The Art of Calculating Corruption
For the past three decades, China has defied orthodoxy by maintaining astonishing growth rates despite experiencing worsening corruption. Studies such as Paulo Mauro’s “Corruption and Growth” have demonstrated a negative statistical correlation between the two variables, yet China’s booming economy has marked it as an outlier to this trend. In the 1990s, this paradox puzzled Andrew Wedeman, and embedded within him the seeds for his controversial new book, “Double Paradox, Rapid Growth and Rising Corruption in China.” Wedeman, a professor of Political Science at Georgia State University, visited McGill University on October 25 to discuss his book at the International Development Studies Speaker Series. The presentation attracted a diverse crowd of professors and students, and challenged them to rethink corruption and its configuration in China.
Wedeman’s presentation drew attention to media reports and corruption indices that suggest corruption in China has risen to cataclysmic proportions in the past few decades. Sexy stories of the Beijing Vice Major Wang Baosen’s suicide related to corruption charges in 1995, to the more current sentencing of politician Bo Xilai to life in prison on charges of bribery and abuse of power, suggest corruption is fervently integrated into the Chinese bureaucracy. Reported cases of corruption have shot up from 9000 in 1980 to 28,000 in 1985, to over 77,000 during the 1989 anticorruption campaign. Indictment of senior officials alone rose from 190 in 1988 to over 2500 per year by 2000. Moreover, corruption intensified with bribes exploding from 4,000 RMB in 1984 to 273,000 RMB in 2005. With such statistics and stories, conventional corruption theory would suggest China should be experiencing economic turmoil.
Yet, China’s economic performance has been far from catastrophic. The country’s economy grew at an average rate of 8.75 percent between 1979 and 2010, lending to the thirteen-fold increase in GDP per capita. However surprising this economic success is in the face of intense corruption, it is not unheard of. Wedeman has also studied Japan and South Korea, which both have successful economies despite extreme economic corruption. In these countries, corruption takes shape as what Wedeman calls “developmental corruption.” Essentially, this means that corruption is integrated into politics, with payoffs from businesses to the government as a way of stabilizing the ruling party and in turn stabilizing the economy.
In contrast, Wedeman points out that the strength of the Chinese Communist Party is independent of corruption, and that the leadership strives for economic invigoration due to recent uprisings (eg. Tiananmen) rather than as an avenue for institutional bribery. According to Wedeman, corruption in China is predatory and anarchical instead of organized and systemic. As such, corruption in China is more aligned with the Zairian Mobuto regime and the systemic rent scraping in the Philippines, which proved destructive to their economies Thus, the key paradoxes are not only that rapid growth continued with an intensification of corruption, but also that China’s economy continued to prosper despite the predatory form of corruption more associated with economic decline.
Wedeman argues that this situation emerged as a reaction between economic reform, corrupt officials with a bout of sensibility, and governmental anticorruption efforts. Corruption is far from new to China, but Wedeman argues it was limited to petty corruption in the Maoist era. With the transition from a command to market economy beginning in the 1980s, economic corruption intensified. Officials would scrape a piece of the windfall profits created when closing the gap between lower command economy prices and high market prices. While this behaviour could have spiraled out of control, Wedeman suggests that corrupt officials limited their short term plunder in the outlook of more stable long-term corruption schemes. Rather than digging into the economy, they would merely skim off a layer of new growth. After anti-governmental demonstrations in 1989, China set out on a “war on corruption” that has also prevented corruption from reaching economically destructive levels.
However, the continued growth of the Chinese economy also brings into question whether the extent of corruption in China is really as bad as it is purported to be. Wedeman’s presentation underscored a more subtle aim of his studies; while his book is about explicating China as an outlier to corruption orthodoxy, it is equally about criticizing corruption indicators used by institutions and the public. It is evident that the media heavily influences the public, but Wedeman also emphasizes that media influences the opinions of professionals, which are often used to shape corruption indices. While these types of indices may suggest a worsening of corruption in China, Wedeman’s studies suggest this is inflated. His analysis of the “revealed rate of corruption,” which is the number of arrests and prosecutions for corruption, indicates a surge of corruption in the 1980s and 1990s after which it leveled off. Even this indicator is limited because technically, each arrest represents a relative improvement of corruption. To address this shortcoming, Wedeman has developed an “accumulative” indicator of corruption that assesses increasing corruption from the moment corrupt activity begins to when it ends. Due to mathematical flaws, Wedeman suggested this indicator is still being developed.
As Wedeman admitted to his mathematical handicap, an empathetic chuckle spread across the audience composed overwhelmingly of Arts students, emphasizing the impossible task of measuring and interpreting corruption. The stream of questions in the Q&A period, regarding methods of indictment, reinvestment trends, and public perception underlines the complexity and span of the issue at hand. Having a long history of studying corruption and China, Wedeman addressed all questions in such a way that no argumentative commentators persisted. However, the surprising lack of depth regarding the dynamic of corruption in predicting China’s economic future was striking. The lack of discussing regarding the future of the Chinese economy brings into questions: does Wedeman’s theory have predictive power?
As anyone who has studied theories will know, a theory that is generalizable is valuable but often disregards the idiosyncratic influences in a situation. Wedeman is set on a path to find the factors idiosyncratic to China that set it apart from Mauro’s trend. His analysis is particularly valuable because it emphasizes the downfalls of corruption indices, which make predictions concerning corruption inherently difficult. While the revealed rate of corruption suggests corruption in China is not as bad as it seems, this method is constricted primarily because the level of veiled corruption is unknown, and limited state resources will translate into a ceiling on said revealed rate. While Wedeman’s new accumulative corruption indicator may be useful, its value is limited in that it rests upon revealed cases; thus, the indicator holds the aforementioned limitation and can also only measure accumulation retrospectively. While interesting, the indicator’s capacity is underwhelming.
Since corruption indices are limited in their predictive power, Wedeman’s theory may be more useful in terms of corruption checks and balances. His in-depth analysis is insightful, although contradictory at times. Though far from central to his argument, Wedeman purports that China evaded economic downturn in part because corrupt officials limited their corruption to avoid placing stress on the overall economy, thus ensuring long term corruption schemes. This theory assumes that despite anarchical and predatory corruption, thousands of independently acting officials managed to make calculated assessments of the impact of their corrupt actions, independently and in relation to all other corrupt activities. The point seems random, and disconnected from the more striking check on corruption: China’s anti-corruption campaigns. As Wedeman emphasized, corruption in China is very risky, and punishable by death. Perhaps officials’ calculations are less about long term corruption schemes and more about analyzing how much risk that looting the economy to detrimental levels would have on their lives.
Zeroing in on the importance of these factors is central to predicting not only China’s future, but also that of other developing states. If the Chinese economy experienced a downturn, would officials recalibrate the levels of their corruption to fit a new corruption equation? The implausibility of such a scenario impinges on the usefulness of assessing a subjective widespread economic understanding that would somehow translate into an abstract invisible hand of corruption. Rather, it would be more useful to assess the relationship between the level and consistency of punishment, and levels of corruption. A theory grounded in these factors may help further understand corruption in China’s past and future, and could be feasibly used in the assessment of other countries’ economic, political, and judicial development.