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CHAPTER 7: DESPOTISM The easiest political system to analyze in the liberalism-cronyism framework is despotism, which is a clear form of cronyism. While at first it may appear that despots wield absolute power, despots are only able to remain in power as long as they have sufficient support to prevent their overthrow. Examples like Stalin and Castro notwithstanding, most despots remain in power for a relatively short time. Political scientist Milan Svolik has collected a data set of 738 autocrats who ruled from 1945 on, and the median tenure of those autocrats was 3.2 years. 1 Regardless of the political system, those with political power can maintain it only with support. 2 In democracies, maintaining this support means gaining a majority’s support in elections. In autocracies, the support group is more limited. A military dictatorship obviously requires the support of the military, and those with economic power must always be content enough with the incumbent regime that they will not step up to finance the opposition. In a nondemocratic government, political power must be maintained by force, because there is no other way for people discontented with the incumbent regime to replace it. Those in power must DESPOTISM 51
therefore provide sufficient benefits to their supporters so that those supporters, or cronies, continue to back the incumbent regime rather than the opposition. Cronies can always shift their allegiance to the despot’s opposition if the opposition makes them a better offer. Political power under despotism is always tenuous. On the one hand, even if a substantial share of the population would prefer a change in leadership, most people will not become activists because of the threats that despots can hold over those who oppose them. On the other hand, if the opposition gains sufficient support that it appears likely that they could take power, the general population’s allegiance can suddenly and unpredictably shift. 3 Thus, it is important for despots to reward their cronies in order to maintain power. The cronyism necessary to support despotic governments is one of the reasons economists Daron Acemoglu and James Robinson cite for the poor economic performance such governments deliver. 4 Similarly, referring to the poor nations of Africa, Ghanaian economist and president of the Free Africa Foundation Ge<strong>org</strong>e Ayittey says, “African despots are loath to relinquish control or power. They would rather destroy their economies and countries than give up economic and political power. This power allows them to allocate or extract resources to build personal fortunes and to dispense patronage to buy political support.” 5 That patronage is cronyism. Despotism is a form of cronyism because despots need the support of cronies to remain in power, and cronies offer that support in exchange for the favors that the force of despotic government can provide them. Despite economic models that depict government as an omniscient, 52 LIBERALISM AND CRONYISM
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LIBERALISM AND CRONYISM Two Rival P
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LIBERALISM AND CRONYISM: TWO RIVAL
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CONTENTS Introduction 1 Chapter 1:
Page 10 and 11: INTRODUCTION People often see polit
Page 12 and 13: who have the power to make decision
Page 14 and 15: CHAPTER 1: LAYING A FOUNDATION Befo
Page 16 and 17: hijacking of the term to describe a
Page 18 and 19: esources can be taken from some for
Page 20 and 21: suffers from “market failure,”
Page 22: is a group of cronies in a dictator
Page 25 and 26: ecause it permits voluntary exchang
Page 27 and 28: people’s economic well-being. The
Page 29 and 30: consumer demands. Examples of rent-
Page 31 and 32: the Politburo and the needs of conn
Page 33 and 34: consider the benefits and costs of
Page 35 and 36: upon state privilege and disproport
Page 37 and 38: their loyalty to the socialist stat
Page 39 and 40: cronyism from gripping every area i
Page 41 and 42: communism are well documented and w
Page 43 and 44: Accountability was embodied by refo
Page 45 and 46: despite comprising only 3 percent o
Page 48 and 49: CHAPTER 5: FASCISM Fascism, the pol
Page 50 and 51: use the sword of the Nazi state to
Page 52 and 53: planners created a back door for in
Page 54 and 55: CHAPTER 6: CORPORATISM Corporatism
Page 56 and 57: puts men and their possibilities in
Page 58: that this form of guided capitalism
Page 64 and 65: CHAPTER 8: PROGRESSIVISM Progressiv
Page 66 and 67: people who argue for limited govern
Page 68: Security, Medicare, and Medicaid do
Page 71 and 72: the direct election of senators, ch
Page 73 and 74: argue for narrow individual interes
Page 75 and 76: their roots to diverse sources of i
Page 77 and 78: promises to assume a company’s de
Page 79 and 80: enefits for his former venture capi
Page 81 and 82: prices of firms within the textile
Page 83 and 84: ment the power to make decisions an
Page 85 and 86: of social justice, cronyism has an
Page 87 and 88: for women in the twentieth century,
Page 89 and 90: ecause it advocates granting these
Page 91 and 92: should pay the same as comparable b
Page 93 and 94: way, the US government replaced the
Page 95 and 96: an individual, social justice advoc
Page 98 and 99: CHAPTER 12: CRONY CAPITALISM AND DE
Page 100 and 101: subsidies, political connections di
Page 102 and 103: CHAPTER 13: INDUSTRIAL POLICY The t
Page 104 and 105: “cottage industries” that clust
Page 106 and 107: of complex systems. He applied this
Page 108 and 109: South Korean industrial policy gave
Page 110:
The degree to which Japan’s and S
Page 113 and 114:
to get involved in lobbying to prot
Page 116 and 117:
CHAPTER 15: LIBERALISM VERSUS CRONY
Page 118:
that power will arise with another
Page 121 and 122:
with power support each other to ma
Page 123 and 124:
an incentive to cooperate for the b
Page 125:
environmental movement often advoca
Page 129 and 130:
6. Ludwig von Mises, Human Action,
Page 131 and 132:
12. James Heinzen, “The Art of th
Page 133 and 134:
CHAPTER 5: FASCISM 1. Peter Temin,
Page 135 and 136:
CHAPTER 8: PROGRESSIVISM 1. Terry L
Page 137 and 138:
16. Bruce Yandle, “Bootleggers an
Page 139 and 140:
3. Eamonn Fingleton, “Japan’s I
Page 142 and 143:
FURTHER READING Acemoglu, Daron and
Page 144 and 145:
ABOUT THE AUTHORS Randall G. Holcom
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