Crony Capitalism: It Exists Everywhere, It’s Just a Matter of Scale

Author: Gordana Gelenčer

March 17, 2025

As we taste the consequences of geopolitical fractures and catch the morning customs news hoping that it will still be valid by evening, when we try to lull ourselves to sleep with a glass of red, few engage in pondering the social systems we live in across the globe.

Flailing about with customs, quotas, accusations of espionage, investigations into dumping prices, none of this sounds liberal, free, market-oriented, or indeed capitalist. Or, to be more honest, it’s not that the latter doesn’t exist; it’s just a matter of lexicon. Do we call what we live (at least) in the West market, free capitalism? Or is it somewhat everywhere just ordinary cronyism, a negotiated capitalism where the state caresses the chosen ones?

Is laissez faire (a term from the 18th century advocating minimal state intervention in the economy, embraced by Adam Smith) merely a charming ideological relic left behind in economic textbooks? Trump may only seem like a lunatic who expands the state into the market, but the market has been contracting… well, actually always. Because, (always) there have been wars, crises, panics. And to the most backward unbeliever in the abolition of the market, the trend has been particularly visible since 2008, which was nicely followed by 2020 when the state closed economies and paid employees to do – nothing.

Economist Velimir Šonje states that crony capitalism is a fluid concept. Elements of ‘cronyism’ (politics and business) are everywhere. – The real questions are the scales of cronyism and the mechanisms by which it is realized. Through answers to these questions, we are in a position to more clearly distinguish systems with different political-economic characteristics without using the fluid concept of crony capitalism. First, we will define examples at the extremes. An extreme example is political capitalism – China, where there is no separation of powers and democratic oversight. Corporations and political bodies (government, state-party) are one, they intertwine, assist each other, and the state, or party, calls the shots. Private property rights are relative. Russia is similar. The fascist model of economic governance is also similar, where the boundaries between the political and business sectors are erased and there is no external control. In contrast to this stands not laissez faire, which is a theoretical concept, but ordoliberalism, which has been realized in the German model of development after WWII. Strict control of monopolies, encouragement of market competition, equal conditions for all entrepreneurs, competition within the order established by laws and rules enacted through democratic procedures, which minimizes exceptions and simultaneously oversees the functioning of the system. In alternative terminology, the Chinese and fascist models are pro Big Business, while the ordoliberal model is pro Market – concludes Šonje.

Political philosopher Željko Ivanković asserts clearly and succinctly – no, there is no capitalism that is not crony capitalism, especially in the digital age.

– In the book ‘The Agrokor Case’ from 2018, I wrote that the characteristics (elements) of crony capitalism, which are beginning to be referred to as cronyisms, are recognized worldwide, not only in East Asia but also in Russia, Latin America, India, Africa, as well as in the developed countries of the West, the United States and Europe, and even in Eastern Europe, the countries of former socialism. That same year, I published the book ‘Free’, about the political economy of the digital age. In it, I quoted Nobel economist Herbert Simon: ‘According to Nobel laureate Herbert Simon (1991), in the industrial age, companies practically suffocated the market. If an alien were to observe the economic structures on Earth, they would notice large blobs within which are the connections characteristic of companies, and between them thin lines that denote market relationships, writes Simon.’ In other words, there are only companies that are, by definition, hierarchical organizations, competition is almost non-existent, or very thin, as we can see ourselves. The digital economy, I write on that page, and in the next chapter about platforms, further encourages the development of mega-corporations, because in it the principle ‘the winner takes all’ applies, as they work with innovations that capture monopolies and information that allows them to control cash flows at the expense of customers and suppliers, behaving towards them as masters – thinks Ivanković.

So is there a free market or has the state dipped its fingers everywhere? Read the rest of the text in the printed or e-edition of Lider.

—

‘;