In Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, Ha-Joon Chang argues that corruption extends beyond individual misconduct to encompass systemic injustice within the global economic order.[1] He contends that this system privileges multinational corporations and financial elites while undermining the developmental autonomy of poorer nations. Moreover, the moral rhetoric of “good governance” often conceals exploitative economic relationships, and policies promoted under the guise of “efficiency” or “anti-corruption” can paradoxically weaken effective state institutions and exacerbate inequality.
Corruption and Anti-Corruption Politics: A Trap for Reformers
Corruption and anti-corruption politics in developing countries often reveal a troubling paradox: reformist leaders who rise to power on promises to eliminate corruption frequently end up discredited or imprisoned for it themselves. This recurring pattern is not merely the result of individual moral failings but reflects deeper systemic and structural realities that neoliberal frameworks tend to overlook.
Leaders such as Fernando Collor de Mello in Brazil and Alberto Fujimori in Peru exemplify this dilemma. Both were elected on strong anti-corruption platforms, positioning themselves as agents of moral renewal and institutional reform[1]. Yet, each ultimately fell from power amid corruption scandals, illustrating how efforts to purge corruption can be consumed by the very dynamics they aim to dismantle.
The underlying reason lies in the neoliberal treatment of corruption as a moral or cultural deficiency rather than as a symptom of entrenched institutional and economic dysfunction. By focusing on personal integrity and market liberalization instead of addressing structural incentives and power imbalances, neoliberal reforms often leave the root causes of corruption untouched—or even exacerbate them. Consequently, anti-corruption politics in such contexts can become a trap for reformers, reproducing the same cycles of disillusionment and decay they set out to end.
The Myth that Democracy Automatically Promotes Development
Neoliberal thinkers often assert that democracy naturally fosters free markets, and that free markets, in turn, generate economic development. Ha-Joon Chang challenges this notion, arguing that the relationship between democracy and development is neither linear nor automatic. The assumption that political freedom inevitably produces economic prosperity overlooks the inherent tensions between democratic governance and market logic.
Democracy operates on the principle of “one person, one vote,” whereas markets function on the basis of “one dollar, one vote.” This fundamental difference creates friction: democratic processes prioritize social welfare, redistribution, and equity, while markets privilege profit and capital accumulation. When citizens use democratic power to demand regulation, social protection, or public investment, such measures can contradict neoliberal expectations of unrestrained market efficiency.
Consequently, when democracy does contribute to development, it is not by advancing market liberalization but by enabling redistributive and productive policies—such as investment in education, infrastructure, and social welfare—that enhance long-term economic and human development. In this sense, democracy’s developmental potential lies not in reinforcing markets but in tempering and directing them toward broader social goals.
Neoliberal Reforms Often Increase Corruption
Neoliberal reforms, often promoted as a means to reduce corruption and enhance economic efficiency, have in many cases produced the opposite effect. Deregulation and privatization—central pillars of neoliberal policy—frequently create new avenues for rent-seeking and elite capture. Instead of eliminating state interference, these reforms often transform it into less transparent forms of collusion. Public assets are sometimes sold below market value to politically connected elites, a phenomenon known as crony capitalism. Similarly, the weakening of regulatory frameworks allows businesses to exploit loopholes or engage in bribery to evade taxes and oversight. Trade liberalization, another hallmark of neoliberalism, can further erode state capacity by reducing tariff revenues, thereby constraining public finances and depressing public-sector wages. This, in turn, incentivizes petty corruption among low-paid officials, undermining the very integrity that market-oriented reforms claim to promote.
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In contrast, historical experience demonstrates that strong, capable states have often played a decisive role in driving economic development. Japan’s postwar industrial policy exemplifies how government intervention—through state ownership, subsidies, directed credit, and protection for strategic industries—can foster growth and competitiveness. The early protection and guidance given to firms like Toyota illustrate how state support, rather than pure market forces, can nurture world-class industries. Similar approaches were later adopted by other East Asian economies such as South Korea and Taiwan, where disciplined bureaucracies and coherent long-term strategies underpinned sustained industrial success. These examples challenge the neoliberal assumption that state involvement necessarily breeds inefficiency or corruption.
