A Fistful of Dollars
This weeks Ramble is aware that A Fistful of Dollars came before For a Few Dollars More, but forgot when it published last week’s Ramble…
* * *
Last week’s Ramble ended mid-argument, and stimulated four post-length comments from opposing viewpoints. To recap, the basic thrust was that corruption itself is not necessarily a bad thing for development, defined in primarily material terms. It can, in fact, have a positive effect, if it acts to stimulate the socio-economic transition to capitalism. This all depends on the form of corruption seen.
Now, at this juncture, it’s probably helpful to clarify what I mean by the form of corruption. A lot of argument last week centred around kinds of different levels of corruption from the petty (policemen asking for a thousand Kwacha to let you pass a roadblock) to the grand (millions being siphoned off from the Government coffers). That’s not really what I mean. For one, the former kind of corruption is pretty much inevitable during development. It’s a by-product of high poverty and high inequality. I’m really talking about the second type of corruption. Within that, there are many different forms it can take, and some forms serve to power transition, while others keep a country mired in unproductiveness. Which type obtains in a given country depends on the social and political makeup of the country, and is the focus of this week’s Ramble.
Consider one of the examples last week, South Korea. As mentioned earlier, post-war economic development was powered by the Government’s policy of focusing subsidies (often with illicit incentives) on a select group of large conglomerates, who correspondingly grew extremely rapidly. A couple of aspects of this relationship are crucial for understanding why this contributed to rapid growth. Firstly, there was a small group of conglomerates upon whom Government could focus its rewards, allowing for fairly detailed intervention in the economy in the initial stages.
Secondly, and crucially, the power in this relationship was asymmetric. Government was in a position of unchallenged power vis-à-vis the Chaebol, a legacy of the war. Put simply, the Chaebol were seen as collaborators during the war. As a result, they had very, very little popular support. If they tried to lead an economic or political backlash against the Government they were never likely to get the kind of mass support they would need to win any significant victories. As a result, Government was in a position to offer subsidies (and accept bribes), but more importantly, it was in a position to remove these subsidies without political repercussions. This meant that if a conglomerate was unable to meet the targets that Government set, it could easily be disciplined through the removal of subsidies. So, to sum up: a small number of groups were able to access Government patronage, but on the Government’s terms; most grew rapidly, and those that failed to were removed from the Government’s patronage, and the resources available were focused on those who could deliver. The corruption that accompanied this facilitated the process of resource transfer to the productive and rapidly growing economic sector, but was not the root cause of growth – indeed, one can see it as almost incidental. (In the British example, it was far more central, but the basic structure of relationships involved was similar, though not the same).
Compare this with the situation that obtains in many African countries. The political structure is relatively young, as is the post-colonial socio-economic structure. In most cases, they are characterised by complex patron-client networks, in which a number of groups (often defined by ethnic and regional differences) vie for the patronage of a Government with a weak power base vis-à-vis these groups. As a result, the Government cannot cut the two-way, corrupt relationships that exist between them and any of these groups, as the spurned group frequently has the political power base to successfully challenge the Government (or more likely the individual MP concerned). As a result, the Government distributes its favours widely and accepts monetary returns from a number of groups. The element of the relationship that powered transition in South Korea is absent, namely the ability of Government to focus returns on a few groups and to effectively discipline these groups if they did not provide the returns required. The complex web of corruption and reward is an unproductive one on two levels: firstly, there is a static economic loss (one which, as MC pointed out last week, cumulatively adds up to a significant loss to the economy). Secondly, it not only fails to contribute to any economic transformation, but plays a part in the prevention of it.
So, there you have my take on corruption. The impact of corruption depends on much deeper factors, which are more important determinants of the path development takes, if it takes one at all.
I also mentioned that you can still argue for the eradication of corruption despite it’s potential ability to contribute to corruption. Quite simply, make the equity argument: I’m all for free and fairer societies. Just don’t pretend you’re improving the prospects of development by doing this. It’s dishonest. The direction of the impact of eradicating corruption is incidental to the act of eradicating it. I feel the same way about arguments on democracy – it’s a good thing in and of itself. But there’s no evidence to suggest it speeds up the process of development in material terms.
* * *
And a word on the cricket. Sri Lanka are still in with a chance. We’ve got a tough team, with a varied attack and a potentially explosive batting order. For us to win the whole thing, we’d need everyone to click at crucial moments, as opposed to a couple of bowlers and a couple of batsmen, as happened against South Africa. Malinga’s four in four was stunning, but he was still bashed around the pitch too much with the new ball. Murali was a class act as usual, but the batsmen were terrible. We need at least one big score from our top three in every game if we want to advance, and we’ll need everyone to fire if we’re to stand a chance against Australia. No chance of Punter’s men collapsing like Smith’s.
