Crony capitalism is, according to the definition of laissez-faire advocates, what happens when collusion occurs between state and private entities. But, as Marx says, "the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie". Any interaction between state and private entity is lobbying, and therefore intrusion on the free market. The only way to prevent this collusion from occurring is to have regulations banning all corporate influence in government... but it is exactly these regulations to prevent corporate dominance which laissez-faire advocates want to do away with. Ultimately I think all of these arguments that the state should do less can be boiled down to ancap arguments, which are purely absurd (obviously, you can't enforce private property without a state, or a corporate pseudo-state).

    Another absurd argument is that it is regulation which allows for monopolies to form. Not only is this ahistorical (it was the lack of regulations which led to the era of business trusts in the late-1800s USA, probably one of the most prominent examples of corporate dominance and monopolization in modern history), it makes no business sense. Competition is a threat to any business, and they are in fact encouraged to suppress competition since it eats into their consumer base. The most efficient way to outplay other businesses is not to leverage resources into innovation (as advocates of capitalism claim will happen), it's to spend money on marketing and on acquisitions and mergers. In a free market, whatever company grows the fastest (due either to a starting advantage or pure luck) has the most leverage to exert and is most likely to create a monopoly. And, as mentioned earlier, it is the government who stops these anti-competitive practices. Maybe the disciples of Austrian economics don't like that the government does this, since they see monopolies as being a good thing somehow... but to any sane human being it's obvious that the competitive facade of capitalism can only exist with regulatory enforcement.

    The corollary to this argument is that regulations hurt small businesses which try to compete with these monopolies, by making it harder for them to start up... but it's easy for a monopoly to undercut the prices of any competitor, or swamp them with litigation, and get away with choking all competition before they become a threat. And regulations have nothing to do with this - businesses with more spare capital can exert more power on competitors. Plus, in many economic sectors, it isn't workable to become a startup without absurd amounts of venture capital. Like, you can't have any small start-up airlines or nuclear energy companies challenging the existing hegemonies in those sectors, because becoming a viable competitor takes an impractical amount of money to even get off the ground (economies of scale and all that).