What do you think?
Rate this book
Cronyism: Liberty vs Power in America, 1607-1849
The present book is an economic and political history of early America, describing government policies and their effects on marketplace activity. In particular, it is a history of cronyism: when the government passes policies to benefit special-interest politicians, bureaucrats, businesses, and other groups at the expense of the general public. Examples include a central bank’s selective credit expansion, discriminatory taxes and regulations, business subsidies, territorial acquisitions, and other foreign policy maneuvers, and new constitutions. The rewards of cronyism take the form of monetary gains, particularly increased incomes and profits for individuals and businesses, or psychic gains from greater power and authority. The government’s claim that it passed legislation to enhance public welfare is only a thin veneer for privileges and redistribution.
Special-interest legislation is inherent in the very nature of government. On the free market, the network of voluntary exchanges, all activity is based on individual liberty and results in mutually beneficial outcomes. The competitive profit and loss mechanism incentivizes individuals to produce goods and services that consumers desire. However, the government, the legitimated monopoly of power, lacks this mechanism and produces outcomes that are harmful to society. The incentive structure is different: unlike the Invisible Hand of the market, individuals that control the coercive Visible Hand are encouraged to pass legislation that benefits themselves at the expense of others. The stronger the government, the more lucrative the rewards. To control the government machinery is to control the levers of cronyism.
Researchers have analyzed American special privileges before, but their studies focus on individual cases in select time periods that remain unintegrated into an overarching narrative. There is still a need for an overview of cronyism that covers the motivations behind and development of relevant policies, their effects on the economy, and the critical attempts to reform the system. To achieve this goal, I utilize the “Liberty versus Power” theory, developed by Murray Rothbard in his five-volume Conceived in Liberty series. It contains three core components.
First, history is a clash between the forces of liberty, or those in favor of individual decision making and the market allocating resources, and the proponents of power, the factions that support coercion and government organization of production. Libertarians want to reduce government power to limit cronyism while statists strive for the opposite. Favoritism is limited when a substantial interest with an ideological and pecuniary incentive to promote freedom exists. Otherwise, only clashing groups that want to control power mitigates special privileges. The liberty and power forces, with a spectrum in between, continually define the evolution of a government’s interference with the free society. When liberty triumphs overpower, cronyism is reduced; when the opposite occurs, privileges increase.
Second, those who control the government’s power are corrupted over time. To quote Lord Acton, “power tends to corrupt and absolute power corrupts absolutely.” I define corruption as the willingness of government officials to push for interventions that benefit themselves and other favored interests. Coercion and the use of force increases the ability to dispense favors, which incentivizes its occurrence. While there is often a strong moral element to corruption, my primary focus is the increased inducement to secure special-interest policies. Lord Acton’s famous quote can be modified accordingly: “power tends to incentivize cronyism and absolute power incentivizes cronyism absolutely.” Cronyism is due to the corrupting nature of government power and only by eliminating it can society destroy such favoritism.
Third, reforms that eliminate restrictions and redistributions are difficult to achieve because they require smaller government. This can only be accomplished through an outside amputation of power, particularly secession, or a change in the administrative leadership that internally dismantles the government’s power. The problem with reform, internal or external, is that any attempt requires laissez-faire proponents to use the coercive structure to enact their preferred policies. However, power tends to corrupt, which means that the previous advocates of freedom ineluctably start to pass their own special privileges. Radicals lose sight of their original goals, moderates stress the need to compromise with the opposition, and political office increases the incentive to provide favors to supporters. Soon the temptation to grant cronyism becomes irresistible. While in office, the libertarian faction transforms into a new coalition indistinguishable from the former statist party.
My thesis is the following: in early American history, special privileges increased in a...
Special-interest legislation is inherent in the very nature of government. On the free market, the network of voluntary exchanges, all activity is based on individual liberty and results in mutually beneficial outcomes. The competitive profit and loss mechanism incentivizes individuals to produce goods and services that consumers desire. However, the government, the legitimated monopoly of power, lacks this mechanism and produces outcomes that are harmful to society. The incentive structure is different: unlike the Invisible Hand of the market, individuals that control the coercive Visible Hand are encouraged to pass legislation that benefits themselves at the expense of others. The stronger the government, the more lucrative the rewards. To control the government machinery is to control the levers of cronyism.
Researchers have analyzed American special privileges before, but their studies focus on individual cases in select time periods that remain unintegrated into an overarching narrative. There is still a need for an overview of cronyism that covers the motivations behind and development of relevant policies, their effects on the economy, and the critical attempts to reform the system. To achieve this goal, I utilize the “Liberty versus Power” theory, developed by Murray Rothbard in his five-volume Conceived in Liberty series. It contains three core components.
First, history is a clash between the forces of liberty, or those in favor of individual decision making and the market allocating resources, and the proponents of power, the factions that support coercion and government organization of production. Libertarians want to reduce government power to limit cronyism while statists strive for the opposite. Favoritism is limited when a substantial interest with an ideological and pecuniary incentive to promote freedom exists. Otherwise, only clashing groups that want to control power mitigates special privileges. The liberty and power forces, with a spectrum in between, continually define the evolution of a government’s interference with the free society. When liberty triumphs overpower, cronyism is reduced; when the opposite occurs, privileges increase.