* * *
Last week’s Ramble ended mid-argument, and stimulated four post-length comments from opposing viewpoints. To recap, the basic thrust was that corruption itself is not necessarily a bad thing for development, defined in primarily material terms. It can, in fact, have a positive effect, if it acts to stimulate the socio-economic transition to capitalism. This all depends on the form of corruption seen.
Now, at this juncture, it’s probably helpful to clarify what I mean by the form of corruption. A lot of argument last week centred around kinds of different levels of corruption from the petty (policemen asking for a thousand Kwacha to let you pass a roadblock) to the grand (millions being siphoned off from the Government coffers). That’s not really what I mean. For one, the former kind of corruption is pretty much inevitable during development. It’s a by-product of high poverty and high inequality. I’m really talking about the second type of corruption. Within that, there are many different forms it can take, and some forms serve to power transition, while others keep a country mired in unproductiveness. Which type obtains in a given country depends on the social and political makeup of the country, and is the focus of this week’s Ramble.
Consider one of the examples last week, South Korea. As mentioned earlier, post-war economic development was powered by the Government’s policy of focusing subsidies (often with illicit incentives) on a select group of large conglomerates, who correspondingly grew extremely rapidly. A couple of aspects of this relationship are crucial for understanding why this contributed to rapid growth. Firstly, there was a small group of conglomerates upon whom Government could focus its rewards, allowing for fairly detailed intervention in the economy in the initial stages.
Secondly, and crucially, the power in this relationship was asymmetric. Government was in a position of unchallenged power vis-à-vis the Chaebol, a legacy of the war. Put simply, the Chaebol were seen as collaborators during the war. As a result, they had very, very little popular support. If they tried to lead an economic or political backlash against the Government they were never likely to get the kind of mass support they would need to win any significant victories. As a result, Government was in a position to offer subsidies (and accept bribes), but more importantly, it was in a position to remove these subsidies without political repercussions. This meant that if a conglomerate was unable to meet the targets that Government set, it could easily be disciplined through the removal of subsidies. So, to sum up: a small number of groups were able to access Government patronage, but on the Government’s terms; most grew rapidly, and those that failed to were removed from the Government’s patronage, and the resources available were focused on those who could deliver. The corruption that accompanied this facilitated the process of resource transfer to the productive and rapidly growing economic sector, but was not the root cause of growth – indeed, one can see it as almost incidental. (In the British example, it was far more central, but the basic structure of relationships involved was similar, though not the same).
Compare this with the situation that obtains in many African countries. The political structure is relatively young, as is the post-colonial socio-economic structure. In most cases, they are characterised by complex patron-client networks, in which a number of groups (often defined by ethnic and regional differences) vie for the patronage of a Government with a weak power base vis-à-vis these groups. As a result, the Government cannot cut the two-way, corrupt relationships that exist between them and any of these groups, as the spurned group frequently has the political power base to successfully challenge the Government (or more likely the individual MP concerned). As a result, the Government distributes its favours widely and accepts monetary returns from a number of groups. The element of the relationship that powered transition in South Korea is absent, namely the ability of Government to focus returns on a few groups and to effectively discipline these groups if they did not provide the returns required. The complex web of corruption and reward is an unproductive one on two levels: firstly, there is a static economic loss (one which, as MC pointed out last week, cumulatively adds up to a significant loss to the economy). Secondly, it not only fails to contribute to any economic transformation, but plays a part in the prevention of it.
So, there you have my take on corruption. The impact of corruption depends on much deeper factors, which are more important determinants of the path development takes, if it takes one at all.
I also mentioned that you can still argue for the eradication of corruption despite it’s potential ability to contribute to corruption. Quite simply, make the equity argument: I’m all for free and fairer societies. Just don’t pretend you’re improving the prospects of development by doing this. It’s dishonest. The direction of the impact of eradicating corruption is incidental to the act of eradicating it. I feel the same way about arguments on democracy – it’s a good thing in and of itself. But there’s no evidence to suggest it speeds up the process of development in material terms.
* * *
And a word on the cricket. Sri Lanka are still in with a chance. We’ve got a tough team, with a varied attack and a potentially explosive batting order. For us to win the whole thing, we’d need everyone to click at crucial moments, as opposed to a couple of bowlers and a couple of batsmen, as happened against South Africa. Malinga’s four in four was stunning, but he was still bashed around the pitch too much with the new ball. Murali was a class act as usual, but the batsmen were terrible. We need at least one big score from our top three in every game if we want to advance, and we’ll need everyone to fire if we’re to stand a chance against Australia. No chance of Punter’s men collapsing like Smith’s.
posted by the Maradona of Malawi at 11:24 PM
