The Politics of Privilege: Assessing the Impact of Rents, Corruption, and Clientelism on Third World Development
| DOI | 10.1111/1467-9248.00100 |
| Published date | 01 August 1997 |
| Author | Paul D. Hutchcroft |
| Date | 01 August 1997 |
| Subject Matter | Article |
The Politics of Privilege: Assessing the
Impact of Rents, Corruption,
and Clientelism on Third
World Development
PAUL D. HUTCHCROFT
`I am me,' explains Singaporean Senior Minister Lee Kuan Yew in response to
criticism that he derived substantial personal advantage from a recent deal
involving luxury condominiums. `It's not a level playing ®eld.'1 To be sure,
some element of particularistic privilege is found in all political systems ± most
clearly in those where corruption and rent havens predominate, but even in
meritocracies such as that built up by Lee himself during his three decades as
Prime Minister. While no `playing ®eld' is entirely level, however, it is equally
obvious that landscapes of special advantage vary enormously in shape from
one political economy to another: some varieties of unevenness may actually
promote economic growth, while other types of rough terrain seem to pose
enormous barriers to sustained development.
This paper takes initial steps toward building a framework able to explain
why a range of related phenomena ± variously described as rent-seeking,
corruption, and clientelism ± may be relatively more compatible or relatively
more obstructive to the process of Third World development. In doing so, I will
highlight how contrasting political settings spawn very dierent patterns of
seeking ± and dispensing ± particularistic advantage. Moreover, I will seek to
demonstrate that the process of creating such a broad framework bene®ts from
an eclectic approach; speci®cally, it is valuable to draw insights from three
literatures, with distinct lineages, that overlap but all too rarely interact: those
relating to rents, corruption, and clientelism.
The ®rst section of this paper discusses the utility of drawing on the three
major paradigms, and the relative advantages and disadvantages of each in
building a broad comparative framework. Second, I propose a preliminary
framework for assessing the varying impact of major phenomena described by
the literature on rents, corruption, and clientelism, focusing attention on seven
Thanks to Don Emmerson, Jomo K. S., Mushtaq Khan, Andrew MacIntyre, Amado Mendoza,
Jr, T. J. Pempel, Ansil Ramsay, Temario Rivera, and Joel Rocamora ± as well as to participants in
both a panel of the Association of Asian Studies annual meetings, 11±14 April 1996, Honolulu,
Hawaii and the `Rents and Development in Southeast Asia' workshop, 27±28 August 1996, Kuala
Lumpur, Malaysia ± for oering comments that contributed to this article. All errors, of course, are
mine alone.
1 New York Times, 5 June 1996. Lee was responding to a report that he and his son, Deputy
Prime Minister Lee Hsien Loong, accepted discounts of more than $700,000 in a `soft sale' of
condominiums conducted before bids were opened to the public.
# Political Studies Association 1997. Published by Blackwell Publishers, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main
Street, Malden, MA 02148, USA.
640
The Politics of Privilege
elements not fully captured in any one of the paradigms. Together, they examine
the variability of the `take' among comparable acts of corruption, the processes
by which advantages are allocated, the way in which gains obtained are
invested, the manner in which corruption aects the operation of markets, the
impact of corruption on a state's capacity to execute a range of essential
developmental tasks, the role that corruption may play in promoting or
impeding the institutionalization of both state agencies and political parties,
and the relative presence of factors able to mitigate or counterbalance the
prevalence of corruption. The conclusion summarizes key lessons, and proposes
paths that may be fruitful in further comparative research.
Surveying the Paradigms: Rents, Corruption, and Clientelism
The quest for and allocation of particularistic advantage has long been the
subject of academic investigation, but the language and concepts employed in
this process of inquiry have varied across time and across disciplines. Each of
the major paradigms ± rents, corruption, and clientelism ± oers important
insights to political economists, yet all would be enhanced by a more concerted
eort at cross-fertilization. The following is a preliminary attempt to encourage
useful hybrids.
