Crony Capitalism
Why is Latin America leaning left? Gary Becker notes:
One of the more interesting and disturbing developments during the past several years is the leftward movement of several governments in South America, including Venezuela, Bolivia, Argentina, and others.
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One legitimate reason for the opposition to capitalism in Latin America is that it frequently has been “crony capitalism” as opposed to the competitive capitalism that produces desirable social outcomes. Crony capitalism is a system where companies with close connections to the government gain economic power not by competing better, but by using the government to get favored and protected positions.
Just today, Roberto Lavagna, the former Argentine Economy Minister, mentioned crony capitalism (capitalismo de amigos) as one of the issues facing Argentina.
“Habrá que decidir como sociedad si queremos más o menos estatismo en el sector de los servicios, más o menos economÃa libre, más o menos capitalismo de amigos, más o menos relación con el mundo desarrollado, más o menos tecnologÃa, más o menos importancia a una real y sustentable distribución de oportunidades e ingresos, más o menos tecnologÃa, más o menos instituciones y reglas claras”
If living in Argentina has taught me anything about Argentine politics/economics, it’s that many people (most?) mistakingly blame neo-liberal policies for the horrific economic crises (plural; recession, depression, pesification, etc.) suffered from 1998 to 2003, give or take a couple years. My mantra when talking politics/economics with folks here is that any system fails when corruption runs rampant.
Most don’t realize that they weren’t “victims” of neo-liberalism, or economic neo-imperialism, but instead endured a demented form of capitalism that lacked many of the necessary ingredients of sustainable growth: true competition, government non-involvement in the private sector, etc. As Rubén over at BlogBis notes, Ricardo Lopez Murphy refers to this brand of crony capitalism as neo-mercantilism.
It’s no wonder that Hugo Chavez is able to make ideological inroads throughout the region. Fortunately, the recent summit in Vienna highlighted some schisms in the Latin American left. Perhaps Chavez and Evo “I Don’t Wear Imperialist Suits and Ties” Morales didn’t anticipate the amount of blowback from Morales’ nationalization of Bolivia’s oil and gas. I suppose that’s a hopeful sign that more reasonable center-leftists may prevail in Latin America’s swing to the izquierda.
4 Responses to “Crony Capitalism”
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fascinating doug. i do have one question: what does “pesification” mean? if i were to venture a guess, i’d say it is spanglish for “becoming fishy.”
am i far off?
Google is your friend.
It was the conversion of dollar denominated financial assets to pesos, mainly bank accounts.
that sounds pretty fishy. i think we’re both right.