However, the effectiveness of such intervention depends critically on institutional quality and governance. Where states lack capacity, political stability, or accountability—as seen in many parts of Latin America and Africa—industrial policies have often failed. Bureaucratic mismanagement, rent-seeking, and weak legal systems led to inefficiencies, waste, and overreliance on commodity exports. In contrast, China’s development experience underscores the importance of strong institutions and strategic vision. The Chinese state successfully coordinated infrastructure development, foreign investment, and human capital formation while maintaining oversight of key industries through state-owned enterprises. By blending state direction with market mechanisms, China managed to sustain growth and industrial transformation on a massive scale.
Ultimately, the evidence suggests that corruption and inefficiency are not inherent to state involvement but rather symptoms of weak governance. Neoliberal reforms that hollow out the state without strengthening its institutions often exacerbate corruption instead of curbing it. Sustainable development requires not the retreat of the state but its effective modernization—one capable of guiding markets, enforcing accountability, and pursuing long-term national objectives.
Democracy Weakened by Neoliberal “Reforms”
Neoliberal reforms, while often couched in the language of promoting democracy and economic freedom, have in practice eroded democratic control in many developing countries. By expanding the domain of the market, neoliberalism systematically removes key economic decisions from democratic oversight and places them in the hands of technocratic institutions such as “independent” central banks and revenue authorities. Furthermore, international treaties and trade agreements—such as those governed by the WTO or bilateral accords—bind future governments to predetermined economic rules, regardless of the preferences expressed by voters.
As a result, although elections may continue to occur, the scope of democratic governance is sharply constrained. Fundamental policy areas are rendered immune to public deliberation, weakening the ability of citizens—particularly the poor and working class—to advocate for redistributive or interventionist measures like job creation, subsidies, and public services. This process amounts to a subtle yet profound disenfranchisement, as formal democratic structures persist while substantive control over economic policy quietly shifts beyond the reach of the electorate.
From Policy Failures to Cultural Blame
Neoliberal institutions such as the IMF, World Bank, and WTO—often referred to as the “Unholy Trinity”—have faced repeated policy failures in developing countries despite the consistent application of textbook neoliberal prescriptions. The 1990s Argentine collapse serves as a stark example, illustrating how the rigid pursuit of market orthodoxy failed to deliver promised stability and growth. Instead of fostering sustainable development, these policies frequently led to economic volatility, social dislocation, and weakened state capacity.
A central problem lies in the implementation of privatization, which, rather than enhancing efficiency, often becomes a vehicle for corruption and rent-seeking. In many cases, the sale of public assets benefits a small elite through legal mechanisms such as consultant fees and insider deals, or through outright illegal practices involving bribes and kickbacks. Russia’s transition from communism epitomizes this dynamic, as vast state assets were transferred into the hands of a few oligarchs under the guise of reform. Contrary to the neoliberal claim that privatization reduces corruption, evidence suggests that private enterprises can be equally, if not more, susceptible to corrupt behavior.
When these reforms failed to yield the expected outcomes, neoliberal thinkers and institutions largely avoided questioning their own policy frameworks. Instead, they shifted the blame toward political and cultural factors within the affected countries. This deflection served as a convenient ideological maneuver: it absolved policy architects of responsibility, delegitimized local governance by portraying developing societies as politically immature or culturally deficient, and justified further external oversight. In doing so, the neoliberal narrative not only preserved its intellectual authority but also reinforced patterns of dependency and external control over developing economies.
Political Problems Cannot Excuse Policy Failures
Neoliberalism’s recent fixation on issues such as corruption, democracy, and institutional weakness represents less a genuine analytical breakthrough than a strategic evasion of responsibility for its own policy failures. By attributing development setbacks to political or cultural deficiencies, neoliberal thinkers deflect attention from the structural flaws within their economic model. This narrative not only obscures the role that neoliberal reforms themselves have played in generating instability and inequality, but also ignores the fact that such policies often erode political institutions—weakening governance, fostering corruption, and undermining democratic accountability rather than strengthening them.
