<<

CORE Metadata, citation and similar papers at core.ac.uk

Provided by IDS OpenDocs

1Introduction1 The new political economy (NPE) - perhaps more accurately called 'economic politics' - has applied to political 'markets' or to political action in eco- nomic markets the and utility maximizing assumptions which underlie neoclassical econom- and ics (Basu 1991) to show the conditions of rent seeking2 under which individually rational behav- jour on the part of bureaucrats3 impedes the col- Corruption: lective economic good, leads to economically irrational outcomes and overwhelms 'good policy advice' (Krueger 1974).While the soft policy Resolving the options both required by NPE and acquired from it form a lengthy and messy agenda4, the hard option Paradox is less contested and is entirely consistent with the macroeconomic theoretical background underlying (A Discussion Based the first decade of structural adjustment.This involves : - in extreme states the limi- onSouth Indian tation of the state to the protection of private prop- erty rights and the enforcement of 'voluntary Material) private contracts'.5 Barbara Harriss-White While NPE does not require the individually ratio- nal behaviour of bureaucrats to be corrupt, corrup- tion, when defined as the 'clearing response to the inefficientdistribution of freepublic goods' (Jagganathan 1987:110), is entirely consistent with thistheoretical approach and its policy implications.

1 am grateful to S. Adnan, EA. Brett, S. Guhan, T. Hyat, D. Jayaraj, S. Janakarajan, MI-1. Khan, P.J. Krishnamurthy, CT. Runen, J. Mooij, N. Narayanan, WK. Olsen, J. Rapley, R.Roy and D.G. White for discussion and helpful reactions to a draft but the inadequacies remaining are my own. 2 Rent seeking is understood hereas the use of resources to obtain politically created rents. And on occasions a conflated category of 'bureaucrat- politician' which is referred to by either designation. Increase information to curb rent seeking; use law to restrict the activities of those most prone to rent seeking; raise bureaucrats' salaries; rent seeking activities; use rent-seeking status to prioritise deregulation (Jagganathan 1987; Grindle and Thomas 1991). (Krueger 1974; Buchanan 1980; Basu 1991 and critically discussed in Grindle and Thomas 1991). The sequencing of and liberalization, of inter- and intra- sectoral contraction, the mix of and current expenditure in a compressed state sector are contentious policy issues, all of which follow from the deregulation agenda (Cornia and Stewart 1990). 1DS Bulletin Vol 27 No 2 1996

