Is capitalism always corrupt?
In the light of the drip-drip of revelations over recent weeks and months about the behaviour of business leaders, particularly in the financial institutions, a number of commentators have suggested that what has been demonstrated is that unregulated capitalism will become inherently corrupt, as the instincts of the key movers and shakers in a capitalist economy are corrupt and they are only held in check through effective regulation. In fact, this thesis is not new – it was suggested in an interesting (if flawed) book by John Girling, Corruption, Capitalism and Democracy, published in 1997 by Routledge. In this the author suggested that there is an inherent contradiction, or clash, between the public service ethos of democracy and the private gain imperative of capitalism, resulting in corruption wherever the latter is not held under strong control.
It could be thought that the news over recent times gives strong credence to that argument. How can anyone justify the apparent lunacy into which financial institutions slipped for no better reason than the maintenance of bonus payments for managers; or what we have just heard about personal (but carefully disguised) loans by a bank to its chairman? Not to mention all the stuff we discovered a few years ago about Enron and WorldCom.
And yet, it is facile to suggest that corruption is somehow symptomatic of capitalism, or even of capitalism only. When the Soviet Union and its satellite states went under in the early 1990s, one of the initial things we discovered was the systematic corruption which had pervaded the upper levels of the system. Furthermore, we know that a number of countries with authoritarian but left-leaning governments (Zimbabwe being an extreme example) have demonstrated huge and often violent levels of corruption.
It seems to me that corruption is always a risk that we run, under any system of government, when there is a sustained period of untroubled economic or political development, such as a sustained boom in a market economy, or a dictatorship without any visible or effective opposition. Recent events have demonstrated the need for vigilance, but perhaps also suggest that every so often a disturbance is needed to clean out unacceptable practices and wholesale lapses of ethics. And while of course it is a disaster when a recession deprives people of jobs and security, it may at least have the side effect of pushing to the surface the reprehensible behaviour of those who have become arrogant.
The sometimes suggested response – greater levels of regulation – is not always ideal, as its main effect tends to be to bureaucratise behaviour and inhibit initiative; but vigilance is always needed, and the determination to ensure that corruption is never accepted as one of the normal characteristics of public or private conduct. And no system can afford the complacency of a belief that it is immune to such risks.Explore posts in the same categories: economy, politics comment below, or link to this permanent URL from your own site.