Acton Institute Powerblog

Creeping Crony Corporatism

Share this article:
Join the Discussion:

In this week’s Acton Commentary, “Corrupted Capitalism and the Housing Crisis,” I contend we need to add some categories to our thinking about political economy. In this case, the idea of “corporatism” helps understand a good deal of what we see in the American system today. Adding corporatism to our quiver helps us to make some more nuanced distinctions than simple “socialism” and “capitalism” allow.

Take, for instance, Mitt Romney’s contention this week while campaigning in Michigan that the bailouts of the auto companies was a feature of “crony capitalism.” A better way to understand the relationship between big business and big government today might instead be characterized as “crony corporatism.” You have a select group at the highest levels of an industry influencing government policy, which in turn favors those big businesses, provides various moral and fiscal incentives to consumers to patronize these industries, and then when necessary bails them out.

In this week’s commentary I use corporatism as a way of unpacking what happened in the recent housing crisis. For too long the American dream has revolved around home ownership. Owning a home is a good thing for many people; for many others it isn’t. What we have failed to recognize is the moral hazard that attends to government promotion of a particular vision of the American dream and the crises that result. As Dambisa Moyo characterized the housing crisis,

The direct consequence of the subsidized homeownership culture was the emergence of a society of leverage, one where citizen and country were mortgaged up to the hilt; promoting a way of life where people grew comfortable with the idea of living beyond one’s means.

The definition of the American dream offered by politicians should be far less precise, and presumably not include the level of specificity that says we should all own a home, drive a GM car, and have a college degree. As Nobel laureate Edmund Phelps put it in a 2009 interview,

I’m hoping that the administration and other thought leaders will succeed eventually in bringing the country back to the older idea that the American dream is having a career, getting a job, and getting involved in it, and doing well. That was the core of the good life. That’s what we have to get back to, and get away from this mystique that the most important thing in your life that could ever happen to you is to be a home owner.

The cultivation of an “ownership society” through government subsidy is only one feature of the creeping corporatism of contemporary America. As has been documented just in the last few days, the role of the government in directing and providing social goods has increased dramatically over recent decades. Following a New York Times story describing the increasing dependence of the American middle class on governmental initiatives of one form or another, Steve Hayward summarizes, “increasingly we’re taxing the middle class to pay themselves their own money, minus a large commission to Washington DC” (HT: The Transom). The government is increasingly using these subsidies and incentives to shape how people live their lives.

As I conclude in today’s piece, “The American people do not need politicians to tell them what happiness is and how it should be pursued. These are functions that our families, churches, and friendships fulfill.” One place to look instead would be the Westminster Shorter Catechism: “Man’s chief end is to enjoy God and glorify him forever.” Another would be the words of Jesus: “Life does not consist in an abundance of possessions” (Luke 12:15).

Jordan J. Ballor Jordan J. Ballor (Dr. theol., University of Zurich; Ph.D., Calvin Theological Seminary) is a senior research fellow and director of publishing at the Acton Institute for the Study of Religion & Liberty. He is also a postdoctoral researcher in theology and economics at the VU University Amsterdam as part of the "What Good Markets Are Good For" project. He is author of Get Your Hands Dirty: Essays on Christian Social Thought (and Action) (Wipf & Stock, 2013), Covenant, Causality, and Law: A Study in the Theology of Wolfgang Musculus (Vandenhoeck & Ruprecht, 2012) and Ecumenical Babel: Confusing Economic Ideology and the Church's Social Witness (Christian's Library Press, 2010), as well as editor of numerous works, including Abraham Kuyper Collected Works in Public Theology. Jordan is also associate director of the Junius Institute for Digital Reformation Research at Calvin Theological Seminary.


  • ceemac

    Hmmm. He may not have used the exact words but the 1st person I recall lifting up the idea of an “Ownership Society” was Millard Fuller back in the 80’s. Probably in “Theology of the Hammer” or “Love in the Mortar Joints.”

  • Roger McKinney

    “Corporatism is distinct from socialism, because under corporatism the means of production (capital) remain in private hands…Fascism, which uses coercion, bullying, and demagoguery to control private firms, is an extreme form of corporatism.”

    Fascism was just a flavor of socialism, as was Nazism. Fascists and Nazis understood the danger of taking away the paper title to property as the communists in the USSR had. Germany had tried that before WWI with disastrous results. They understood that they needed a small space for markets in order to keep people from starving to death as they did in the USSR and China.

    If we’re going to keep from making hash of history, we need to identify communism as the system of no private property. Socialism is the system that allows people to retain the paper title to property while the state controls the use of the property.

    Socialism is much more insidious than communism. Everyone fears communism for obvious reasons. But they see socialism as warm and fuzzy and no threat.

    The problem is that property is control. If you lose control of your property you no longer have property regardless of what the paper says. Nazis and fascists understood that and they understood how easy it is to fool people into thinking they still have property when they have a paper title even though they have no control. It’s much easier to sell than communism.

    We are far more fascist in this country than even Jordan suggests. Read Buchanan’s theories about public choice and regulatory capture. Corporations dictate law through campaign contributions and regulatory capture.

    Crony capitalism is a deceptive term. We don’t have anything close to free markets in the US. We are much closer to Nazism and fascism. We should call our system market socialism. 

  • “The government is increasingly using these subsidies and incentives to shape how people live their lives.” …So true!