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The Law of Capitalism Vs. the Lawlessness of Politics

Here’s a letter sent yesterday to the Wall Street Journal:

My friend and former professor Gerry O’Driscoll eloquently explains that “crony capitalism” has as much to do with real capitalism as praying mantises have to do with real prayer (“An Economy of Liars,” April 20).  But I must pick one nit.

Gerry writes that “Thomas Carlyle, the 19th century Victorian essayist, unflatteringly described classical liberalism as ‘anarchy plus a constable.’  As a romanticist, Carlyle hated the system – but described it accurately.”  I disagree that Carlyle’s description is accurate.

To the modern American ear, “anarchy” no longer means simply “no ruler”; instead it now means “no law” – true, free-for-all chaos.  In vivid contrast, capitalism – real capitalism – is infused with law, most of which is self-enforcing.  The manufacturer who pays his suppliers late gets poorer credit terms in the future; the retailer who cheats her customers loses business; the customer who doesn’t pay his bills can no longer buy on credit.

The chief problem with crony capitalism is precisely that it injects significant amounts of lawlessness into the economy, transforming capitalism into something entirely different and dysfunctional.  Under crony capitalism, government excuses the politically influential from capitalism’s laws.  Thus unleashed from the impartial discipline of the invisible hand, the politically influential become criminals who lie, rape, pillage, and plunder.  And that’s true lawlessness and chaos.

Donald J. Boudreaux