Cronyism: Necessary for the Minimal, Protective State

Abstract

This paper is part of a symposium on Michael Munger and Mario Villarreal-Diaz's essay, “The Road to Crony Capitalism.” Munger and Villarreal-Diaz force readers to wrestle with the oft-neglected, but crucial distinction between “ideal” capitalism, which is immune from cronyism by definition, and “real” capitalism, which is not. Our paper is motivated by their claim that “it is at least possible that cronyism is intrinsic to, and not separable from, capitalism." We make a stronger claim and argue that, to the extent that capitalism requires the existence of a state, even a minimal state, it also requires some degree of cronyism. Cronyism is inherent in state activities so where the state exists, so too does cronyism. The question is not whether cronyism exists or whether there is a tendency for cronyism to emerge, but instead the magnitude of cronyism given that the existence of the state is its very cause.

Keywords: cronyism, ideal capitalism, real capitalism, military, military-industrial complex