Kleptocracy: How Power Turns into Wealth
Corruption is an ancient phenomenon. Historians say that even the sacrifices made to the gods by our distant ancestors can be considered a prototype of bribes. Corruption can stem from personal interest, the desire to ensure security, the ambition to climb the social ladder, or the need to bypass bureaucracy. Despite efforts to eradicate it through free media, increased literacy, and societal transparency, this phenomenon remains widespread today. The process is slow and uneven; in some places, the situation is even worsening.
Kleptocracy, the subject of this article, is the highest form of corruption where the beneficiaries are those in power. All efforts of such a regime are aimed at self-preservation.
Terminology poses the first difficulty. Why is Country A, where a group in power steals taxes and resources, considered a kleptocracy, while Country B, where a similar group commits the same acts, is deemed a developing state with “its own difficulties”? Could the difference lie in the manner of coming to power or the size of the group of beneficiaries? Or perhaps the key difference depends on the source of income?
In fact, it makes no difference how power was obtained, how many people participate in corruption, or whether the country has oil (resource-based economies will be discussed later). Kleptocracy is primarily a vertical power structure focused on its own enrichment, sustained by elements that protect it. Control of the military, bribery, nepotism, suppression of independent media, and legal manipulation — such as changing laws and controlling the judiciary — are powerful shields that protect kleptocrats and allow them to maintain power and wealth. While corruption can be a large-scale problem in a country, it often stems from the bottom and does not necessarily require systemic integration.
However, kleptocracies have their own tendencies, such as demonstrative consumerism. It is rare for a kleptocrat to refuse luxury items in their home. In the 21st century, this excessive consumption is no longer a trend. The culture of minimalism and sharing has made the idea of excess consumption seem so wild that social pressure from below has long forced political figures to switch to bicycles and even adopt a minimalist wardrobe.
Dynamics: A Look into the Past and Present
Contrary to popular belief, kleptocracies are not limited to any one region or political regime. Currently, there are about a dozen of them, although there is no clear consensus about some countries. The list includes Turkmenistan, Uzbekistan, Equatorial Guinea, North Korea (DPRK), Venezuela, Saudi Arabia, Iran, Myanmar, Angola, and Russia.
Some countries show signs of kleptocracy but are not clearly considered as such, including Afghanistan, Eritrea, and Azerbaijan. Indonesia, the Philippines, Ukraine, Kazakhstan, and the Democratic Republic of Congo (formerly Zaire) are actively fighting corruption at the institutional level. The list is so diverse in terms of government form, GDP level, literacy rate, medical standards, cultural, and religious aspects that any attempt to definitively stereotype kleptocracies is simply inappropriate.
The number of countries described as kleptocracies has decreased compared to the 20th and early 21st centuries. Some countries have made significant effort to combat corruption, while in others, the fight continues. The key to this progress is transparency. In the era of globalization, we can monitor everything: the state monitors the citizens, and the citizens monitor the state. This has allowed for the emergence of entirely new laws and institutions. The global trend towards the desacralization of power introduces new norms, such as the mandatory declaration of income by civil servants. While this does not entirely prevent corruption, it is a step in the right direction. This is a relatively recent phenomenon; even in the highly transparent United States, civil servants began declaring their income only in 1978. Overall, the trend is very positive.
The President Stole My Heart (and $5 Million): The Personalism of Kleptocracies
We often think of kleptocracies and corrupt governments in the context of certain individuals. This is exactly how it is presented in the media, which makes it difficult to analyze the situation in depth. Concentration on the personal qualities of the ruler prevents an objective assessment of the weakness of institutions, ineffective laws, lack of social mobility, and inherited poverty. However, there is indeed a tendency towards the depersonalization of kleptocracies compared to the last century. The concentration of wealth in the hands of one individual and his family is no longer relevant, even in monarchies like Saudi Arabia. While the Kim dynasty in North Korea is well-known, even there, the circle of beneficiaries is expanding. In their case, enrichment is not even the main motivation; rather, it is paternalism with a gun in front of your face, demanding absolute loyalty and obedience.
It should be noted that the 20th century as a whole was a century of liberation of colonies, the flourishing of nationalism, and ideologies. Political power in many countries was often concentrated in the hands of one person or a narrow group of people for a number of reasons.
To simplify it completely: The liberation of the colonies, where power “locally” was in the hands of a trusted autocrat, led to a logical conclusion — the trusted autocrat did not go anywhere. If he was lucky, he was offered a deal: loyalty to one of the superpowers in exchange for funding his regime. If the country had natural resources, it was even better — the ruler did not have to worry about taxes and irritate the people; he could sell oil and polymers. The colonialists did not leave strong political and legal institutions that could control and limit the power of the ruler, which allowed leaders to concentrate power without significant resistance.
