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June 5, 1998

Dear Colleague,

According to Webster’s,, cronyism could not be confused with, nor considered a variant of, capitalism. Let’s get our terms and our priorities straight.

cronyism: partiality to cronies especially as evidenced in the appointment of political hangers-on to office without regard to their qualifications.

capitalism:an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.

socialism:any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.

corporatism: the organization of a society into industrial and professional corporations serving as organs of political representation and exercising some control over persons and activities within their jurisdiction.

“Crony capitalism” was not the cause of the trouble. Inflationism and political corruption allow crony “capitalism” to exist. It would be better to call it economic interventionism for the benefit of special interests--a mild form of fascism--than to abuse the free market term of capitalism. The philosophy of the free market holds a lot of answers--yet the difference between free market capitalism and interventionist political cronyism has not been adequately considered. Monetary inflation, the mother of all “crony capitalism,” caused the economic bubble which led to all the other problems. The attached article should be understood in that light: economic interventionism(for the benefit of political special interests) enables this shameful corruption.

Concern for personal liberty is not a subject associated with the crisis and is an ongoing casualty of past and current policy. A greater concern for individual liberty will be required if a positive outcome is to be expected from the fall-out of these crises. Let’s hope we can get our priorities straight. Congress has an obligation not to worsen the crisis by capitulating to more bailouts and to remain vigilant enough to keep the administration from accomplishing a similar bailout through extra- legal Executive Orders.

In liberty,

Ron Paul