Putting corruption in perspective

By Andrew M. Mwenda

Those arguing against corruption are not wrong but neither are the leaders who depend on it

Recently, I said on my NTV show that the existence of corruption in a country does not automatically impede its ability to develop. With those words, I let loose the dogs of intellectual (actually mostly emotional) war on twitter, with some accusing me of endorsing corruption. To avoid being misunderstood, let me state clearly that I hate corruption. It is morally repugnant.

Sad stories abound of certain aspects of corruption causing grievous harm to nations and peoples. For example, 80,000 kids die of preventable diseases each year in Uganda due to corruption because public officials have stolen money for immunisation. This is unacceptable.

So morally we all must stand in angry and determined resistance to corruption. But we need to be clear that we are dealing with the immoral aspect of corruption. To deal with it as an economic development issue requires different lens.

It is understandable when people think corruption undermines development. There was a lot of corruption in Zaire (now DR Congo) under the late Mobutu Sese Seko that corresponded with state and economic failure.

Such presence of economic failure and corruption leads people to confuse correlation with causality. Making a link sounds like common sense. However, a lot of common sense is actually common nonsense. As the Nobel laureate in economics Robert Solow said, just because the tire is flat does not mean the hole is at the bottom.

It is a fact that many successful countries had high levels of corruption during their transition from poverty to riches. In 1996, the most prosperous nation in East Asia, South Korea, arrested two of its former presidents – Chun Doo-hwan and Roh Tai-woo – for corruption. The duo had presided over South Korea’s economic transformation. Both admitted to having stolen more than $650m each. Why did South Korea develop in spite of leaders being thieves?

Corruption takes too many forms for anyone to pinpoint which form is harmful to development. Secondly, development is also too complex a process with many factors interacting with one another in complex ways for it to be reduced to a single impediment. And what is morally wrong and even harmful is not necessarily injurious to economic development.

Let me give some extreme examples on morality and development.

Mass murder is a horrible human wrong. But it does not automatically stop economic development.  The same applies to discrimination based on identity.

The world’s richest nation, USA, grew rich while exterminating Native Americans and enslaving its black citizens.

This is not to say the genocide of Native Americans and slavery of black people is what caused America’s transformation. Rather it is to underline the point that a country can develop economically in spite of its leaders and elites being venal and sadistic.

The history of the West’s rise to global dominance is littered with war, exploitation, and oppression at home and genocide and repression of colonised peoples abroad. Just reading Karl Marx and Charles Dickens descriptions of life in factories in England during its industrialisation process, or the depredations of Jim Crow on black communities in USA to see what I am talking about.

Therefore, if corruption undermines development in Africa, we need to establish why this happens.

Prof. William Easterly has a compelling argument in his book Elusive Quest for Growth, comparing Indonesia under Gen. Surhato (which was corrupt but performed well economically) with Congo under Gen. Mobutu (which was corrupt and its economy virtually collapsed).

He argues that corruption is harmful when decentralised but un-harmful (or beneficial) when it is centralised.  Prof. Mushtaq Khan makes an almost similar argument comparing South Korea under Gen. Park Chung Hee and Pakistan under Field Marshal Mohammed Ayub Khan in his paper, A Typology of Corrupt Transactions in a Third World State. However, both arguments are speculative and their illustrations are suggestive but not conclusive.

Practically every country that is developed now had high levels of corruption during its intense period of transformation as Samuel Huntington argues in his majestic book, Political Order in Changing Societies.

The historian-philosopher Will Durant said the present is the past rolled up for action; the past is the present unrolled for understanding. So let us peep into history to illuminate the present.

Most of what we call corruption today was only codified so by Western nations (Europe and her offshoots in Australia, New Zeeland and North America) over the last 100 years or so. And this was mostly after these countries had transformed from poor agricultural societies to rich industrial nations. Many of the practices classified as “corrupt” today were actually normal and/or legal during the West’s intense period of economic transformation. We cannot for sure say they facilitated transformation. But it is clear they did not impede it.

For example, using public office for private gain was normal and legal in all Western nations in the mid to late 19th century, in some countries up to the early 20th century. Most politics was organised around prebendalism i.e. public officials sharing government revenues with friends, relatives and supporters. The “spoils system” (where elected officials would reward their supporters, friends and relatives with government jobs and public contracts) did not end in America until the 1930s. In the UK up to the late 19th century someone could buy a military rank.

Economic transformation led to the emergence of new social groups. When they began to make new demands, the basis of state legitimacy was restructured from repression and patronage to service delivery. This process was gradual and has to date not achieved the ideal we read of in textbooks.

The new political demands altered the governance structures of those societies making old forms of governance obsolete, and the practices that had been normal and legal were made corrupt. The works of Max Weber and Karl Polanyi illuminate this point.

The restructuring was possible after these nations became rich, with government revenues able to provide a large basket of public goods and services to most citizens.

Therefore, the lesson from history is that low levels of corruption are a consequence, not a cause, of development. History suggests corruption accompanies transformation, like flies on a carcass.