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 of 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 under an aura of legality and expertise Beneath the technocratic veneer 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 operates, prioritizing private values over public values through flexible rules that favor ex-post control, discretion, and self-regulation in investment promotion processes, rather than rigid rules that emphasize ex-post 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 does not seek to defraud the law, but rather to... to be the law, and to to be the law invests in political campaigns, media and think tanks by 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.
