Saints or Thieves - Corruption and the Chinese Dilemma

08/13/2013 03:50 am ET | Updated Oct 12, 2013

At last, Bo Xilai is going on trial. The case against the former Politburo member brings to a climax the aggressive anti-corruption drive undertaken by the Chinese Communist Party. In fact, the new general secretary Xi Jinping has identified corruption as a threat to the very survival of the party-state. Some political commentators have proclaimed that severe corruption is inherent to China's one-party system and cannot be contained without anything short of changing the entire political system. Perhaps it is time to examine corruption in the larger historic and intellectual context.

Corruption, in its contemporary form, has been a subject of global attention and scholarship in the last twenty years. Before that, the Cold War shielded rampant corruption behind ideologies. Marcos and Suharto were corrupt but protected by the Western alliance and the same happened on the other side. Since then the amount of research and literature on the topic has been vast. So what have we learned?

First, a global consensus on corruption was formed, without much empirical data, very early in this 20-year period. The consensus went as follows: Corruption happens because of incomplete economic liberalization, lack of political competition, no independent judiciary, no freedom of the press, and a weak civil society. Furthermore, standardized measurement systems were developed to produce single-dimension indexes where corruption is for the most part equated with illegal bribery. According to such indexes, corruption is qualitatively the same across all countries and varies only in quantity. Transparency International's Corruption Perception Index (CPI) is the most authoritative among such indexes. Since the root causes are the same everywhere and the severity of the problem can be accurately measured, it was only natural to conclude that there was a standardized prescription, namely, economic liberalization (i.e. privatization), political opening (i.e. multi-party elections), independent judiciary, press freedom, and civil society. Professor Michael Johnston summarizes this development in his book Syndromes of Corruption.

Along with popular "how-to-get-rich" books, a myriad of "how-to" books were issued by respected institutions such as USAID's Handbook for Fighting Corruption, World Bank's Helping Countries Combat Corruption, UNDP's Corruption and Good Governance. But like their commercial cousins, there is only one problem to these "how-to" books: they don't quite work.

Take the example of Indonesia. After forty years of severe corruption during the Sukarno-Suharto eras, the country began to implement all the prescriptions in the "how-to" books in 1998. More than sixty political parties were formed to compete in elections, the press was set free, judges became independent, and companies were privatized. Yet, just about every study has shown corruption has gotten worse. In the words of Professor Andrew MacIntyre, Indonesia went from "one Suharto to hundreds of little Suhartos". Examples like this abound, particularly in the developing world.

In recent years, many scholars have begun to re-examine the dominant consensus. The academic world has learned that corruption is a complex, multi-dimensional, and multi-faceted phenomenon. Furthermore, corruption and its effects vary qualitatively across different places and are nearly impossible to measure (Williams & Beare 1999, Rose-Ackerman 1999).

The most commonly accepted definition of corruption is the abuse of public trust for private benefits. The most important two words are "public" and "private". However, the distinction between public and private varies considerably between stable and transitioning economies. In the developed West, clear boundaries between public and private properties have been defined for decades or even centuries. In a rapidly transitioning economy like China, the line is constantly shifting. What is public today could become private tomorrow. It is very difficult to define corruption and to measure it. In a stable economy even a small quantity of corruption can be very damaging, whereas in a transitioning economy the effects are much less certain.

Corruption is also multi-dimensional and takes many shapes. One example is what Johnston refers to as "influence market corruption" - particularly rampant in developed democracies. It is corruption that has been legalized (i.e. rule of law co-opted) in the forms of political contributions, special interests lobbying, and revolving doors. The United States, for example, ranks very high in TI's Corruption Perception Index - meaning low-level of corruption. But the American people seem to disagree. Seventy-seven percent of Americans say elected officials are influenced by financial contributors vs. 19 percent say they are led by the best interests of the country (Gallup); 59 percent of Americans say elections are for sale vs. 37 percent believe they are won by the best candidates (Gallup); 70 percent of Americans say the political system is controlled by special interests and not responsive to the country's real needs (Newsweek Poll); and 93 percent of Americans say politicians do special favors for campaign contributors (ABC News & Washington Post Poll). Under normal circumstances one would say such numbers represent rather wide perception of severe corruption. Yet they are never counted in any of the ranking systems because these acts are legal.

