Ackerman’s Neoliberal Argument on the Causes of Corruption

Critically evaluate the following statement by Susan Rose-Ackerman (1996):

‘The level of corruption is a function of the honesty and integrity of both public officials and private individuals. With these factors held constant, the size and incidence of bribe payments are determined by the overall level of benefits available, the riskiness of corrupt deals, and the relative bargaining power of briber and bribee.’

Corruption has grown as a significant and growing problem in the Asian region in the 21st century. The World Bank (2005) broadly defines corruption as the “abuse of public office for private gain”. For Susan Rose-Ackerman (1996), she states that levels of corruption is due to ‘individual characteristics’ such as “honesty and integrity” as well as the “benefits…size, riskiness”. While her neoliberal perspective has some accurate points in describing corruption in Indonesia, there are also flaws in her argument in relation to simplifying corruption to mere individual action and excluding structural and cultural factors as seen in the Philippines and China.

Ackerman’s neoliberal argument on the causes of corruption, in relation to size, risk and punishment can be demonstrated in countries such as Indonesia. Aspects of a modern state include the development and growth of public bureaucracy and administration. Due to this, opportunities for corruption has increased in the area of rent-seeking in regulatory sectors, deemed as “wet” government agencies that deal with more development, allowances and budgets (Quah 2003, p. 241). In Indonesia, taxation was one of the most profitable agencies during 1989-1993. “Wet” sectors have direct contact with the public, which means larger monetary budgets like the police or taxation office, giving greater chances of corruption. Another factor is the the low level of risk and punishment that facilitates corruption. For Indonesia, corruption is advanced due to the inability of the government and its agencies to investigate and provide strong punishment for corrupt activities committed by its workers. Instead of receiving a harsh penalty and dismissal for corrupt civil servants, what commonly occurred was a job transfer to hide and remove attention of their illicit behaviour (p. 243). This is compounded by the creation and failings of multiple anti-corruption agencies such as Corruption Education Team, National Security Agency and various anti-corruption legislation. The ineffectiveness of these anti-corruption laws and groups have been attributed to Indonesia’s protection of corrupt high-ranking government officials and the lack of authority. Because of this, high-ranking corrupt members of bureaucracy have avoided punishment and the lack of authority means civil servants are more likely to disobey the law due to the absence of any harsh penalty. As a result, the decreased risk of punishment and large benefits have allowed both significant and low-ranking corrupt individuals to continue their behaviours at the expense of Indonesian society and development.

However, Ackerman’s neoliberal stance has flaws as structural factors in society can also contribute to levels of corruption, as seen in the Philippines. Structural theory is more appropriate in explaining the corruption rooted in class division in the Philippines. The failure of land reform in the Philippines since World War II, has created a ruling land-owning minority both economically and politically, creating a large inequality in Filipino society. In the 1950s, Congress altered President Magsaysay’s moderate land reform and consequently, much land evaded being seized by the government. The 1955 ‘Land Reform Act’ saw the government only seize 0.4% of the 2% of land meant for redistribution (You 2014, p. 203). Much of the land reform in the Philippines was little, slow or diluted creating an unequal division of society in the form of a powerful land-owning minority and landless majority. This structural inequality provides fertile ground for corrupt behaviours to take root in the shape of political and bureaucratic corruption. Due to high inequality, high pressure for redistributive policies by the majority would encourage the landowning elite to interfere in government legislation for example, taxation. Despite high levels of taxation, due to special tax privileges or bribery, low tax collection became the reality (pp. 207-8). This in turn maintained the concentration of wealth held by the elite land-owning minority. Another corrupt practice is vote-buying in the central bureaucracy. Although a competitive exam was put in place to ensure individuals chosen based on merit in the central bureaucracy, the number of jobs based on the merit exam has dwindled in favour of “oral interviews” (p. 208). Consequently, this ensures the bureaucracy is continually held by the wealthy elite and their interests, instead of an independent merit-based bureaucracy. As such structural theory best represents corruption levels in the Philippines.                               

Ackerman’s reduction of corruption as limiting itself to only the individual can simplify the complexity of corruption, as elements of cultural norms can impact corruption as seen in China. Cultural theory can provide roots of corruption such as the Chinese tradition of the ‘guanxi’ network, an informal system used in the transition from feudalism to modernity in China. Guanxi is characterised as a duty to help close people such as family or friends (Zhan 2012, p. 98). The network depends on three major components, communication, exchange and reciprocity. Communication in guanxi allows significant and uncensored information to spread, which guanxi members gain access to (p. 99). As such, people can obtain an advantage due to uncensored and secretive access to political and business information and continue to prolong their membership. Exchange is vital to guanxi, for example ‘gift-giving’, which solidifies the relationship between the gifter and the given for future, stable long-term relations (p. 99). This mutual transaction is significant as a private means for access to resources when the state is unable to provide economically or politically. Reciprocity works as a normative means of expectations placed on both individuals (p. 99). Membership in a secretive network like guanxi creates behavioural expectations, where guanxi may be prioritised over their public roles. These three aspects in guanxi create grounds for corruption in that it alters people’s position by gaining advantage to information and resources through exclusive relations and prioritises this membership over the general public, at the expense of China’s development. Although anti-corruption laws have been legislated it is rarely enforced and guanxi has adapted to this for example, instead of direct cash ‘gifts’, luxury goods such as designer clothing and artworks are given (p. 105). As such, the cultural system of guanxi networks can facilitate and create opportunities for corruption in China.

In Asia, corruption has become a widespread problem in countries such as Indonesia, Philippines and China. Rose-Ackerman argues that corruption is caused by the degree of benefits offered by the level of size, risk and punishment by individuals. While her view can be argued in Indonesia in relation to “wet” agencies and low level of risk and punishment, it cannot be broadly argued in places such as the Philippines, where structural factors such as unequal class division and China, where cultural networks such as ‘guanxi’ become grounds that breed corruption.

REFERENCE LIST

• Bhargava, V October 2005, The Cancer of Corruption, World Bank, United States, viewed 3 May 2019, <http://siteresources.worldbank.org/EXTABOUTUS/Resources/Corruption.pdf>
• Quah, J.ST 2003, ‘Causes and corruption in south-east asia: a comparative analysis of indonesia, the philippines and thailand’, Asian Journal of Public Administration, vol. 25, no. 2, pp. 241, 243.
• You, JS 2014, ‘Land Reform, inequality, and corruption: a comparative historical study of korea, taiwan, and the philippines’, The Korean Journal of International Studies, vol. 12, no. 1, pp. 203, 207, 208.
• Zhan, JV 2012, ‘Filling the gap of formal institutions: the effects
• of guanxi network on corruption in reform-era china’, Crime, Law and Social Change, vol. 58, no. 2, pp. 98, 99, 105.