A dispatch from crony Zimbabwe: Crony capitalism and its perils

Zimbabwe has traded one type of crony capitalism for another.

We often refer to China as the “Ultimate Crony Capitalist State.” It is an economy built on “who one knows” and which skids are greased in city hall and Beijing. Not that we aren’t increasingly rife with crony capitalism here of course. From Enron to Goldman Sachs to Boeing to Tesla there is plenty of the crony stuff going on in the USA. We are home to the Federal Reserve after all, the prime mover of crony capitalism.

But there is at least a tradition and culture of reasonably fair business that still exists in this country. It is the good part of America’s economic DNA. We at least can remember something that looked sort of like a free market. Unfortunately for much of the developing world no such tradition exists, and so, getting ahead means one MUST play the crony game. There is NO option. Many countries have gone from the cronyism inherent in colonialism, straight to the cronyism inherent (sadly) in post-colonialism.

(From The Independent.co.zw)

Without mentioning any names or corporations, Zimbabwe has largely been affected by this form of capitalism where the allocation of economic resources and business opportunities within the country has largely been skewed towards the privileged elite or politically-connected “cronies”. In most cases, the issues have not become public knowledge given that the transactions might not involve the physical exchange of bribes, but certain political favours being exchanged with preferential treatment from the regulators, while entrepreneurs, in turn, make political donations.

This sounds familiar.

It is worth noting that Zimbabwe was once called “the breadbasket of Africa.” It was a relatively rich country. But it followed a path not entirely unlike what we see in Venezuela now. As such it is now much poorer than it should be.

Click here for the article.