Cronyism and corruption are somewhat less common in democratic countries than in non-democratic ones, but statistical correlations don’t settle the question of whether or not free-market economies tend to degenerate into corporate cronyism. More suggestive is the fact that cronyism and corruption existed long before the advent of capitalism, large corporations, and democracy.

Geoffrey M. Hodgson is a professor at the University of Cambridge.
Bureaucracy and GovernmentEconomic History and DevelopmentEconomyGovernment and PoliticsGovernment PowerLaw and LibertyPolitical HistoryPolitical TheoryPublic Choice
Other Independent Review articles by Geoffrey M. Hodgson
Fall 1998 Institutions and Economic Theory: The Contribution of the New Institutional Economics