What's The Difference Between Fascism, Communism And Crony-Capitalism? Nothing

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The essence of crony-capitalism is the merger of state and corporate power--the definition of fascism.

When it comes to the real world, the difference between fascism, communism and crony-capitalism is semantic. Let's start with everyone's favorite hot-word, fascism, which Italian dictator Benito Mussolini defined as "the merger of state and corporate power." In other words, the state and corporate cartels are one system.

Real-world communism, for example as practiced in the People's Republic of China, boils down to protecting a thoroughly corrupt elite and state-owned enterprises (SOEs). The state prohibits anything that threatens the profits (and bribes) of SOEs--for example, taxi-apps that enable consumers to bypass the SOE cab companies.

What A Ban On Taxi Apps In Shanghai Says About China's Economy

The Chinese mega-city of Shanghai has been cracking down on popular taxi-booking apps, banning their use during rush hour. Until the apps came along, the taxi companies, which are government owned, set the real price for fares and collected about 33 cents each time someone called for a cab. That can add up in a city the size of Shanghai. Wang says the apps bypassed the old system and cut into company revenues.

Much has been made of China's embrace of capitalism, but — along with transportation — the government still dominates key sectors, including energy, telecommunications and banking. Wang says vested government interests won't give them up easily.

How else to describe this other than the merger of state and corporate power? Any company the state doesn't own operates at the whim of the state.

Now let's turn to the crony-capitalist model of the U.S., Japan, the European Union and various kleptocracies around the globe. For PR purposes, the economies of these nations claim to be capitalist, as in free-market capitalism.

Nothing could be further from the truth: these economies are crony-capitalist systems that protect and enrich elites, insiders and vested interests who the state shields from competition and the law.

The essence of crony-capitalism is of course the merger of state and corporate power. There are two sets of laws, one for the non-elites and one for cronies, and two kinds of capitalism: the free-market variety for small businesses that are unprotected by the state and the crony variety for corporations, cartels and state fiefdoms protected by the state.

Since crony-capitalism is set up to benefit parasitic politicos and their private-sector cartel benefactors, reform is impossible. Even the most obviously beneficial variety of reform--for example, simplifying the 4 million-word U.S. tax code--is politically impossible, regardless of who wins the electoral equivalent of a game show (i.e. Demopublicans vs. Republicrats).

The annual cost of navigating the tax code comes to about $170 billion:

Since 2001, Congress has enacted about one new change to the tax law per day. Pathetic, isn’t it? This tax code is a burden and a fiasco and deeply unpatriotic. As Olson’s Taxpayer Advocate Service notes, this code helps tax evaders; hurts ordinary, honest taxpayers; and corrodes trust in our system.

Here's why the tax code will never be simplified: tax breaks are what the parasitic politicos auction off to their crony-capitalist benefactors. Simplify the tax code and you take away the the intrinsically corrupt politicos' primary source of revenue: accepting enormous bribes in exchange for tax breaks for the super-wealthy.

You would also eliminate the livelihood of an entire industry that feeds off the complexities of the tax code. Tax attorneys don't just vote--they constitute a powerful lobby for the Status Quo, even if that Status Quo is rigged, unjust, wasteful, absurd, etc.

It's not that hard to design a simple and fair tax code. Setting aside the thousands of quibbles that benefit one industry or another, it's clear that a consumption-based tax is easier to collect and it promotes production rather than consumption: two good things.

As for a consumption tax being regressive, i.e. punishing low-income households, the solution is very straightforward: exempt real-food groceries (but not snacks, packaged or prepared foods such as fast-food), rent, utilities and local public transportation--the major expenses of low-income households.

1. A 10% consumption tax on everything else would raise about $1.1 trillion, or almost 2/3 of total income tax revenues, not counting payroll taxes (15.3% of all payroll/earned income up to around $113,000 annually, paid half-half by employees and employers), which generate about one-third of all Federal tax revenues and fund the majority of Social Security and a chunk of Medicare.

As for the claim that a 10% consumption tax would kill business--the typical sales tax in California is 9+%, and that hasn't wiped out consumption.

