Political Order and Political Decay (14 page)

It was only with the growth of centralized states in the seventeenth and eighteenth centuries that the ruler's domain came to be seen less as personal property and more as a kind of public trust that the ruler managed on behalf of the larger society. Early modern doctrines of state sovereignty put forward by Grotius, Hobbes, Bodin, and Pufendorf all emphasized the fact that the legitimacy of the sovereign rested not on ancient or inherited ownership rights but rather on the fact that the sovereign is in some sense the guardian of a larger public interest. He could legitimately extract taxes only in return for providing necessary public services, first and foremost public order to avoid the war of every man against every man described by Hobbes.

Moreover, the behavior of public officials, reaching up to the ruler himself, increasingly came to be defined by formal rules. Among the laws that made up the Prussian Rechtsstaat were rules that clearly established the boundary between public and private resources. Chinese Confucianism had developed a parallel doctrine many centuries earlier: emperors were not simply owners of the lands and people they ruled but rather moral guardians of the whole community, who had duties to communal well-being. Although Chinese emperors could and did appropriate public funds for their own uses (like the Wanli emperor toward the end of the Ming Dynasty), the distinction between these accounts was always well established.
5

NOT SIMPLY CORRUPT

There are two phenomena that are closely related to corruption as defined above but that are not identical to it. The first is the creation and extraction of rents, and the second is what is referred to as patronage or clientelism.

In economics, a rent is technically defined as the difference between the cost of keeping a good or service in production and its price. One of the most important sources of rents is scarcity: a barrel of oil today sells well above its marginal cost of production because it is in high demand; the difference between the two is thus referred to as a resource rent. The owner of a condominium on Park Avenue in New York can charge a much higher rent than for an equal amount of square footage in the middle of Iowa because land is much scarcer in Manhattan.

While rents are created by natural scarcities of land or commodities, they can also be artificially generated by governments. A typical example is licensing. In New York City, the total number of legal taxicabs is set by the Taxi and Limousine Commission. Because this number has been capped for many years, the number of taxis has not kept up with demand for them, and the medallions awarded by the city that grant the right to operate a taxi sell for as much as a million dollars. The cost of a medallion is a rent generated by political authorities, one that would disappear immediately if the city allowed any individual to hang a sign on his or her car and take passengers for hire.

Governments have any number of ways of creating artificial scarcities, and thus the most basic forms of corruption involve abuse of this kind of power. For example, placing tariffs on imports restricts imports and generates rents for the government; one of the most widespread forms of corruption around the world lies in customs agencies, where the customs agent will take a bribe in order to either reduce the duties charged or expedite the clearance process so that the importer will have his goods on time. In Indonesia during the 1950s and '60s, corruption in the customs agency was so widespread that the government eventually decided to outsource the function to a Swiss company that would inspect all incoming containers.
6

The ease with which governments can create rents through taxation or regulatory power has led many economists to denounce rents in general as distortions of efficient resource allocation by markets, and to see rent creation and distribution as virtually synonymous with corruption. The ability of governments to generate rents encourages many ambitious people to choose politics rather than entrepreneurship or the private sector as a route to wealth. Douglass North, John Wallis, and Barry Weingast make a fundamental distinction between what they label limited and open access orders: in the former, elites deliberately limit access to economic activity so as to create rents and increase their own income, preventing the emergence of a dynamic, competitive modern economy.
7

But while rents can be and are abused in these ways, they also have perfectly legitimate uses that complicate any blanket denunciation of them. The most obvious type of a “good” rent is a patent or copyright, by which the government gives the creator of an idea or creative work the exclusive right to any resulting revenues for some defined period of time. The difference between the cost of production of the book you are holding in your hand and the price you paid for it (assuming you didn't steal or illegally download it) is a rent, but one that society legitimates as a means of spurring innovation and creativity. Economist Mushtaq Khan points out that many Asian governments have promoted industrialization by allowing favored firms to generate excess profits, provided they are plowed back into new investment. While this opened the door to considerable corruption and abuse, it also stimulated rapid growth at a rate possibly higher than market forces on their own would have produced.
8

All government regulatory functions, from protecting wetlands, to requiring disclosure in initial public offerings of stocks, to certifying drugs as safe and effective, create artificial scarcities. Any ability to grant or withhold regulatory power generates a rent. But while we can argue about the appropriate extent of regulation, few people would like to see these functions abandoned simply because they create rents. Indeed, even the much criticized New York taxi medallion had its origin in the need to maintain a certain minimum level of service and ensure equality of access in public carriage. Without this type of regulation, many taxis would simply refuse short fares or rides to poor neighborhoods.

Thus the creation and distribution of rents by governments have a high degree of overlap with corruption, but they are not the same phenomenon. One must look at the purpose of the rent and judge whether it is generating a purely private good that is being appropriated by the government official, or whether it is actually serving a broader public purpose.