31 Jagganathan (ibid.) for instance (acknowledging his lines of accountability and by diluting enforcement debt to Wade 1985) distinguishes three sorts of cor- capacitySecond, there will be no change in cor- ruption for 'India' according to location within the ruption under privatization if the state continues to The first and second are very similar: regulate economic conduct directly or indirectly 1)the traditional revenue collection/registration through quasi-state organizations. Then some busi- functions of the state and ii) the developmental ness interests may use corrupt means to maintain functions of the state.Both face excess demand. access to resources or exemptions, while other Type i)is characterized by chronic institutional interests will bribe to enforce deregulation and scarcityCorruption is not the only response to increase the territory of market exchange.Third, such scarcity Nepotism is also both rational and officials may seek bribes against promises of future common as a rationing mechanism. Public officials economic rents, given that their tenure outlives that become discriminating monopolists. In type ii) cor- of politicians. ruption, privately appropriable benefits are per- ceived to be provided by public services e.g. the The prediction grounded in NPE can also be dis- delivery of newly created supposedly common cussed with empirical material.It is not surprising rights (health, irrigation, roads, control that corruption - the 'great black hole of develop- over necessary inputs e.g. fertiliser). The third type ment economics and public policy' (Jagganathan is fraud: 'the exploitation of information asymme- 1987:116) - is easier to theorize than to analyse tries within the bureaucracy to defraud the exche- empirically As Leys (1965) pointed out long ago, quer'. Type iii) happens when public agencies are there is a 'widespread feeling that the facts cannot not accountable and/or when public opinion is be discovered or that if they can, they cannot be unaware and a feeble regulator. Officials may proved, or that if they can be proved, the proof can- become private co-owners, or creditors of contract- not be published' for reasons either of research ing firms and simultaneously contract awarders. In diplomacy or of social science conventions about all three forms of corruption, intangible property validity Here we will use empirical material gath- rights result and can be purchased. ered as a by-product of research on the develop- ment (despite, or because of, noticeable Here, the bribe is not a transfer with a socially neu- neglect) of a small South Indian market town over tral impact. It is distinctly ambivalent. On the one two decades. hand, it is an 'efficient' reward to the entrepreneur- ial drive of the bureaucrat. On the other, it is an Three propositions will be explored: incentive for the bureaucratic propagation of corrupt sites (by restricting activity and then accepting a i that the overall process of capital accumula- rent preferentially to ration it at price which may be tion is as important to corruption as is the formed under a variety of competitive conditions bureaucrat; depending upon assumptions about bureaucratic structure and organization) (Shleifer and Vishny 1993). ii that bureaucratic corruption is but a subset of its commonly observed forms; Deregulation will then remove the positions where this 'systematic exploitation of illegal income earn- iiithat deregulation may be accompanied by an ing opportunities' in the public sector is possible. increase in corruption and by mutations in By contrast, this article is a preliminary attempt to relations of corruption. examine the opposite proposition - that a reduction of state controls may be accompanied by increased The concept of corruption as it is practised and corruption. experienced in the town under study is in line with the definition given in 1964 by the then influential Even within the stylized world of NPE, there are Santhanam Report on the Prevent of Corruption: several reasons why its prediction that deregulation 'all forms of impropriety or selfish exercise of will reduce corruption may be confounded.First, power and influence attached to a public office partial changes in (as with quango-ization) or to the special position one occupies in public may multiply sites for corruption by complicating life'.This is a broad brush definition, but accords

32 with my understanding of what local citizens mean corruption. The first is instanced by the burgeon- when they use the word. ing scrap metal sector where commercial are levied on the first purchase. The sector is struc- tured around a sizeable number of independent 2 Primary and Primitive small wholesalers whose gross output is beneath Accumulation as a Motor the commercial tax threshold and who bulk and sell of Corruption to a small number of large wholesalers (whose 'sec- The maximizing behaviour of bureaucrats in cor- ond purchases' are therefore tax exempt). In prac- rupt exchange theorized as 'markets' neglects the tice,alltheapparentlyindependentsmall social relations by which corrupt transactions are wholesalers are completely financed by the large 'demanded' (or funds for corruption are 'supplied') wholesalers and are poorly disguised . by the non-bureaucratic party to the corrupt con- The second evasion is instanced by groundnut, tract. Talk of 'market clearing' asserts one form of subject to cascading taxes at every stage, which are corrupt exchange and yet obscures the mechanisms extensively evaded by means of verbal, spot con- by which there might be a 'market' in the first place. tracts with immediate cash payment. Thus the only My empirical evidence suggests that three types of whose conditionsoftransaction relation are particularly important in supplying the remotely resemble those of perfect means whereby the non-bureaucratic party engages assumes this particular and rare contractual form in corrupt transactions, and in enabling intangible specifically to escape state intervention. rights to be created over public in the first place: tax evasion, The failure to pay local municipal taxes has a dire exploitative labour relations and fraud and eco- effect on municipal finance and its implications for nomic crime. In this article we have room to dis- urban development are far reaching. Over a period cuss only the first of these.6 of two decades, taxes raised from the very poorest categories (from the bullock- and horse-cart stands and from stalls in the municipal market) con- Tax evasion tributed nearly as much as those from all inhabi- Widespread, large scale tax evasion is entrenched in tants with taxable property and income. The India. As long ago as the early 1980s it was esti- Municipality appears to tax people earning less than mated that 41-58 per cent of potentially taxable its own employees, but is unable or unwilling to tax income from all sources escaped taxation and that the elite. Three interpretations suggest themselves: in specific instances of commercial taxation on agri- cultural products non-compliance amounted to a class conspiracy (between officials and the possibly 80 per cent of potential revenue.7 There is commercial elite); a trade-off between the costs of, and returns to, tax collection which creates incentives to organize pro- ii the political weakness of local government in duction and commerce in units below the various the face of the commercial elite; thresholds. Below the threshold the art of avoid- ance is practised while above them the craft of eva- iiithe local government's lack of legitimacy, such sion prevails. In the economy of the South that tax evasion represents a 'principled protest' Indian market town all but the pettiest of commer- by the economic elite at the high spend on cial firms had net returns before tax above the salaries and the low spend on infrastructure: a income tax threshold of Rs 45,000 p.a. Little tax is set of circumstances which is likely to be self- paid. Bus for instance keep no accounts perpetuating, if not self-reinforcing. at all and the income tax of owisers is collectively negotiated.Commercial taxation is also avoided Tax evasion fuels a black economy characterized by by pre-emptive development and evaded with a large black financial sector, by tendencies to invest