2. The balance could be raised by a progressive tax on unearned income, collected at the source. Most of the income of the super-wealthy is unearned, i.e. dividends, investment income, interest, capital gains, stock options, etc. As a result, a tax on unearned income (above, say, $10,000 annually to enable non-wealthy households to accrue some tax-free investment income) will be a tax on the super-wealthy who collect the vast majority of dividends, interest, capital gains and investment income.

A rough estimate would be 20% of all unearned income.

This would "tax the rich" while leaving all earned income untaxed, other than the payroll tax, which is based on the idea that everyone should pay into a system that secures the income of all workers. This would incentivize productive labor and de-incentivize speculation, rentier skimming, etc.

The corporate tax would be eliminated for several reasons:

1. It is heavily gamed, rewarding the scammers and punishing the honest

2. All income from enterprises is eventually distributed to individuals, who would pay the tax on all unearned investment income.

But such common-sense reform is politically impossible. That's why the answer to the question, what's the the difference between fascism, communism and crony-capitalism is nothing.

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RafterManFMJ's picture

Well, one difference is in a communist state you could be murdered by security forces and nothing would happen to the killers.

Oh, wait...

flacon's picture

What they all have in common is that people live at the expense of someone else instead of their own hard-earned labour.


And that is especially true of the bankers, politicians, those on welfare and insider-corporations. They make it virtually impossible to NOT be dependent on the rotten system by passing laws outlawing cows from grazing or "owning" your own land (property). 

john39's picture

looking back time, you can see the root of this issue...  some people believe that they are destined by divine right to rule over the masses...  and that this arrangement is 'for the best'...  and as such, nothing they do, no matter how seemingly vile and evil, is a problem.

insanelysane's picture

Progressive taxes are UNCONSTITUTIONAL!

Taxes are laws and in the US, according to the Constitution at least, all citizens must be treated equally under the law.  You can't have a law that says people with an income of $100k serve 2 years in prison and people with an income of $50k server 1 year in prison.  The Federal Income tax laws are laws regarding how much LABOR one "owes" the government.  Under the current set of laws, some citizens are required to work 25% of their workday for the state, whilst others 35%, and others 15%, etc.


Imagine you are in a village of 350 people instead of a country of 350 million people.  How long would it last when 60%, 210 villagers, are doing work?  And less than 50% are contributing their labor to the common good.

Cursive's picture


Well, the current federal income tax rates are progressive, so add that to the list of unconstitutional things.  Remember, the perfect is the enemy of the good....

insanelysane's picture

Exactly, which is why that Grover douchebag guy is full of shit with his anti tax group.  If they wanted to really change something they would sue the US over the progressive tax system.  Instead, just like the article states, they want the tax laws changed in their favor.

strannick's picture

The principles of Jefferson and Jackson would seem bizarre to Jamie Dimon, Mike Rogers, the NSA and the CIA. However they would surely be nodding in ascent to a speech from Stalin, clapping to Goebbels, high fiving Mao....

flacon's picture

Imagine a world where the government would tax each person once a year for simply being alive - we could call it a birthday tax. We could think of it as giving back to the earth what we took from the earth (except that the politicians would get the money).

Jumbotron's picture

The principles of Jefferson and Jackson would seem bizarre to Jamie Dimon, Mike Rogers, the NSA and the CIA.

You mean slave owning for both Jefferson and Jackson and instigator of genocide for Jackson?

Seems to me that's right up those folk's alley.

MachoMan's picture

So you're under the impression that the progressive tax has never been challenged in court?

Howard_Roark0112's picture

I'm all for a flat tax rate... except not as long the Fed is around and doing what it does. If we were to move to a flat tax and keep the Fed and the status quo that would be the biggest con in history. 

At the end of the day the Fed esentially prints money for the elite... think about it, why else would they accept a progressive tax rate. Yes a flat tax rate would be fair and just, but only if it comes with other stipulations and reforms. 

Stuck on Zero's picture

Since when did the U.S. have a progressive tax system?  The 0.001% don't pay no taxes.  That's regressive.


flacon's picture

contributing their labor to the common good.