At the same time, national movements were especially strong in Europe. Few people know, but Europe was more multi-ethnic before the war than after. Leaders of nationalist ideas and independence movements often became the first leaders of new states and were perceived as “fathers of the nation,” which strengthened their legitimacy and made the concentration of power possible. The cult of personality was a consequence of this paternity. Irreplaceable and charismatic leaders, capable of solving all the country’s problems, had every chance to remain in power for a long time, which they took advantage of.
In both cases, repressions were widespread. Leaders often used repression to suppress opposition, which helped them maintain power longer by eliminating potential threats.
These factors contributed to the emergence and strengthening of personalist regimes in the 20th century. Given weak institutions, external pressures, historical legacies, and economic controls, leaders were able to effectively concentrate power in their own hands and govern countries based on personal loyalty and repression.
Kleptocracy and Military Regimes: Violence as a Path to Power
We often forget that the beauty of democracy lies not only in regular changes. Change is inevitable, like the future, and it comes to everyone, always. In fact, a key advantage of democracy is the ability to transfer power non-violently through regular elections.
Although a coup or seizure of power is not a definitive feature that characterizes a kleptocracy, most kleptocracies do arise from undemocratic and violent seizures of power. These takeovers include military coups, rigged elections, and succession within a narrow ruling elite. Cases where kleptocracy arose as a result of a non-violent transfer of power are extremely rare. Even if a leader comes to power through elections, the subsequent establishment of a kleptocratic regime is often associated with repression, fraud, and concentration of power.
A striking example is Myanmar. In 2011, the country began a transition to democratic reforms after decades of military rule. However, in 2021, the military seized power again, citing alleged election fraud, followed by the familiar chain of events: “discontent — rallies — suppression of protesters — repression.”
Outsourcing in Kleptocracies: “Race to the Bottom”
There is a noticeable trend: kleptocracies often arise in countries where the economy is heavily dependent on the sale of natural resources or cheap labor abroad. With the exception of Saudi Arabia, GDP per capita in such countries usually leaves much to be desired. Saudi Arabia, for instance, is actively diversifying its economy and creating various social funds, allowing the population to receive a decent income.
Kleptocracies often arise where foreign investment in exchange for the sale of natural resources take place. However, what about the “outsourcing” of kleptocracies in general? Why is worker labor so much cheaper there? And most importantly, is it getting worse?
The export of natural resources and agricultural products abroad by kleptocracies is as competitive an area as any other. Sectors related to the extraction and export of natural resources are almost always completely controlled by the state. To be more competitive in the international market, a kleptocrat can offer a cheaper price for his resource. This phenomenon is often called the “race to the bottom,” where countries try to offer their goods or labor at the lowest prices to remain competitive in the world market. This includes falling wages, weakening labor laws, and lowering environmental standards.
The problem with the “race to the bottom” is the “bottom” itself. Even if average worker wages increase, global inflation is a faster process. By making his product or labor cheaper and cheaper in a world where there is more and more money, the kleptocrat dooms the population to economic backwardness. The undiversified economy of raw materials, even after the kleptocrat leaves power, will not allow the country to get back on its feet for a long time.
Mentality problem (It’s Your Own Fault)
“It’s your own fault” is almost the first statement that can be heard when it comes to kleptocracies. “Corruption is a mentality,” “You folks should fight harder” and “Just elect another president” are standard phrases, similar to those used in 2008 when the financial crisis was blamed on the poor rather than on securities brokers. The mass population is always to blame, the lower strata of society are always the most vicious.
Corruption is not a consequence of mentality. Claiming that mentality is the cause of corruption is as wrong as blaming the financial securities crisis on poor people who have never seen a single security in their entire lives. Mentality is a simplified explanation, the fastest answer that comes to mind. This is not a set of qualities inherent in society that causes corruption. A striking example is North and South Korea. Both countries share a common cultural and historical background but differ radically in their levels of corruption and economic development.
In fact, corruption gives rise to new qualities in society, primarily atomization. An atomized society is one with a low level of trust, which, due to this lack of trust, does not create the necessary structures. Upon receiving the first money, a person in such a society will first buy a new lock for the door. It is not to expect that this kind of society will organize itself for a protest.
This atomization starts a cycle where isolation overrides collective action, making it difficult to establish robust institutions that can combat corruption effectively. The focus on self-preservation over community welfare means that even well-intentioned efforts to fight corruption are fragmented and easily undermined by those in power. To break this cycle, there needs to be a concerted effort to rebuild social trust and cohesion, fostering a culture where collective action is valued and supported. Only then can meaningful and sustained progress be made against kleptocracy and systemic corruption.
