Their transitional process gets coopted by cronies. The market system is comparatively more reliable.
Foss, et al, 22—Professor of Strategy at the Department of Strategy and Innovation, Copenhagen Business School, Honorary Adjunct Professor, Department of Marketing & Management, Southern Denmark University (Nicolai, with Peter Klein, W. W. Caruth Endowed Chair, Professor of Entrepreneurship, and Chair of the Department of Entrepreneurship and Corporate Innovation, Baylor University, Adjunct Professor of Strategy and Management at the Norwegian School of Economics, Carl Menger Research Fellow at the Mises Institute, and Research Affiliate at GRANEM, and Samuele Murtinu, Chair Full Professor of International Business and Interim Head of Section (Entrepreneurship) at the Utrecht University School of Economics, “The economy doesn’t need a reset, and neither does management theory,” Scandinavian Journal of Management, Volume 38, Issue 3, September 2022, dml)
Great Reset proponents see “capitalism” as an outdated, inefficient, and unjust system and want its current “neoliberal” manifestation supplanted with a much more regulated system. However, as we have argued capitalism simply means that most means of production are privately owned, that unhampered markets are used to allocate resources, and that there are high levels of economic freedom because state intervention is relatively limited. Economies organized on these principles also tend to be associated with high levels of social and political liberty. In such a system, firms concentrate on learning how to better serve customers. If customers want firms to produce more “socially responsible” products and services (and we certainly don’t deny that huge segments among modern customers and consumers hold such preferences), that is what firms will do. Not so in a cronyist system where the attention of managers is focused instead on winning favors with bureaucrats (lucrative contracts, network connections that may be of value in the future, harm done to competitors, privileges and even monopolies). Consumers lose directly because their interests and preferences may be overridden in favor of the preferences of bureaucrats and politicians. The wrong goods and services are produced and resources are spent on influencing public decision makers. Again, what is criticized by the critics of “capitalism” is in actuality “cronyism” (see also Klein et al., 2021).
Research on cronyism suggests that economies with high levels of government engagement with the economy are likely to exhibit particularly high levels of cronyism. There are reasons to expect a Great Reset to result in more cronyism. A recent WEF (2017) proclamation says that.
Public-private cooperation needs to be stepped up to accelerate action required to achieve the Sustainable Development Goals (SDGs) by 2030 … Stefan Löfven, Prime Minister of Sweden, told participants “Goals matter. If we are to succeed, we also need business, academia, civil society and trade unions. There will be no progress without public-private cooperation. This is a business case. This will boost our innovation capacity. Innovations are crucial for the transition to a new sustainable society.”1
This and similar proclamations are oblivious to the potential dangers of public-private partnerships. While such partnerships can upgrade existing and build new innovation capabilities within some areas, they also make it more attractive to be a politically connected firm. This is not just a matter of getting access to resources such as public research funds; it is also a matter of gaining influence that can be leveraged in the service of curbing the influence of rivals.
In short, cronyism causes real social and economic harms, including those that catch the attention of Great Reset proponents. Ironically, many of the reforms associated with Great Reset proposals—substantial public-sector investments in “green” technology, an increased use of public-private partnerships, greater government involvement in the innovation process, and a move from market-based to vague, complex, and politicized measures of company performance—will lead to more cronyism and are thus self-defeating.