6 See Harriss-White, 1996, for the second and third with Goswami et al. 1991; Harriss 1984.It is estimated that reference to agricultural trade elsewhere in South India. a mere seven million Out of a total population of over 1,000 million Indians pay income tax.

33 in rather than production, by short-term 'sunlighting' is also widely regarded as corrupt since finance and investment, by the privatization of civic it deviates from bureaucratic norms, intensifies the services and by pervasive relations of corruption. rationing of their work time, lengthens queues and Avoidance and evasion, while legally distinct activi- increases incentives for bribes to gain preferential ties, are both part of the tactical armoury of private access. accumulation. iiJudicial corruption.This is one aspect of an alleged deterioration of professional conduct. 3 The Social Locations of Certain lawyers are said to be corrupt intermedi- Corruption aries between clients and judicial officers so that There are respects in which local-level state institu- criminal and civil cases are increasingly selectively tions are considerably more progressive than are prioritized, judgements warped and the implemen- their market counterparts: 40 per cent of municipal tation of judgements delayed. employees are from scheduled castes and 43 per cent are women. The structure of wages in state iii Political corruption.This is the most com- institutions is more egalitarian than that of the com- monly reported form. lt may take the form of inter- mercial workforce (though absolute pay levels are mediation e.g.the political negotiation of an lower). While throughout the Indian state, uncor- indefinite delay to a work-force pay rise agreed by rupt individuals are to be found, local level corrup- employers after a strike; the political invasion of a tion is widely experienced to be much more board of management, which proceeds extensive and systematic than it was 20 years ago. to embezzle from the cooperative; or It takes a greater variety of mutually intersecting the political appropriation of 'donations' required forms: for entry to Teachers' Training Institutes.

jBureaucratic corruption. This includes 'commis- Bureaucratic corruption has been politicized over sions' paid to employees of nationalized for time, in a trend which can be illustrated through loans; expansion of property rights on official posts, the case of bus transport. Bus routes should be allo- promotions and transfers (sometimes - as in the cated bureaucratically according to closed tender case of entrance to the police sub-inspectorate - proceedings and bus fares are capped by adminis- using bribery to screen applicants in the wake of trativefiat. However, administrative corruption open competition); complex modes of purchase of over time ensured a 'clearing response' type of pri- state regulated goods (e.g. liquor) with bribes at oritization of routes according to returns, net of every stage (for the permit, transport certificate, and wear and tear, which matched the ranking of bribes. records of payment at the and lifting at the In the next phase, this administrative rent-seeking store); multiple bribes for the acquisition of a good discretion was subjected to political capture. or service (one for the transaction, another for Politicians have inserted themselves as regulators speed and a third for certification); and discre- and fund collectors and routes are doled out peri- tionary valuation (e.g. under the Stamp Duty odically in a 'public' meeting of politicians and bus Prohibition Act 67 where a registrar undervalues owners according to the latter's individual roles in property for stamp duty by an amount which is electoral and party political funding.Thus the shared between registrar and transacting parties). political executive both commands the administra- This category also includes pre-emptive bribery and tion and captures the formerly private rents they extortion.Those sectors of the bureaucracy with gathered. Even more recently, the collective politi- the role of vigilance or control are bribed so as not cal investments of bus owners themselves have to harass their clients (classically, in the field of borne fruit in the form of discriminatory policy industrial audit and income taxation). Technically changes timed to disadvantage the state's own incompetent officials are bribed so that the 'victim' public bus transport and to advantage private can gain irregular access to a competent official; owners. This is a more subtle form of corruption vigilance and inspection officials privately appropri- (also theorized by Khan and Roy in this issue) ate fines so that offenders can avoid penalties for wherein the state subverts its popularly mandated breaches of regulatory law. The practice of official or otherwise legitimated development project to

