As the ruling UPA dispensation becomes increasingly mired in various scams and scandals, it is now a common refrain of intellectuals to blame the 'capitalistic' system for increased corruption in society. Recently P. Sainath, in an opinion piece for The Hindu, put the blame squarely on 'neo-liberal economic framework' . Mani Shankar Aiyer echoed these thoughts in a Times Now TV segment.

We decided to look at data. 

How does one measure 'capitalism'? Fortunately, the US based think tank The Heritage Foundation publishes an annual report on index of economic freedom in collaboration with The Wall Street Journal. This index can be used as a proxy for capitalism. Corruption data is also easily available in the form of the widely known index published by Transparency International. The chart above is a result of plotting the corruption perceptions index (higher value means more transparency and hence less corrupt) against the index of economic freedom. 

What we see here is a beautiful representation of cold hard facts that blows the socialist propaganda to smithereens. The freer a country in terms of economic freedom (i.e. the more 'capitalistic' a country is), the less corrupt it happens to be. 

India (economic freedom=54.6, corruption perceptions index=3.3) happens to be smack on the trendline.

There are a few more interesting things that stand out in the chart. It looks like the less capitalistic countries are actually doing even worse than trend in terms of corruption - see these clustered below the line. There is also an inflexion point of sorts, it happens at around an economic freedom index value of about 70. Above this value, the countries are able to beat the trend and even match the least corrupt countries. So, which are these countries? Some of them are South Korea, Japan, Taiwan, Belgium, Sweden etc. 

 

References:

Transparency International - Corruption Perceptions Index 2010
Heritage Foundation - The 2011 Index of Economic Freedom