“Crony capitalism” is not capitalism, but political cronyism: the granting of political favors by the government to one’s friends (“cronies”) at the expense of the rights of others.

Capitalism is a political-economic system based on the principle of individual rights, which means the separation of state and economics (just like the separation of church and state).

Cronyism is the practice of giving rewards based on considerations other than merit: it is a form of injustice. Cronyism, in a political context, is the government granting political favors and privileges to one party at the expense of the rights of others, i.e., a politician subsidizing a private business with taxpayer funds, i.e., the government granting a monopoly (exclusive license) to some company, i.e., a government official creating a law to benefit some friend (crony), i.e., the government granting a state contract to a crony for personal reasons.

The proper term for such a policy is not “crony capitalism” but political cronyism. Crony capitalism” is an anti-concept — a contradiction in terms used to blame capitalism, for what is in fact, the fault of anti-capitalist politicians. What those who wish to disparage capitalism by linking it to cronyism is to hide the fact that under capitalism all political cronyism is forbidden.


Examples of cronyism in the private sphere are the awarding of a job to a less qualified candidate because of their sex, ancestry, family relation, or race. Under capitalism, a business is free to hire and award employees as they wish so long as they do not violate the rights of others. However, under a free-market, a business that selects and rewards employees on considerations other than ability and merit will lose to competitors who are more concerned with hiring and awarding employees based on ability and merit.



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