Corruption and state capture

In corruption studies, a field largely unheralded in the Philippines, there is a concept with growing global impact that has not drawn much attention yet in the country: state capture. Corruption studies expert Daniel Kaufmann defines state capture as “the undue influence by members or groups in the economic and political elite in shaping the rules of the game: morphing and distorting the laws, policies, regulations and institutions of the state to their own advantage at the expense of society.”

The Philippines has been rocked by scandals of grand corruption over the past few decades and is now confronted with a flood control scam said to be the biggest corruption scandal in the country’s history. Has the scale and level of corruption in the Philippines reached that of state capture? If so, what is the relationship between corruption and state capture?

The idea of the Philippine state being “captured” or “captive” is not really new, but characterizations of such capture have usually been subsumed to broader characterizations of the state as being “weak,” “soft,” “patrimonial,” or “anti-development.”

Temario Rivera described the Philippine state as being “a weak state” that is a captive of “dominant social classes and powerful political families and clans.” Jose Abueva portrayed the Philippines as “a ‘soft state’ dominated and perpetuated by the political and economic elite,” specifically “‘rent-seeking’ oligarchs,” and “rich and powerful politicians and their families.”

Paul Hutchcroft characterized the Philippines as a “patrimonial oligarchic state” — a weak state preyed on by “a powerful oligarchic class that enjoys an independent economic base outside the state, yet depends upon particularistic access to the political machinery as the major avenue to private accumulation.” While agreeing with Hutchcroft, Walden Bello argued that the Philippines’ weak state was manipulated as well by powerful external forces — the US, the International Monetary Fund, and the World Bank.

At the global level, corruption studies scholars started studying “state capture” as a specific and significant area of focus at the turn of the millennium. Joel Hellman, Geraint Jones, and Kaufmann introduced the concept in a study of transition economies in Eastern Europe and the former Soviet Union, in which “oligarchs who ‘capture the state’” increasingly drew their attention.

The concept of state capture has evolved. From an initial focus on non-state actors capturing the state, some attention has turned to state actors being captors as well. “Very powerful non-state and state actors,” notes Kaufmann, “often collude in capturing the rules of the game.” Moreover, the concept has been applied to many more countries, including some democratizing countries or even resilient democracies.

In the very first global report of the State Capture Index (SCI), released in September last year, the Philippines had a percentile rank of 65.4 in 2020-2022, with the scoring ranging from 0 (no capture) to 100 (full capture). The SCI measures state capture based on three indicators: corrupt and captured rule of law; captured political access and policy; and capture enabling environment. The Philippines was classified in category 4 (50-75 percentile), not the sixth and worst category (90-100 percentile).

The SCI has come up with a less damning assessment of state capture in the Philippines than many political scientists. While Rivera, Abueva, Hutchcroft, and Bello characterize the Philippine state in different ways, they all agree in categorical terms that it has been captured by the country’s economic and political elites (with Bello adding external forces as well). Nonetheless, the SCI attests that state capture has a grip on the country at least to a certain extent.

Reversing state capture in the Philippines is not as daunting a task as in category 6 countries, such as Russia, Equatorial Guinea, and Turkmenistan — all closed autocracies where opposition and criticism are thoroughly suppressed.

What is distinctive about the Philippines is that the entrenchment of the political elite has come about not through autocracy but through the proliferation and “fattening” of political dynasties.

As in other “captured” states, corruption and state capture in the Philippines mutually reinforce one another. Oligarchs and corrupt public officials engage in rent creation and extraction. Through the intercession of corrupt politicians, the government creates rent through laws or policies granting licenses, subsidies, monopolies, quotas, protection, and other privileges to the limited resource, and oligarchs are given preferential access. The oligarchs share the rent extracted with public officials through bribes or kickbacks. Part of these end up in the electoral campaign chests of corrupt politicians who then resort to patronage and vote-buying to win elections.

Corruption weakens state institutions. Bribes, kickbacks, budget insertions, and overpriced or ghost projects all chip away at state institutions, producing dynasty-infested national and local governments and a politicized and inefficient bureaucracy, as well as promoting a culture of impunity. Corruption expands the influence of oligarchs and dynastic politicians in the making of laws, budgets, and appointments that advance and protect their private interests. By systematically gaining control of institutions, policies and resource flows, they eventually succeed in shaping the very rules of the game — state capture.

State capture, in turn, perpetuates and deepens corruption. Once corrupt politicians gain dominance in the policymaking process, they produce laws that ensure greater rent access for predatory businessmen; budget frameworks that enable more insertions and discretionary funds; low transparency standards; and weak audit powers. Big corporate interests capture regulatory agencies; monopolies and cartels prosper. Dynastic politicians turn public office into a family asset instead of a public trust. State capture renders corruption no longer risky, as corrupt officials further weaken or even subvert the courts. Instead of being episodic, corruption becomes systemic. Instead of being a crime, it turns into a mode of governance. At certain times, bribes become superfluous, as state capture simply generates policies and institutions that benefit oligarchic and dynastic interests.

While the Philippines is yet far from falling into SCI’s category 6, it has to watch out. State capture in the Philippines has been worsening — up from a percentile rank of 58.5 in 2011-2013. More scams and the continued spread and “fattening” of political dynasties will deepen state capture.

Nathan Gilbert Quimpo, who has retired from teaching Political Science and International Relations at the University of Tsukuba, Japan, taught an online course on “Corruption” at the Ateneo de Manila University last year and earlier this year. He is now based in Amsterdam, the Netherlands.