There are a lot of arguments about Socialism Vs. Capitalism. Communism vs. Capitalism. But what about Crony Capitalism vs Capitalism? I think it’s prudent to discuss the differences between the two.
Crony Capitalism is when a small rich elite, an oligarchy controls and runs all the industry of a country. A small handful of corrupt business men who control every resource without competition from anyone else. With crony capitalism there is usually no middle class present. Only a small wealthy elite and everyone else is poor. Absolute corporate monopoly. There is a close and privileged relationship between business leaders and government officials, where they reward each other.
True Capitalism is where you have a truly open market with competition. Entrepeanuers are free to succeed or fail to start their own business. They are not prevented by the corporate elite from trying. In true Capitalism, people will compete against each other, and people are able to climb up the economic ladder. In this type of economics there is a middle class, a rich, and a poor.
Let’s discuss some examples. In the Western Hemisphere there are many crony capitalist economies but the most blatant examples would be Haiti and Honduras. The Central American nation of Honduras is a very poor country with one of the largest economic class gaps in the region. Honduras is not a Socialist country. It is has historically been a Right-Wing Conservative country. Honduras is also officially a “Capitalist” country. The country has no middle class. How is this so in a non-socialist country? The Honduran economy is an oligarchy, and I will discuss this further.
The main exports in Honduras are bananas, tobacco, and textiles. Honduras is infamous for being a Banana Republic, completely reliant on that export. The Banana market is almost totally controlled by the U.S company Chiquita Fruits Inc. Wealthy landowners who collaborate with Chiquita Fruits reap the economic benefits while plantation workers get very small wages. Smaller landowners are often intimidated and sometimes attacked by more powerful landowners to give up their land. Those who try to stand up to the economic elite of Honduras often times get killed. It is very difficult for people to start their own small businesses and succeed. Multi-national corporations are more likely to invest in the Rich elite rather than take a chance on some up and coming businessman trying to get a start. Already there are few economic opportunities in Honduras, so the vast majority of the population live in poverty. As a result of that poverty many young men join gangs and participate in narcotics smuggling, which is a big money making industry. What happens is a system of violence and poverty. The rich elite don’t care about the poor and get the blessing of the Honduran Government who they work hand in hand with. No Middle Class and no healthy economic competition. One of the ugliest examples of crony capitalism.
Another example; Haiti. The Caribbean nation of Haiti is the poorest nation in the Western Hemisphere. Roughly 90% of the population lives in extreme poverty similar to living in an African nation like Sudan or Somalia. The main export of that country is sugar cane. Haiti has a rich business elite that is likely smaller than Honduras. Multinational companies work with and invest with these monopolies while everyone else lives in dire poverty. As a result Haiti is so corrupt and very unstable. Haiti has always had corrupt leaders, military coups, and violent protests. This is crony capitalism at its saddest.
On the contrast are countries that have emerged from crony capitalism that have become healthy economies with a true free market. Nations such as the Dominican Republic, Chile, Argentina, Uruguay. These countries also have remarkable less crime than Haiti or Honduras, they have more tourism, and more stable societies.
In the end Crony Capitalism is no better than Socialism itself. It is a gangster like economic system and is extremely unfair. It should be a disgraced economic system and international companies should not enable it. A true free market is needed to have a healthy economy with government assistance and bribery.