Crony Capitalism

Thursday, January 23rd, 2014

The three candidates running for president in 1912 offered three different solutions to crony capitalism, Lynn C. Rees says:

The candidate of the Progressive Party, former president Theodore Roosevelt of New York, sought to build the United States federal government into an over-awing Leviathan that could cow large concentrations of wealth by subjecting them to tight scrutiny and regulation. This Leviathan would not necessarily seek to break up these concentrations of economic power: Roosevelt was convinced bigness was the future. Furthermore, such concentrations of economic power were necessary for competing in the increasingly vicious international market for power where empires and nations struggled against other empires and nations. Some hinted that there was a possibility of Roosevelt’s Leviathan itself being bought by dollars from those great concentrations of wealth. However, Roosevelt dismissed this fear because the natural ruling class that would control the Federal government was Old Money of Impeccable Old Blood like himself and Old Money can’t be bought by New Money. Old Money would be supported by professional regulators trained in the latest science of administration, many of whom would be from the ranks of Old Money themselves.

The candidate of the Republican Party, incumbent president and former Roosevelt henchman William Howard Taft of Ohio, sought to contain large economic concentrations by using the Federal government to selectively break them down into smaller pieces and regulating them around the edges by controlling their interactions with each other. Taft’s vision was one of checks and balances where Federal-scale concentrations of economic power were checked and balanced by other Federal scale concentrations of power while Federal checks and balances on private wealth were checked by the constitutional checks and balances within the Federal government itself. As president, Taft struck a more moderate rhetorical tone about business than Roosevelt had when Roosevelt was president. But Taft more energetically pursued judicial remedies to break up or impose structural checks on the more vicious concentrations of economic power. Taft favored checks and balances through one-time restructurings of concentrated economic power and its institutional forms over continuous oversight governed by the discretion of a permanent regulatory agency. The former approach put in place firmer checks and balances on the ravages of concentrated economic power without as much possibility of the corruption of business and state by an ongoing regulatory relationship between the two.

The candidate of the Democratic Party, New Jersey Governor Thomas Woodrow Wilson, proposed breaking up large concentrations of wealth into so many tiny pieces that each tiny piece could be overawed by just one of the forty-six little leviathans of the several states of the Union. They’d be so small they could be drowned in a bathtub. This was a variation on the tradition of state’s rights and a smaller less activist Federal government that the Democratic Party had advocated with varying degrees of seriousness since Martin van Buren had formed it around the person of General Andrew Jackson after 1824. Federal attention to Federal-scale large concentrations of wealth was only necessary if there were Federal-scale large concentrations of wealth to pay attention to. Breaking them up into state-level concentrations of wealth would return responsibility for policing concentrations of wealth to the states or the people respectively.


  1. Toddy Cat says:

    Taft was right, Wilson won, but we got TR’s “solution”.

  2. Steve Johnson says:

    They were all wrong but had persuasive arguments if you judge by the standards of people who are of average intelligence and no particular education.

    Of course, what did you expect?

    And yes, we did get TR’s “solution” — which is very hard to distinguish from communism.

  3. Toddy Cat says:

    Speaking as a person of average intelligence and no particular education, I still think that Taft came closer to being right than any of them. And yeah, we may not be at communism right now, but give it a few years.

Leave a Reply