34 benefit powerful economic interests. Political consumption. Under a patrimonial political regime, corruption may bypass the bureaucracy entirely, they may be reallocated into semi-legitimate forms the implementation of favours from corrupt align- of politicized bureaucratic provision or commercial ments being administered according to political investment.Thus the distribution of gains from command in an entirely legal and orthodox manner. political corruption is central to party politics and Here officials are far from being principals and pri- to state forms. vate sector clients far from being agents.

While bureaucratic earnings are comparatively low, 4 , Deregulation, and low-risk, the commercial elite tolerates long Accumulation and Corruption and extremely costly waits in order to lodge kin Ever since Independence, commercial regulation (routinely and corruptly) in the bureaucracy by state intervention has had a variety of develop- Administrative positions have high economic and ment objectives in which the suppression of open non-economic entry barriers and are in effect market rent-seeking and equitable public provision investments (made with funds derived from pri- of basic goods and services have figured promi- mary accumulation) requiring returns (derived nentlyIn suppressing open market rent-seeking, from corruption).Symbiotic economic relations opportunities are created for bureaucratic rent- develop between business, the administration and seeking.Further, the curbing of corruption and the ruling political party Furthermore, the under- black marketing by state regulation not only entails funding of state institutions as a result of tax eva- direct bureaucratic costs, and the transaction costs sion results in an understaffing and a resource of compliance to the parties involved, but also scarcity which reinforces bureaucratic and political reproduces and multiplies the very structural incentives for rent-seeking. Poor quality, easily sab- conditions it is intended to regulate.This is well otagable law raises questions about the intentions illustrated by what are by now the 'classic' com- underlying law and the possibility of corrupt coali- modities, the distribution of which is still widely tions between legislators, administrators and the thought to require state regulation (e.g.grain, judiciary The impoverished nature of training for cloth, fertiliser, kerosene, liquor), and activities political office at state level (due to a history of sup- such as moneylending and the private provision pression of democratic local government) favours a of public transport. In every case, corruption is, so verdict of incompetence rather than conspiracy on far as we can judge, mandatorily and routinely the part of legislators. But the resultant, apparently entailed at each stage of the transactions, involving widely ramified skeins of corruption satisfies a a wide range of parties in consequence (such as broad set of interests so effectively that the conse- store-keepers, check-post guards, police, officials quences of incompetent law making are indistin- and labourers). guishable from that of a conspiracy The question is whether, given the conditions we Flows of up and down political networks have described, deregulation is any better at guar- solidify social relations of tribute and clientelage anteeing compliant, unexploitative and orderly eco- which run closely parallel to those of state revenue nomic behaviour. Part of the answer may be sought and development. Under a populist regime, funds by examining how minimally regulated market (originating mainly in the commercial economy) exchange presently obtains order, Despite, or may flow upwards, be centralized and subsequently because of , widespread corruption, a strong sys- redistributed to the mass of potential voters in the tem of ethics orders and protects the commercial form of money as pre-election sweeteners.8In a economy9Business contracts are mostly oral and predatory state,centralized funds may also be traders respect one another's property Market privately appropriated and used for conspicuous exchange is strongly structured not to by open

8 Wade described similar relations for village councils This is no 'generalized morality' of the sort Platteau and the irrigation bureaucracy in his Village Republics argues underlies market exchange (1994). On the (1988). contrary the commerce we have researched is underlain by a pluralist ethical system (see Harriss-White 1996).

