Corruption, Capitalism and Democracy

John Girling

• Publisher: Routledge
• Year: 2002
• Print ISBN: 9781138880078
• eBook ISBN: 9781134744695
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Corruption arises from the collusion of economic and political elites, a practice that has developed in order to overcome the contradiction of two important processes of our time: capitalism and democracy. In this new study of the phenomenon, the author shows how corruption is the practice of collusion taken to excess; 'the unacceptable face of capitalism'. Corruption, by 'going too far', exposes what is normally hidden from view; the collusive system of elites furthering the expansion of capitalist practice and market practice at the expense of democratic practice and public values.

1 Introduction

DEFINING CORRUPTION

‘Corruption’ represents the normative perception of capitalist ‘excess’: the culmination of the systemic process of collusion among economic and political elites that results—contrary to democratic theory—in the ‘re-confusion’ of public and private spheres. In the first part of this chapter, I explain the social implications of the normative definition; in the second part, I analyse the structural factors in the systemic process: incompatibility, collusion and corruption.

Corruption: structural condition, normatively defined

Normative definition provides the starting-point from which to consider two major forms of corruption: corruption in relation to democratic theory and historic practice (‘power corruption’) and in relation to democratic practice in the age of capitalism (‘political-economy corruption’). The implications of normative definition point, first, to the modern distinction between ‘public’ and ‘private’, which is basic to legal-rational politics and administration; and second, to the debate over restricted (legalistic) definition or broad (social) definition of corruption.

The latter debate, in turn, is directed not only to the related issue of ‘procedural’ or ‘substantive’ definitions of democracy but also, and by extension, to the ‘exclusivist’ notion of democracy and capitalism in which each is considered to be a self-contained entity, as endorsed by mainstream political science. This is in contrast to the ‘inclusivist’, or political-economy, conception of interacting political and economic systems. Now, the choice between ‘narrow’ and ‘broad’ perspectives in all three cases—democracy, corruption and capitalism—is crucial to understanding their roles in the modern world.

Normative distinction

Historically, the notion of corruption goes back to Aristotle’s distinction between political constitutions which are ‘right’ or ‘just’, because they are in the common interest, and those which are ‘wrong’ or ‘perversions of the right forms’, because they consider only the personal interest of rulers. (‘Moved by the profits to be derived from office and the handling of public property, men want to hold office continuously.’) For the true purpose of the political community, Aristotle points out, is that each member attain a share in the good life.¹

The normative element in the notion of corruption remains crucial. It explains Lord Acton’s well-known aphorism, ‘Power tends to corrupt, and absolute power corrupts absolutely’, which stems from his belief in ‘conscious rectitude’ as the abiding standard of judgement of all persons in authority.² Acton’s rather simple assumption that democratic (and ethical) constraints on the power of rulers will reduce the tendency to corruption has of course only partially been borne out in practice. Nevertheless, the two essential conditions that he proposes— checks on power and high moral standards—had, and still have, a strong public appeal, both in the West and in the developing world.

The prevention of absolutism by a complex system of checks and balances, for instance, is characteristic of American democratic pluralism, under which executive power is offset, or even fragmented, by a separately elected legislature, the influence of voluntary associations, and the federal system. Even so, the corruption of American officeholders was a byword in the nineteenth-century heyday of voluntarism and laissez-faire (that is, the supposedly ‘arm’s length’ relationship between wealth and power). As an American student of corruption points out, the urban political ‘machine’, in particular, has been part of an entire system of electoral and financial influence, in which legal patronage, pork-barrel legislation and lax regulation of city-based business interests are also important features.³

It is evident, then, that neither the existence of ‘checks and balances’ nor insistence on ethical performance necessarily leads to ‘honest’ government serving the ‘common interest’. Yet the moral aspect is, as I have suggested, crucial to the explanation: corruption is defined normatively, as a ‘deviation’ from the public good. Now, the expansion of democracy, itself normatively defined—‘government of the people, by the people, and for the people’, in Lincoln’s famous phrase—has enhanced that definition, by sharpening the distinction between ‘public’ and ‘private’. For, in a democracy, politicians become ‘people’s representatives’ and bureaucrats ‘public servants’ precisely because these functions are deemed to be conducive to the common good.⁴ Corruption— ‘improper’ behaviour—denotes deformation of this norm. It is the abuse of public office, for private gain, that constitutes corruption.