The most recent addition to the theoretical repertoire is, of course, the
literature on rents that has emerged from economics. The strength of this body
of thought is its attention to market processes, and it is not surprising that rent
theorists have achieved prominence in an era in which markets are widely
praised and governments routinely reviled. Rents are, by de®nition, created
when the state restricts the operations of the market. The processes of rationing
foreign exchange, curbing free trade, and licensing some aspect of economic
activity ± to give just a few examples ± serve to create `rent havens' that can be
captured by some combination of well-placed businesspersons and bureaucrats.
The ®ght for privilege, known as rent-seeking, encourages `directly unproduct-
ive pro®t-seeking' activities ± sometimes legal (e.g. lobbying) and sometimes
not (e.g., bribery). Overall, the focus is on `the rent-seeking society'; analysis of
the speci®c types of state structures in which this behaviour most thrives is
commonly thwarted by distrust of states in general. Because rent-seeking is said
to be `directly related to the scope and range of governmental activity in the
economy, and to the relative size of the public sector',2 the solution is self-
evident: `the state's sphere should be reduced to the minimum, and bureaucratic
control should be replaced by market mechanisms wherever possible'.3
Indeed, a major problem with the rent-seeking literature is its often strong
ideological bias. The majority of theorists
are obsessed with demonstrating the negative impact of government on
the economy. They view competitive markets as the most socially
ecient means to produce goods and services . . . [and] do not treat the
2 J. M. Buchanan, `Rent Seeking and Pro®t Seeking', in J. M. Buchanan, R. D. Tollison and
G. Tullock (eds), Toward A Theory of the Rent-Seeking Society (College Station, Texas A & M Press,
1980), p. 9.
3 P. Evans Embedded Autonomy: States and Industrial Transformation (Princeton NJ, Princeton
University Press, 1995), p. 24.
# Political Studies Association, 1997
PAUL HUTCHCROFT
641
eects of government intervention as variable, sometimes reducing and
sometimes stimulating social waste.4
This bias is best refuted by Peter Evans, who points out that many bureaucracies
do indeed possess the capacity to restrain rent-seeking tendencies and promote
collective eort among individual oceholders; `strict adherence to a neo-
utilitarian logic,' he asserts, `makes the existence of a collective actor dicult to
explain and the nightwatchman state [favoured by neo-utilitarians] a theoretical
impossibility'. His analysis of the role of states in economic transformation,
moreover, highlights major problems with the assumption that competitive
markets `are sucient to the kind of structural transformation that lies at the
heart of development'.5
Ideological bias aside, there are at least four other major de®ciencies with
much of the rent-seeking literature. First, even if a bureaucracy is pared down to
a minimalist role, it is likely to retain ultimate responsibility for such basic tasks
as building infrastructure and providing law and order. As long as bureaucrats
continue to be tasked with supplying these goods, there remain `rent havens'. In
settings where (to quote Weber) individual bureaucrats can easily `squirm out of
the [bureaucratic] apparatus', the provision of public goods may bring signi®-
cant opportunities for private pro®t.6 Even in a minimalist state, for example,
motor vehicle licensing authorities will potentially be able to extract an extra
unocial sum for a scarce resource, and police may be able to transform their
public power into lucrative kidnap-for-ransom schemes. Privatization by no
means resolves the dilemma: the process of bidding and negotiating with private
companies seeking to build and maintain a road, for example, can provide
enormous rent havens easily tapped by those with the most favourable political
connections. Because rent theorists have little to say about such post-market-
shrinking problems, the solution necessarily shifts away from market remedies
and toward the realm of politics and public administration.
Second, the literature on rents generally neglects vitally important political
elements of government-business relations. As Jomo and Gomez explain, there
are major problems with the presumption that rents will be allocated solely
according to market processes ± and a `certain irony' that
the very people who assume that markets have been distorted with the
creation of rents also seem to assume the existence of perfectly competitive
markets for rent capture involving a fully competitive process. Rent-seeking
may, in fact, not be very competitive ± due to the clandestine, illegal,
closed, exclusive or protected nature of rent capture processes ± thus
limiting rent-seeking activity and keeping down rent-seeking costs.7
The allocation is likely to be based not only on the market but also on a range of
non-market considerations, including ethnic,...
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