The power of the law or the law of power? Public-Private Partnerships and State Capture in Peru
Roger Merino
As part of the research series “Elites, State Capture, and Inequality” promoted by Oxfam and CLACSO, we studied whether Peru's policy of promoting private investment (1990–2017) has been subject to state capture. To this end, we began by proposing a typology of the phenomenon, given its conceptual ambiguity and confusion with the phenomenon of corruption.
We conceive of capture as the undue influence of certain power groups over society in general (political capture), public administration (state capture), or specific regulatory spheres (regulatory capture) for the approval and implementation of policies, norms, or decisions that benefit them. Within this framework, we focus on the capture of the state over the normative sphere (what we call the capture of legality), and we propose that for an influence to be considered undue, both a formal and a substantive element must be present. The former refers to the formulation of the legal framework through decrees or other legal mechanisms without due public deliberation. The latter refers to the fact that the actors who develop these norms are cognitively aligned with corporate interests (ideological capture) or are directly representatives of those interests through mechanisms such as the revolving door (corporate capture).
We found that the formal element is configured in the aforementioned policy, since, in the case of the institutionalization processes of Public-Private Partnerships (PPPs), their regulatory development was generally carried out through decrees approved without public deliberation and under the rhetoric of “economic order,” “trickle-down economics,” “economic growth,” and “unblocking investments.” We identified the substantive element through the analysis of large investment projects accused of having been developed under situations of conflict of interest or even corruption. We observed that beneath an aura of legality and technocratic expertise lay the true foundation of the law: the power of elites who share a pro-market vision (ideological capture) and are strongly linked to the private sector (corporate capture). These elites profoundly influenced the way the State was managed, prioritizing private values over public values, through flexible rules that favor post-control, discretion, and self-regulation in investment promotion processes, instead of rigid rules that emphasize prior control, State oversight, and its role in balancing the interests of investors with those of the citizenry.
Thus, when the rule of law and technocratic legality (the power of the law) are extolled, what is actually being extolled is a captured legality (the law of power). Therefore, legal frameworks end up being configured where private interest predominates or, at best, conflicts of interest prevail, facilitating acts of corruption. This is why the problem goes beyond specific instances of corruption; it has to do with the normalization of a legal system that, to a certain extent, has normalized them. And today, grand corruption doesn't seek to circumvent the law, but rather to become the law, and to become the law , it invests in political campaigns, media outlets, and think tanks of experts in legal reform.
The problem, then, cannot be solved solely by identifying and punishing corrupt individuals, but also by restructuring regulatory frameworks in areas as diverse as political competition, public procurement, public-private partnerships, and interest groups. Above all, it requires self-criticism regarding how legal reform processes often unfold without democratic participation or social legitimacy.
