Kleptocracy: curse of development.

• Author: Gloster-Coates, Patricia

Development signifies a diverse, prosperous world presenting many choices and opportunities for the "good life"--self-improvement and education, friends and associates, urban or country life, discretionary leisure activities, and productive employment-all supported by technological sophistication to make it work. This definition has elasticity, inasmuch as it allows for individuals and groups to pursue preferences and for local, provincial, and national authorities to engage in public works that benefit society. Development on the international agenda refers to rich and poor states, haves and have-nots. The reconstruction of Europe and Japan that followed World War II promoted the belief that poor states could become rich and that have-nots could become haves. Aid and investment followed, but good government did not. (2) Instead, kleptocracy (3) did. In the twenty-first century, corruption (4) is dysfunctional and pathological, and kleptocracy is no longer acceptable anywhere in the world.

"Rich" is not a synonym for "developed." Being rich aids but is hardly sufficient in promoting development, either for states or for individuals. Political will and a commitment to allocate costs and benefits fairly through rule-of-law institutions are both necessary to convert assets of all kinds--natural resources, financial connections, foreign investment, loans, aid, remittances, transfers of technology--into a diverse, prosperous country that offers numerous choices and opportunities for an entire populace to attain the "good life." (5) For a few to live in opulence while a great many are destitute is not development. Economists claim that $5,000 annual disposable income per person is sufficient for discretionary spending to take off. (6) This represents development only if that income is getting to ordinary people. Unfortunately, corruption is doing more harm to development in third- and second- world countries than aid does good. Realistically, corruption is a suicide strategy--whether pursued through obedience to traditional norms or from egoistical moral disorientation. If one expects development to work as planned, he/she can no longer simply dismiss kleptocracy with excuses of "business as usual" or "power corrupts." (7)

Looking at Kleptocracy

There is a connection between corruption and poor development. Economist John Kay notes that Joseph Conrad identified cultural conflict as part of this linkage in describing the "Curse of Kurtz" in Heart of Darkness (1902). (8) In 1966, Stanislav Andreski used the term "kleptocracy" in his book, Parasitism and Subversion, and, two years later, in The Predicament of Africa, linking it to failing development, namely, distorting the economy, deepening divisions in society, and frustrating policy. The Economist and the Times Literary Supplement, which reviewed Andreski's books, (9) subsequently circulated the term "kleptocracy," initially apropos in describing the rule of Francisco Franco in Spain, Ferdinand Marcos in the Philippines, and the PRI in Mexico. Inverse correlations between kleptocracy and development have gained greater attention since the end of the Cold War once the United States and the former Soviet Union cared less about embarrassing their tinpot allies. (10)

Kleptocracy and corruption are now used interchangeably, with kleptocracy generally referring to systems of rule and corruption to venal acts and abusive practices. Kleptocracy is only one of a network of vicious circles that obstruct development, although it is one about which correctives can be applied. Corruption is hard to calculate, but perception of it has increased. Greater freedom of the press has exposed the correlation. Security analysts have tied it in many countries with a "political-criminal nexus." (11) Transparency International, since 1993, has addressed perceptions of corruption, expanding its scrutiny and impact annually. "Watch groups" nongovernmental organizations (NGOS)--such as Freedom House, Amnesty International, and Human Rights Watch--have added the internet to their traditional paper publications to expose corruption. (12) The perquisites afforded by corruption--ostentation, regime maintenance, golden parachutes--cost about the same whether an official belongs to a poor country or a rich one. Yet, the toll that such practices take on a poor country or on a small economy is disproportionately greater than in a rich state. Nonetheless, numbers of officials in control of decisions and in command of sanctions, (13) that is, those who are positioned to take graft, are similar in systems of any size. Corruption is more parasitical to developing countries than to developed ones. That kleptocracy interferes with development is accepted wisdom; norms that support practices of corruption are recognized to be retrograde to development. As James Wolfensohn, current president of the World Bank, asserts, corruption is corrosive to development. (14) It is thus hard to make the case that the services provided by kleptocrats are "worth it." (15)