The Myth of Corruption as the Key Obstacle to Development
The widely held belief that corruption is the primary barrier to development—popularized by Western institutions such as the World Bank—has long shaped global policy debates. According to this view, corruption explains why many developing countries fail to achieve sustained growth despite aid, resources, or reform programs. Yuen Yuen Ang’s China’s Gilded Age: The Paradox of Economic Boom and Vast Corruption (Cambridge University Press, 2020) challenges this orthodoxy through the case of China. She asks a simple yet profound question: how has China achieved record-breaking economic growth since the late 1970s despite pervasive corruption?
Ang argues that the paradox lies not in the mere existence of corruption, but in its type and relationship to political-economic structures. Rejecting the notion of corruption as a monolithic evil, she “unbundles” it into four distinct forms: petty theft (small-scale extortion), grand theft (large-scale embezzlement), speed money (bribes to expedite services), and access money (high-stakes exchanges granting privileged access to opportunities or regulatory favors). The first three, she notes, typically impede growth by raising costs and eroding trust. In contrast, access money operates as the “steroids of capitalism”—fueling investment and deal-making in China’s state–business networks, even while creating inequality and opacity.[2]
This duality defines what Ang calls China’s “Gilded Age,” reminiscent of the late nineteenth-century United States: an era of explosive growth, elite enrichment, and widespread inequality. China’s local bureaucracies, motivated by performance-based incentives and quasi–profit-sharing arrangements, have been encouraged to pursue growth through investment and infrastructure projects, often facilitated by access money. This political-institutional configuration has tied officials’ personal rewards to economic success, fostering a system where corruption coexists with, and at times accelerates, development.
Ang situates China’s experience within a broader historical perspective, noting that early phases of Western industrialization also featured informal elite deal-making before bureaucratic norms of transparency emerged. Since the 1990s, China has reduced petty and grand theft through institutional reforms but has seen access money deepen and evolve. The result is a political economy where corruption has become more sophisticated, embedded in networks of investment and power rather than simple theft.
Ultimately, Ang’s analysis reframes the global discourse on corruption and development. China’s case demonstrates that corruption, while corrosive to fairness and social trust, does not necessarily preclude growth. Instead, development outcomes depend on how political institutions structure incentives and channel rents. The deeper obstacles to development, she argues, lie not in corruption per se but in misguided policies—such as the neoliberal prescriptions promoted by the West—that fail to address structural and institutional realities. Her work invites a more nuanced understanding of how capitalism and corruption intertwine within different developmental contexts.
Anti-Corruption Strategies and Governance Mechanisms in China
China’s anti-corruption mechanisms are closely tied to its centralized personnel and governance system. A key instrument is cadre rotation, designed to prevent the emergence of entrenched local power bases, often called “local emperors.” By regularly transferring officials between regions and departments, the Communist Party of China (CPC) reduces the risks of localism, nepotism, and corruption, while reinforcing loyalty to the central leadership over local interests. The Central Organization Department manages these rotations, ensuring that key appointments remain under centralized control. Officials are often parachuted in from outside their home provinces, promoting neutrality in local politics and stronger oversight, while sending reform-minded cadres to underdeveloped areas facilitates knowledge transfer and inter-regional governance improvements, albeit with mixed success due to local adaptation challenges.
Rotation also serves as a deliberate leadership training tool, exposing officials to diverse challenges. Performance in varied roles—especially in complex or less developed regions—can accelerate promotion, forming what is sometimes called the “Cadre Training Ladder.” Xi Jinping’s own career exemplifies this approach, having held positions across rural and urban provinces before ascending to national leadership. Coupled with term limits—typically around five years for provincial party secretaries and governors—these practices maintain mobility, accountability, and the avoidance of entrenched local interests, all while strengthening institutional continuity.
The rationale for such strict governance stems from China’s one-party system. Unlike Western political models, where parties are temporary vehicles subject to electoral turnover, the CPC is constitutionally enshrined as the ruling party. Without competitive rotation of parties, self-purification becomes essential: corruption or loss of legitimacy within the Party threatens the stability of the state itself. Anti-corruption initiatives, such as the “tigers and flies” campaign under Xi Jinping, have therefore been used not to weaken the Party, but to consolidate authority, discipline rival networks, and reinforce central control.
