Crony Capitalism?

Why do libertarians, anarcho-capitalists and so many others keep complaining about "crony capitalism"? When the obvious destructive features of capitalism are pointed out to them they say "what you're describing is not capitalism bro, that's crony capitalism, it's a plutocracy!" Well, as far as I'm concerned, these people simply fail to understand what capitalism is.

They go on to point a finger at the government and complain about them influencing and regulating the markets to the benefit of their corporate friends, their "cronies." And then they accuse the FED or whatever central bank is creating money in their part of the world: "it's the monetary system that creates money out of thin air and as debt!" And they're right; the governments, banks and corporations are indeed the bestest of friends, and they indeed collaborate under a covenant from the Devil to make our lifes hell on Earth. What they fail to understand however, is that this is all just capitalism doing its thing. So when these people point a finger at the central banks, the government and the mega-corporations, and then make a dreamy-eyed for smaller government and free markets, they're not understanding that this would solve nothing. Let me explain why.

First thing to mention is that there is no such thing as an "Invisible Hand". Adam Smith and his peers knew this and mentioned it only once or twice in all his writings:

One of the best-kept secrets in economics is that there is no case for the invisible hand. After more than a century trying to prove the opposite, economic theorists investigating the matter finally concluded in the 1970s that there is no reason to believe markets are led, as if by an invisible hand, to an optimal equilibrium — or any equilibrium at all. But the message never got through to their supposedly practical colleagues who so eagerly push advice about almost anything. Most never even heard what the theorists said, or else resolutely ignored it.

[...]

Adam Smith suggested the invisible hand in an otherwise obscure passage in his Inquiry Into the Nature and Causes of the Wealth of Nations in 1776. He mentioned it only once in the book, while he repeatedly noted situations where “natural liberty” does not work. Let banks charge much more than 5% interest, and they will lend to “prodigals and projectors,” precipitating bubbles and crashes. Let “people of the same trade” meet, and their conversation turns to “some contrivance to raise prices.” Let market competition continue to drive the division of labor, and it produces workers as “stupid and ignorant as it is possible for a human creature to become.”
_{source: Harvard Business Review}

The idea that Smith was a laissez-faire economist who didn't believe in government intervention is a stubborn myth. He never envisioned a completely free market, he indeed qualified that idea as absurd as Utopia: "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." Smith instead argued for taxation, tariffs and the government's role in providing public goods. He most strongly argued in favor of a public education system because of the workers as “stupid and ignorant as it is possible for a human creature to become” mentioned in the above quote.

Smith saw capitalism as a political economy from the start, an economy that needs to be governed in order for that economy to be deployed for the good of all participating citizens. He did frequently refer to the "system of natural liberty", but he always made the caveat that the capitalist economy has a natural tendency to concentrating wealth and power, and that markets are inherently unstable and prone to crashes. This does not mean that government intervention is always good, just that some kind of government intervention is needed to combat certain destructive natural tendencies of capitalism. But we don't need Smith or anyone else to explain to us why this can never work. We can see with our own eyes that government ultimately always takes the side of the capitalist class, the owners of the means of production. Worse even; it is the capitalist class that becomes the government. But if you call that "cronyism", you simply fail to reckon with capitalism's natural tendencies.

Capitalism is a mode of production characterized by the private ownership of the means of production accompanied by a mode of distribution characterized by regulated markets. It's a fool's errand to even entertain the idea of an unregulated capitalist economy; that's simply advocating for a return to the Wild West, the right of the man with the biggest gun. The concentration of wealth and power into the hands of the capitalist class isn't the result of cronyism but the result of capitalism doing its thing. When the means of production are privately owned, it follows that all the workers have to sell their time, muscle power and brainpower to those owners. Couple that with a profit-motive and it follows that these workers will be exploited, they will never receive as wages the value of what they produce. If I get a job that pays 20 dollars per hour, I produce 40 dollars per hour of value of which 5 dollars go to the maintenance of the workplace and 15 dollars go to the owner as profit; this capitalist system of production is the root of the class division, this is where the small but powerful ruling class is separated from the large working class. And it's that same ruling class that is or buys our governments. Not cronyism, but capitalism.

The current financial system, as a whole, is simply the result of capital that's constantly seeking financial returns. We buy stuff with our money, but capitalists who have loads of money left over after they've bough everything they could possibly need or want, will "put that money to work", so they can make even more money. Part of that work is playing the stock markets and financial markets, and the other part is the commodification of everything under the Sun. The private ownership of stuff is the basis for being able to trade and make money of that stuff. This is why capitalists endeavor to transform all goods, services, land, all of nature, even ideas, personal information and people into objects of trade. The irrational blind faith in markets as the answer to all of humanity's economic questions, which is based largely on the myth that the grandfather of modern economics was an advocate for laissez-faire capitalism, has brought us where we are now. All goods that were once seen as public have become private and subservient to the profit motive. Now, one could say that the land from which we get all our food and water is the public good of all public goods, but there's another public good that rules them all...

And that public good is money. Money, my dear friends, is a claim on physical goods, ultimately a claim on a piece of the planet. Money is the one public good that should have never been transformed into yet another commodity. Money is something that should be issued by an impartial organ, and its amount should represent the value of the real goods and services in the real economy. The Federal Reserve and any other Central Bank is not a government institution, but merely a collection of private banks with a profit motive. These banks create money they don't have by issuing debts. When I go to the bank for a mortgage on a house, let me briefly explain what happens. Say I buy a house from mister X. I go to the bank and ask for a lone, a mortgage, to buy that house. The bank then creates a debt in my name. They don't have the money, they simply type in numbers on a computer and I now have a debt. But they also type in numbers on the account of mister X; he now owns money that never existed in the first place, and is able to spend that money in the real economy, maybe he goes on a cruise... And When I pay back the money that never existed, I pay interest to the bank; that's how they make money with money that doesn't exist, and that's how they create inflation.

This inflation is not only to make money for the banks, no, it's also a main driver behind so called economic growth. When economists and central banks say that an inflation of approximately 2% per year is "healthy", they really mean to say that we, as a collective, need to produce 2% more real value per year to make up for the money creation; we first create the money and only afterwards we create the goods and services that money's supposed to represent. It's a rat race. A race to the bottom. We're speeding ever faster to the destruction of the planet and our civilization. But it's all capitalism. It all starts with a division of society in one distinct small ruling class on one side and the rest of us on the other. It starts with the private ownership of the means of production, with the ownership of the stuff we ALL need. Before cryptocurrencies money should have been issued by the government, not by private banks. Now we have cryptocurrencies, and we don't need the government for that anymore. But cryptocurrencies are not a miracle cure for capitalism's deeper problems, it's merely a step in the right direction. And cryptocurrencies also paint a horror-scenario if and when people see the benefits behind their technology, but fail to see the danger of central banks; many governments all over the world are now hard at work creating their own central bank issued cryptocurrencies...

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