improve their product or services and offer it at a better price constantly. The problem with Corporatism is that the government is the one who decides who wins and who loses and not the consumers, as would happen in pure capitalism, which has not been achieved in history because the state has always intervened in one way or another in the economy.

What is Crony Capitalism

"The mechanisms of crony capitalism are numerous: Bailouts, stimulus, special loans, too-big-to-fail, favors, mandates, barriers to entry, political appointments, tax breaks, campaign contributions, 'sole-source' procurement, connections, grants, government-union cooperation, exemptions, government sponsored enterprises, political insider trading, and legal bribery." Source

I want to emphasise the fact that if there were a real free market there could be no monopolies, and as Ron Paul says: "Government taxes and regulations are effective means of limiting competition in an industry. Large companies can afford the costs of complying with government regulations, costs which cripple their smaller competitors. Big business can also afford to hire lobbyists to ensure that new laws and regulations favor big business." Capitalism is moral because there are completely voluntary transactions in an equal opportunity market, corporatism is not because the government uses taxes to benefit its friends or supporters and misspends that money. All this goes against free competition and the free market.


Source

"The failure of AOL-Time-Warner demonstrates that even the biggest companies are vulnerable to competition if there is open entry into the marketplace. AOL-Time-Warner failed because consumers left them for competitors offering lower prices and/or better quality." Source

However, the worst monopolies are those that belong to the government, monopolies that we pay through taxes (Extortions), as we have no other alternative in the market, we will only have that service and we will have to pay for it even though we do not want it or use it. A solution to Corporatism would be to limit the government, or eliminate it directly, history shows us that big governments generate big problems, a small government without the power to get into the market would undoubtedly cause fewer problems. In my opinion, I don't even believe that there should be a government because history has shown us that the smaller the government, the less power it has in the economy and the less taxes it charges, the better for society and for the free market, the absence of the state would mean something perfect for Capitalism. And don't get me wrong, this system was the one that made us progress economically during the last 200 years and we should be grateful for that, but we must acknowledge it and be objective, this system can improve and become pure Capitalism, but this requires an absolutely free market and currently there is not, the economic system could only improve with more freedom and without unnecessary government intervention.

"Big-government economics breeds crony capitalism. It's corrupt, anything but neutral, and a barrier to broad participation in prosperity." - Paul Ryan

#ReferencesTitles
1DictionaryCapitalism
2ForbesCapitalism is Decidedly not Corporatism or Cronyism
3Intellectual TakeoutFree Market Capitalism Vs. Crony Capitalism
4MisesBlame Government, Not Markets for Monopoly
5MisesThe Myth of Natural Monopoly
6YoutubeBen Shapiro on Corporatism, talks about Trump's Carrier deal, and Obama's failed job package
7YoutubeWhat is Crony Capitalism?

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Large companies can afford the costs of complying with government regulations, costs which cripple their smaller competitors.

Or, in the case of some Australian companies, they don't even pay costs to government.

Yeah, there are a lot of examples hahaha, a list to be exact.

Well, in fact, I do not like to call the free market, capitalism, since this in the first instance is a Marxist concept.

The Western democracy’s have all changed into a corporatocracy, great post btw

Sadly is true... Thanks! ^^

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free markets freedom of trading with who you want can cause kartels when there is not enough demand and supply... this works all in high demand and average supply

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