Is the System Rigged? Adam Smith on Crony Capitalism, Its Causes—and Cures

Heritage Foundation ^ | 2018 | Lauren Brubaker

[CondoleezzaProtege]

Noted libertarian Charles Koch, writing in the Washington Post, argued that he agreed with one claim made by socialist Senator Bernie Sanders: that the system is rigged in favor of the few.

This result, he argues, can only be accomplished when society is experiencing continued, preferably increasing, economic growth. Is there something inherent in the system of natural liberty, or in human nature itself, that is systematically corrupting in ways that undermine its claims of universal benefits? —

[Adam] Smith warned that natural liberty faces natural obstacles in the form of human nature, particularly the desire of especially “merchants and manufacturers” to “rig the system.” They accomplish this self-enriching corruption of free markets by using the power of government to procure for themselves “systems either of preference or of restraint.” In so doing, they impose an “absurd tax on the rest of their fellow-citizens.” These preferences and restraints are what we today call crony capitalism.

For Smith, cronyism fails on two grounds: It is unjust, favoring a few at the expense of the many, and it is destructive of the desired end of political economy—economic growth…

While the concept of a free market may be obvious and simple, its achievement or perpetuation is not. Despite spending much of his book detailing the folly of preferences and restraints, Smith is not sanguine about “completely” removing them: “To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as to expect that an Oceana or Utopia should ever be established in it.”

Free markets are neither self-establishing nor self-maintaining. If we are to continue to reap the very real benefits of natural liberty, we must be prepared for a constant political defense against cronyism…

---

TOPICS: Business/Economy; Society
KEYWORDS: adamsmith; cronycapitalism; freemarket; freetrade; heritagefoundation; humannature; koch; leftistdrivel; rigged

[chickenlips]

Term limit Congress!

[DiogenesLamp]

Term limit Congress!

That too.

[PGR88]

Congress should not be allowed to gain wealth. They should be forced to either choose to serve, or stay out of congress.

That's how you get monkeys and psychopaths in Congress. What sane and intelligent person with a family or business obligations would sign up for the brutality of politics, AND to be poor?

The real answer, is ALWAYS, we have too much government, and we have fake money.

[Brian Griffin]

BALLOT PLACEMENT APPLICATION

....

I certify that I have not owned financial instruments other than bank CDs and government bonds paying rates in the range enjoyed by the general public during the time in federal office of the applicant after 4/10/2026.

spouse of federal elected official Blank

eldest child of federal elected official Blank

....

[z3n]

Term limit Congress!

~~~

Term limit people!

As long as you term limit offices, you will still have career politicians. But instead of seeing resumes where people ascend from dog catcher to Senator and then stagnate when they can't rise any higher, you'll simply have more people moving somewhat laterally. Congressman to Senator to appointee to Governor to lobbyist to consultant.

[Brian Griffin]

Limit all persons under age 80 to at most 20 years at government feed troughs.

[Ditto]

I read once where half of the world‘s wealth is held by 80 people.

I don’t believe that is actually the case.

[MarlonRando]

I know! it’s hard to believe isn’t it.

[Manuel OKelley]

absolutely agree

[Opinionated Blowhard]

Let's ask the expert:

Mr. Speaker, all levels of income are better off than they were in 1979. But what the honorable member is saying is that he would rather the poor were poorer provided the rich were less rich. That way you will never create the wealth for better social services as we have. And what a policy. Yes, he would rather have the poor poorer provided the rich were less rich. That is a liberal policy. Yes, it came out. He didn't intend it to, but it did. I give way to the honorable gentleman.

Capitalism works, even if the rich get richer. As long as the government does not play favorites.

[ridesthemiles]

BERNIE IS THEIR LEADER

[enumerated]

The billionaires in my town are the Asplundhs, whose wealth derives from Asplundh Tree Company. Sure, their lives are a hell of a lot easier than mine.. but they can’t move a muscle without employing somebody, directly or indirectly.

Even the wealth they “hoard” benefits others in a thousand different ways. Their vast land holdings wind up being ecological preserves.. when I enjoy “the view”, or walk on the trail, is that their view or mine? Who cares.

Everything they spend, everything they invest in… everything they develop - every patch of wilderness they prevent from being developed - it all gets shared somehow whether they like it or not.

Of course its hard to see it that way when I compare their standard of living to mine. But “comparisons are odious” as my grandmother used to say.

It’s not healthy to covet - and anyway, many aspects of the world can’t be “owned” per se - even if they are owned ‘on paper’. In many cases, the owner can’t stop me from enjoying what they own, or wouldn’t even want to stop me.

In fact, often, the value of an asset owned by a billionaire is derived from its appeal to others. Disney World, for example - if millions of middle class people couldn’t enjoy it, it would have no value.

A lot of the best art in museums is (or was) owned by someone, but it winds up in a museum anyway, preserved where all can enjoy it.

[circlecity]

“ Adam] Smith warned that natural liberty faces natural obstacles in the form of human nature, particularly the desire of especially “merchants and manufacturers” to “rig the system.” They accomplish this self-enriching corruption of free markets by using the power of government to procure for themselves “systems either of preference or of restraint.”

This is why we have such a massively regulated nation. It prevents competition. The cost of dealing with the massive regulations is too much for the smaller guys, especially in the start up phase. It acts as a barrier to entering the market. The big corps can afford an entire floor of lawyers to deal with regulatory compliance. It is a price they are happy to pay because it prevents competition.

[ProgressingAmerica]

“And how do you do that magic? And who does it?”

We the people do it, but we refuse to get up and fight for it as our Founders showed us.

We the people had an active and vibrant Tea Party movement(2009/2010) that was successful in its day but our guys don’t want to be powerful and successful so here we are all of us sitting on our couches wondering why couch sitting is not a successful political plan.

I am praying for the day mass apathy ends.

[ProgressingAmerica]

Yeah but unfortunately lets be real.

I can go right now and get a lot of people bent out of shape (I do it all the time) by creating a forum post(just a general one, I mean) to abolish the TSA or abolish the DoEd or abolish any other things that are unconstitutional. It is guaranteed to pull in 5 or 10 replies about how that will never work or this that or the other thing.

Yes, I mean right here on FreeRepublic. I’m not talking saying these things at the local grocery store or American Legion. Here at FR.

Getting rid of government is just not popular right now. Big government is in the ascendancy and its everywhere.

[rottndog]

I call it corporafascism.

[rottndog]

“The system” is rigged only to the extent government exercises excessive power...like anything above and beyond the enumerated powers of A1S8. Money has always followed power, all throughout human history. The only way to minimize that corruption is to limit the powers the government has that the money seeks to corrupt. That is the whole purpose of the Constitution...you know, LIMITED government.

[ek_hornbeck]

We don’t have capitalism, we have korporatism.

Crony capitalist plutocracies rapidly evolve into outright kleptocracies.

[lastchance]

And which one of those descriptions fits Adam Smith?

[Bruce Campbells Chin]

I agree with you. No chance of turning back the clock all the way to a much more free market. But at least we should be conscious moving forward of trying to resolve economic issues by maybe removing a few laws rather than adding more.