Corruption, Democracy, and the Business of Politics in Taiwan

Written by Erik Mobrand.

Image credit: Money by 401(K) 2012/Flickr, license CC BY-SA 2.0

Assessments of the state of corruption in Taiwan show wildly diverging conclusions. Corruption scandals break out regularly, seeming to keep the island in a series of emergencies. At the same time, global surveys laud Taiwanese authorities for successfully fighting corruption. If Taiwan is so clean, why do corruption scandals happen? Or, if corruption scandals are so regular, how can Taiwan be assessed as an anti-corruption success story?

Answering these questions – and squaring conflicting observations on corruption in Taiwan – requires examining the primary sources of corruption in this context. “Corruption” is hardly a neutral term, and its strong negative meaning can entice users to place unlike things in the same category. In Taiwan, much of what emerges in corruption scandals stem from relationships between business and politics. Looking at business-politics ties can provide some purchase on questions of corruption.

In Taiwan, business and politics have a complicated relationship for a few reasons. First, long before democratization in the 1980s and 1990s, politics was for many on the fringes of the ruling Kuomintang (KMT, or Chinese Nationalist Party)an extension of business. The KMT dangled particular business benefits as a way of building support – or diminishing resistance – among the island-born population. Local elections allowed Taiwanese outside the party to hold office. Those offices often came with discretion over local economic affairs: zoning, access to credit, discretionary policing, and so on. Many joined the party then gained these benefits; a few stayed outside the party and still got them. Promises to small businesses were a core part of the way the KMT held its authority together. All of this was in addition to the sprawling business interests of the KMT itself.

Second, shifting business-politics relationships contributed to Taiwan’s democratization. Business leaders play a role in stories of democracy’s origins in many contexts. One version based predominantly on the English experience, holds that democracy arose through the demands of merchants for private property protection. In this formulation, a key component of democracy is guaranteeing the right to property. Using parliament, merchants could ensure business property was safe under the law.

From the perspective of contemporary Taiwan – or any society in the past few centuries – that relationship between business and politics sounds somewhat simple. The influence of business in government takes so many forms other than protection of property: they lobby for government contracts, they seek inside information, they want preferential loans, and so on. The KMT had trained businesses to look to politicians for these forms of support.

Taiwan’s industrialization saw firms on the edges of the party-state swell. By the 1980s, businesses could provide support to politicians. With private financial backing, politicians could veer away from the KMT. Joining the party and gaining party resources for campaigning became less important for winning office. The growth of politics-interested businesspeople contributed to the fraying of KMT authority.

The point here is not that the rise of business was the main driver of Taiwan’s democratization. Rather, it is that the growth of business with political interests created a countervailing force to the authoritarian party-state. Business demands for particular benefits thus played a role in Taiwan’s shift away from authoritarianism. This source of pressure is not what is dreamed of in primers on democracy, but business nonetheless represented an alternative power.

Third, condemnation of business-politics ties became a mode of electoral mobilization. By the 1990s, the opposition Democratic Progressive Party (DPP) pointed to suspect alliances between KMT representatives and business interests. These included ties with underworld figures. These ties had been a fundamental part of the KMT’s adaptation to ruling in Taiwan, but that power structure became a weak point once electoral competition became more open.

In the 1990s, the KMT faced a dilemma. If it stuck with its forms of local mobilization, it would have to endure public criticism from the DPP. If it abandoned those forms, then it would have a better chance in cities, but it could struggle in rural places and local elections. This issue was, by the 2000s, somewhat resolved in favour of the latter option. It also helped, from the KMT’s perspective, that the first DPP president (Chen Shui-bian) ended up in jail on corruption charges, while the subsequent president, the KMT’s Ma Ying-jeou, had served as justice minister.

Today, politicians compete to gain the moral upper hand by condemning suspect behaviour from their competitors. The DPP had pioneered this approach in the days of single-party rule, but now representatives of any party can take it. Such politics exacerbate the urgency around corruption scandals. Scandals emerge not only because there is corruption but because media is free to report them, investigators can examine them, and because people understand them in political terms as “corruption.”

Global corruption indices capture something about Taiwan but not everything. Simple bribing of administrators is not generally part of life in Taiwan, and anti-corruption systems are in place. Furthermore, the foreign businesspeople who are the respondents in perceptions surveys sit outside the business-politics networks that can be ripe for corruption. Little wonder they rate Taiwan positively when asked about corruption. Global surveys fail, therefore, to catch the business-politics networks that have a strong historical base, as well as the public reactions to exposures of illegal activity within those networks.

These comments point to a deeper problem in the language of “corruption.” The term is commonly used to describe (and judge!) a culture or the effectiveness of legal and administrative responses. To say that a place is “corrupt” is usually to say that people or government officials are culturally prone to bribery as a means of getting things done, or that anti-corruption systems are too weak. In Taiwan’s case, neither of these is true. The island’s democracy emerged from patterns of business-politics interactions. Those interactions and responses to them mean that corruption of a particular sort is highly visible in Taiwan. Whether that makes Taiwan more or less corrupt than any other society depends on what other societies defines as corruption and how well media and prosecutors investigate corruption.

Erik Mobrand is an associate professor in the Graduate School of International Studies at Seoul National University. He is currently a visiting researcher at the Centre for East and South-East Asian Studies at Lund University. His research focuses on Korean and Chinese societies, and he is the author of Top-Down Democracy in South Korea. He tweets @erikmobrand

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