China’s model is rooted in its long civilizational tradition, which emphasizes centralized authority, internal discipline, and continuity of governance. From the Qin and Han dynasties to the present, the political culture has prioritized the unity of power and long-term stability over cyclical leadership change. The CPC positions itself as a modern incarnation of this tradition, combining ideological discipline with institutional mechanisms to ensure renewal, rather than relying on Western-style party competition or democratization. The broader message to the world is that China has established an alternative governance model: one where institutional resilience, continuity, and internal discipline replace electoral turnover, demonstrating that anti-corruption efforts can serve as a tool for legitimacy and long-term stability rather than destabilization.
China’s Gradualism and Sequencing
China’s economic strategy has been defined by gradualism and careful sequencing of reforms, prioritizing growth before redistribution and structural changes. Unlike the abrupt liberalization pursued by many Eastern European countries in the 1990s, China focused first on internal capacity-building and market development, deferring concerns such as corruption or social inequalities until a sustainable growth foundation had been established. This incremental approach allowed China to avoid the economic and social shocks that destabilized economies undergoing “big bang” reforms elsewhere.
The sequencing of reforms created a virtuous cycle in which early policy successes reinforced subsequent development. Agricultural and rural market liberalization were the initial steps, boosting incomes and consumption, which in turn stimulated industrial production and economic growth. Rising revenues provided the resources for more complex reforms, including state-owned enterprise (SOE) restructuring, infrastructure investment, and the development of special economic zones (SEZs). Policies such as dual-track pricing, the growth of township and village enterprises (TVEs), and gradual SOE reform exemplify this measured approach, allowing the economy to expand while institutions adapted incrementally.
China’s managed transition extended to global integration, including exchange rate unification and eventual accession to the World Trade Organization (WTO), ensuring that reforms proceeded without systemic collapse. While this path entailed costs—corruption in dual-track systems, temporary unemployment and social unrest from SOE restructuring, and regional disparities due to coastal-first SEZ strategies—the benefits were substantial: the creation of globally competitive SOEs, the rise of private enterprise, massive export capacity, and strong fiscal and foreign exchange reserves. In contrast, Eastern Europe and Russia experienced a vicious cycle of premature structural reform, with rapid liberalization triggering economic collapse, social dislocation, and political instability. China’s example demonstrates that sequencing reforms thoughtfully, prioritizing growth, and building institutional capacity first can enable sustained development and avoid systemic crises.
Conclusion
In Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, Ha-Joon Chang critiques the imposition of neoliberal policies on developing countries, often enforced through conditional loans or trade agreements. He argues that these policies represent a form of structural injustice, as premature liberalization can undermine domestic industries, increase inequality, and weaken state capacity. While poor governance and corruption can exacerbate these challenges, Chang emphasizes that the deeper problem lies in the rigid application of free-market ideology, rather than the moral failings of leaders in developing nations.
Chang’s analysis resonates with the developmental experiences of countries like China, which avoided abrupt structural reforms that caused economic collapse in Eastern Europe and Russia during the 1990s. By phasing reforms pragmatically and focusing first on growth, China was able to create the economic foundation necessary for redistribution, welfare expansion, and structural reform. This sequencing illustrates that state capacity and policy space are crucial: growth first enables reforms, rather than expecting immediate institutional perfection or corruption-free governance.
Ultimately, Bad Samaritans highlights that neoliberalism’s assault on the state, democracy, and political institutions has rarely resolved issues of corruption or underdevelopment; in many cases, it has worsened them. Chang advocates for preserving policy space, allowing developing countries to employ tariffs, subsidies, state-owned enterprises, and capital controls as tools for industrialization—strategies historically used by today’s advanced economies. By reframing the debate around structural constraints rather than individual corruption, Chang underscores the importance of context-sensitive economic policy over ideological rigidity.
References
[1] Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, by Ha-Joon Chang, 2007
[2] China’s Gilded Age: The Paradox of Economic Boom and Vast Corruption, Yuen Yuen Ang, Cambridge University Press, 2020