PATRONAGE AND CLIENTELISM

A second phenomenon that is often identified with corruption is that of patronage or clientelism. A patronage relationship is a reciprocal exchange of favors between two individuals of different status and power, usually involving favors given by the patron to the client in exchange for the client's loyalty and political support. The favor given to the client must be a good that can be individually appropriated, like a job in the post office, or a Christmas turkey, or a get-out-of-jail card for a relative, rather than a public good or policy that applies to a broad class of people.
9
The following is an example: “In Sicily, a student, interested in getting an introduction to a professor from whom he needs a favour, approaches a local small-town politician who owes him a favour. The politician puts him in contact with a cousin at the regional urban centre and the latter contacts an assistant to the professor who then arranges the appointment. The favour sought is granted and in return the student promises to campaign for the politician at election times.”
10

Patronage is sometimes distinguished from clientelism by scale; patronage relationships are typically face-to-face ones between patrons and clients and exist in all regimes whether authoritarian or democratic, whereas clientelism involves larger-scale exchanges of favors between patrons and clients, often requiring a hierarchy of intermediaries.
11
Clientelism thus exists primarily in democratic countries where large numbers of voters need to be mobilized.
12
What is traditionally referred to as the patronage system in American politics was by this definition actually a clientelistic system since it involved mass party organizations distributing widespread favors through complex hierarchical political machines.
13

Clientelism is considered a bad thing and a deviation from good democratic practice in several respects. In a modern democracy, we expect citizens to vote for politicians based on their promises of broad public policies, or what political scientists label a “programmatic” agenda. People on the left may support government programs to provide health care and social services, while conservatives may prefer that the government allocate resources to national defense. In either case, voter preferences are supposed to reflect general views of what is good for the political community as a whole, not just what is good for one individual voter. Of course, voters in advanced democracies cast their ballots according to their self-interest, whether that lies in lower taxes for the well-to-do, or subsidies for a particular type of business, or programs targeted at the poor. Nonetheless, such targeted programs are justified in terms of broad concepts of justice or the general good, and even when targeted must apply impartially not to individuals but to broad classes of people. The government is in particular not supposed to give a benefit to specific individuals based on whether or not they supported it.

In a clientelistic system, politicians provide individualized benefits only to political supporters in exchange for their votes. These benefits can include jobs in the public sector, cash payments, political favors, or even public goods like schools and clinics that are selectively given only to political supporters. This has negative effects on both the economy and the political system for a number of reasons.
14

First and perhaps most important is the impact of patronage and clientelism on the quality of government. Modern bureaucracies are built on a foundation of merit, technical competence, and impersonality. When they are staffed by a politician's political supporters or cronies, they almost inevitably perform much more poorly. Stuffing a bureaucracy with political appointees also inflates the wage bill and is a major source of fiscal deficits. Unlike the private sector, the public sector does not face the threat of bankruptcy or have easy metrics for performance, which means that governments staffed with patronage appointments become very hard to reform.
15

The second way clientelism undermines good democratic practice has to do with the fact that it strengthens existing elites and blocks democratic accountability. A clientelistic relationship is by definition between unequals, in which powerful and/or wealthy politicians in effect buy the support of ordinary citizens. These politicians are typically interested in promoting their own narrow interests. They may be interested in promoting the welfare of the clients who provide their base of support but not the public at large. In Europe, inequality was reduced in the course of the twentieth century due to the rise of programmatic parties such as the British Labour Party or the German Social Democratic Party (see Part III below). These parties pushed for broad social programs that had the effect of redistributing resources from rich to poor on a relatively impartial basis. Many Latin American countries, by contrast, continue to experience high levels of inequality because the poor have tended to vote for clientelistic parties—the Peronist party in Argentina is a classic example—rather than programmatic ones. Instead of procuring broad benefits for the poor, clientelistic parties dissipate resources on what are in effect individual bribes for voters.

NATURAL MODES OF SOCIABILITY

Patronage and clientelism are sometimes treated as if they were highly deviant forms of political behavior that exist only in developing countries due to peculiarities of those societies. In fact, the political patronage relationship, whether involving family or friends, is one of the most basic forms of human social organization in existence. It is universal because it is natural to human beings. The big historical mystery that has to be solved is thus not why patronage exists but rather why in modern political systems it came to be outlawed and replaced by impersonal organization.

In Volume 1, I argued that human beings are social creatures by nature and that their social organization is rooted in biology. There are two basic biological principles that are shared not only by virtually all human societies but also by many other sexually reproducing species: kin selection or inclusive fitness, and reciprocal altruism.
16
In kin selection, individuals favor genetic relatives, in proportion to the number of genes they share; it is the basis of nepotism. Reciprocal altruism involves the exchange of favors between unrelated individuals on a face-to-face basis.

Neither kin selection nor reciprocal altruism is a learned behavior; every human child regardless of culture instinctively tends to favor relatives and exchanges favors with those around him or her. Nor are these behaviors rooted solely in rational calculation; human beings are born with a suite of emotions that fortify the development of social relationships based on cooperation with friends and family. To behave differently—to choose, for example, a highly qualified employee over a friend or relative, or to work in an impersonal bureaucracy—is a socially constructed behavior that runs counter to our natural inclinations. It is only with the development of political institutions like the modern state that humans begin to organize themselves and learn to cooperate in a manner that transcends friends and family. When such institutions break down, we revert to patronage and nepotism as a default form of sociability.

The earliest forms of human social organization are the band and the tribe. Both constitute what we would today call patronage organizations, and they were the only form of organization that existed for the first forty thousand or so years of human history. The band consists of small groups of a few dozen related individuals; the tribe is based on a principle of descent from a common ancestor, which allows the scale of the society to vastly increase. Both kin selection and reciprocal altruism are necessary to hold these two types of groups together: solidarity is based on genetic relatedness, and in both there is a reciprocal exchange of favors between the chief or Big Man who leads the group and his followers. Leaders in tribal organizations do not have the kind of absolute authority that they would acquire under state-level societies. If they fail to keep up the flow of resources to their followers, or make mistakes that hurt the group's interests, they can be replaced. There is consequently a real degree of reciprocity between leaders and followers in such organizations.