Crony Capitalism

What is 'Crony Capitalism'

Crony capitalism is a description of capitalist society as being based on the close relationships between businessmen and the state. Instead of success being determined by a free market and the rule of law, the success of a business is dependent on the favoritism that is shown to it by the ruling government in the form of tax breaks, government grants and other incentives.

BREAKING DOWN 'Crony Capitalism'

Both socialists and capitalists have been at odds with each other over assigning blame to the opposite group for the rise of crony capitalism. Socialists believe that crony capitalism is the inevitable result of pure capitalism. This belief is supported by their claims that people in power, whether business or government, look to stay in power and the only way to do this is to create networks between government and business that support each other.

On the other hand, capitalists believe that crony capitalism arises from the need of socialist governments to control the state. This requires businesses to operate closely with the government to achieve the greatest success.

RELATED TERMS
  1. Adventure Capitalist

    1. Another word for "venture capitalist", or someone who invests ...
  2. Vulture Capitalist

    1. A slang word for a venture capitalist who deprives an inventor ...
  3. Anarcho-Capitalism

    A term coined by Austrian-school economist Murray Rothbard to ...
  4. Government Grant

    A financial award given by the federal, state or local government ...
  5. Diluted Founders

    A slang term often used by venture capitalists to describe the ...
  6. Business To Government - B To G

    Professional affairs conducted between companies and regional, ...
Related Articles
  1. Markets

    Can Socialism Work In America?

    Capitalism has its shortcomings, but pure socialism is not the answer. The American system of capitalism with socialistic touches might be good for the US.
  2. Markets

    Understanding Capitalist Economy Traits

    Capitalist economies share several traits.
  3. Markets

    Main Characteristics of Capitalist Economies

    Commerce is based on the principles of capitalism, but there are few, if any, examples of pure capitalism except in theory.
  4. Retirement

    How Socialism Differs From Capitalism

    Socialism is an economic and political system based on the public ownership of the means of production.
  5. Markets

    Pros and Cons of Capitalist vs Socialist Economies

    Capitalism relies on the markets. Socialism, on government planning. Each system has its pros and cons.
  6. Markets

    Is Argentina a Socialist Country?

    Find out why it does not really make sense to call Argentina a socialist country, even though the South American nation has many socialistic tendencies.
  7. Managing Wealth

    A Day in the Life of a Venture Capitalist

    Learn more about the job description of a venture capitalist and discover what a typical day in the life of this professional might look like.
  8. Managing Wealth

    Who are Venture Capitalists?

    Venture capital investment firms can provide the seed money for high-risk, start-up companies. People called venture capitalists run these firms, and make the investment decisions.
  9. Markets

    What Exactly is a Socialist Economy?

    Socialism's role in the world has changed dramatically in the last several decades.
  10. Markets

    What are Government Securities?

    Government securities are debt instruments that governments issue to raise capital.
RELATED FAQS
  1. What are the differences between capitalism and socialism?

    Discover the differences between capitalism and socialism. Take a look at the ideology and arguments for each of these modern ... Read Answer >>
  2. What are the main differences between a market economy and a socialist economy?

    Read about some key differences between a socialist economy and a free market economy, including common objections of both ... Read Answer >>
  3. What are the most important aspects of a capitalist system?

    Understand the main aspects of a capitalist system and how they contrast with the tenets of other types of economic systems, ... Read Answer >>
  4. Why do most economists favor capitalism?

    Learn more about how capitalism works and why it is a popular system among economists throughout the world. Read Answer >>
  5. What role does the government play in capitalism?

    Take a deeper look at the role of government in a capitalist economic system and about competing ideas about the proper amount ... Read Answer >>
  6. What is the difference between free enterprise and capitalism?

    Read about the differences between free enterprise and capitalism, and how it is possible to conceive of one system existing ... Read Answer >>
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center