That is the question Pennsylvania State University Political Scientists Vineeta Yadav and Bumba Mukherjee leave readers to ponder at the conclusion of their fine new book, The Politics of Corruption in Dictatorships. But not before the authors provide a plethora of new insights on anticorruption policy and political change in authoritarian states.
They begin with the well-known finding that non-democratic states are more corrupt than democratic ones and continue with a review of the standard explanations for why this is so. Authoritarian states lack a free press, separation of powers, and the other means democracies have for holding corruption in check. Furthermore, corruption is many times the glue that holds a dictatorial government together. It’s the way rulers buy the support of the security services, business elites, and others that might be tempted to overthrow them. It also provides leaders an insurance policy in the event supporters don’t stay bought as they can siphon off a bit (okay often a lot) into a rainy day fund somewhere offshore.
If the story were that simple, an examination of non-democratic states’ scores on cross-national measures of corruption would reveal two things: first, the scores would all cluster at the “most corrupt” end of the measures; second, absent the rare political upheaval, the scores would remain relatively stable over time. Here is where the story gets interesting – and where Yadav and Mukherjee go to work.
Of the 86 states Yadav and Mukherjee classify as dictatorial or authoritarian (terms they use interchangeably), corruption is low in close to half. Furthermore, over the period 1985 – 2010 the scores of almost half these states declined. Why these differences? What explains why corruption in some authoritarian states is low while it remains high in others?
Political change, the authors argue, requires two things: someone to demand it and some way for the demand to be heard and acted upon. Start with the demand side. Who in an authoritarian government is willing to say the government should do something about corruption? Not ordinary citizens. Not only do they lack access to an independent media, an impartial legal system, and the other ways citizens in democracies have for making their voices heard, they risk arrest, or worse, if they do raise their voice.
So who might be willing to stick their neck out? This is where the authors break new ground. They contend that across all authoritarian states there is a group that has both the incentive and the means to demand anticorruption policies: small- and medium-sized enterprises. The literature on politics in authoritarian states has heretofore treated the business sector as one big, undifferentiated lump. The authors argue, and then show, that this masks significant differences within the business community. There are the large, often state-owned businesses that form a part of the ruling elite — that in return for lucrative government contracts or monopoly rights over a particular sector of the economy support the status quo.
But there are also SMEs. Unlike elite firm, they are not a part of the ruling clique; like the mass of the population, they are outsiders. They are not, however, just any outsider. Picking up on a large body of research by the World Bank and others, Yadav and Mukherjee argue that SMEs are a key part of the economy in authoritarian states: “they employ the most workers, own substantial shares of a nation’s fixed assets, and are significant generators of new jobs.” Despite their economic import, however, within the business community it is the SMEs who bear the brunt of a corrupt system, who confront on a regular basis demands from corrupt customs officials, tax collectors, and licensing authorities for “informal payments.”
If their vulnerability to corruption sets them apart from the elite businesses, whose political connections insulate them from its effects, SMEs also differ from the other group in society vulnerable to corruption: ordinary citizens. For unlike citizens, under certain conditions (which Yadav and Mukherjee nicely explicate) they have a ready-made vehicle for coming together to demand change: a nationwide business association. While usually viewed as “apolitical organizations” that are a useful conduit to governments on economic concerns, a broad, nationwide association of SMEs can also be the critical voice demanding reductions in corruption.
Voice alone, no matter how loud, is not enough to bring change of course. A second contribution the authors make to thinking about corruption in authoritarian states comes from their delving into the conditions that make it likely an authoritarian state will respond to the demands of the SME community. If previous analyses erred in treating the business sector in these countries as one big, undifferentiated lump, earlier analyses also erred in lumping all non-democratic states together under the rubric “authoritarian.” Yadav and Mukherjee remind that not all authoritarian regimes are organized the same way. They differ “in how they manage the negotiations for policy concessions between opposition groups, regime elites, and the general citizenry, and consequently in the policy outcomes achieved through these negotiations.” In their introduction, the authors suggest that differences in “these political institutions may influence corruption [levels] in autocracies” and succeeding chapters use a combination of sophisticated statistical techniques and in-depth case studies of Jordan, Malaysia, and Uganda to show just what type of political institution is most likely to respond to a demand from the SME community to combat corruption.
The Politics of Corruption in Dictatorships deserves a careful read by those seeking to reduce corruption in those states that are less than robust, Western-style democracies, and from students of politics in authoritarian states, and I won’t spoil the plot, or compromise book sales, by providing further details about Yadav and Mukherjee’s findings.
I will, however, return to the troubling question they leave with readers at the end: If authoritarian states that successfully reduce corruption can stave off democratic change, should “advanced industrial democracies and international financial institutions . . . push for implementation of anticorruption reforms?” in a future post. I would invite comments and guest posts from readers on this most critical question.