Corruption, Capitalism and Democracy The scandal of corruption is boundless. As John Girling demonstrates in this new study, corruption does not disappear as countries develop and modernize. Instead, corruption takes on new forms. For corruption is symptomatic of a deeper problem: the collusive system in which politicians mediate the often contradictory claims of capitalism and democracy. The author illustrates from case studies the three dimensions of the modern collusive-corrupt system: that is, functional (economic) corruption, dysfunctional (political) corruption, and corruption that is offset by normative strengths, as in civil society. He concludes with policy prescriptions that require, not more ‘neo-liberalism’ according to the values of the market, but more democracy. Corruption, Capitalism and Democracy describes how such corruption is damaging to democracy and its institutions, but also how it is checked by the ideal of citizenship expressed in civil society. As such, it is an important and very relevant study of the problem of political corruption. John Girling has been a Senior Research Fellow at the Australian National University. His work is unusually wide-ranging, from analysis of insurgency to interpretation of myths, and includes two acclaimed studies: America and the Third World and Thailand: Society and Politics. He now lives in Toulouse. Routledge Studies in Social and Political Thought 1 Hayek and After Hayekian Liberalism as a Research Programme Jeremy Shearmur 2 Conflicts in Social Science Edited by Anton van Harskamp 3 Political Thought of André Gorz Adrian Little 4 Corruption, Capitalism and Democracy John Girling Corruption, Capitalism and Democracy John Girling London and New York First published 1997 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2002. © 1997 John Girling All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalogue record for this book has been requested ISBN 0-415-15206-2 (Print Edition) ISBN 0-203-20306-2 Master e-book ISBN ISBN 0-203-20309-7 (Glassbook Format) Contents Preface vii Acknowledgements xv 1 Introduction 1 Defining corruption 1 Analysing corruption 12 Developing democracy 27 Theory and practice 29 Notes 31 References 39 2 Functional corruption: a developmental role? 42 Case study: Southeast Asia 42 The Philippines: acquisitive elites 48 Indonesian dualities 54 Thailand: business as usual 59 Conclusion 70 Notes 73 References 82 3 Dysfunctional corruption and destabilized politics 86 Case study: France—consensus and collusion 86 Rise and fall of the Third Republic 87 Epilogue: plus ça change…? 106 Conclusion 113 Notes 114 References 118 4 Normative strengths 119 Case study: Britain 119 vi Contents Eminent Victorians 119 Social Consensus 136 Conclusion 138 Notes 139 References 146 5 Conclusion: corruption—structural, symbolic 150 Capitalism-democracy-society nexus 152 Alternative values 159 Policy prescriptions 167 Notes 173 References 175 Index 177 Preface Corruption is the illegitimate reminder of the values of the market place (everything can be bought and sold) that in the age of capitalism increasingly, even legitimately, permeate formerly autonomous political and social spheres. Democracy is on the march throughout the world, so it seems. At the same time the scandal of corruption, in one country or another, is never far from the surface. These are not separate issues, but are intimately linked. The study of corruption provides valuable insights into the nature of democracy (as of other regimes, where corruption is rife) for these reasons: 1 Corruption is normatively defined: the abuse of a public position of trust for private gain. Corruption negates positive social purpose: that is, proper means to attain a valued end (the ‘common good’, the ‘public interest’). 2 Democratic theory is formed around this opposition. Belief in ‘popular sovereignty’ requires the shaping of society in accordance with the majority will. This is a large claim, upheld (rhetorically, at least) by politicians at every election. 3 Democratic theory, however, was put into practice (in the USA) simultaneously with the founding of classical economics (Adam Smith, 1776). The latter assumes an entirely different relationship between means and ends: the selfish interest of each, as a result of competition in a market economy, redounds to the advantage of all. 4 The scientific-industrial revolution, sharpening the theoretical distinction between politics and economics, widens the gap between democratic theory and capitalist practice. Democratically elected governments, deferring to powerful business interests in a way that contradicts electoral pledges, reveal the ‘misfit’ between political theory and economic practice. viii Preface 5 Such is the ambiguity inherent in the capitalism-democracy nexus. On the one hand, there is the correlation between economic freedom (market exchange) and political freedom (liberal democracy); on the other, there is the contrast between private appropriation (sanctioned by corporate power) and social goals (‘the will of the people’). 6 To accommodate both aspects (economic and political freedom: private and public power) ‘normal’ political behaviour requires ‘collusion’ between capitalism and democracy to make the system work. (Democratic theory, in its exclusive claim to sovereignty, ‘does not work’). Corruption makes this point. It is the ‘excessive’ or shocking aspect of ‘normal’ practice: ‘the unacceptable face of capitalism’. 7 Precisely because of its normative derivation, corruption is widely regarded as ‘scandalous’ (private gain at the expense of the public good). The symbolic effect of corruption, however, displaces public resentment from the ‘collusive’ political-economic system on to the misdeeds of individual ‘wrongdoers’. Ritual sacrifice of the latter is required to purge public anger, thus allowing normal practice to continue. 8 When there is profound or prolonged crisis—economic, political or social—the usual displacement effect is overwhelmed. Corruption then symbolizes the degradation of the regime. In other words, corruption in a wealth-producing system is the froth on a dynamic economy. But in a wealth-consuming system, i.e. where there is conspicuous consumption by a selfish elite (as in the French Third Republic in the inter-war years, and the Philippines under Marcos), corruption signals the course of decline. 9 Corruption is the symptom, not the disease. The ‘disease’ is the predicament of our time: the frustrated popular yearning for ‘the good society’, to be achieved by democratic means, yet confronting an economic system that may well contribute materially but does not contribute morally (in the sense of valuing public participation and consent) to that desired social end: an economic system, moreover, that substantially escapes democratic control. Political sovereignty (in a democracy) and economic sovereignty (consumer choice in a free market) are not equivalent terms. Despite being equal political units, the millionaire, at one end of the scale, brings immense economic power to the market, which dominates social existence, as Max Weber long ago pointed out; while the worker or small farmer, at the other end, has little or no effective demand whatsoever. Paradoxically, where capitalism is most compatible with democracy—through its improvement of material living standards so that electoral choices are no longer constrained by poverty—it is Preface ix precisely in this way that capitalism (consumerism, commercialized values) penetrates non-economic spheres, contrary to liberal-democratic theorizing. 10 Nevertheless, the potential for corruption in the relation between capital and power can be overridden, provided that a strong normative commitment exists elsewhere in society. These are two important examples, from Japan and the USA. In post-World War II Japan, a strict sense of personal morality reinforced a corporatist culture: the aim of lifetime employment in major firms, company loyalty, and cooperation between employers and workforce rather than class antagonism. The USA in the nineteenth century (if to a lesser extent today) exhibited robust voluntary associations, which so impressed Tocqueville, as well as an optimistic faith in progress that countervailed the debilitating effect of corruption. The significance of such normative commitments for a healthy society is evident from Chapter 4 on the British ‘exception’ and in Chapter 5. EVALUATING CORRUPTION IN MODERN AND MODERNIZING SOCIETIES By ‘modernizing’, I mean the general trend in society toward pluralistic politics and openness to outside ideas within the framework of expanding capitalism. Evaluation Corruption is not just a deviant aspect of social behaviour, identified by the legal institution. Rather, corruption stems from the incompatibility in important respects of the economic and political systems. Thus, corruption is