Zenobia Ismail*
Corruption involving the state, such as neopatrimonialism, clientelism and crony capitalism, are generally perceived to occur mainly in emerging democracies in the Global South or Eastern Europe. The so-called mature democracies tend to be seen as largely immune from extensive corruption. However, the unprecedented influence of business elites like Elon Musk in the recent US election campaign raises concerns about a form of elite corruption known as state capture. Americans can learn to detect state capture from the experiences of other countries which experienced this, in particular South Africa, which is coincidently the birthplace of Musk.
The term state capture arose in the 2000s to describe close relations between the political and new business elites in Eastern European and Asian countries that were transitioning away from communism towards democracy and free markets (Hellman, Jones and Kaufman, 2000; Grzymala-Busse, 2008). The simultaneous development of new laws and regulations and rapid privatisation of state-owned enterprises created opportunities for business elites to mould the laws and regulations that would govern their new private sector businesses.
In 2016 the term state capture regained currency as it dominated headlines in South African newspapers. State capture described the corrupt relationship between the former president, Jacob Zuma, and his business associates, the Gupta brothers. The Guptas were allegedly responsible for the dismissal of the Minister of Finance, Nhlanhla Nene, and the appointment of his successor, Des van Rooyen, who held the post for four days before being forced out by widespread condemnation. In addition, companies linked to the Guptas were favoured for public procurement contracts and were often overpaid. Since then, scholars, political commentators, activists and the media applied the term state capture to describe high-level corruption involving political elites, usually the executive branch of government, and narrow, private interest groups, usually from the business sector. Recent scholarship draws links between state capture and democratic decline and argues that capture or shadow states are detectable in many countries including Brazil, Sri Lanka, Georgia, Serbia, Hungary, Malaysia, Democratic Republic of Congo, Uganda and Zambia (David-Barret, 2021; Akechm Gyimah-Boadi, Hassan, Ologou, Nuvunga, 2021; Cheeseman, Wakenge, Rolls, Sishuwa and Zamchiya, 2020).
In the United States the fossil fuel industry and the National Rifle Association are well-known for their lobbying practices which have influenced the direction and pace of laws, rules and regulations. However, lobbying differs from state capture in that it is more transparent (Hellman et al., 2000) and traditionally focuses on influencing elected officials rather than influencing the results of elections. However, the role and influence of big donors on elections has increased steadily over time through Political Action Committees (PACs) and Super PACs, which are tax exempt organisations that pool campaign contributions.
David-Barret (2021) identifies three mechanisms of state capture that are useful for determining if state capture is coming to the United States. The first mechanism is the formulation of law and policy with the intent to shape the rules of the game. The key targets of capture are elections, the constitution, military and police, strategic economic assets and the legislature. The second mechanism involves influencing the implementation of public policy by capturing control of budgets, appointments, government contracts and regulatory decisions. The third mechanism requires disabling accountability mechanisms by capturing the judiciary, law enforcement and prosecution, supreme audit institutions, media, civil society organisations and academia.
There is evidence that the first two mechanisms are in operation in the United States. Firstly, billionaires, industry groups and other special interest groups have spent millions in 2024 to influence the outcomes of primary races and the recent elections. The richest person in the world, Elon Musk, campaigned with Donald Trump and contributed around USD 120 million to his campaign. Musk’s PAC offered a USD 1 million a day sweepstakes to encourage registered voters in swing states to sign their petition, a controversial move that tests the limits of electoral law. Similarly, the crypto currency industry allegedly spent USD 130 million on the 2024 election (Goodman, 2024). In a Senate race in Ohio the crypto industry spent USD 40 million to unseat the Senate Banking Chair and multi-term Democratic senator, Sherrod Brown, who lost the election to Bernie Moreno, a Republican favoured by the crypto industry. Trump stated that he wants to make the United States the crypto capital of the world and Musk is a champion of crypto currencies. Secondly, billionaires like Musk and Rupert Murdoch used their ownership of social media or traditional print and broadcast media to support their preferred candidate.
Since the election Musk is playing a visible role in government affairs. He participated in a phone call between the President-Elect and the Ukrainian president, Volodymyr Zelensky, and met the Iranian envoy to the United Nations. Musk and Vivek Ramaswami will co -lead a new external, advisory Department of Government Efficiency that will work alongside the Office of Management and Budget to scale down bureaucracy and reduce excessive regulation and wasteful expenditure (Wen, 2024). Musk pledged to operate with maximum transparency. The crypto industry boasted that the most crypto friendly Congress in history was elected (Goodman, 2024) and is upfront about its goal: to pursue deregulation of crypto currencies. After the election Bitcoin rose above USD 87,000 and the share price of Musk’s company, Tesla, rose by 35% (Sherman, 2024).
At this stage it is unclear how Musk and the cost-cutting Department of Government Efficiency will change rules, regulations and institutions of accountability, or if these changes will be beneficial for his vast business interests. However, it is worth noting that state capture at the South African Revenue Service (SARS) commenced with partisan appointments to key government posts and significant restructuring of the institution under the guise of promoting efficiency and cost savings. The Judicial Commission of Inquiry into Allegations of State Capture chaired by Justice Raymond Zondo concluded that the restructuring was unnecessary and undermined SARS’s capacity to enforce compliance with tax and customs regulations (Ismail and Richards, 2023).
It is also not clear if Musk and other donors are influencing appointments at Cabinet level or of key oversight agencies. Before the election Musk stated that Lina Khan, Chair of the Federal Trade Commission, would be fired. Furthermore, the first Trump presidency had a significant impact on judicial appointments at the Supreme Court, and lower courts since he made as many judicial appointments in one term as former president Obama made in two terms (Gramlich, 2021). It is therefore likely that he will continue to deepen his influence on the judiciary through the appointment of judges who are sympathetic to his policies.
These worrying signs indicate that the gap between the United States and countries that experienced capture or shadow states is narrowing. The key lessons for Americans are that oversight processes like Senate confirmations do not prevent institutions from being captured through partisan appointments, biased media narratives or misinformation are used to justify sweeping reforms that gut regulations and damage institutions of accountability. Such damage is difficult to reverse in the short term. On the positive side, large-scale protest action mitigates the most egregious policies from coming to fruition.
*Zenobia Ismail, PhD, joined the GSDRC in 2018 as a Research Fellow and is currently K4DD Helpdesk Manager. Her research speaks to institutions, party politics, and elections. Read her recent study on state capture in South Africa here.
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