Political Capitalism: How Economic And Political Power Is Made And Maintained PDF
Preview Political Capitalism: How Economic And Political Power Is Made And Maintained
POLITICALCAPITALISM Problems associated with cronyism, corporatism, and policies that favor the elite over the masses have received increasing attention in recent years. Political Capitalism explains that what people often view as the result of corruption and unethical behavior are symptoms of a distinct system of political economy. The symptoms of political capitalism are often viewed as theresultofgovernmentinterventioninamarketeconomy,orasattributesof a capitalist economy itself. Randall G. Holcombe combines well-established theoriesineconomicsandthesocialsciencestoshowthatpoliticalcapitalism isnotamixedeconomy,orgovernmentinterventioninamarketeconomy,or someintermediatestepbetweencapitalismandsocialism.Afterdevelopingthe economic theory of political capitalism, Holcombe goes on to explain how changesinpoliticalideologyhavefacilitatedthegrowthofpoliticalcapitalism, andwhatcanbedonetoredirectpublicpolicybacktowardthepublicinterest. RandallG.HolcombeisDeVoeMooreProfessorofEconomicsatFloridaState University.Dr.HolcombeisalsoSeniorFellowattheJamesMadisonInstitute, a Tallahassee-based think tank that specializes in issues facing state govern- ments. He served on Florida Governor Jeb Bush's Council of Economic Advisors from 2000 to 2006, and is past president of the Public Choice SocietyandtheSocietyfortheDevelopmentofAustrianEconomics. CAMBRIDGE STUDIES IN ECONOMICS, CHOICE, AND SOCIETY FoundingEditors TimurKuran,DukeUniversity PeterJ.Boettke,GeorgeMasonUniversity This interdisciplinary series promotes original theoretical and empirical research as well as integrative syntheses involving links between individual choice, institutions, and social outcomes. Contributions are welcome from acrossthesocialsciences,particularlyintheareaswhereeconomicanalysisis joined with other disciplines such as comparative political economy, new institutionaleconomics,andbehavioraleconomics. BooksintheSeries: TERRY L. 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WILSON Humanomics: Moral Sentiments and the WealthofNationsfortheTwenty-FirstCentury PAULDRAGOSALIGICAPublicEntrepreneurship,Citizenship,andSelf-Governance Political Capitalism How Economic and Political Power Is Made and Maintained RANDALL G. HOLCOMBE FloridaStateUniversity UniversityPrintingHouse,CambridgeCB28BS,UnitedKingdom OneLibertyPlaza,20thFloor,NewYork,NY10006,USA 477WilliamstownRoad,PortMelbourne,VIC3207,Australia 314–321,3rdFloor,Plot3,SplendorForum,JasolaDistrictCentre, NewDelhi–110025,India 79AnsonRoad,#06–04/06,Singapore079906 CambridgeUniversityPressispartoftheUniversityofCambridge. ItfurtherstheUniversity’smissionbydisseminatingknowledgeinthepursuitof education,learning,andresearchatthehighestinternationallevelsofexcellence. www.cambridge.org Informationonthistitle:www.cambridge.org/9781108471770 DOI:10.1017/9781108637251 ©RandallG.Holcombe2018 Thispublicationisincopyright.Subjecttostatutoryexception andtotheprovisionsofrelevantcollectivelicensingagreements, noreproductionofanypartmaytakeplacewithoutthewritten permissionofCambridgeUniversityPress. Firstpublished2018 PrintedintheUnitedStatesofAmericabySheridanBooks,Inc. AcataloguerecordforthispublicationisavailablefromtheBritishLibrary. LibraryofCongressCataloging-in-PublicationData Names:Holcombe,RandallG.,author. Title:Politicalcapitalism:howpoliticalinfluenceismadeand maintained/RandallG.Holcombe,FloridaStateUniversity. Description:Cambridge,UnitedKingdom;NewYork,NY: CambridgeUniversityPress,2018.|Includesbibliographicalreferences Identifiers:LCCN2018006517|ISBN9781108471770 Subjects:LCSH:Capitalism–Politicalaspects.|Power(Socialsciences) Classification:LCCHB501.H552018|DDC330.12/2–dc23 LCrecordavailableathttps://lccn.loc.gov/2018006517 ISBN978-1-108-47177-0Hardback ISBN978-1-108-44990-8Paperback CambridgeUniversityPresshasnoresponsibilityforthepersistenceoraccuracyof URLsforexternalorthird-partyinternetwebsitesreferredtointhispublication anddoesnotguaranteethatanycontentonsuchwebsitesis,orwillremain, accurateorappropriate. ForLora,Ross,Mark,andConnor Contents ListofFigures pageviii Preface ix 1 TheConceptofPoliticalCapitalism 1 2 PoliticalCapitalismasanEconomicSystem 20 3 ThePoliticalandEconomicElite 44 4 InterestGroupsandPoliticalExchange 72 5 PoliticalCreationofEconomicRents 97 6 TransitionalGainsandRentExtraction 122 7 TheRegulatoryState 148 8 CapitalismVersusDemocracy 171 9 TheInstitutionalEvolutionofPoliticalCapitalism 198 10 PublicPolicyandPoliticalCapitalism 224 11 IsPoliticalCapitalismInevitable? 251 References 279 Index 291 vii Figures 2.1 EconomicandPoliticalSystems page26 4.1 IsPoliticalPoweraContinuousFunction? 85 4.2 TheDiscontinuityinPoliticalPower 86 viii Preface The Industrial Revolution, which began in the mid-1700s, brought about thelargesteverincreaseinthematerialwell-beingofmankind.Priortothe IndustrialRevolution,mostpeoplebarelyscrapedbyatasubsistencelevel ofexistence.AsThomasRobertMalthusnoted,thesizeofthepopulation was regulated by its ability to produce enough food tosupport itself, and starvation was a constant threat. In the twenty-first century, people who liveincapitalisteconomiesaremoreconcernedaboutobesitythanstarva- tion,andeventhosebelowthepovertylevelenjoyamenitiesunimaginable afewdecadesearlier,suchasmobilephones,microwaveovens,flat-screen televisions, and indoor plumbing. People who live in economies that are primarilymarket-orientedenjoyhighstandardsofliving,whilethosewho do not are much poorer. Judged by its ability to produce material well- being,capitalismisanundeniablesuccess. CapitalismhasitscriticswhopointtoperiodicfailuressuchastheGreat Depression and the financial collapse that began in 2008, and, more generally,depictitasasystemthatleadstoincomeinequalityandallows sometousetheirprivilegedpositionswithintheeconomicsystemtogain advantages over others. Regarding these more general criticisms, capital- ism is well named, because it is the ownership of capital that conveys advantagestotheeconomicelite.Capitalism,asaneconomicsystem,has takenthebulkofthecriticismforthecronyismandfavoritismthatallows sometoexploitthesystemfortheirownbenefit. Theanalysisthatfollowsconcludesthatpoliticalcapitalism,inwhichthe politicalandeconomicelitecontrolthesystemfortheirownbenefit,isnot marketcapitalismandshouldbeanalyzedasaseparateeconomicsystem. The study of economic systems, a major area of inquiry in the twentieth century, when there was a vigorous debate on the merits of capitalism versus socialism, has fallen out of favor in the twenty-first, so economic ix
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