Friday, March 18, 2016

Crony Capitalism and Threefolding: Part 2

The previous post ended by asking
  • how big a problem is crony capitalism (corrupt partnerships between the private sector and politicians seeking funding for election campaigns) in the U.S.;
  • what solutions are offered in the Community for Economic Development report Crony Capitalism: Unhealthy Relations Between Business and Government;
  • and how might an advocate of social threefolding view the report's solutions?
According to the report, crony capitalism happens when politicians seeking financial support for expensive election campaigns legislatively favor corporations and others who can heavily fund those campaigns.  Crony capitalism means
government part of a pursuit of a purely private interest through some subsidy (whether delivered through public spending or as a tax preference) or some regulatory protection against fair competition. (p.10)
In opposing crony capitalism, the CED report, unsurprisingly, proposes only one alternative, namely restoration of conventional mainstream competitive capitalism.  The report does not consider how capitalism in its more cooperative forms (such as certified B-corporations) might diminish crony capitalism more than standard capitalism can.

But to our first question above: how big is crony capitalism in the U.S.?

The report says that by 2012, the average cost of a winning campaign for a seat in the House of Representatives had grown to $1.5 million.  The cost of a winning campaign for a Senate seat averaged $9 million. (p.24)  Pollsters, consultants, and television advertising are expensive, and the candidates spend ever increasing amounts of money to outdo opponents.  The report says members of Congress use as much as a third of their time raising funds for campaigns.  In 2012 groups nominally independent of candidates spent a billion dollars supporting them. (p.25)  To win election, politicians feel increasingly pressured to vote for legislation in accord with major donors' preferences and views.  Thus politicians sell state power to special economic interests while the public interest gets increasingly short shrift.

So how big a problem is crony capitalism?  We still must touch on the lobbying industry to give a fuller picture of that.  And so far we have barely hinted at how an advocate of social threefolding might respond to the report's solutions. 

Part 3 is here.

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