Rethinking Corruption (Rethinking Political Science and International Studies series) 180037982X, 9781800379824

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Rethinking Corruption

RETHINKING POLITICAL SCIENCE AND INTERNATIONAL STUDIES This series is a forum for innovative scholarly writing from across all substantive fields of political science and international studies. The series aims to enrich the study of these fields by promoting a cutting-edge approach to thought and analysis. Academic scrutiny and challenge is an essential component in the development of political science and international studies as fields of study, and the act of re-thinking and re-examining principles and precepts that may have been long-held is imperative. Rethinking Political Science and International Studies showcases authored books that address the field from a new angle, expose the weaknesses of existing concepts and arguments, or ‘re-frame’ the topic in some way. This might be through the introduction of radical ideas, through the integration of perspectives from other fields or even disciplines, through challenging existing paradigms, or simply through a level of analysis that elevates or sharpens our understanding of a subject. For a full list of Edward Elgar published titles, including the titles in this series, visit our website at www​.e​-elgar​.com​.

Rethinking Corruption Alina Mungiu-Pippidi Professor of Comparative Public Policy, LUISS Guido Carli, Rome, Italy

RETHINKING POLITICAL SCIENCE AND INTERNATIONAL STUDIES

Cheltenham, UK • Northampton, MA, USA

© Alina Mungiu-Pippidi 2023 Cover image: Alina Mungiu-Pippidi All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2023940173 This book is available electronically in the Political Science and Public Policy subject collection http://dx.doi.org/10.4337/9781800379831

ISBN 978 1 80037 982 4 (cased) ISBN 978 1 80037 983 1 (eBook)

EEP BoX

Contents List of figures List of tables Acknowledgments List of abbreviations

vi viii ix xi

1

Rethinking how we approach corruption

2

The policy analysis of corruption problems

22

3

Rethinking actionable measurement

44

4

Rethinking corruption and democracy

73

5

Rethinking capitalism and corruption

93

6

Rethinking corruption as a social dilemma

115

7

The post-truth about corruption

134

References Index

1

149 171

v

Figures 2.1

The association between red tape and government favouritism

35

2.2

Trends in the evolution of bureaucracy and corruption

41

3.1

Modelling public integrity versus corruption at national level

53

3.2

The association between Control of Corruption indicator and Index of Public Integrity

56

3.3

Transparency’s influence on public integrity

58

3.4

Transparency and implementation gap across regions

62

3.5

De facto transparency by component: share of countries achieving each level of fulfilment

65

4.1

The association between democracy and corruption

77

4.2

The association between democracy and public integrity

80

4.3

Freedom House status over time, 2006–2022

84

4.4

Evolution of corruption, 1996–2020

85

4.5

Association between changes in corruption and democracy, 2006–2020

88

5.1

The vicious circle of political capitalism

5.2

Trends of administrative burden across regions and years, 2004–2020102

5.3

GDP growth by CoC tercile and selected countries, 1996–2021

112

5.4

Why globalization has not solved the quality of governance problem

113

6.1

Stakeholder analysis of corruption in Mexico’s education system 120

vi

101

Figures

vii

6.2

Stakeholder analysis of police corruption and cartel infiltration in Monterrey, Mexico

124

6.3

Active mobile broadband internet subscriptions per 100 inhabitants, 2007–2021

130

Tables 1.1

Thick versus thin approaches to anticorruption

2.1

Corruption: individual exception versus social norm and practice

25

2.2

Variants of corruption and its opposites in literature

27

2.3

Causes of corruption in the equilibrium model

33

2.4

Market and government failure mechanisms of corruption

39

2.5

Governance context and political will

42

3.1

Components of T-index de jure and de facto dimensions

61

3.2

Pairwise correlations of T-index and indicators of transparency and enabling factors

63

3.3

Pairwise correlations of T-index and indicators of corruption

64

3.4

Comprehensive Indicator Matrix for the Measurement of Public Integrity (CIMMPI): public procurement measures

69

4.1

Corruption across political regimes

76

4.2

Democracy status by corruption terciles, 2020

81

4.3

Public opinion on corruption by political regime

81

4.4

Change in political regime by corruption terciles

86

4.5

Backsliding democracies versus autocracies by corruption status

87

4.6

Explaining the backslide of electoral democracies

89

5.1

Crony capitalism indicators

105

5.2

Top fines paid by companies following settlements under Foreign Corrupt Practices Act

