Corruption has come onto center stage in India’s public discourse in the last three years with mega scandals exposed by the country’s Controller and Auditor General, and agitations against corruption by citizens’ movements, most notably the nation-wide movement led by Anna Hazare. Economists say that corruption affects economic growth, and have made various calculations about the cost of corruption in the lives of citizens and the damper of corruption on the growth of the economy. At the same time, social scientists worry about corrosion of societal values by corruption. And all agree that corruption has become a cancer in India and that reduction of corruption is essential to leap-frog India into the 21st century.
In what ways is Indian society corrupt, and how can the cancer of corruption be rooted out of the system, are questions that are engaging Indian citizens and policy-makers. Therefore the first question is what is corruption? How will we know when we see it, so that we can weed it out of our society and our economy.
Do in Rome as the Romans do is an exhortation to follow the customs and laws of the land. ‘Give unto Caesar, what is Caesar’s—his picture is on the coin of the land’, Jesus Christ, advised his followers. Follow the law. Respect money. These are principles that citizens adhere to in almost all countries. However Jesus was pointing to the other side of the coin—to give unto people, the community, and to God, what is not Caesar’s, and what cannot, and should not be paid for with money.
Here is a personal story from the land of Jesus’ birth that raises some fundamental questions about the laws countries make and the values citizens choose to live by.
I was crossing the Israeli customs barrier on the Jordan River, that separates Palestine and Jordan after a visit to Jerusalem at Christmas. There are two systems for travelers at the customs barrier. One for the common man. The other, an officially approved arrangement of ‘special handling’ for a fee which gets one ahead of the queue. The hefty fee for special handling is clearly displayed and private agents in uniform provide the service. The official agents seemed very friendly with the private agency staff: were the agents given any Christmas hampers, I wondered? The line seemed short so I opted to save money and go with the common folks. When many groups of people led by uniformed handling agents began jumping ahead of us, some of the common folks and I became quite concerned that we may miss our travel connections. An agent was quite annoyed when a common traveler complained about the favored treatment to some. ‘You could have also paid and got the special treatment too’, she said. ‘The rates are posted up there’.
A major concern of corruption in India is that the poor are compelled to pay bribes to get services they need. Therefore the Government of India is rolling out the Sevottam program and Citizens’ Charters, whereby all government departments must establish the service levels they are expected to deliver to citizens. Bihar and other states are also establishing citizens’ rights to timely service, with penalties for government departments who fail to deliver on time. Having recently observed the system at the border crossing between Palestine and Jordan, I posed a question in a seminar in Delhi on corruption and ways to improve service delivery. Would not the giving of an incentive to government servants to provide better service be a better way than imposing penalties for not delivering service? The riposte was that government servants should not be paid more to do what they should be doing anyway—that is what they are paid salaries for, aren’t they?
Could people not be given an option, I asked, like at the Jordan River? Pay more if you want better service, and this could also be a way to raise more revenues for the government. In fact an incentive could be given to the staff to sell more such ‘paid-for’ services by giving them a share of the increased revenues, someone added. But then people who may not be able to afford them will also be pushed by the staff to buy such services, was the counter. Moreover, if these better quality services are to be provided by private agencies, like at the Jordan crossing, there will be private gains, but how will government revenues increase? Soon we were embroiled in a rather ideological discussion about the pros and cons of privatization of public services intended for the common man.
Equal inclusion in framing rules
This story and the discussion suggest that corruption must be seen not only through the crude lens of what is legal, but also the sharper lens of what is right. Just because something is legal and official does not make it right. In fact, converting what is inherently unjust into a legalized system will not remove, but will embed corruption into the system.
This is the difficult question at the heart of the debate on ‘lobbying’. All citizens, and organizations representing them, have a right, in a democracy, to advocate their causes to government. Indeed, they must be enabled to do this. Political parties are means for citizens to advocate causes through elections and in Parliament. Hence they are legitimate institutions in democracies. And so are labor unions who represent the cause of workers. As well as civil society organizations that represent myriad interests. In the same vein, corporations too must have rights to represent their views to government. This brings us to another facet of corruption that has propelled corruption onto our TV screens and newspapers, namely ‘crony capitalism.’
A problem with processes of advocacy in democracies is the unequal access to financial resources between corporations and other institutions such as unions, civil society organizations, and even political parties. The quanta of corporations’ legal cash flows are in another league altogether compared to other institutions. Corporations get money from citizens for the many products and services they provide, and thus corporations (and businesses generally) are the engines of the money economy. (Government may be the next largest legal accumulator of money, through taxes.) Whereas their own sources of revenues for other institutions (unions, civil society organizations, political parties) through the fees they can charge their members and the few services they may be in a position to sell, are far less than corporations’ cash flows. Therefore they are much less able than businesses to offer inducements (when it is illegal), or to make transparent payments and donations (when it is legal), to obtain access to and win the favors of people in power. Hence any system that requires money to pay for advocacy services, legally or otherwise, puts business corporations, especially the largest ones, at a great advantage.
