Walter Isaacson, the former CEO of PBS, bestselling author and historian, recently expressed alarm. In particular, he’s dismayed by the increasing influence of crony capitalism in the technology sector—particularly as it concerns former President Donald Trump. Then he unpacked how state capitalism often devolves into crony capitalism. This new reality creates a culture in which well-connected, favored competitors flourish while the innovation of healthy competition withers.
In a recent discussion, Isaacson emphasized that when government officials favor certain businesses, it can lead to a corrupt and chaotic marketplace. In conclusion, he warned that this practice not only curbs innovation but can be deadly for the economy at large.
You’ve hollowed out the organization,” he said, shining a spotlight on the harm done to agencies and sectors that experience cronyism and lack of oversight. His statements were set against the backdrop of Trump’s focus on big tech companies such as Nvidia and Intel.
Isaacson made a more fundamental point about the nature of state capitalism and how easily it can slip into crony capitalism. He elaborated that rewarding firms in exchange for loyalty to politicians sets an ugly precedent. Yet this narrow emphasis turns the public eye away from all that they do to benefit everyone.
“That state capitalism often evolves into crony capitalism, where you have favored companies and industries that pay tribute to the leader, and that is a recipe for not only disaster, but just sort of a corrupt sense of messiness.” – Walter Isaacson
This is a conversation that couldn’t come at a better time. The tech sector is going through a period of intense regulatory harassment and criticism, demanding increased oversight. Silicon Valley stakeholders and others around the nation are watching in real time to see how government policies affect industry dynamics and competitive practices.
Isaacson’s take sheds light on a fierce ongoing debate. It focuses on the tension that exists between the need for government to support innovation and the risks of picking winners and losers. The landscape is changing quickly and crony capitalism is quickly becoming a big problem. This trend leads to critical issues of equity, openness and lasting sustainability in technology.