35 contract-forming processes but by tight persistent Formal institutions are more successful in regulat- networks of repeated transactions, established ing labour relations than commodity exchange. hereditarily or through long processes of appren- Certain parts of the urban labour force are union- ticeship or induction, i.e. with high non-economic ized and strikes over working conditions are regu- barriers.In such networks, trust and reputation lar events.However, organization by competing are as important structuring principles as is power, political parties weakens the work-force by divid- and all are simultaneously deployed.Repeated ing it and works in the favour of management. contracts develop normative extra-contractual Much of the working population of the town is obligations, the breaking of which (by trading collectively regulated:e.g. market-place coolies outside them) may affect reputation and even and cartmen whose associations set entry barriers lead to exclusion. With the development over the and unilaterally fix job-rates. The paddy and rice least two decades of complex and sophisticated sector is poorly organized, however, and work long distance trade with non face-to-face con- conditions for casual female labour are the poorest tracts, the nature of the reputation - and trust - remunerated and most physically oppressive.By based networks has changed. Ascribed reputation and large the regulation of the urban work force (on the basis of family, caste or locality) is being is achieved by the strategic use of family labour. replaced by acquired reputation (on the basis of Such labour is both controllable and trustable. reliability or efficiency).In the town we study, Power and trust run together and structure much social relations of commerce are still strongly rooted of the regulation of the labour force in the commer- in institutions of ascription.Acquired reputation cial economy factors are most evident in long distance networks for new commodities, the products of corporate Finally, the market town has a total of 25 profes- industry sional associations based on occupation, a fledgling chamber of commerce plus two ginger groups for Regulation by reputation is as important for some consumer welfare and urban development. These kinds of ultimate client as it is for . In the collective institutions appear superficially as regu- black financial economy, for caste-insiders, reputa- latory bodies to whom disputing parties would be tion is crucial for creditworthiness, for terms and expected to turn. They can establish norms of con- conditions.It is still inherited.If repayment is duct for transactions and for the adjudication of delayed, the possibility of future loans elsewhere is disputes. But such regulatory activity is rarely put jeopardized.People will stay in very oppressive into practice. In fact, these associations i) defend credit and debt relations rather than let reputational members from threat - from organized labour and failure affect their children and familyWith a from the government; ii) organize collective bribes reported increase in corruption, with the prevalence in the general interest of members; iii) exclude of adulteration, quackery and incompetence, the entrants; and iv) perform small acts of redistributive importance of reputation as a mechanism of regu- charity At closer gaze many are tight networks of lating conduct cannot be underestimated. interest cemented by caste and kin, exemplifying how old institutions such as kinship are being put However, enforcement is also carried out by private to new economic roles. security forces: 'goondas'.The locations of these institutions of regulation are very precise.In the These kinds of regulatory institutions conspicu- black financial economy, social outsiders such as ously fail to control an enormous amount of minor marwaris employ a visible coercive squad to disorder in market exchange which never reaches enforce repayment.The extra-contractual obliga- 'official' notice.Such disorder includes adulter- tion of paddy producers indebted to paddy mundy ation and tampering with price and brand labels owners to sell all marketed surplus (not merely or weights and measures, pervasive agency prob- that which repays loans) is regulated by collusion lems, such as the underdeclaration of turnover and force. Moreover, mercenary forces are amassed to owners by managers; the above-norm appro- by local political bosses to protect returns to their priation of earnings (e.g. by bus conductors); rogue investments.Itis the black and the 'political' extra-contractual behaviour; petty of economy which tends to use extra-legM force. ; evasion of taxation and labour

36 laws;theactiveresistance by employersto displacement of large numbers of highly skilled unionization. local craftsmen is expected.

