Question

When does "crony capitalism" become so severe that the national economic system should no longer be considered market capitalism?  

Answer 1

Crony capitalism is when businesses operate in the market not because of the risks they take but because of the preferential treatment they get from the government through regulation or other unfair means.

Such practices disturb the free competition in the market and result in inefficient production and allocation of resources.

When crony capitalism becomes so much that market power becomes concentrated in the hands of a few market players because of unfair government treatment or when corruption becomes too much that the poor start getting exploited in the hands of the rich industrialists, that is when the economic system can no longer be considered market capitalism. Infact the economic system becomes completely under the control of monopolistic firms without any competition and leading to inefficient resource allocation.