The incentives for (controlling) corruption under counter-elite
capture can be understood in comparison with elite capture. The
leaders of counter-elite capture are less likely to come from economic
elites. Thus, they may demand more (public) resources even
for their private consumption. Moreover, they may need resources
to distribute among the sections of society which helped them to
capture power. The need for such redistribution is much more
crucial for the counter-elites as compared to the elites. Hence,
counter-elite rulers are likely to capture a greater part of the public
resources. Some of these could manifest as corruption in both legal
and economic terms.
We are not taking a moral view here. It could be that the economic
elites had historically enjoyed greater access to resources,
and some parts of this history could be very extractive or exploitative.
Moreover, the legal system is likely to legitimise such historically
acquired assets and access to resources. Hence, elites may
have lesser needs to meet their private consumption through public
resource in the way it is constructed. Such use can be interpreted
as corruption in legal terms. Thus, the elites may be seen as less
corrupt in legal or common sense terms.
Counter-elite capture is to be seen as part of redistribution of
assets or endowments in society. Whether such redistribution
leads to more resources for the leadership of counter-elites or for
the people at large is a moot question. Such changes in the regimes
of governance will lead to redistribution of resources even when
there is no formal or legal redistribution, such as land reforms in
a country. Hence, the acquisition of a greater share of the public
resources, if it happens under counter-elite capture, can also be
taken as part of a dynamic redistribution happening in society.
How does this redistribution shape corruption in an economic
sense? This depends on the means by which counter-elites corner
greater parts of public resources. If their government imposes a
greater amount of (lump sum) tax on some sections of society,
and this additional resource is distributed (through cash transfer)
among another section of society, then there could be minimum
social losses or economic corruption. There could be some loss
due to the diversion of productive effort to corner a greater part
of redistributed wealth, and also to avoid such imposition of taxes.
However, such window of efficient redistribution may not
exist for the counter-elite rulers. Hence, what they do in real
world to transfer greater amount of resources for themselves and
to their supporters may lead to economic losses and corruption.
For example, one way of such transfer to their supporters could
be to allow (passively) the lower tier of political functionaries to
indulge in corruption. This can be an informal tax on production
and consumption, like what the mafia extracts from the traders or
industrialists. This can be costlier economically because some beneficial
economic activities may not take place due to the expected
loss arising out of such potential payments. As some of these economic
activities are based on long-term investments, a decline in
such investments may lead to a dampening of economic activity
for a reasonable period of time.
The counter-elites may try to extract resources from the existing
capitalist (industrialist) class, as they could be seen as collaborators
of the previously ruling elite. The new rulers may establish
collaborative relationships with the existing industrialists over a
period of time or with newer ones. Through this process, counterelite
capture may lead to a different type of crony capitalism, and
in this way it may not be very different from elite capture. Counterelites,
like elites, do not have much incentive to control monopoly
behaviour, since the dependence of their support base on markets
could be lower, and the rulers can share a part of the extra-normal
profits created. Thus, if we reckon the persistence of monopoly
practice as a form of corruption, counter-elites and elites may not
be significantly different when they control the government.
Another form of corruption arises out of the demand for breaking
public rules created to address market failure (including public
goods, externality and so on). The counter-elites, who have captured
power, at the initial stages, are likely to have a lower demand
for public goods in general (since their private consumption is
likely to be lower). Moreover, the leaders of the counter-elites are
marginally more accountable to their support base (compared to
the previously ruling elites), which also have a lower demand for
public goods. This may have an implication for the rule of law
made for public purposes. The new rulers and their support base
may not see following such rules to be very important. Moreover,
the breaking of such rules through corruption could be resorted
to, if it could add resources to the counter-elites for redistribution.
Thus, one may see a greater tolerance of policemen collecting bribes
and facilitating the breaking of rule of law or of similar acts. The
difference between the elites and counter-elites here is the former’s
higher demand for public goods and lesser requirement to keep
sections of lower tiers of rent-seekers happy.
The purpose of this section is not to argue that it is inevitable to
see an increase in corruption under counter-elite capture. Instead,
the position is that one should not be surprised to see an increase
in corruption at this stage, even though the capture of power by the
counter-elites is immensely important as part of democratisation
and positive political transition.
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