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"Crony capitalism" is a pejorative expression, denoting a type of capitalism in which business success is heavily dependent upon one's connections. In such a system, business decisions are significantly influenced by friendships and family ties, rather than by market forces and open competition. The term, often abbreviated "crapitalism", is generally used as part of an explanation for why a superficially market-based system fails to generate adequate economic growth. The term has been used to describe the economic systems of Japan, Indonesia and the United States. Like fascism, "crony capitalism" often describes a close relationship between government and business, but to a much less obvious extent. Instead of the government directly controlling businesses and giving it orders (as is the case with Fascism), the government gives legislative favors to certain businesses or types of businesses - ease of permits, government grants, specially created tax benefits, etc.
Many capitalists argue that such favours are not "true capitalism", but socialists generally argue that such actions are. Furthermore, many opponents of capitalism argue that the emergence of crony capitalism is the inevitable result of any capitalist system. Jane Jacobs, for instance, calls it a natural consequence of collusion between those managing power and tradeTrade centers on the exchange of goods and/or services. Exchanges may take place between two parties (bilateral trade) or amongst more than two parties (multilateral trade). In its original form trade necessarily used barter and the exchange of goods and.
Crony capitalism is partially explainable by using the principles which govern any network. As government and business leaders try to accomplish things they naturally turn to other hubsIn general, a hub is a central node in a network. The term comes from the analogy to a wheel's hub, which is the center of the wheel with spokes radiating out from it. An airline hub is an airport that serves as the base of operations for that airline, us (powerful people) for support in their endeavors. In a developing country those hubs may be very few thus concentrating economic and political power in a small interlocking group. In a fully developed country, wealth may have become concentrated in a small group with the same result, reduction of the number of hubs or influential persons and institutions.
Critics question the meaningfulness of the concept by pointing out that personal factors influence business decisions in all economic systems and that the existence of these factors, per se, is insufficient as an explanation for why certain economic systems work better than others. Other critics point to the newness of the term, by noting its absence from many dictionaries.
In RussiaThe Russian Federation ( Russian: , transliteration: Rossiyskaya Federatsiya or Rossijskaja Federacija , or Russia (Russian: , transliteration: Rossiya or Rossija , is a country that stretches over a vast expanse of eastern Europe and northern Asia. With and the other successor states to the former Soviet UnionThe Union of Soviet Socialist Republics (USSR ( Russian: ; tr. Soyuz Sovetskikh Sotsialisticheskikh Respublik (SSSR) also called the Soviet Union ( ; tr. Sovetsky Soyuz , was a state in much of the northern region of Eurasia that existed from 1922 until 1, in PolandThe Republic of Poland a country in Central Europe, lies between Germany to the west, the Czech Republic and Slovakia to the south, Ukraine and Belarus to the east, and the Baltic Sea, Lithuania and Russia (in the form of the Kaliningrad Oblast exclave) t, and in ChinaThis article is on the geographic and cultural entity. For other meanings, see China (disambiguation). China ( Traditional Chinese: , Simplified Chinese: , Hanyu Pinyin: Zhongguo, Wade-Giles: Chung-kuo) is a country in continental East Asia with some oute, government connections are almost indispensable to business success. The same is true for certain industries with a connection or dependence on the military-industrial complex in the United States.
