Crony Capitalism

Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, or other forms of dirigisme Crony capitalism is believed to arise when political cronyism spills over into the business world; self-serving friendships and family ties between businessmen and the government influence the economy and society to the extent that it corrupts public-serving economic and political ideals.

The term "crony capitalism" made a significant impact in the public arena as an explanation of the Asian financial crisis. It is also used world wide to describe virtually any governmental decisions favoring "cronies" of governmental officials. In many cases, the term is used interchangeably with corporate welfare; to the extent that there is a difference, the latter might be restricted only to direct government subsidies of major corporations, excluding tax loopholes and all manner of regulatory and trade decisions, which in practice could be much larger than any direct subsidies.