The consequence of the unequal access to money power between corporations and other institutions, such as civil society organizations and unions, creates apprehension in all societies, even ardently capitalist ones like the USA, that corporations may be misusing their power to shape the rules of the game. The history of how corporations have shaped US laws in their own favor is described by Ted Nace in his book, Gangs of America: The Rise of Corporate Power and the Disabling of Democracy (Barret-Koehler, 2003). While processes for all citizens to advocate their causes are necessary, legalizing lobbying merely legitimizes the unequal access of richer corporations to policy-makers.
Representative Institutions
What is the alternative then for advocacy to be encouraged in ways that are fair to all? One way would be to strengthen institutions that represent the common man (and common woman too, one must add), and to give these institutions a larger role in the policy-shaping process. Indeed, the emasculation of labor unions since the era of President Ronald Reagan may have caused the rising inequality in incomes between the top and bottom quintiles of American society, according to Robert Reich, in his book, Supercapitalism: the Transformation of Business, Democracy, and Everyday Life (Alfred A. Knopf, 2007).
The German model of capitalism has evolved differently to the American one. ‘Social dialogue’ is an established way in Germany for shaping policies regarding employment, the environment, and other matters that concern all citizens. An inclusive social dialogue requires good and strong institutions that represent the stakeholders. Therefore I was impressed, in a visit to Germany to study the German system of social dialogue, that unions, business associations, and political parties were all engaged in improving their internal processes of inclusion and representation. Unions are strong in Germany. And German law requires that all businesses, large as well as tiny, are members of regional chambers of commerce. The law also requires that these chambers are consulted in several matters. Moreover German law requires that all affected stakeholders must be involved in the law making process.
When the issue of corruption grabbed Indian civil society’s attention with Anna Hazare’s movement demanding civil society’s involvement in the framing of laws, several political commentators raised alarms about the encroachment by ‘non-representative’ civil society groups into the legitimate space of elected law-makers. Hazare clarified that civil society merely wanted to participate in the drafting of the laws, not in their passage which is the function of the elected Parliament. A similar concern is now expressed about the ‘interference’ by the Supreme Court (also in matters of corruption) into the legitimate space of government. My view is that these rumblings amongst Indian democratic institutions that we are hearing is the noise of democracy getting into higher gear, drawing on its reserves of power to go over obstacles to the country’s progress.
As economies grow, they evolve. New industries develop that require new capabilities for their governance. The awareness of citizens about what is happening increases with advances in their education, the growth of the middle class, the expansion of media and availability of information. Therefore new institutional capabilities for representation and regulation are required along with economic growth. Moreover the quality of the public discourse must improve too: to shift from ringing alarms to develop solutions; and from recriminations amongst citizens and institutions to a search for consensus.
The values we live by: a vision of our future
Laws alone will not eliminate corruption. By legalizing what is seen as black now as white hereafter, the quantum of black money can be reduced. But deeper-seated corruption will not be removed. Indeed, some new laws and market institutions that make legitimate and transparent what was clandestine and considered corrupt may legitimize deep injustice. Therefore an ongoing social dialogue is necessary, amongst and within various institutions that protect and represent citizens’ interests, about the values we wish to live by and the society we want to shape. The ‘economy’, which is measured almost solely in money terms, is only a part of our lives.
Ministers of the Indian Government have argued that the Supreme Court has no business to comment on the economy and make adverse remarks about the role of greed in economic growth. Jesus had asked his followers to look at the image of Caesar on the coin and asked them to render to Caesar what was Caesar’s. He also told them that there was a much higher kingdom of God to which they must turn.
Mahatma Gandhi’s image is prominently displayed on Indian currency. It was he who had said that while the Earth may have enough for everyone’s needs, it will not have enough for everyone’s greed. In the ongoing debate about corruption, an important distinction must be made between corruption for need and corruption for greed.
If society expects persons or institutions to perform legitimate functions but does not provide them with legitimate means to perform their roles, what should they do? We expect political parties to communicate extensively with citizens before elections. Since the cost of public communications has become very high with the proliferation of electronic media, how should they get the funds they need? At the other extreme, we expect our policemen to be ever vigilant, working long hours too. In fact our lives depend on this. But do we pay them enough to support their families decently? We hold them to a high standard of integrity and expect that they should find ways to live and perform within their legitimate means, and not be tempted by the inducements of those who want rules bent in their favor.
But what about those who have enough, and much more than enough, and yet indulge in corruption to get more? That is the stink from corruption in high places. When wealthy businessmen and rich politicians bend rules, or advocate new rules that can make them even more wealthy, what moral basis can there be for their defense of their own economic freedoms?
A final story. Two office bearers of an association of young Indian entrepreneurs met me some time ago, very concerned about corruption in the country. It had gone too far they said. Their members had compiled some twenty examples of corruption that they had personally suffered. Almost all of these, to their surprise, were demands to their members from middle level executives in large Indian companies and MNCs to whom they were suppliers to inflate invoice values and deposit surpluses into personal bank accounts. Why would people, who holidayed abroad, drove big cars, and lived in posh apartments, want to top up their incomes so much these young people wondered? Surely, it was greed and not need. In a society in which personal worthiness is judged by how much one has rather than how one earned it, corruption will be rampant.
To conclude: to eliminate corruption, new laws and new institutions will not be enough. For India to leapfrog into a more just and more inclusive world, we must also question the values we live by. What do we value most about our society: it’s GDP or its character?