Second, those who control the government’s power are corrupted over time. To quote Lord Acton, “power tends to corrupt and absolute power corrupts absolutely.” I define corruption as the willingness of government officials to push for interventions that benefit themselves and other favored interests. Coercion and the use of force increases the ability to dispense favors, which incentivizes its occurrence. While there is often a strong moral element to corruption, my primary focus is the increased inducement to secure special-interest policies. Lord Acton’s famous quote can be modified accordingly: “power tends to incentivize cronyism and absolute power incentivizes cronyism absolutely.” Cronyism is due to the corrupting nature of government power and only by eliminating it can society destroy such favoritism.
Third, reforms that eliminate restrictions and redistributions are difficult to achieve because they require smaller government. This can only be accomplished through an outside amputation of power, particularly secession, or a change in the administrative leadership that internally dismantles the government’s power. The problem with reform, internal or external, is that any attempt requires laissez-faire proponents to use the coercive structure to enact their preferred policies. However, power tends to corrupt, which means that the previous advocates of freedom ineluctably start to pass their own special privileges. Radicals lose sight of their original goals, moderates stress the need to compromise with the opposition, and political office increases the incentive to provide favors to supporters. Soon the temptation to grant cronyism becomes irresistible. While in office, the libertarian faction transforms into a new coalition indistinguishable from the former statist party.
My thesis is the following: in early American history, special privileges increased in a...
318 pages, Hardcover
Published January 1, 2021
27 people are currently reading
138 people want to read
About the author
Patrick Newman
3 books4 followersLibrarian Note: There is more than one author by this name in the Goodreads database.
Patrick Newman Ph.D.
Patrick Newman Ph.D.
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 7 of 7 reviews
May 21, 2022
Excellent read.
October 10, 2024
Patrick Newman is a young economist trained in the Austrian school, and a devotee of Murray Rothbard's libertarian political theory. In this book, Newman applies Rothbard's Liberty versus Power model to early American history. (The LvP model essentially stipulates that history displays a clash between the forces of liberty and proponents of power, those who control government are corrupted by its power over time, and efforts to eliminate crony arrangements built up over time are very difficult to achieve.)
Through this analytical framework, Newman demonstrates that from the founding of the United States, special interests used prevailing power structures for their own benefit at the expense of the American populace. While the American Revolution, the Articles of Incorporation, and the Jacksonian revolution served as catalysts to further the interests of liberty for Americans, power brokers would ultimately resume the reins of power so that they could implement policies that met their needs.
Newman's book builds quite nicely on Rothbard's majestic Conceived in Liberty series on early American history. I would recommend this to anyone wishing to learn about American history from a libertarian perspective.
Through this analytical framework, Newman demonstrates that from the founding of the United States, special interests used prevailing power structures for their own benefit at the expense of the American populace. While the American Revolution, the Articles of Incorporation, and the Jacksonian revolution served as catalysts to further the interests of liberty for Americans, power brokers would ultimately resume the reins of power so that they could implement policies that met their needs.
Newman's book builds quite nicely on Rothbard's majestic Conceived in Liberty series on early American history. I would recommend this to anyone wishing to learn about American history from a libertarian perspective.
March 14, 2022
Insanely detailed and convincing, just the sheer amount of firsthand documents that Newman presents contain the proof to show that his arguments existed in the minds of people at the time and the arguments they had are far more three-dimensional than what is normally taught. At times this can actually become a bit of a crutch because since he goes into so much detail, it leads to tangents (e.g. explaining the connections between two individuals and going into either the past or present) that takes away from the present discussion. It is however written partly like a narrative, which when the story does flow, it flows really well and becomes an easy read.
May 15, 2022
Best section was on the constitution. A red pill chapter for sure.
June 20, 2022
My new favorite history book!
August 17, 2025
This Is a Must-Read for American History Buffs
If you are a libertarian, or your ideology leans that way, this book is perfect for you. Most people think corruption in the American government is a new thing but the struggle has been there since the country's birth.
The age old strategy of war, conquest and plunder has been part of the American empire from the beginning.
Very few people understand that rapid expansion is brought on by attaching false pretenses to start wars only to have powerful and cunning men ride the coat tails of the generals in order to capitalize on the opportunities to control resources.
Don't read this book if you hold all of our founders in an angelic light.
If you are a libertarian, or your ideology leans that way, this book is perfect for you. Most people think corruption in the American government is a new thing but the struggle has been there since the country's birth.
The age old strategy of war, conquest and plunder has been part of the American empire from the beginning.
Very few people understand that rapid expansion is brought on by attaching false pretenses to start wars only to have powerful and cunning men ride the coat tails of the generals in order to capitalize on the opportunities to control resources.
Don't read this book if you hold all of our founders in an angelic light.
October 8, 2024
This books proves to be an extremely enlightening investigation into uncovering the deep seated and ever rapacious crony desires that have slowly bitten away at our freedoms ever since the founding of this nation. Through this novel view of history as seen through Newman's Rothbardian "liberty Vs. power" thesis, all of modern Americas woes can be traced back to special interest seeking politicians and businessmen. Who planted and nutured the seed of this now behemoth hydra we call the American Government today. That only seeks further plundering of the American people to only enrich a small caste of elites. All in the name of "the people's general welfare" and "in the nation's defense."
Displaying 1 - 7 of 7 reviews