Solyndra crony capitalism
Religion & Liberty Online

Christians shouldn’t be surprised to find capitalism infected by cronyism

When anyone criticizes socialism by pointing out the failures of socialist countries like Cuba or Venezuela, its defenders claim, “That’s authoritarian socialism, that’s not the type of socialism we support.” We defenders of free enterprise mock this shift, but don’t we do something similar? When anyone criticizes capitalism, don’t we say, “That’s crony capitalism, that’s not the type of capitalism we support”?

Can the two really be separated? As political scientists Michael C. Munger and Mario Villarreal-Diaz write in their new essay, “The Road to Crony Capitalism”:

When opponents criticize some aspect of markets—solar startup Solyndra’s highly subsidized collapse or Martin Shkreli’s use of procedures approved by the U.S. Food and Drug Administration to squelch competition—we dismiss those examples. “That’s not capitalism. That’s crony capitalism!” Might not a modern Hayek but of the left be tempted to write his own treatise called “The Road to Crony Capitalism”? The thesis would be that real capitalism is not sustainable and that any attempt to set up capitalism in democracies is a step toward crony capitalism.

Suppose it’s true that capitalism has a tendency—it’s not inevitable or irreversible, but a tendency nonetheless—to devolve into crony capitalism. Is laissez-faire simply the first step on a kind of road to serfdom, where giant corporate syndicates achieve a parallel kind of economic planning every bit as pernicious as that feared by Hayek? Of course, the planning takes the form of cartelized industry, protection from competition, and restrictions on innovation, but it is planning nonetheless. Thus, it is at least possible that cronyism is intrinsic to and not separable from capitalism.


Our question, then—the question of our age—is simple: If real capitalism exists, is it sustainable? Or does capitalism in a democracy always devolve into corporatist cronyism?

Oftentimes, it may seem difficult to distinguish the views of the Acton Institute from other organizations that promote free enterprise. But on this question our approach distinguishes us from our secular co-belligerents. The Acton Institute was founded on the basis of ten Core Principles, integrating “Judeo-Christian Truths with Free Market Principles.” One of those principles is the reality of sin:

SIN – Although human beings in their created nature are good, in their current state, they are fallen and corrupted by sin. The reality of sin makes the state necessary to restrain evil. The ubiquity of sin, however, requires that the state be limited in its power and jurisdiction. The persistent reality of sin requires that we be skeptical of all utopian “solutions” to social ills such as poverty and injustice.

Recognizing the reality of sin provides a much needed level of realism to the discussion, and changes the way we think about the issue. Is cronyism intrinsic to capitalism? Yes, because people are sinful. Does capitalism in a democracy always devolve into corporatist cronyism? Yes, because people are sinful. Is capitalism sustainable? Yes, but only if account for the sinfulness of humanity.

Christians should not be surprised by cronyism; we should expect it. Cronyism is not some aberration of capitalism but the inevitable outcome of sinful and unvirtuous humans using the system for their advantage. That’s why the three most popular political movements in America today—populism, nationalism, and socialism—are ones that promote cronyism.

Former supporters of the Tea Party movement didn’t wake up one day and suddenly decide that they had been wrong free enterprise and should instead embrace statism. Instead, they gained a modicum of power and supported a presidential candidate who would promote the cronyist policies that benefitted them (at least in theory). As history has repeatedly shown, it doesn’t take much to flip a person from an advocate of free markets to a supporter of cronyism. All it takes is access to power and influence.

To effectively fight cronyism requires us to be more realistic about our susceptibility to the allure of statism. Just as we can’t oppose sinful behavior in other people and excuse it in ourselves, we can’t oppose cronyism only when we see it in political opponents and ignore it when our allies support it. If we want to save capitalism, we must start by saving it from our own sinful inclinations.

“Solyndra Tax Sinkhole” by Jay Cross is licensed under CC BY 2.0

Joe Carter

Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).