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American Values: Cronyism Isn't Capitalism

Highly intelligent, sophisticated, successful.  I think he was of Indian ancestry, or maybe Pakistani? A modern Canadian citizen; executive of a Fortune 10 corporation responsible for North American operations for the British based corporation, first in its market position. He is a major player.

“Crony Capitalism.” Isn’t that what American capitalism is? We were into our third glass of very fine red wine at the banquet following the training session. He was absolutely sincere. I was horrified.

My grandfather was one of those who invented American capitalism. The assembly line; “efficiency experts”, Henry Ford, Joe Kennedy, the Johnson family. They all came to my grandfather who was orphaned at age 8 and made his own way in the early years of American industrial expansion. August Chapin Spahn, holder of many fine patents. My father, John Robert Spahn, spoiled wealthy football star quarterback, who had money during the Great Depression, and received an honorary doctorate at his graduation from Rensselaer Polytechnic Institute for inventing what I think was similar to the overhead cam engine (to outrun cops as he did the Canadian rum running route during Prohibition).

Cronyism is not capitalism, I replied. Cronyism is the opposite of capitalism. American capitalism is about markets, competition. “Rational” markets in which sellers compete; purchasers decide based on price, quality, service, brand. Cronyism, nepotism, elites reserving the goods for themselves -- This is the opposite, the antithesis of American capitalism. This is why we revolted in the first place.

He looked at me. I looked at him. Ah, he said.

It is indeed a Revolution. Happy 4th of July from Boston.


Elizabeth K. Spahn is a professor at New England Law | Boston, where she's been on the faculty since 1978. She can be contacted here.

Reader Comments (3)

July 5, 2012 | Unregistered CommenterDenise Froehlich
I"ve always found this idea difficult to convey to other people because it can't easily fit into their black-and-white world of liberal/conservative, good/evil, etc.
July 7, 2012 | Unregistered CommenterSteve
This executive is where he is because he accepts that cronyism is how it is now done in America. This has taken time but the result was inevitable. It happens over and over through history. Why should the USA be any different?

My favorite quote:
"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it."
Frederic Bastiat,
The Law
July 8, 2012 | Unregistered CommenterJim in PA

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