The Varieties of Corruption

By Sam Vaknin
Author of "Malignant Self Love - Narcissism Revisited"

To do the fashionable thing and to hold the moral high ground is
rare. Yet, denouncing corruption and fighting it satisfies both
conditions. Yet, corruption is not a monolithic practice. Nor are
its outcomes universally deplorable or damaging. One would do best
to adopt a utilitarian approach to it. The advent of moral
relativism has taught us that "right" and "wrong" are flexible,
context dependent and culture-sensitive yardsticks. What amounts to
venality in one culture is considered no more than gregariousness or
hospitality in another.
Moreover, corruption is often "imported" by multinationals, foreign
investors, and expats. It is introduced by them to all levels of
governments, often in order to expedite matters or secure a
beneficial outcome. To eradicate corruption, one must tackle both
giver and taker.

Thus, we are better off asking "cui bono" than "is it the right
thing to do". Phenomenologically, "corruption" is a common - and
misleading - label for a group of behaviours. One of the following
criteria must apply:

1.. The withholding of a service, information, or goods that, by
law, and by right, should have been provided or divulged.
2.. The provision of a service, information, or goods that, by
law, and by right, should not have been provided or divulged.
3.. That the withholding or the provision of said service,
information, or goods are in the power of the withholder or the
provider to withhold or to provide AND That the withholding or the
provision of said service, information, or goods constitute an
integral and substantial part of the authority or the function of
the withholder or the provider.
4.. That the service, information, or goods that are provided or
divulged are provided or divulged against a benefit or the promise
of a benefit from the recipient and as a result of the receipt of
this specific benefit or the promise to receive such benefit.
5.. That the service, information, or goods that are withheld are
withheld because no benefit was provided or promised by the
recipient.
Even then, we should distinguish a few types of corrupt and venal
behaviours in accordance with their OUTCOMES (utilities):

(1) Income Supplement

Corrupt actions whose sole outcome is the supplementing of the
income of the provider without affecting the "real world" in any
manner. Though the perception of corruption itself is a negative
outcome - it is so only when corruption does not constitute an
acceptable and normative part of the playing field. When corruption
becomes institutionalized - it also becomes predictable and is
easily and seamlessly incorporated into decision making processes of
all economic players and moral agents. They develop "by-passes"
and "techniques" which allow them to restore an efficient market
equilibrium. In a way, all-pervasive corruption is transparent and,
thus, a form of taxation.

(2) Acceleration Fees

Corrupt practices whose sole outcome is to ACCELERATE decision
making, the provision of goods and services or the divulging of
information. None of the outcomes or the utility functions are
altered. Only the speed of the economic dynamics is altered. This
kind of corruption is actually economically BENEFICIAL. It is a
limited transfer of wealth (or tax) which increases efficiency. This
is not to say that bureaucracies and venal officialdoms, over-
regulation and intrusive political involvement in the workings of
the marketplace are good (efficient) things. They are not. But if
the choice is between a slow, obstructive and passive-aggressive
civil service and a more forthcoming and accommodating one (the
result of bribery) - the latter is preferable.

(3) Decision Altering Fees

This is where the line is crossed from the point of view of
aggregate utility. When bribes and promises of bribes actually alter
outcomes in the real world - a less than optimal allocation of
resources and distribution of means of production is obtained. The
result is a fall in the general level of production. The many is
hurt by the few. The economy is skewed and economic outcomes are
distorted. This kind of corruption should be uprooted on utilitarian
grounds as well as on moral ones.

(4) Subversive Outcomes

Some corrupt collusions lead to the subversion of the flow of
information within a society or an economic unit. Wrong information
often leads to disastrous outcomes. Consider a medical doctor or an
civil engineer who bribed their way into obtaining a professional
diploma. Human lives are at stake. The wrong information, in this
case is the professional validity of the diplomas granted and the
scholarship (knowledge) that such certificates stand for. But the
outcomes are lost lives. This kind of corruption, of course, is by
far the most damaging.

(5) Reallocation Fees

Benefits paid (mainly to politicians and political decision makers)
in order to affect the allocation of economic resources and material
wealth or the rights thereto. Concessions, licences, permits, assets
privatized, tenders awarded are all subject to reallocation fees.
Here the damage is materially enormous (and visible) but, because it
is widespread, it is "diluted" in individual terms. Still, it is
often irreversible (like when a sold asset is purposefully under-
valued) and pernicious. a factory sold to avaricious and criminally
minded managers is likely to collapse and leave its workers
unemployed.

Corruption pervades daily life even in the prim and often hectoring
countries of the West. It is a win-win game (as far as Game Theory
goes) - hence its attraction. We are all corrupt to varying degrees.
It is the kind of corruption whose evil outcomes outweigh its
benefits that should be fought. This fine (and blurred) distinction
is too often lost on decision makers and law enforcement agencies.

ERADICATING CORRUPTION

An effective program to eradicate corruption must include the
following elements:

1.. Egregiously corrupt, high-profile, public figures,
multinationals, and institutions (domestic and foreign) must be
singled out for harsh (legal) treatment and thus demonstrate that no
one is above the law and that crime does not pay.

2.. All international aid, credits, and investments must be
conditioned upon a clear, performance-based, plan to reduce
corruption levels and intensity. Such a plan should be monitored and
revised as needed. Corruption retards development and produces
instability by undermining the credentials of democracy, state
institutions, and the political class. Reduced corruption is,
therefore, a major target of economic and institutional
developmental.

3.. Corruption cannot be reduced only by punitive measures. A
system of incentives to avoid corruption must be established. Such
incentives should include a higher pay, the fostering of civic
pride, educational campaigns, "good behaviour" bonuses, alternative
income and pension plans, and so on.

4.. Opportunities to be corrupt should be minimized by
liberalizing and deregulating the economy. Red tape should be
minimized, licensing abolished, international trade freed, capital
controls eliminated, competition introduced, monopolies broken,
transparent public tendering be made mandatory, freedom of
information enshrined, the media should be directly supported by the
international community, and so on. Deregulation should be a
developmental target integral to every program of international aid,
investment, or credit provision.

5.. Corruption is a symptom of systemic institutional failure.
Corruption guarantees efficiency and favorable outcomes. The
strengthening of institutions is of critical importance. The police,
the customs, the courts, the government, its agencies, the tax
authorities, the state owned media - all must be subjected to a
massive overhaul. Such a process may require foreign management and
supervision for a limited period of time. It most probably would
entail the replacement of most of the current - irredeemably
corrupt - personnel. It would need to be open to public scrutiny.

6.. Corruption is a symptom of an all-pervasive sense of
helplessness. The citizen (or investor, or firm) feels dwarfed by
the overwhelming and capricious powers of the state. It is through
corruption and venality that the balance is restored. To minimize
this imbalance, potential participants in corrupt dealings must be
made to feel that they are real and effective stakeholders in their
societies. A process of public debate coupled with transparency and
the establishment of just distributive mechanisms will go a long way
towards rendering corruption obsolete.

Sam Vaknin ( http://samvak.tripod.com ) is the author of Malignant
Self Love - Narcissism Revisited and After the Rain - How the West
Lost the East. He served as a columnist for Global Politician,
Central Europe Review, PopMatters, Bellaonline, and eBookWeb, a
United Press International (UPI) Senior Business Correspondent, and
the editor of mental health and Central East Europe categories in
The Open Directory and Suite101.

Until recently, he served as the Economic Advisor to the Government
of Macedonia.

Visit Sam's Web site at http://samvak.tripod.com