Many of the critiques of “capitalism” point to the system itself, as if it were the only problem preventing us from enjoying wealth and social justice – and happiness. Or rather, the critics point to the system necessarily exploiting human nature – our lust for power and money at the expense of others.
Now, what if the shortcomings of capitalism – private property, free markets selling what buyers want and can afford, investment in new technologies – were not the fault of the system, but of distortions imposed on the system?
In particular, the injustices that accompany crony capitalism.
I argue that crony capitalism is a corrupting use of private property and markets, where non-market power structures gain the ability to extract rents. Where rents can be taken, rent-seeking is rewarded and so encouraged. Rent-seekers then arise to bend and twist capitalist mechanisms into structures of inequality, where those in power get richer and the rest look about for the crumbs that might fall their way.
The Economist, in a recent article, raised yet again, though indirectly, the question of the morality of capitalism. The magazine was looking at what it called “paranoid nationalism,” the practice of some regimes to ground their legitimacy on ethnicity or “groupiness,” the appeal for each of us to belong to a collective, be it ethnic (national) or religious. The collective provides us with values, beliefs, best social practices and a sense of personal meaning in a silent cosmos. We are, therefore, who we think we are. Our individual place in history derives from the history of our group.
The Economist argued that promoting “groupiness” with explicit fears of others and superiority over others is a malign human search for belonging and prestige. When people fear that their group is under threat, they rise to defend it, submitting to the claims of group loyalty. Patriotism is the last refuge of the scoundrel.
As people become more and more submissive to such xenophobic leaders, the leaders themselves become more and more self-serving. The Economist argues that bigotry opens the door to misrule and corruption.
Using the following chart, some conclude that more nationalist rhetoric is associated with more corruption and less nationalist discourse aligns more with less corruption.
Simply put, nationalism promotes state capture and rent extraction by an in-group of defenders of the tribe’s psychic well-being.