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Key terms

Corruption and state capture

Corruption tends to be an individual action that occurs in exceptional cases, facilitated by a loose network of corrupt players. It is informally organised, fragmented and opportunistic. State capture is systemic and well organised by people who have an established relationship with one another. It involves repeated transactions, often on an increasing scale.

Our focus in this book is not on small-scale looting but on accessing and redirecting rents (defined below) away from their intended targets into private hands. In order to succeed, the perpetrators need high-level political protection, including from law enforcement agencies; intense loyalty to one another; a climate of fear; and the elimination of competitors.

The aim of state capture is not to bypass rules to get away with corrupt behaviour; the term ‘corruption’ obscures the politics that frequently informs these processes, treating it as a moral or cultural pathology. Yet corruption, as is often the case in South Africa, is frequently the result of a political conviction that the formal ‘rules of the game’ are rigged against specific constituencies and it is therefore legitimate to break them. The aim of state capture is to change the formal and informal rules of the game, legitimise them and select the players who are allowed to participate.

Power elite

We use the notion of a ‘power elite’ to refer to a relatively well-structured network of people located in government, state institutions, state-owned enterprises (SOEs), private businesses, security agencies, traditional leaders, family networks and the governing party. The defining feature of membership of this group is direct (and even indirect) access (either consistently or intermittently) to the inner sanctum of power to influence decisions. It is not a ruling class as such, although it can see itself as acting in the interests of an existing class or, as in the South African case, a new black business class in the making. Nor is it just the political–bureaucratic leadership of the state, which is too fragmented to mount a political project reliably.

The power elite, which is not necessarily directed by a strong strategic centre, includes groups that are to some extent competing for access to the inner sanctum and the opportunity to control rents. It exercises its influence through both formal and informal means. However, what unites the power elite is the desire to manage effectively the symbiotic relationship between the constitutional and shadow states. In order to do this, and in broad terms, it organises itself loosely around a ‘patron’ or ‘strongman’, who has direct access to resources and under whom a layer of ‘elites’ forms. These elites dispense the patronage, which is then managed by another layer of ‘brokers’ or ‘middlemen’.

Repurposing

The repurposing of state institutions is the organised process of reconfiguring the way in which a given institution is structured, governed, managed and funded so that it serves a different purpose from its formal mandate. Understanding state capture purely as a vehicle for looting does not explain the full extent of the political project that enables it. Institutions are captured for a purpose beyond looting, namely consolidating political power to ensure longer-term survival, the maintenance of a political coalition and its validation by an ideology that masks private enrichment with references to public benefit.

Rents and rent seeking

Development is a process that is consciously instigated when states adopt policies to reallocate resources, directly and/or indirectly, to redress the wrongs of the past and to create modern, transformed, industrialised economies that can support the wellbeing of society. To achieve this, state institutions must be used to reallocate resources from one group to another, or to support one group to enable it to overcome the disadvantages of the past. These allocations can be called beneficial rents.

However, once the state takes measures that result in a flow of potentially beneficial rents to specific economic actors (whether these are businesses, households or public institutions), there is competition to access these flows and this creates the conditions for rent seeking.

While legal, ethical rent seeking, such as lobbying or legal interventions, benefits certain groups, rent seeking can also be corrupt and lead ultimately to state capture and repurposing. Corrupt rent-seeking behaviour can undermine the state’s development agenda by diverting resources into the hands of unproductive elites. It follows that if beneficial rents are necessary for development to take place, a system is needed to counteract the inevitable competition to access them from being corrupted by those who gain leverage via political access, bribery, promises of future returns, and so on.

The literature on neopatrimonialism provides examples of countries that managed to accelerate development by effectively deploying beneficial rents to boost specific economic actors.¹ Limiting corruption was a key element of these programmes. The most successful ones tended to be guided by a long-term developmental vision and to centralise control of rents so as to limit overly competitive and destructive rent seeking. They never eliminated corruption, but they prevented it from corroding the development process. Centralised rent management can, of course, also be corrupted by power elites who use it to eliminate lower-level competitors in order to further enrich themselves and entrench their power positions.

Symbiotic relationship between the constitutional state and the shadow state

Drawing on the well-developed literature on neopatrimonialism, we refer to the emergence of a symbiotic relationship between the constitutional state and the shadow state.² The constitutional state is the formalised constitutional, legislative and jurisprudential framework of rules that governs what government and state institutions can and cannot do. The shadow state is the networks of relationships that cross-cut and bind a specific group of people who need to act together in secretive ways so that they can either effectively hide, actively deny or consciously ‘not know’ that which contradicts their formal roles in the constitutional state. This is a world where deniability is valued, culpability is distributed and trust is maintained through mutually binding fear.

Unsurprisingly, therefore, the shadow state is not only the space for extra-legal action facilitated by criminal networks, but also a place where key security and intelligence actions are coordinated. As extra-legal activity becomes more important, ensuring a compliant security and intelligence apparatus becomes a key priority. What matters is the symbiosis between the two, which is what the rent-seeking power elite emerges to achieve.

The symbiosis that binds the power elite consists of the transactions between those located within the constitutional state and those located outside the constitutional state who have been granted preferential access via these networks to the decision-making processes within the constitutional state. These networks have their own rules and logic that endow key players within them with the authority to influence decisions, allocate resources and appoint key personnel. In the South African context the Gupta and Zuma families (popularly referred to as the ‘Zuptas’) have comprised the most powerful node, which has enabled them to determine how the networks operate and who has access. They depend on a range of secondary nodes clustered around key individuals in state departments, SOEs and regulatory agencies.

Radical economic transformation

Although the official African National Congress (ANC) ideology of radical economic transformation is ill defined and lacks a discernible conceptual framework, such transformation is needed if the promise of 1994 is to be realised. Too little has been done to this end. However, because the notion of radical economic transformation is apparently used to mask a political project that enriches the few, subverts South Africa’s democratic and constitutional system, weakens state institutions and expatriates capital overseas, we differentiate between the ideological goal and the real intentions of ANC policy documents. We argue that a new economic consensus will be required that will entail very radical change, but without subverting the constitutional state. For radical economic transformation to become the basis of a new economic consensus it must, in practice, be achieved within the existing constitutional order and an appropriately enacted legislative framework. Contrary to what is stated in ANC policy documents, the power elite professes a commitment to radical economic transformation but sees the constitutional order and legislative framework as obstacles to transformation.

Political project

The political project of the Zuma-centred power elite is the manner in which power is intentionally deployed in ways that serve the interests of this elite. This project is legitimised, in turn, by an ideology that is repeatedly articulated by a specific (but ever-shifting) political coalition of interests (one that includes both the power elite and wider networks). Jacob Zuma’s abuse of power has enabled strategies that are aimed at promoting corrupt rent-seeking practices by preferred networks and the consolidation of power by an inner core around Zuma.

Clientelism

Clientelism is the exchange of goods and services for political support, often involving an implicit or explicit quid pro quo. It involves an asymmetric relationship – that is, a relationship of unequal power – among groups of political actors described as patrons, brokers and clients.

Notes and references

1For a useful overview see Kelsall, T. 2013. Business, Politics and the State in Africa. London: Zed Press.

2Kelsall. 2013. Business, Politics.