Creation of Crony Capitalism in Developing Economies
In its worst form, crony capitalism can devolve into simple corruption, where any pretense of a free market is dispensed with. Bribes to government officials are considered de rigueur and tax evasion is common; this is seen in many parts of Africa, for instance. This is sometimes called plutocracy (rule by wealth) or kleptocracy (rule by theft).
Corrupt governments may favor one set of business owners who have close ties to the government over others. This may also be done with racial, religious, or ethnic favoritism; for instance, Alawites in Syria have a disproportionate share of power in the government and business there. (President Assad is an Alawite.) This can be explained by considering personal relationships as a social network. As government and business leaders try to accomplish various things, they naturally turn to other powerful people for support in their endeavors. These people form hubs in the network. In a developing country those hubs may be very few, thus concentrating economic and political power in a small interlocking group.
Normally, this will be untenable to maintain in business; new entrants will affect the market. However, if business and government are entwined, then the government can maintain the small-hub network.
Read more about this topic: Crony Capitalism
Famous quotes containing the words creation of, creation, capitalism and/or developing:
“The practice of S/M is the creation of pleasure.... And that’s why S/M is really a subculture. It’s a process of invention. S/M is the use of a strategic relationship as a source of pleasure.”
—Michel Foucault (1926–1984)
“If they had said that the sun or the moon had gone out of the heavens, it could not have struck me with the idea of a more awful and dreary blank in creation than the words: “Byron is dead!””
—Jane Welsh Carlyle (1801–1866)
“I’m afraid for all those who’ll have the bread snatched from their mouths by these machines.... What business has science and capitalism got, bringing all these new inventions into the works, before society has produced a generation educated up to using them!”
—Henrik Ibsen (1828–1906)
“Parents must begin to discover their children as individuals of developing tastes and views and so help them be, and see, themselves as thinking, feeling people. It is far too easy for a middle-years child to absorb an over-simplified picture of himself as a sloppy, unreliable, careless, irresponsible, lazy creature and not much more—an attitude toward himself he will carry far beyond these years.”
—Dorothy H. Cohen (20th century)