What "common good"? That sounds Marxist to me. I don't care about anybody else except for me, myself, and my family...... but then... I realize that by COOPERATION I can make ME, MYSELF, and MY FAMILY even wealthier.... so I VOLUNTAIRLY CHOOSE to COOPERATE with others. There is no "COMMON GOOD" - if what I do makes my life miserable for the sake of others then I will not do it. If what I do makes my life better for ME AND MINE then I will do it. This is the law of the universe, all animals on this planet work this way - but us humans have figured out how to COOPERATE and make our lives better than we could do it on our own. There is no coersion here. The other word for VOLUNTARY COOPERATION is CAPITALISM. 


When was the last time you gave $1,000 to your neighbour's wife or washed you neighbour's car for him, or mowed his lawn - expecting nothing in return? Sure if you are living in plenty that's easy, but when you are stuggling to even feed your own family, are you really going to be chucking money around to spend on OTHERS instaed of YOU AND YOUR OWN if there is no chance of it somehow coming around and benefiting you in the end? There is no common good - that is a myth. 


swmnguy's picture

In theory at least, you, yourself and your family are to be included among the "common" in "the common good."  "The Common Good" isn't just other people exclusive of yourself.

flacon's picture

There is nothing in the "commong good" pot of goodies - it is empty except for that which was stolen from those who want to make their own lives better. We hire thieves (politicians) to steal from others so that we can make pretend that there is actually something in the "common good" pot. It's a lie and it's wrong. 


I know I am using an extreme example and I hope people realize that. Would you take food off of your starving child's plate and give it to your neighbour's fat son to eat - or would you ask your fat neighbour's son if he would like to EARN some food by doing something for you, for example mowing your lawn. Nothing is free in life and I don't expect others to live their life for my sake and I don't expect to live my life for others sake unless there is some MUTUAL VOLUNTARY agreement between us. :)

MachoMan's picture

Well, so long as you're espousing the voluntary nature of the capitalist system, then how far do you think your request to your fat neighbor's son is going to go?


flacon's picture

You are missing the point. I am not FORCED to give my son's food to my neighbour's fat son - but if we all agree (me, my son, and neighbour's son) he can EARN the food himself. It's not a "request" as you put it. If he doesn't want to get off his fat ass and mow my lawn then he won't get fed by me.

- Is that an example of me exploiting my neighbour using capitalism?

- Or is that him exploiting me by using capitalism?

- Or is nobody exploiting anybody?


When was the last time you were at McDonalds as a customer and the manager "requested" that you mop the floors? The answer is never since you are not a VOLUNTARY EMPLOYEE - you are a customer. How hard is it for people to understand this.... yikes. 

MachoMan's picture

And how did you get the yard?  Why would you give your son's food to a neighbor even if he mows your yard?

PS, generally speaking, the person mowing the yard is the one being exploited...  and is likely only doing it because he has to mow it to eat...  fortunately or unfortunately, eating is about all he'll get out of the deal.  Or were you meaning that you'll give all your surplus property to him for merely mowing the yard?

flacon's picture

I'm surprised you have enough money for an internet connection. Where did you get your money? Whom did you exploit?

Raymond K Hessel's picture

FLACON = Genius!!

MachoMan <> Genius!!

MachoMan's picture

Well, I got the money from the zero sum game we call the economy...  much of it derived from legal infrastructure that turns my non-productive job into a necessity for many people...  call it whatever you want, but you're dancing around the issue.

flacon's picture

If you have a job that is NON PRODUCTIVE (ie, produces nothing of value to society) then you are living off of a crony-capitalist (ie, SOCIALIST) utopia. In Capitalism there are no jobs that produce nothing. They simply don't exist for more than one pay period. PERIOD! It is only in the distorted reality in which we live where there are jobs which produce nothing of value to society, but instead DRAIN value from society - and people call that "capitalism"? You've got to be shitting me! ;)

MachoMan's picture

You've crossed the rubicon from economic model to religion at this point...  In religion, the answer for all anomalies is "god wills it"...  similarly here, the answer for all anomalies is "because its capitalism."  Does it have electrolytes?

