Crony capitalism, sometimes also called simply cronyism, is a pejorative term used in political discourse to describe a situation in which businesses profit from a close relationship with state power, either through an anti-competitive regulatory environment, direct government largesse, and/or corruption. Examples given for crony capitalism include obtainment of permits, government grants,[1]tax breaks,[1] or other undue influence from businesses over the state's deployment of public goods, for example, mining concessions for primary commodities or contracts for public works.[2] In other words, it is used to describe a situation where businesses thrive not as a result of free enterprise, but rather collusion between a business class and the political class.[3][4]
Wealth is then accumulated not merely by making a profit in the market, but through profiteering by rent seeking using this monopoly or oligopoly. Entrepreneurship and innovative practices which seek to reward risk are stifled since the value-added is little by crony businesses[citation needed], as hardly anything of significant value is created by them[citation needed], with transactions taking the form of trading[clarification needed]. Crony capitalism spills over into the government, the politics, and the media,[5] when this nexus distorts the economy and affects society to an extent it corrupts public-serving economic, political, and social ideals.[6][clarification needed]
^The Discovery that Business Corrupts Politics: A Reappraisal of the Origins of Progressivism, by McCormick, Richard. 1981. The American Historical Review, Vol. 86, No. 2 (Apr. 1981), pp. 247–74.
