Corruption and the Logic of Political Survival Through Extractive Institutions

This article is the second in an editorial series titled “I do not think this word means what you think it means.” The purpose of the series is to encourage dialogue about commonly (mis)used terms to better understand the interplay of theory, practice, and culture. The editorial team encourages you, our readers, to join this conversation by commenting on this post, tweeting at us @DemSociety, and submitting your own short articles to this series.

Currently, the most applicable theory to explain the interaction between states, governance, and corruption is the logic of political survival or selectorate theory. When state institutions are primarily geared toward maintaining the political survival of a small winning coalition, they extract resources from those outside that coalition.[i] Extractive institutions are those in which a small group of individuals does their best to exploit the rest of the population, whereas inclusive institutions involve many people in the process of governing.[ii] China operates as an exception to this theory through a consistent expansion of their economy and highly efficient public services. 

The Chinese political system is centralized and uses resources wisely to develop human capital and achieve growth, despite the absence of inclusive institutions. This strategy of growth through efficiency rather than inclusive institutions presents a deviation from how we understand the institutional weakness of the selectorate theory. Traditionally, countries create extractive institutions to maintain political survival  at the expense of innovations in technology and education that would give more of the population economic and political leverage. Governments use activities such as consolidation of markets, regulation of the size of the middle class, and appeasement of the winning coalition to maintain large extractive institutions. 

Corruption is most aggressive when the government extracts wealth from the poor and middle class by keeping taxes high to maintain the loyalty of the winning coalition. This model creates weak national institutions wherein power is centralized and can be prone to political turmoil through unilateral action. In China, steady growth and a managed middle class has not translated to massive institutional reform and the number of people with influence remains proportionally small. Meanwhile, decentralized authority can mitigate this problem by encouraging the creation of institutions that rely on a larger support base. An expansion of the winning coalition to include the poor and the middle class puts pressure on the government to be more inclusive and accountable. This expansion creates different metrics for government effectiveness that include increasing the quality of public goods through combating corruption, as this becomes more conducive to the development of a modern economy.   

Maintaining the quality of public services — such as rule of law, property right enforcement, education, and infrastructure investment — to appease the winning coalition plays a substantial role in retaining power. When the winning coalition determines that the state is not providing quality leadership, then alternative leaders will replace them. When the winning coalition is small, this can occur quickly because new coalitions involve personal relationships and similar political incentives. This dynamic is rampant throughout highly corrupt countries, irrespective of cultural factors and the degree of access to state representatives. 

When these power dynamics shift and social and economic mobility increases, then institutions become more responsive to the demands of their citizens as the winning coalition includes a variety of different interests. In China, the winning coalition is more diverse with different interests, but mobility is strictly managed by the government, which excludes certain interests from the mechanisms of power that prioritize interests from the top down. Traditionally, a diversity of interests allows for the destruction of extractive institutions that maintain the status quo, which may include the diffusion of political power to local governments and more competitive economic industries. This diffusion of power would force the winning coalition to lose control of the flow of revenue to the state, removing the systemic opportunity for corruption and dissociating economic prosperity from political survival. In China, there is no separation between economic prosperity and political survival which keeps the winning coalition small and maintains access to corruption absent top down reform. 

Cultural factors can play a significant role in how informal power structures can subvert the diffusion of power and the establishment of inclusive institutions. But, strong state institutions evolve specifically to separate themselves from cultural proclivities that can corrupt bureaucratic functions. Many extractive institutions, like those in the Soviet Union, marginalized cultural forces like religion to ensure state dominance. This marginalization is not merely a dynamic of culture versus communism, but a promotion of institutional independence and modernization. 

For example, Chile maintains a very similar culture to its other Latin American cousins. Yet, through the stable institutions of the Chilean government, state security services do not view their relationship with the people as one of the exploitation of the monopoly of force. In China, there is little separation from cultural power and state power because the government views the promotion of cultural hegemony as an element of state responsibility and the maintenance of the public good. Some would argue that culturally societies view the quality of public goods differently, and the absence of corruption through institutional independence does not necessarily imply better services. As China combats corruption, it does so not only as internal reform, but as a social engineering effort. 

As fighting corruption becomes a tool of political survival, bureaucratic mechanisms incentivize anti-corruption initiatives.  As the middle class increases and more of the population is interacting with a greater variety of state services, average citizens will demand access to institutions that fight state corruption. More of these inclusive and independent institutions lead to higher interpersonal trust which shapes cultural expectations of efficiency and the reliability of impersonal relationships. Within China, fighting corruption through government initiatives presents anti-corruption efforts not primarily as a cultural empowerment of public responsibility, but as a function of the state. Combating corruption is lessan aspect of good governance, but instead merely an internal bureaucratic function. 

Culture may explain corruption in the short term. However, political survival explains why specific patterns continue to be reproduced even when political parties lose power. The models that form corruption are entrenched by the incentives to stay in power and maintain access to extractive institutions as a means of funding the state. The state does not develop inclusive institutions because there is little incentive to plan beyond elite personal relationships. Within the winning coalition, there is a significant amount of importance placed on personal relationships as opposed to more merit-driven impersonal relationships. The focus on short term investment in the winning coalition for the sake of maintaining political survival avoids investing in state functions that undermine personal relationships. 

To maintain political survival, countries develop impersonal relationships of exchange of natural resources with countries and corporations. These third-party actors do not require the constant maintenance of personal relationships and are unlikely to upend the social order. These industries often center around small groups of powerful people, which keeps the middle class small and allows the state to strictly control the flow of revenue. As some states diversify their economies, impersonal relationships become more necessary but are difficult to maintain in a state with limited bureaucratic capacity.   

The appeal of the China model is its highly efficient state services that can develop impersonal relationships while keeping power concentrated within the government. Without inclusive institutions, corrupt personal relationships are more capable of preserving the winning coalition. The Chinese model is demonstrating that, with steady growth and efficient state services, countries can manage corruption as part of a government function and not one where citizens hold the government accountable through impersonal relationships. As modern economies compete with one another for access to resources, the developed world can utilize impersonal relationships to gain favor within corrupt countries. China maintains both the capacity for profitable personal relationships and efficient impersonal relationships.  

As modern economies see personal relationships as currency in the developing world, they will be more inclined to protect those relationships through whatever means necessary, creating an incentive to weaken anticorruption standards within the developed world. In China, anti-corruption efforts are less of a systemic answer to a developmental problem and more of a tool to punish officials who have been determined to be detrimental to state initiatives and public trust, not a systematic answer to a development problem.     

William Condon was a Supply Officer with the United States Marine Corps before starting his graduate degree in Governance and Democracy at Georgetown University in 2018. He was a member of an infantry battalion and participated in two deployments to Japan and South Korea. As a graduate student, Will has had the opportunity to attend a variety of classes on governance and corruption, specifically in Latin America. Concurrently, he has been serving in the United States Marine Corps Reserves as a Logistics Advisor with Marine Corps Advisory Company A in Anacostia, Washington DC. Will is also an assistant editor of Democracy and Society.

[i] Bueno de Mesquita, Bruce. 2003. The logic of political survival. Cambridge, Mass: MIT Press.

[ii] Acemoglu, Daron, and James A Robinson. 2012. Why Nations Fail: The Origins of Power, Prosperity and Poverty (1st). 1st ed. New York: Crown