How not to eliminate corruption

  • Corruption is a cancer on societies, both in terms of economic and of social cost.
  • It is not enough to tackle the symptoms of corruption; the underlying causes must also be attacked.
  • Both Saudi Arabia and China are doing the former but ignoring the latter. They will therefore fail.

Last weekend, Saudi Arabia launched a widespread anti-corruption purge. Large numbers of arrests have been made, including a number of well-known princes (admittedly allegedly confined to a Ritz-Carlton hotel, not the worst jail imaginable). In China, President Xi Jinping has of course been running an anti-corruption campaign for years, hunting both “fleas” and “tigers” (low and high-level miscreants).

Corruption is bad for many reasons. It squanders a country’s resources. It erodes the rule of law. It makes people and companies spend time pursuing criminal activities instead of using it for productive purposes. It robs both the private and the public sectors of money.

Corruption is also all-pervasive. In some countries, corruption is minimal, consisting mainly of ‘who do I know’ (for instance to help my child get an internship) and of mutual low-level help; in others if involves large-scale larceny, with almost unimaginable sums involved.

Knowing all this, as we all do, is it not always laudable to fight and attempt to eliminate corruption?

Of course it is. But, crucially, there are two parts to the fight against corruption. One is to fight the symptoms of corruption. This is what what President Xi and Crown Prince Mohammed bin Salman are doing — punishing the corrupt. The second is to attack the underlying causes of corruption. This is where both China and Saudi Arabia are failing.

The causes of corruption are well known and manifold. They include a lack of rule of law, arbitrary and opaque decision-making by unaccountable bureaucrats and politicians and a lack of property rights. Contributory factors include an unfree press, lack of open public debate and little or no civil society and personal freedom. Feudal societies or societies based on patronage are particularly susceptible to corruption. All of these factors apply to both China and to Saudi Arabia. In both societies, unsurprisingly, corruption is endemic.

The causes of corruption are clearly not being tackled, either in China or in Saudi Arabia. President Xi is, if anything, eroding progress towards rule of law in China, reinforcing that the law has to be subordinated to the needs and dictates of the Party. Prince Mohammed talks of changing Saudi society, but giving women the right to drive or setting up enclaves where foreigners can live more freely, is only tinkering at the edges.

In both cases, the anti-corruption campaign is also very much aimed at consolidating the power of the leaders. Since corruption in each country is wide-spread, the easiest way of getting rid of actual or potential rivals is to accuse them of corruption, because they will by definition be corrupt.

However, once you have eliminated your rivals, you cannot continue the anti-corruption campaign for too long. This is because your supporters who you have elevated to new positions of power, will also be corrupt or eventually be corrupted by the system.

This does not necessarily mean that President Xi or Prince Mohammed would not genuinely like to get rid of corruption. Both are presumably aware that corruption is a cancer on society, with both economic and social costs. But it does mean that the methods they are using won’t work.

So how do you get rid of corruption? It may not be possible to eliminate it completely, but history shows that there are two ways of successfully bringing it down, one permanent and one temporary.

The permanent option is to have well paid bureaucrats and politicians, appointed/elected in open processes with little decision-making powers and wide-spread transparency. This is the way chosen by the United Kingdom (and eventually other European countries) in the early 19th Century. Ironically, this was directly inspired by the Chinese state examination system. Today, the perhaps best example of this is Singapore.

The temporary method is to kill or otherwise eliminate anyone suspected of corruption. But the problem with this method is that while the decision-maker may personally not be corrupt, eventually, those closest to power will fear that they are next in line and will strike first to save themselves — exemplified by the Thermidor coup against Maximilian Robespierre in 1794. Again, this does not tackle the causes of corruption.

Unless their methods expand to include changing the system, neither President Xi, nor Prince Mohammed will therefore manage to eliminate corruption. That is unfortunate, because its continued existence on a large scale means ongoing substantial economic and social costs for two important countries.