Complementing the normative definition of corruption, a distinction can be drawn between the ‘morality of wealth’ (individual freedom and initiative) and what we have seen to be the ‘morality of power’ (responsibility for the common good). For the morality of wealth concerns the individual producer (the unproductive are discounted) and the individual consumer (freedom of choice). The morality of power, to the contrary, emphasizes the role of the state in achieving social goals. The ‘perversion of power’ is its negative side: the abuse of political power for private ends, or ‘power corruption’ in Acton’s terms. Similarly, the perversion of wealth is the abuse of economic power, which takes the form both of exploitation of the powerless (so-called ‘free labour’) and penetration of the (ostensibly independent) political system: that is, political-economy corruption.

Paradoxically, democratic theory and democratic institutions, which were expressly designed to counter power corruption, have for this very reason (the almost exclusive concentration on politics) fallen easy victims to political-economy corruption—precisely because of the practical need, theoretically disavowed, for an accommodation between political and economic systems.⁵

Democracy and corruption: substance and procedure

Two major characteristics of political-economy corruption, emphasized by a French analyst in an illuminating study, are corporate funding of the political process;⁶ and the penetration of market values into the social and political spheres.⁷ The dramatic evidence of these two features, revealed in major scandals from Italy to Japan, points to the systemic character of corruption, rather than as being simply a matter of individual responsibility, assumed by the legalistic definition of corruption. The implications of these two different perspectives are of great significance. They can be set out broadly in this way:

• social character of corruption: capitalism-democracy interaction: importance of values;
• individualistic character of corruption: theoretical disregard for the interaction in practice of economics and politics: importance of procedures.

The systemic or dynamic conception of corruption is meaningful only in terms of the whole society; the individualistic or static conception only in terms of breach of legal procedures. The latter is inadequate, in my view, in understanding the interaction of democracy, capitalism and corruption in modern society. The difference between the two conceptions is therefore central to the discussion that follows. First, I consider the modern ‘re-confusion’ of public and private, resulting from the growth of government and the ascendancy of capitalism; second, the distinction between substantive and procedural definitions of democracy; correspondingly, third, the normative and positivist definitions of corruption; fourth, the social context of capitalism, democracy and corruption, that is, the interaction of economics, politics and values (here, normative conceptions of society); finally, fifth, this social interaction points to, and returns to, the systemic rather than aberrant character of corruption.

First, the conditions of modern democracy have given rise, specifically, to corporate political funding and, generally, to the penetration of market values, because ‘public’ office has expanded greatly, in regard to the functions of politicians and the scope of government activity. The latter requires an elaborate centralized administration, financing important public works and welfare programmes; while the competitive growth of political parties involves increasingly costly electoral contests. At the same time, moreover, the opportunities for ‘private’ gain, legitimate or otherwise, have increased exponentially under modern capitalism.⁸ It is the resulting ‘overlap’ of capitalism and democracy— the re-confusion of private and public— that creates the ‘tendency’ of unchecked power to corrupt.

Corruption reflects this clash of values. ‘Public service’ is the raison d’être of officials: to serve the common interest, as defined by the electoral majority and its political leadership. The raison d’être of the capitalist system, to the contrary, is private profit, derived from the operation of a competitive market. Market values guide behaviour. Thus, buying voters, legislators and state officials is ‘good business’ if it produces cost-effective results. Obviously such a procedure, from the normative standpoint of democracy (the sovereignty of the people) is corrupt: it is a deformation of the norm. Yet, in realistic terms, the economic system has an undeniable impact on the political, which in democratic theory it should not have: it should be the other way round. One way of bridging the gap between theory and practice is by establishing either legal or ‘acceptable’ (informal) channels of influence between wealth and power; corruption is another way.

Such a ‘re-confusion’ of public and private, which undermines the very basis of modernity (the ‘legal-rational’ requirements of effective public administration) raises, in the second place, the crucial question of value-oriented or procedural conceptions of democracy and, correspondingly, normative or positivist conceptions of corruption.

