Who says Economics has to be boring? Reading Ha-Joon Chang’s books is a riveting experience! For the past few days, I’ve been poring over Bad Samaritans: The Guilty Secrets of Rich Nations and the Threat to Global Prosperity, and these thoughts assailed and alarmed me. So here they are for you:
Chang adopts a sobering tone in describing the relationship between corruption and economic development, showing that there is no necessary correlation between public morality or the financial integrity of a nation’s leaders, and the economic well-being of a country. As he notes, “If the impact of corruption on economic development is ambiguous, how about the latter’s impact on the former? .. economic development makes it easier to reduce corruption but … there is no automatic relationship. Quite a lot depends on the conscious efforts made to reduce corruption. History shows that, at earlier stages of economic development, corruption is difficult to control. … a country has to rise above absolute poverty before it can significantly reduce venality in the system. When people are poor, it is easy to buy their dignity*—starving people find it difficult not to sell their votes for a bag of flour” (Bad Samaritans, 166).
This pattern has a concrete precedent in the late 18th-century French history that readers of this blog know so well.
The uncertain alliance between the philosophers’ calls for innovation and economic liberalism, as opposed to the State’s attachment to authoritarian rule, made for unwieldy attempts at reform. Louis XV and Louis XVI (1774-92) left an uncertain heritage for the republics that would follow. As Simon Schama has pointed out, the revolutionaries’ “belief that liberty and solvency were natural partners” was widely shared among the French, no matter how absurd it might seem to cynical modern readers. What they did not realize, Schama notes in Citizens, is that their abstract language of reform and the economic plans they had in mind “had to succeed completely if they were to succeed at all. Partial success was the same as complete failure, because it meant running back to the financiers” whose interest in sustaining the monarchy depended on the goodwill and liquidity of a chosen few.**
Questions for everyone:
- Were the French revolutionaries naïve in thinking that in creating more a more bureaucratic governmental system, there would be less nepotism and cronyism, that is, corruption?
- Can the old regime be thought of as a system with any integrity, given that it was based on the buying and selling of venal offices? Or is “corruption” incorrect, given that the moral codes of early-modern Europe are not the same ones which govern public life in the 21st century?
- Does the existence of nepotism or venal offices necessarily imply a system is corrupt?
*Note from editor JD to Ha-Joon Chang: Is it really a question of dignity? I think not. One cannot purchase a person’s dignity. See our Rousseau and Dignity: Art Serving Humanity (2017). Isn’t it more precise to describe the process as destroying, through money, people’s ties to traditional community values and kinship? This kind of corruption can deal a devastating blow to the individual’s sense of self-esteem and status within the group [See Rousseau and Dignity chapters on Mexico and India]. But we cannot know how such negotiations affect individual’s sense of being in the world, that is, their dignity.
** Douthwaite, p. 12 of “Can Financiers be Enlightened? or How to Explain the ‘Inscrutable’ World of Finance, ca. 1748-70, and ca. 1958-2016,” ms. under review.