Corruption has euphemistically been called "poor governance." Since 1997, the World Bank and International Monetary Fund have published data demonstrating that corruption deters investment and retards growth. (16) All countries, including developed ones, are at risk, because corruption represents a domestic threat to national security. (17) Consequently, practitioners of corruption--at least institutional ones--have been subjected to "naming and shaming"--a modest beginning that has had some success (i.e., the disclosure of some prosperous tax havens). (18) It is hoped that reducing corruption would improve development in struggling economies, and that such development would ameliorate the conditions associated with malnutrition, illiteracy, preventable disease, and unequal opportunity.

Looking Up and Looking Down

Administrative corruption generally refers to extortion of firms by bureaucrats who can make it virtually impossible for a company to operate in a particular country. This is often seen in third-world countries where development languishes. Another variety of corruption--a choice strategy producing state capture (19) by the corporate sector--features collusion between firms and state officials or politicians for their mutual benefit. (20) Former second-world countries now in transition are susceptible to problems often associated with command economies. (21) Organized criminal networks form ties with government officials and business outfits for personal advantage. (22)

As the wave of national independence and self-government swelled in the Third World immediately following World War II, sudden, vast wealth became accessible to persons who were in the right place at the right time to become public officials. By the late 1960s, the "commons" hypothesis emerged claiming that humanity was rushing toward ruin in pursuit of self-interest, thus dramatizing conflict between the short-term interests of individuals and the long-term interests of all who use a jointly-owned resource. (23) It became evident that opportunities for corruption had multiplied once colonial civil servants exited. Self-serving newly independent officials understood better than the rank-and-file citizenry and used that knowledge for personal enrichment, cloaking themselves with the mantle of the "big man" venerated in inherited ancestral tradition. (24) As political scientist Bueno de Mosquito and economist Hilton Root observe, "it makes perfect sense for autocrats in poor countries to enrich the clique of supporters around them, even if it means keeping the majority of the population poor." (25) This is not limited to third-world countries, however. Clientelism is historically rooted in cultures throughout the world to such an extent that it is now regarded as a "given." (26) According to de Mosquito and Root, it is "the economic logic of autocracy." (27)

Where corruption and extralegal economies prevail, would people select changes that might actually affect the system? Probably so--especially if the rule-of-law sector offered understandable, affordable access to impartial justice, and if legal alternatives were available to the extralegal, shadow, underground, parallel economic zones. (28) The economic logic of autocracy, in countries where development is sluggish, offers public officials few attractions except maintaining office and continuing in their corruption. Incentives to make Promethean choices on behalf of the public at large are few. Self-interest tells kleptocrats to say no to development rather than to risk the public saying no to them. These officials and their clients are described by economist Hernando de Soto as occupants of historian Fernand Braudel's "bell jar" (29)--an "invisible structure in the past of the West that reserved capitalism for a very small sector of society." Today, in third-world countries and transitional states, bell-jar occupants--elites, technicians, lawyers--can be realistically shown numerous advantages to themselves, which de Soto specifies, in lifting the bell jar. The more developed a country, the more legitimate opportunities that exist for success and achievement. (30) Consequently, erstwhile political leaders--whether they promote prosperity and well-being or disappoint-have prestigious alternatives other than continuing in office.

Looking Around

In the global world of multimedia and diplomacy, tailoring and style project images for spokespersons of guerrilla movements, terrorists (or freedom fighters, depending on one's political perspective), insurgencies, whistle-blowers, heads of state, chiefs of government, ambassadors, and even their chauffeurs. The privilege displayed by these persons might be meant to make them look respectable or dedicated, but probably indicates leadership-gone-bad. (31)

Third-world countries unable internally to make headway toward domestic development, and former second-world countries...