PS, what you're describing is the perfect distribution of goods and services and the perfectly efficient use of resources.  This has never happened in any economic system, capitalism included.

PS2, there is actually an economic definition for production...  note: virtually all jobs in the economy do not meet this standard.

Quus Ant's picture

You see why Lloyd Blankfein can say he is doing "god's work".

NotApplicable's picture

Then you find people like CHS who believe in the fallacy of fair theft (taxation), rendering his entire opinion MOOT!

And here I was beginning to think he was recovering from his statist disease.

Philalethian's picture

"What they all have in common is..."

What they all have in common is, they were all created by the bankster empire of dust to use as pawns in war games, pitting all sides against each other. The evil banksters profit after the wars are over and take more power from the people. To control the opposition, you lead it.

All political differences, and the this's and that's are just chessboard pieces for those banksters to play off against each other so they can profit from the conflicts, and chaos. The world domination using the money-god, and the population elimination agendas are always the roots of what is happening on the surface.

When it comes to news and information, it is a lie, or it is the truth. It will empower you, or dis-empower you for control purposes. Decide which feels better, and then embrace that.

Where's cheney?

Where's poppy bush?

All hands on deck!

Ignatius's picture

What's the difference between capitalism and communism?

Under capitalism, man exploits man. 

Under communism, it's the other way around....

Son of Loki's picture


Thanks for clearing that up.

Anusocracy's picture

Any and all of the various forms of government pretty much define man exploiting man.

Ignatius's picture

Good, you got the joke:  Man exploits man.

Anusocracy's picture


Even the middle class, which is getting hammered, exploits others through its want of government.

The innocents are the anarchists and panarchists.

DaveyJones's picture

I dated ann archist in college. she was a mess

Anusocracy's picture

Ann Teechrist was a handful, too.

DaveyJones's picture

I remember her. weird piercings all over. constantly lying 

flacon's picture

Capitalism exploits man vs. man? Really? Is the employee exploiting hs employer by holding the employer for ransom demanding a salary? Or is the employer holding the employee for ransom by only paying him what he is worth to the company? Perhaps in capitalism the employee and the employer voluntairly use eachother for mutual benefit - not exploitation. What a novel concept

Cursive's picture


What is this "capitalism" and where does it exist?

flacon's picture

Well one could start by looking at the black market. Drugs, hookers, arms, barter groups etc. That's where is exists in it's purest form today. 

Anusocracy's picture

Capitalism - free markets - harnesses mankind's control freak nature and channels it into having to please customers in order to survive.

That is the opposite of the force that government uses to survive.

Cursive's picture


Oh, OK, so prostitution does NOT invovle any kind of exploitation or anything and drug cartels are role models for capitalism.  Got it.

Quus Ant's picture

you didn't know that Thai hooker with the broken nose was an entrepreneur?

Anusocracy's picture

What a stupid stupid comment.

Those problems are caused by government making them illegal.

DaveyJones's picture

man exploits man in every system and every substance. Why would drugs be different? The "legal" drug system (and their companies) contain exponentially more crime and exploitation.  

NickVegas's picture

You did sir, it is all exploitation. They don't call it laborism. Money, capital is slavely. Used to finance standing armies since the Summerians. Print up coin of the realm, and collect taxes in that coin from the serfs under threat of death. That is the basis for the system, and I don't believe anything has changed since the real murky invention of money. Do a little research, you may learn some interesting truths about the human condition here on the planet.

swmnguy's picture

I've thought that too, until I considered violent pimps and the nature of drug addiction.  Then the market isn't so free.

Jumbotron's picture

That's a great theory....flacon.  But like most theories......man fucks it up.

Ignatius's picture

Men exploit one another.  That's human history.

Every system regardless of how good it is gets overrun, is attacked.

Eternal vigilence is the only defense.

flacon's picture

So then, what is a better system? Let's hear your ideas please. 

"You never change things by fighting the existing reality. to change something, build a new model that makes the existing model obsolete." ~ Buckminster Fuller


Jumbotron's picture

You asked, so here goes.

There is none, junior.

Now grow up.