There are thus already many alternatives to státe regulatory intervention.Non-legal enforcement is 5 Conclusions necessary and cheaper;it's not just a market Policy predictions from the New Political Economy response to a defective state law but possibly pre- are derived logically from its theoretical analysis dating it and very likely to survive its demise. which is derived logically from the definition of These alternatives are not to be regarded with starry corruption which is deployed.If the Santhanam eyes.Private industry and commerce may be cor- Committee's definition of corruption is accepted, as rupt when regulated by government, but they are here, then the analysis which flows from it produces not necessarily competitive and efficient when not radically different conclusions. While 'institutional regulated.It is sometimes forgotten that rent-seek- scarcity' (not only understaffing and under-resourc- ing originated in markets, where it seems to remain ing - scarcity in institutions - but the scarcity of a fundamental force.Norms and thugs and a appropriate institutions) does indeed encourage penumbra of exclusive associations are the institu- corruption, corruption is not always a clearing tions on which local commercial orderliness rests. response and the public distribution of goods is not always inefficient compared with market alterna- 'Deregulation' is thus of marginal importance when tives.Pace Jagganathan, public agencies are unac- most regulation is not by law or the state but by countable not(only)throughadministrative reputation, norm and private force.Certain com- incompetence and institutional scarcity but (also) modities will always have to be state-regulated if by dint of being politically captured. Public opin- only on populist political grounds and in order to ion does not act as a regulator not because it is ensure the state's capacity to distribute essential unaware (becauseitis extensively aware), but commodities in emergencies. Others cannot be left because influential factions of the 'policy elite' to self-regulation because the collective interest regard what they (have been taught by NPE to) cannot be served by 'the market', because institu- believe is the market clearing role of corruption as tions such as micro- and collusive oh- developmentally efficient. gopolies conflict with mass public interests, because social goals (such as gender and social justice) are If the workings of one market town are replicated blatantly not served by non-state regulatory institu- widely, then primary accumulation may yet still tions even if they are not well served by the state characterize the mass of firms in an economy whose either. apex is dominated by corporate capital and which is being penetrated by global capital. Open and black Deregulation to date has had a contradictory impact markets function in similar ways. Primary accumu- on the local economy A simplification of paddy lation is not only historically and logically neces- procurement in 1991 resulted in a textbook reduc- sary, it also takes what Marx called 'primitive' forms. tion in corruption in the Civil Supplies Department, Economic crime is one aspect of this 'primitive' increased the velocity of transactions, formalized condition. Corruption is another. But tax evasion the previously seasonally illegal long distance, spe- and black investment are likely to be most impor- cialist trade and provoked improvements in quality tant quantitatively In a society where rent-seeking However, former strategically sited rent-seekers is generalized, the epicentre of corruption is not such as check-post guards, still survive and flourish necessarily the venal official. A shift in the scope of on rents extracted by means of coercion.To this the state may lead not to the eradication of rent- extent deregulation remains rhetorical.The deli- seeking but to its redistribution between 'state' cencing of gold, also in 1991, has had a different and 'market'. Not for nothing is the Tamil proverb: impact. In the short term, it raised for 'an honest person is one who does not know how goldsmiths at the margin, but it is lately leading to to live'. the domination of a millennia-old skilled artisan industry by mechanized, capitalist firms in Madras We have identified four types of party to corrup- and their local agents on tied credit lines.The tion, who may act in contradictory ways:

