Crony Capitalism

AAA

DEFINITION of 'Crony Capitalism'

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.

INVESTOPEDIA EXPLAINS '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. Capitalism

    A system of economics based on the private ownership of capital ...
  2. Perfect Competition

    A market structure in which the following five criteria are met: ...
  3. Free Market

    A market economy based on supply and demand with little or no ...
  4. Pork-Barrel Politics

    A slang term used when politicians or governments "unofficially" ...
  5. Invisible Hand

    A term coined by economist Adam Smith in his 1776 book "An Inquiry ...
  6. Laissez Faire

    An economic theory from the 18th century that is strongly opposed ...
Related Articles
  1. Economics Basics
    Economics

    Economics Basics

  2. Understanding Supply-Side Economics
    Economics

    Understanding Supply-Side Economics

  3. The History Of Capitalism: From Feudalism ...
    Personal Finance

    The History Of Capitalism: From Feudalism ...

  4. Explaining The World Through Macroeconomic ...
    Options & Futures

    Explaining The World Through Macroeconomic ...

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center