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Why Capitalism Loves Corruption

Liberals try to shrug off corruption as a bug in our system, but it's really a feature – one that's been core to capitalism from the very beginning.

British politics has a corruption problem. Owen Paterson is only the latest name to draw attention to the everyday conflicts of interest in both Parliament and government: it’s a list that includes far too many others.

But that corruption should come as no surprise. The country is one of the epicentres of political corruption historically, and a key node in global corruption today. As Mafia expert Roberto Saviano remarked in 2016, there is good reason to think that the UK is ‘the most corrupt country in the world.’ The current government may be particularly brazen, but this ought to be understood in both a historical context and through current trends in neoliberal politics globally, rather than through the lens of the British exceptionalism espoused by moralising liberals these last weeks.

Britain is in fact the grandfather of corruption. As George Robb argues in his history of white-collar crime, the industrial revolution in Britain brought forth a new network of finance, insurance, and legal professions with which came corrupt practices like bank fraud, credit fraud, and stock fraud.

Britain successfully exported its culture of corruption into colonial governance, exhibiting itself in the endemic corruption at which the British colonialists were masters. Mulinge and Lestedi have shown how taxes introduced in Rhodesia (Zimbabwe) and Bechuanaland (Botswana) to create revenues for British colonial rule were sometimes collected through financial kickbacks for local leaders, which corrupted existing public roles and caused warped relationships that in some cases persist to this day.

The East India Company provided a template for the corrupt activities of multinationals today as they invaded more and more of modern-day India and Pakistan, widely utilising corrupt practices forgery and bribes alongside the violence of its private security force. Many of its employees, including its leader, Robert Clive, were actively embezzling funds from both the company and tax collection into their own private fortunes. At one point nearly a quarter of MPs were shareholders in the East India Company, and they dutifully voted in its interests, even if they conflicted with those of the Crown.

Eventually the East India Company would be taken over by the state, but writers have shown that the corrupt practices it instituted in part shaped the bureaucracy of modern-day nations—including constructing the idea that corruption is a problem inherent to the peoples of former colonised nations. Far from being a bastion of liberal probity, British history is dripping from head to foot, from every pore, with the blood and dirt of political corruption.

This history is foundational to contemporary corruption in former colonised nations, but the legacy has also continued domestically. The City of London and its imperial network of ‘offshore’ tax havens is the heart of global corruption. It is widely acknowledged even in the financial press that global money laundering flows through London’s finance and property market—a problem that meets little resistance from a government full of bankers. In both the classical liberalism of the Georgian and Victorian periods and the neoliberal politics of the (long) 1990s, the dominant view was that countries like Britain were models of ‘civilisation’ or ‘good governance’, when in fact in both periods, wealth was being created through—rather than in spite of—political corruption.

Since the financial crisis, there have been several major exposés about the extent of tax evasion and avoidance in the UK and its Overseas Territories (like the Panama Papers) as well as several major scandals that implicated senior establishment figures in political corruption (like phone hacking, expenses, and cash for honours). Each time, politicians have put forward piecemeal approaches to dealing with these problems, while very few people have been punished. This in turn built up a general sense of mistrust toward politicians, who were widely seen to be on the take—in part because quite a lot of them were.

This pervasive sense of mistrust has in turn served as an opportunity for abuse, with the authoritarian right wing appropriating much of the language of nominal ‘anti-corruption’ drives for its own ends. For example, hard-right leader Jair Bolsonaro came to power in Brazil after a corruption investigation that began by focusing on kickbacks and bribes in state-owned petroleum company Petrobras. Despite enacting laws to tackle corruption, President Dilma Rousseff was impeached; former president Lula went to prison following a bogus trial aimed at keeping him from standing for president.

Bolsonaro, backed by some of the high-profile targets of the anti-corruption drive, won his election in 2018 based in part on promises to ‘root out corruption’. He then appointed the judge who convicted Lula, Sergio Moro, as his justice minister. One of Bolsonaro’s own sons has since been charged with embezzlement.

In India, similarly, Narendra Modi’s BJP have utilised supposed anti-corruption drives, last year holding a laughable anti-corruption conference just as the pandemic was about to rip through a largely private healthcare system riven with corrupt exchanges, and as other corrupt practices continue to thrive. Both cases are proof of the usefulness of the rhetoric of anti-corruption to those most opposed to its reality, perhaps most clearly expressed in the anglophone world by President Trump’s famous stated intention to ‘drain the swamp’.

While Boris Johnson doesn’t make explicit use of this ‘anti-corruption’ rhetoric—perhaps because doing so would be too brazen, even for him—we have to challenge the absurdity of claiming that the UK is naturally against corruption. Political liberals like Ed Davey and Chris Bryant have used the scandal to talk tough, but both have profited from expenses and second job rules. Bryant was one of many MPs to compare the UK with Russia and China, arguing that political corruption is ‘not what we do in this country’, which is both ahistorical and ignorant of the economics of finance and the role British companies play abroad.

The ‘solutions’ offered so far this time around are based largely on fantasy. Liberal politicians and press have decided that raising MPs’ salaries, a toothless commitment to ‘more transparency’, and an improved Standards Committee are the sensible approach to tackling corruption. This response, steeped in British mythology, misconstrues corruption as a problem of individual morality, probity, or ‘natural justice’.

But corruption really comes down to relations of power, which in Britain are deeply politically and economically unequal. Corruption is a means by which the ruling class get their way, even when there has been some democratic or bureaucratic process instituted to allow citizens some power; it’s a means by which they prove they are above the rules that apply to others. That means that new rules may have a place, but their usefulness will be limited as long as they exist within a politics that grants the wealthy the sense that they are born to rule unchallenged—and therefore born to game the system. Put simply, corruption is an inevitable consequence of decades of capitalism concentrating wealth and power in the hands of an elite.

To seriously counter corruption, then, we have to radically expand democracy. You can bribe ten people, but it’s much harder to bribe 10,000. Constitutional reforms would all be a good start, but a genuinely progressive response to corruption is to make it clear this is a constitutive feature of liberal capitalism, not a perversion of it. As long as we privilege a few individuals as the anointed leaders of our society, and as long as we allow capital to flow unhindered and wealth of the few to grow exponentially, we will have corruption. A politics of anti-corruption can only be useful to the Left, then, if it is understood and articulated in terms of diffusing power through every institution—and every workplace—in the country.