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The Answer Is Transaction Costs
Political Capitalism and the Power of Elites: Randall Holcombe
Dec 24, 2024
Randall Holcombe, a Professor at Florida State University and expert in political capitalism, delves into the intricate dance between democracy and capitalism. He critiques the notion that democracy inherently checks power, emphasizing the significance of competing elites for accountability. Holcombe explores how transaction costs hinder citizen engagement, while charismatic leadership shapes political beliefs. He also discusses the dynamics of cronyism in democracy and offers reasons for optimism in innovation within political challenges, hinting at his upcoming book, 'Politics as Exchange.'
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Quick takeaways
- Transaction costs create barriers for public engagement in politics, allowing only a few elites to effectively influence policy.
- Political capitalism exemplifies how democratic systems can devolve into cronyism, with elites manipulating structures for personal gain.
Deep dives
The Concept of Political Capitalism
Political capitalism is described as a distinct and sustainable form of government that can exist in equilibrium for extended periods. This concept diverges from traditional views by emphasizing that capitalism, particularly in a democratic context, often transitions towards cronyism, where political leaders and elites manipulate economic structures for personal gain. This challenges the belief that capitalism inherently promotes freedom and efficiency, suggesting instead that it can become a tool for abuse by those in power. The discussion raises significant questions about the viability of capitalism within a democratic setting and whether reforms can prevent its darker tendencies.
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