ABSTRACT
Economists have offered two explanations for the inequality that exists in capitalist economies. One is that growing inequality is an inherent characteristic of capitalism, while the other argues that inequality is the result of cronyism, as the economic and political elite conspire to design policies for their own benefit. A substantial body of economic theory not specifically developed to examine inequality supports the view that inequality is exacerbated by cronyism. Drawing together a variety of ideas from economics and other social sciences lends support to the view that the elite have been able to manipulate public policy to transfer benefits to themselves at the expense of the masses.
