Political economy
Progressive social science has long recognised that the separation of economics from politics, even if we narrowly construe politics as relating to “power” is far too arbitrary to be acceptable. Consequently, radical development economists have always kept the two together and their approach has been usually labelled as the “new political economy”, in contrast to “mainstream” or “orthodox” economic analysis.

The “new political economy” approach to economic analysis and policy prescription has long been resisted by established mainstream economics and its institutional practitioners, particularly the major international financial institutions and the economic authorities in the major donor countries. However, under the relentless pressure of unfolding events, which we cannot examine here, this opposition has diminished considerably in recent years. “Political economy” now appears everywhere, but this time in the guise of governance, corruption and development.

Corruption and impoverishment
Some time ago in this series (August 2002) I had referred to the fact that the World Bank had identified corruption not only as an impediment to development but in fact as “the single greatest obstacle to economic and social development.” The consequence of this is that the issue of “good governance” has leapt to the forefront of the development agenda, with the sedate and conservative World Bank now blaming corruption as the chief adversary standing in the way of its global war on poverty.

The significance of this declaration by the World Bank is staggering, for a number of reasons.

First, it is a belated recognition of the wisdom of earlier arguments advanced by several development economists, including those that have studied Guyana, which stated that Guyana’s underdevelopment, economic regress, and poverty in the 1980s, were largely the product of, and a major contributor to, the political circumstances of the time.

Secondly, because the World Bank is a major global player, the positions it adopts are decisive in shaping global economic policies and the allocation of re-sources for the international development effort.

Thirdly, the conclusions that the World Bank has derived from this position are very far reaching in their intent and scope. Consider a few examples. To begin with its written policy line is that “corruption thrives in an environment where the power of individual members of society measured in terms of access to people in power and financial resources supersedes the rule of law.” The World Bank goes on to state that corruption “directly promotes administrative corruption.” And, by “administrative corrup-tion” it refers to the “international imposition of distortions in the implementation of existing laws, rules, and regulations to provide advantages to either state or non-state actors as a result of the illicit and non-transparent provision of private gains to public officials.”

Had these strong words emanated from an individual author it might be argued by those who wished to disagree that the author’s judgement was “misguided,” or his/her pronouncements “overstated.” These points of view may of course still be expressed, but the World Bank cannot be dismissed as an individual author might be in this way, if only because it is a major player in shaping international development policy and dispensing development resources. The key reason for the position adopted by the World Bank is that it has defined its “overarching mission” as the reduction of poverty.

And, the biggest obstacle to achieving this is corruption, whose “harmful effects... are especially severe on the poor [as] corruption sabotages policies and programmes that aim to reduce poverty.”

Generally, I share the World Bank’s view about the tragic importance of global poverty. I also share its recognition of the crucial contribution, which corruption makes to the process of impoverishment. I do not intend, however, to pursue these issues at this stage, save and except to win readers’ acceptance of the fundamental significance of corruption as an obstacle to development. Beyond that my immediate aim is seek to establish the size and importance of corruption in Guyana today.

Corruption and the shadow economy
In the 1980s, in the midst of the long economic recession and massive state ownership and regulation of the economy, the measure above all which was used to indicate the extent to which these circumstances had “criminalized” the population and made the by-passing, circumventing and evading of laws routine for ordinary citizens, was the flourishing underground/parallel/shadow/’blackmarket’ economy. This point of view was so widely accepted that, in response to it, I undertook to measure this economy, in order to glean the extent to which this might have been true. Those results were published in an academic journal in 1989 and became an important input into the political debates about the economy at that time. I will use this article as the starting point for indicating the likely nature, scale, and magnitude of corruption today.