37 iOfficials. Where demand by officials is the ori- redistribute resources. Corrupt and uncorrupt gin of corruption, then deregulation would not only activity co-exist,Second, the distinction between reduce the 'supply' of activity amenable to corrup- types of actor is increasingly blurred. tion; it will also reduce the 'demand' for it. Liberalization occurs slowly and incrementally The iiPoliticians.1f ministers are at the origin of cor- official process of liberalization was long predated ruption (with various chains of money collected for by forms of development which pre-empted state them and dispensed by them), then deregulation intervention and was exacerbated by a regulatory would simply increase the political competition incapacity stemming from strategic understaffing. over state employees and the resources they com- When the state does not perform well the minimal- mand.Depending on the political gains from ist role to which NPE would reduce it, other so- money-collecting corruption, the price of corrupt called 'informal' regulating institutions imperfectly transactions could increase. There is no reason to fillthe breach.Their existence has yet to be assume the quantity of corruption would decline if acknowledged in policy debate. political corruption is the most prevalent form. That deregulation can be accompanied by an iiiBusinessmen. Bribes may be supplied without increase in corruption is a proposition sustained much coercion as an institutionalized transaction because corruption takes much more complex cost to influence future events. Then neither offi- forms than allowed for in NPE. A ganglion of rela- cials nor politicians would be the source of cor- tions of black economy, economic crime and cor- ruption, rather it would stem from 'demand' for ruption (increasingly political) sets the conditions goods, services and preferential non-compliance. for its own perpetuation.Corruption is a social Merchants and business houses fund political parties phenomenon - part of a broader, institutionalized on a large scale. They lobby systematically to pro- process of redistribution and accumulation, of new tect business from threats; their kin are placed in forms of property relation. Decades of tax evasion, politics and in the bureaucracy and they can place black investment and corruption results in relations pressure on the police and judiciary Deregulation and institutions which are now serious obstacles to by itself would not set conditions requiring a signif- reform in directions predicted by NPE. icant change in such behaviour. Indeed it could strip the state of its residual capacity to curb it. New norms, contractual arrangements and institu- tions have replaced broken laws or plugged gaps ivLawyers. All the other groups are in positions where regulatory law is not implemented as for- to bribe the judiciary to decide and implement in mally laid down. Complex contracts where mafiosi their favour.Deregulation would not necessarily have the of force might be expected to reduce such corruption, merely shift its content. lead to the eventual extortion of other parties. This article has not touched on the developmental effects The relations surrounding these four types of 'actor' of this ganglion of relations. While these may be are complicated by two facts.First, their role in ambiguous (Harriss-White 1994), the mafianization relations of corruption is subject to internal contra- of the local political economy is developmentally dictions.For the state does have the capacity to very unwelcome.

References Basu, K., 1991, Economic Graffiti, New Delhi, Cornia, GA. and Stewart, F., 1990, 'The fiscal sys- Oxford University Press tem, adjustment and the poor', Working Paper Buchanan, J.M., 1980, 'Reform in the rent seeking 29, Oxford:Luca d'Agliano/Queen Elizabeth society', in J. M. Buchanan, RD., Tolison and G. House Tullock, (eds) Towards a Theory of a Rent Government of India,1964, Report of the Seeking Society, College Station Texas: A&M Committee on the Prevent of Corruption University Press (Santhanam Report) New Delhi, Ministry of Home Affairs

38 Grindle, M. and Thomas, J., 1991, Public Choices Leys, C., 1965, 'What is the problem about corrup- and Policy Change: the Political Economy of tion?', Journal of Modern African Studies, Vol Reform in Developing Countries, Baltimore: 3 No 2: 215-230 Johns Hopkins University Press Platteau, J-P, 1994, 'Behind the market stage where Harriss, B., 1984, State and Market, New Delhi: real societies exist - part 1 the role of public and Concept. privateorderinstitutions',Journalof Harriss-White, B., 1994, 'Graft root development: Development Studies, Vol 30 No 3: 533-578 black markets, rent seeking and corruption and Ronik, D.S., 19980, 'How should structural adjust- the of a small town', ment programmesbedesigned?',World AdjustmentandDevelopmentProject Development, Vol 14 No 3: 429-439 Working Paper, Oxford:Queen Elizabeth Shleifer, A. and Vishny, R.,1993, 'Corruption', House Quarterly Journal of Economics: 599-617 1996, A Political Economy of Agricultural Wade, R., 1985, 'The market for public office, or Markets in South India: Masters of the why India is not better at development', World Countryside, New Delhi: Sage Development, Vol 13 No 4: 467-97 Jagganathan, V.,1987, Informal Markets in 1988, Village Republics, Cambridge: DevelopingCountries,Oxford: Oxford Cambridge University Press University Press Krueger, A. 1974, 'The political economy of a rent seeking society', American Economic Review, Vol64No3: 291-303

39