Crony capitalism, according to online dictionary Investopedia.com, is a “description of capitalist society as being based on the close relationships between businessmen and the state. Instead of success being determined by a free market and the rule of law, the success of a business is dependent on the favouritism that is shown by the ruling government in the form of tax breaks, government grants and other incentives.”
In a sense, it could be said that crony capitalism emerges when the pretence of a “free market and the rule of law” wears thin and the reality of capitalist governments as mere executive committees of an actual ruling class is put, shamelessly and nakedly, on public display.
The government, which is entrusted by the ruling class to exercise certain powers for the benefit of the capitalist class as a whole, becomes puffed up with the arrogance of its ability to play sectional interests of the capitalist class off against each other, and emerges as a broker in the awarding of favours to those interests that pledge to reciprocate by maintaining it in office.
The reality of the state as the executive committee of the whole ruling class becomes tainted with the corruption of service to favoured sections of the elite.
Social democrats and crony capitalists getting into bed
Generally, crony capitalism has been associated with the most reactionary proponents of capitalist class rule. The Bush-Cheney regime in the United States is a byword for crony capitalism. The privatising apparatchiks of the countries of the former Soviet Union have taken crony capitalism to new heights. Reactionary governments in Mexico, South Korea, the Philippines and Indonesia took and are taking crony capitalism to new lows.
South Australia might seem far away from these homelands of crony capitalism. But its governing Labor Party, now in its eighth year of office, obviously sees no reason why the benefits of crony capitalism should be left to the open parties of big business.
Despite the affiliated membership of certain large trade unions, it is rapidly dropping any pretence to being a social-democratic or “labor” party and has proudly rebadged itself as “pro-business, pro-growth and pro-mining”.
The state’s 14,000 public school education workers (right) recently staged a 24-hour stoppage in order to force, successfully, a meeting with the Ministers responsible for negotiations over their new enterprise agreement.
Business leaders, on the other hand, are offered access to leading Ministers in return for payments to Labor Party coffers.
And not just any business leaders.
PPPs foster crony capitalism
Prominent among those hosting lunches and dinners for Labor politicians are companies bidding for government contracts for Public Private Partnership (PPP) projects.
PPPs create particularly favourable opportunities for crony capitalism. A privileged few big corporations “win” contracts for rock solid investment opportunities with the government as guarantor or profitability. In return, they talk up the “business-friendly” and “investment-friendly” credentials of the government.
Of course, who “wins” has no relationship to the capacity to attract business contributions to the government’s own bank accounts.
So it must be purely coincidence that two of the three contenders for the $134 million “super schools” PPP are hosting their own fund-raisers for the government.
Abigroup is putting on a luncheon for Premier Mike Rann and Treasurer Kevin Foley on November 20 which will only set you back $2000 per ticket. (Teachers interested in positions at the super schools are advised to line up for tickets in the far queue!)
Abigroup is a subsidiary of Bilfinger Berger AG, a German multinational. It is a partner in a consortium that includes European banker ABN Amro and facilities management company United Group Services.
If you are not interested in helping Abigroup win the contract, then perhaps a dinner in Melbourne with Rann and Foley on October 9 may be more to your taste. This one costs a mere $1500 per ticket. Mine host for the evening is the Plenary Group, a recently-established company operating in Canada as well as Australia. It specialises exclusively in PPP projects and is underwritten by the Deutsche Bank. Its consortium partners are SA builders Built Environs and Badge Constructions, together with notorious British catering company Scholarest.
The third consortium is looking distinctly unhealthy at this stage as its principal partner Babcock and Brown is in all sorts of financial strife with a year-to-date share price fall of 91.4 per cent. According to rumours circulating in Adelaide, they are in such bad shape that they have even had to cancel a planned $5 per head breakfast with Rann and Foley at the Hindley Street outlet of MacDonalds!
Other PPP-related fundraisers for the Labor Party included dinner with Health Minister John Hill provided by the Westpac Bank, one of the consortia bidding for the new $557 million new men’s and women’s prison. Consistent with the government’s social inclusion priorities, both public and private patients were able to purchase tickets for the August 28 function at a mere $1500 per head.
Which brings us back to Bilfinger Berger who are part of a rival consortium for the prisons project. They’re putting on a luncheon for Rann and Foley in Sydney on October 31 at $2000 per ticket.
Money doesn’t talk, it swears…
So rampant is this transition to crony capitalism under the Labor Party that Murdoch’s Advertiser reports “Business leaders say brochures arrive in the mail every week for events offering high-priced boardroom functions and cocktail briefings with state and federal Labor MPs. Some business leaders also say that they have been asked to host events.”
This brings out contradictions between the various sectional interests of the ruling class, or as the Advertiser put it, “The functions raise questions about the potential of buying influence or paying for the ear of the state’s most powerful people…”
Some might say that there is nothing new in all of this. It’s true, for example, that the pro-business Liberal Party has been past master at soliciting the financial support of powerful corporate interests. Former Prime Monster Howard was notorious for this sort of thing.
What is new is the way in which Labor is unashamedly stealing the pro-business mantle from the Liberals and their open cultivation of crony capitalism as their preferred means of keeping themselves in office.
These developments can only contribute to the further disillusionment of working people from the whole system, beginning with their rejection of Labor as any sort of alternative to the Liberals.
So long as they have faith in their own capacity to wage struggle independent of the two-party monopoly that is the bourgeois parliament, the conditions will exist for the growth of the revolutionary movement for the abolition of capitalism.