Now, the substantive (political ethics) and the procedural components of democracy cannot be dissociated, writes Yves Mény: ‘Beyond the organizational shell, such [values] are the objectives—liberty, equality and justice, to cite only the most fundamental rights—and the concrete means to achieve them, which allow the democratic quality of the system to be judged.’⁹

Mény’s assertion recalls the celebrated ‘Declaration of the Rights of Man’, drawn up during the French Revolution, stating that the ‘goal of every political association’ is to assure the ‘natural rights’ of man: life, liberty, security and property. It was precisely the emergence of political-economy corruption in the intervening two centuries—when the procedure if not the substance prevailed—that in turn brought about a reaffirmation of ‘déontologie’ (codes of ethical behaviour), as in the official French report on corruption of 1992. Significantly, the report’s proposed reforms, notably openness and accountability of administrative and political decisions, would not be effective, as a commentator warned, unless ‘elected representatives and officials respect the basic rules of democracy, in the name of which they are entrusted to act’.¹⁰ Conversely, as Mény argues, the spread of corruption originated in the ‘enfeeblement of public values’ under the assault of ‘neo-liberal’ economic policies and the penetration of market values.¹¹

The importance of values is evident even in the home of laissez-faire. For American reform movements, as one scholar emphasizes, have been continuously concerned ‘with restoring the fairness of the basic rules of the political game’. He relates these rules to ‘structural and procedural’ democratization: ‘At bottom, the effort was nothing less than to make the mechanics of politics and government embody the essence of democracy itself.’¹²

This ethical and political commitment is crucial to democracy. It was in this vein that the president of the National Assembly in France, Philippe Seguin, announced on 27 October 1994 the report of the Assembly’s ‘working group’ on corruption. The report insisted that ‘sovereign power belongs to the people, who exercise it through the intermediary of freely elected representatives’. Yet, it warned, there was a ‘crisis of confidence’ arising from the public’s ‘widespread suspicion’ of political-economic activity by national and local representatives, which ‘contributes to undermine the foundations of democracy’.

It is precisely from an ethical standpoint, to take a further example, that certain judges have been inspired to repudiate the pragmatic trend of accommodation to power—especially in Italy, but also in France, Spain and Japan—and thus bring to light the systemic corruption that has plagued those countries.

Reduction or interaction

It is in this normative context, in the third place, that ‘corruption’ becomes meaningful. To repeat: corruption in the broad sense signifies the perversion of principles upon which a political system is founded. Corruption in the narrow (legalistic) sense, however, is reduced, as Mény puts it, to ‘a secret form of social exchange by which the political or administrative power-holders make a living, in one form or another, from the power or influence that they exercise by virtue of their mandate or function’.¹³

The ‘reductive’ character of such a conception (the shift from emphasis on social values to procedural or institutional forms), Mény asserts, is contestable in that it is concerned only with the most reprehensible, even pathological, attitudes—namely, criminal behaviour, punishable by penal codes. The procedural approach, in other words, fails to take account of the ‘systemic’ character of corruption. But Mény’s argument can be taken a step further. For the ‘criminalization’ of corruption— confining corrupt behaviour to tangible illegality—obscures, in the fourth place, the social context in which corruption takes place: that is, the sphere of interaction, or confrontation, of economic and political systems.

The confrontation of the two systems (and the victory of the economic) has been strikingly revealed in the confidential diary of a British Cabinet minister, R.H.S.Crossman, writing in the mid-1960s. The Wilson government, of which he was a prominent member, had come to power in the confident expectation of stimulating the economy through the active promotion of science and technology. But instead of the government mastering the economic system, it was the other way round: the economy, in crisis, brought about the abandonment of official policy and, eventually, the collapse of government. Crossman, for example, had urged a modest increase in the public housing programme, in accordance with the socialist principles on which the Labour Party had been elected. The Chancellor of the Exchequer replied ‘in a long, violent harangue’ that ‘we were going to crack up and cra...

Table of contents

• COVER PAGE
• TITLE PAGE
• COPYRIGHT PAGE
• PREFACE
• ACKNOWLEDGEMENTS
• 1 INTRODUCTION
• 2 FUNCTIONAL CORRUPTION
• 3 DYSFUNCTIONAL CORRUPTION AND DESTABILIZED POLITICS
• 4 NORMATIVE STRENGTHS
• CONCLUSION