Why Cronyism Doesn't Explain the Free Market's Unpopularity
By Bryan Caplan
I could be wrong, but it seems like one of left-libertarians‘ main goals is to salvage populism. Most libertarians condemn the public’s anti-market reflexes. Left-libertarians reply, in essence, is: “It’s only natural for the public to condemn the unholy alliance of big business and big government that passes for ‘the free market’ nowadays.”
The key problem with this position: Normal people think that government is the solution, not the cause, of monopoly problems. Before I studied economics, I repeatedly heard about government’s struggle against monopoly – and never heard that government might be part of the problem. I’ve been arguing about monopoly for two decades – and teaching about monopoly for the last thirteen years. As far as I can tell, the idea that government habitually creates monopolies on purpose is largely limited to free-market economists and the hard left.
So what? Well, if most of public isn’t even aware of the government-monopoly connection, it’s hard to see how “cronyism” could explain public hostility to markets. What the public objects to, I’m afraid, is the market mechanism itself. That’s why protectionist arguments are so popular; the public doesn’t like to see foreigners showering consumers with cheap goods – and welcomes government-business alliances to handle this “problem.”
What about the hard left? I’ll admit that they’re often aware of the unholy alliance of business and government. But it’s naive to conclude that their real beef is with cronyism, not the free market. Strange as it seems, the hard left sees the unholy alliance of business and government as an argument for government.* Marxist historian Gabriel Kolko wrote a whole book about crony capitalism, but his research certainly didn’t shake his faith in socialism. As he bluntly explained:
As I made clear often and candidly to many so-called libertarians, I have been a socialist and against capitalism all my life, my works are attacks on that system, and I have no common area of sympathy with the quaint irrelevancy called “free market” economics. There has never been such a system in historical reality, and if it ever comes into being you can count on me to favor its abolition.
Libertarians have every reason to attack cronyism. But cronyism is not the wedge issue that left-libertarians imagine. The public would still deeply resent markets even if government stopped playing favorites. Indeed, the public’s complaint is often that the government fails to play favorites when it should; international trade is only the most obvious example.
* The hard left argument, I guess, is that the weaker business is, the
less able it will be to corrupt government. But can’t government be
corrupt all by itself?