Market Entrepreneurs:
Market entrepreneurs or free market can be explained as a system in which individuals are free to make decisions at their own, strive for their own benefits, and possess ownership of goods and services, they provide. Further, seller and buyer are free to settle prices by mutual consent, so making it a voluntary exchange instead of any coercion. In this form of economy, the role of government is just restricted to: provide basic human rights, freedom, safety, and legal services to protect the rights of either parties.
The reason behind emergence of entrepreneurial economy is the globalization process. Due to globalization, the rise in cost efficiency techniques by using high skilled labor force in certain regions of the world and the revolution that changed the shape of telecommunication industry are the two important aspects of the rise of entrepreneurial market (Audretsch, 1997).
In market entrepreneurs, the rise and fall in product prices is determined by demand and supply in the market. Higher the demand, higher would be the profitability of the producer and a greater competition. Producers sometimes make good use of competitive market by decreasing product prices to attract customers and compete on product differentiation. Thus, an economy without any undue government influence is the most suitable economic condition for an entrepreneur to compete.
Crony Capitalism:
In contrast, the cronyism or crony capitalism, the role of government is critical in managing business affairs. Too much politics and government influence sometimes spoil the economic system due to high influx of corruption and mismanagement. The crony capitalism is sometimes more beneficial for businessmen to spend extra money on bribing and lobbying legislators to turn table in their favor at government level. Government officials in return provide incentives to businesses in the form of tax rebates, loans, special grants, creation of monopoly to create more profits. All these benefits and compensations are made to businesses and legislators at the cost of buyers and taxpayers. Buyers have to pay huge prices because of less market competition, and taxpayers have to pay higher for the granted loans and bailouts. Hence crony capitalism is about the privatizing profits and socializing losses.
The coordination between companies and government has extended in recent years. The most primary example of crony capitalism took place in Bush time period when huge bailouts were released under certain agreements. Later on the Obama’s government released money for alternative energy companies like Solyndra, which went to bankruptcy after getting funding from the government.
Anger spread all around at the time of protests to Occupy Wall Street during 2011. Demonstrators were blaming financial institutions for the economic crisis of 2007-2009, as large corporations were influencing government decisions and legislations.
There are large number of examples to demonstrate crony capitalism. This form of capitalism is always willing to rise and grow wherever favorable environment is created for it. Crony capitalism has both sides i.e. demand side and supply side. On demand side, there are strong institutions like Goldman Sachs or Morgan Stanley are standing with special demands in their hands to influence regulating bodies, however on the other side, legislators and bureaucrats are standing, ready to serve corporate giants for mutual benefits. It will be in favor of companies and public to reduce the influence of government in businesses by allowing more competition in the market. The only way to weaken the impact of corny capitalism is to restrict the government’s tendency to extend undue favors to business tycoons and force the government to protect basic consumer’s rights (Macey, 2014).
