Is corruption the cause of our poverty?

During an intense debate on corruption on our WhatsApp chat-group last week, I argued (as I have always done) that there is no evidence that corruption automatically or necessarily stops a country from developing. This is not an opinion but a statement of a historic fact. Most of the nations that are developed today had corruption during their intense period of transformation from backward, poor agrarian societies to modern affluent industrial nations. This let loose the dogs of largely intellectual (and emotional) war.

I was accused of “defending” corruption and of arguing that it drives growth, an argument I had not (and have never) made. Whoever claims the contrary should table evidence. However, I know that corruption is a very unfair practice: one man steals money meant for everyone and takes it all by himself. It is even more painful when he stays in power, arrogantly displaying his ill-gotten riches. Such unfairness offends people’s moral tastes and easily leads many to give it a casual link with poverty. Yet, corruption [per se] is not a cause of poverty but a mere characteristic of it. Why?

Corruption takes many forms across thousands of transactions in contexts whose multitudinous complexity we can never fully capture or comprehend. It can be a doctor stealing drugs from a public hospital to his private clinic, a nurse charging a fee for a public hospital bed meant to be free, a traffic police officer taking a bribe to let an offender off the hook, a headteacher stealing the building fund. This petty corruption has different implications from the grand corruption of a minister taking a 10% commission off a road contract, another giving a tax exemption to a company in exchange for shares, a tax official taking a bribe to let an importer under-declare taxes, a president taking a campaign contribution from an investor in exchange for free prime land, etc.

First, these acts [in and of themselves] neither stifle nor promote prosperity. Their impact depends on many other variables: the capacity of the state and society to secure accountability for results, the quality of existing regulations, the prevailing economic policies, the nature of the business elites who get favors, the interests and values of dominant elites, etc. Second, corruption is not a single reified activity. Rather it is a myriad of transactions across multitudes of activities. Depending on the aforementioned factors and combinations, some corrupt acts can have a negative impact, others a positive one and others can be totally neutral. The outcome is not determined by corruption only but its interaction with all these factors.

Furthermore, the effect of corruption is not in its extent per se (there was much more corruption in Indonesia under Gen. Suharto than in Zaire under Marshal Mobutu; but Indonesia grew rapidly while Zaire regressed), or even in the specific acts categorized as corrupt (favors given to a small select group of industrial houses by Park Chung Hee in South Korea in exchange for campaign contributions led to rapid industrial transformation while the same given to similar groups in Pakistan led to civil war, the breakup of the country and economic stagnation). Its consequences are context-specific.

Look at Kenya and Tanzania under Jomo Kenyatta and Julius Nyerere respectively. Kenyatta ran a corrupt administration and made himself wealthy. Nyerere ran an honest government and did not accumulate personal wealth. During their time Kenya grew rapidly, Tanzania retrogressed. Here, Kenyatta’s corruption interacted with capitalist policies while Nyerere’s honesty with collectivization. Even within Kenya, corruption seems to have stifled growth under Daniel Arap Moi, Kenyatta’s successor. Robert Bates captured the specificity of these dynamics in his majestic study of that country, Beyond the Miracle of the Market.

Finally, corruption is both a moral and a legal issue. Yet moral values differ from society to society and within a society from one era to another. The same applies to legal norms. For instance, most of the acts characterized as corrupt in the rich world today were perfectly normal and legal during their period of transformation. Using public office for private gain was seen as ethical and legal in most of Western Europe and North America until the turn of the 19th century. The transformation of these societies led to the change in both moral and legal norms, not the other way round.

Why is this debate on corruption critical? It is because African governments and elites are obsessed with it as the biggest threat to our prosperity. Yet we have neglected debate on the most critical factors that drive the prosperity of nations: terms of trade (the price index of exports vis a vis the price index of imports – which means we must add value to our exports) and having local ownership of our economies (which means we retain that value). If we devoted 10% of the political, economic and emotional resources we expend fighting and arguing about corruption on promoting these two, our nations would be on a better path to prosperity.

Why then do very intelligent and well-educated people fail to see this simple evidence and logic? Cognitive scientists tell us that human beings are [inherently] cognitive misers i.e. we prefer to do as little thinking as possible. So when we confront a challenge, our instinct is NOT to look for facts to help us understand it. Rather we lean on our biases, prejudices, values and beliefs to make judgment. Evolutionary psychology tells us why it is not profitable for us to stretch our minds to acquire a large body of knowledge. The command of a large body of facts did not give our ancestors a competitive advantage in the dating market. The most competitive qualities in mate selection are power, wealth, generosity, kindness, caring, good looks, good health and such artistic qualities as music, art and athletics, not knowledge.

There is a truly great book, The Righteous Mind, by the moral psychologist, Jonathan Haidt. He argues that people’s moral judgments shape their reasoning, rather than the other way round. Reasons purport to explain and justify judgments. But in fact we grasp at reasons and pull them into service to legitimize judgments that we have already made on the basis of our moral tastes. On no significant issue is all the evidence lined up on one side of the argument. Our ethics determine the reasoning and evidence that we are prepared to accept. We give credence to the flimsiest of straws in the wind that are aligned with our values, while dismissing opposite evidence with a torrent of contempt and vitriol. This is why I get attacked with contempt and vitriol for stating an obvious historic fact.


What do you think?

Written by Andrew M. Mwenda

Andrew M. Mwenda is currently the Managing Director of Independent Publications Limited, the publishers of The Independent, East Africa’s leading current affairs newsmagazine. An admirer of Socrates, Karl Popper and Frederick Von Hayek, he is an activist, a journalist, a columnist, a part time poet, a businessman and a social entrepreneur.

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