Month: January 2018

The average cost of winning a US Congressional seat (HoR) is about $1.6 million.
 
We know from insider accounts that the equivalent cost of a Ghanaian parliamentary seat is about $500,000.
 
US per capita income in PPP terms is nearly $60,000. Ghana’s per capita income in PPP terms is just a little above $4000. In nominal terms the difference is even more staggering.
 
The population in an average US congressional district is more than 700,000. The population in an average constituency in Ghana is just a little above 100,000. This is relevant if the standard marketing notion that audience size is a factor in outreach cost i correct (a theory, by the way, on which the $520 billion global digital ad industry depends).
 
There are other comparison factors that produce similar outcomes.
 
In relative terms therefore it is at least ten times more *expensive* to get into the Ghanaian Parliament than into the US Congress.
 
Some have hypothesised that the high costs of doing politics in developing countries like Ghana make higher levels of corruption inevitable.
 
What they have failed to do however is to provide a uniform theoretic to probe this situation rigorously without losing the human essence of the analysis. That is to say, without unnecessary quantitative distractions.
 
I propose, in a very very brief treatment, a “cost of capital” framework for understanding why this is so.
 
And no, I don’t mean that we must magnify the headline costs provided in respect of Ghanaian parliamentary campaigns above by taking into account interest rates and the opportunity costs of going into politics in Ghana in the context of such large expenditures. That would be a perfectly valid addition, but we would be overflogging the matter.
 
Rather, what I have in mind is a “capital interconvertibility framework”.
 
I would like us to consider a simplified world in which three main forms of capital define one’s capacity to play the game of politics: Social Capital, Economic Capital and Political Capital.
 
Social capital refers to all the assets available to an individual or entity that can be used directly to offset the transaction costs of building new social connections (i.e. human to human, institution to institution or human to institution).
 
It is obvious that reputation is a prime example of the kind of assets mentioned here. Reputation reduces the search time involved in due diligence for a counter-party during a transaction.
 
Economic capital refers to material assets that can be deployed to material ends with minimal loss of value.
 
Political capital refers to all the assets that can be used directly to offset the *agency costs* associated with group actions. This obviously includes authority, power, position, legitimacy etc. Power, for example, dramatically reduces the coordination costs of getting a group of unruly, self-interested, people to fall in line.
 
I theorise that in developing countries the conversion ratio/”exchange rate” between one form of capital and the other tends to be excessively large.
 
In particular, converting social capital to economic capital and thence to political capital is highly difficult/expensive. Converting political capital to economic capital or economic capital to social capital, on the other hand, is much easier.
 
The implication then is that many simply skip the accumulation of social capital, borrow economic capital in large amounts, trade it for political capital and then aggressively look for channels to convert the latter back into economic capital to pay off the borrowed economic capital.
 
In the so-called developed societies the process of converting political capital to economic capital or economic capital to social capital tend to be more difficult, thus incentivising the accumulation of social capital directly.
 
Furthermore, the lower conversion ratios in developed societies often allow a quicker conversion cycle between social and political forms of capital.
 
You may counter the argument put forward here by pointing to the near-universality of political corruption and dismiss the entire analysis as built on the fallacy of exceptional levels of corruption in developing societies compared to so-called developed societies.
 
But you would only be partially right. Whilst political corruption is indeed universal, the “proportionality” of corruption is not of universal character.
 
Corruption is a standard “agency cost” associated with economic transactions. Often people with decision making power in economic transactions try to compensate for what they perceive to be an undervaluation of their political capital.
 
Despite the logical universality of this phenomenon, theory is still required to explain why developing country politicians tend to charge such high corruption fees relative to the value of their economic decisions.
 
Only the capital interconvertibility framework explains why, for instance, African politicians in charge of tiny economic fiefdoms still price their kickbacks at a level considerably above that of their compatriots in, say, the West.
 
All one has to do is look at the sums mentioned in European and American political corruption scandals versus the case in African scandals.
 
Here is a random sample:
 
Ghana
______
 
Woyome Scandal – ~$30 million
SADA ACICL Scandal – $25 million
AMERI Scandal – $150 million
GYEEDA Scandal – $900 million (investigative committee’s estimate)
 
Kenya
______
 
Goldenberg Scandal – $1.5 billion
 
Nigeria
_______
 
Abacha Scandal – $500 million (recovered; actual amount is in the billions of dollars)
 
US
______
 
Whitewater Scandal – $300,000
William Jefferson Scandal – $400,000
Jesse Jackson Jr Scandal – $750,000
 
Europe
_________
 
Chirac Scandal – $3 million
Kohl Scandal – $1.6 million (2.3M DM)
 
 
There is no doubt, upon any careful analysis of the evidence, that African politicians, for instance, overcharge corruption fees relative to the economic value of their political decisions.
 
Only the capital interconvertibility framework provides an adequate account of why this is so by linking the phenomenon to the high convertibility ratio from economic to political forms of capital, and the conversely low convertibility ratio from the political to the economic form.
 
 

There is little doubt that the propagation of “cultural power” has something to do with the accumulation of “economic power”.
There are, however, some types of “economic power” that are inherently more “cultural”; some national industries that project cultural power/imperialism better. Technology and fashion for instance. Thus “economic power” is best replaced with the notion of “economic influence” when one embarks down this thematic path.
 
When a country transforms economically in a way that impacts other countries, they get taken “seriously” and their forms of representation become more worthy of imitation and appropriation.
 
That is why you can actually track the rise and decline of the “Ninja” genre in Hollywood with the rise and decline of Japan’s economic influence.
 
You might counter by asking why “kung fu”, as a cinematic fixture, also appears to have emerged in the 70s, at the onset of China’s opening up, but peaked in the mid-90s, aligning with the waning of the appeal of the likes of Jet Li, Jackie Chan, Bolo Yeung etc, even as China’s climb continues on an even steeper trajectory. But you would be wrong.
 
Kung fu did not peak and crash. It became appropriated, mainstreamed and enfolded in the same way that burger, pizza, blazers, sunglasses and nail extensions have become. Every fight choreography in every action flick embodies kung fu moves today. That is in fact the height of cultural diffusion. And the fact that you don’t even notice kung fu anymore is actually proof of one successful Chinese cultural globalisation project.
 
Note however that “economic influence” rather than “economic power” is the driving force here. Contrary to some formulations, cultural imperialists don’t have to do all the heavy lifting to diffuse their forms and symbols themselves.
As Gramsci so brilliantly framed it: very often those at the receiving end of imperialism do the PULLING that makes imperialism thrive. Good imperialism therefore requires “induced consent”.
 
Thus it is not China’s expanding GDP that will drive more projects like kung fu into our global consciousness. It is its ability to attain excellence in certain industries, particular orientations of its economic diaspora, its willingness to trade identity for influence, and the direction of its investments in “show off innovations” that inspires beyond making money.