Now let's consider the case of China. Corruption is not new. Every dynasty suffered from it. But the root causes of Chinese corruption are rather unique. One of them is embedded in the DNA of the Confucian Mandarin class - shi da fu - the centuries old non-hereditary and meritocratic ruling bureaucracy. The shi da fu class is defined by its moral claim that Mandarins should be selflessly devoted to the people, as Fan Zhongyan stated, "first in worrying about the world's troubles and last in enjoying its pleasures". Over many centuries, the cultural expectations the Chinese people have for their paternalistic rulers have conformed to this moral standard. In contrast to this claim, Confucius also used the term xiaokang to describe an orderly society with comfortable means. Here private desires and personal interests including those of bureaucrats are accommodated. And, of course, the party proclaims to be building for China exactly that - a xiaokang society. These two concepts have been in conflict in Chinese officialdom for centuries and represent the root cause of corruption.

We can recall the story of Hai Rui, the corruption-fighting minister in the Ming dynasty during which officials' salaries were the lowest, anti-corruption campaigns were the fiercest, yet corruption level stubbornly remained the highest. Hai Rui, so strict on himself and his government salary was so meager that he could barely support his family, was said to eat meat only once a year on his mother's birthday. His two wives both committed suicide. This disconnect between political authority based on a selfless moral claim and economic realities is at the core of persistent official corruption. A rich Chinese citizen's dinner could cost more than the entire monthly salary of Wang Qishan - the Party's Politburo standing committee member in charge of fighting corruption.

During the first 30 years of the People's Republic, the level of corruption was low because nearly everything was public. Market reforms brought about the emergence of private property and along with it the byproduct of corruption exacerbated by the growing disparity between public service and private wealth. The party inherited the moral claims of the Confucian Mandarin class, consistent with the expectations of the people, and its officials are faced with the unenviable and mutually exclusive choice of being either saints or thieves. Given this deeply rooted cultural tradition, neither Singapore's high-salaried bureaucracy nor America's revolving door approach could gain legitimacy with the Chinese public. Here lies the dilemma and no "how-to" books on sale today offer a solution to this problem.

We are discovering that the causes of corruption vary across different countries and solutions should not be ready-made, imported, and applied without consideration for existing institutional characteristics and cultural backgrounds. For China, instead of scrapping existing institutions and replacing them with imported ones, the existing institution of the party is the most viable vehicle to contain corruption and should be strengthened. If the country were to adopt the checks and balances provided by the division of political power into three branches, as advocated by some experts, the result could very well be the current quantity of corruption times three.

Back on the ground, all of China is riveted by the current spring-summer offensive. Since Bo Xilai's arrest, many ministers and mayors have been detained and prosecuted. Many more officials live in fear of being caught on camera hosting a fancy banquet or wearing an expensive wristwatch. Some experts say the campaign style anti-corruption drive, like many before it, is unsustainable because it attacks the symptoms but does not cure the disease. True, it is not elegant institutionally and its effects might not last very long. But the current campaign is so harsh that it will most likely reduce corruption significantly in the next several years. Of course, corruption will inevitably come back and grow to a level when another campaign would be required. Not an ideal approach but sure better than theoretical solutions that flop in reality.

While the inherent shi da fu conflict can never be resolved and deepens corruption in a down cycle, the Confucian Mandarin ethos and the party's instinct for self-preservation could combine to effectively check corruption in an up cycle. And the country seems to be in such an up cycle now. The saints are on the march and the thieves are in retreat. Let it continue.

Eric X. Li is a venture capitalist and political scientist in Shanghai. This essay is adapted from a talk given in July 2013 at an anti-corruption conference organized by the European Economic and Social Committee in Brussels. It was published in the South China Morning Post on August 13, 2013.