107

viii

4

Acknowledgments This book is the last in a series of books on corruption published by me in the last 15 years, and as such it is something of an act of closure and the time to acknowledge some significant contributions to this effort to change the main international anticorruption approach of the time. The Norwegian Agency for Development Cooperation (NORAD) was the first to commission me, demanding an approach explicitly challenging the leading principal–agent five-year anticorruption plan paradigm (for lack of a better denomination) in 2010. I worked on that project with a group of excellent students from Hertie School of Governance in Berlin. Bo Rothstein was one of the reviewers of this project and a significant contributor, alongside Michael Johnston, Robert Rotberg, Paul Heywood and Francesca Recanatini, to the effort to rationalize the corruption paradigm since then. Other significant commissions came from the Ministry of the Interior and Kingdom Relations in the Netherlands (the pilot project for the Index of Public Integrity), the World Bank, the European Parliament, the Swedish government, the US State Department and the United Nations Office on Drugs and Crime (UNODC) – all adding up to what became over time a significant endeavour not just to redefine the approach to corruption, but also to create a better evidence base for it. The hundreds of invited keynotes and talks I have given all over the world, in person or online after the COVID-19 pandemic changed our lifestyles, brought extraordinary feedback which went into it all. I am grateful to countless NGOs, academics and development practitioners I have interacted with during all these years. Although I wrote most of this book in 2022, the cumulative character of its innovations makes it that some landmarks had already been published by that time. The Index of Public Integrity (IPI), which I co-authored with Ramin Dadašov, first appeared in the European Journal on Criminal Policy and Research (editor Professor Ernesto Savona) in 2016. Its first webpage was www​.integrity​-index​.org, then it moved to www​.corruptionrisk​.org/​integrity after undergoing some transformation due to the closure of the World Bank’s Doing Business project. The argument on the endogeneity of bureaucracy and meritocracy as solutions to the corruption problem has been with me for a while, but its most complete and final expression is in the article ‘The Quality of Government and Public Administration’ in the Oxford Research Encyclopedia of Politics – Encyclopedia of Public Administration published by Oxford University Press in 2020. The genealogy of ethical universalism, ix

x

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originally sketched in my 2015 Cambridge University Press monograph A Quest for Good Governance. How Do Societies Build Control of Corruption has been further developed as a 2019 Seymour Martin Lipset lecture (hosted by National Endowment for Democracy and the University of Toronto), originally published in a shorter version by the Journal of Democracy (edited by Marc Plattner and Larry Diamond) and in the fuller version in the The Oxford Handbook of the Quality of Government published by Oxford University Press in 2021. Finally, the T-index, hosted on www​.corruptionrisk​.org/​transparency, started its academic life with its publication in Regulation and Governance (edited by David Levi-Faur) in 2022 as ‘Transparency and corruption: Measuring real transparency by a new index’. The Corruption Risk Forecast and the T-index were supported by grants from the National Endowment for Democracy (NED) and the International Centre for Private Enterprise (CIPE) and made possible due to the work of over one hundred country experts, reviewers, Hertie School students and invited external experts who offered input in two dedicated sessions. Michael Johnston, Bianca Vaz Del Mondo, Lucia Cizmaiova, Alvaro Lopez, Roberto Martinez Kukutschka, Till Hartmann, Belen Cruz, Joseph Foti, Niklas Kossow, Julian Brummer, Debora Ferreira, Francesco Bono, Ingrida Kalinauskienė, Sergejus Muravjovas, Laviana Zorzi, Jon Vrushi, Gresa Smolica and Nedim Hogic deserve special recognition. The creators of Opentender.eu, Mihaly Fazekas, and of Europam.eu, Aram Khaghaghordyan, also deserve special recognition for their innovations which inspired more rethinking. Alexandru Popescu developed the webpage www​.corruptionrisk​.org, where all the new measurements came together. Regina List brought a significant contribution to the present book, the last in what is actually a series of Edward Elgar books of mine. The first was dedicated to the success stories of the transition to good governance, edited with Michael Johnston in 2017, and the second on the state of the art on corruption research, edited with Paul Heywood in 2020. This monograph thus concludes the series, but by doing so it does not review all the past evidence from the academic community that exists in these Elgar books or my own contribution from previous monographs. Its role is to close the door to the past, from theory to indicators, and open a door to the future, or better said an illustrative glimpse of it, sufficient to be used as a textbook and provide the starting point for a new generation of research and practice. At least this was the plan: the readers will judge how it worked. Berlin, December 1, 2022

Abbreviations AAP ABC ACRC AIS BJP CED CIC CIMMPI CoC CPATPP CPC CPI DoJ EITI ENA ERCAS EU FCPA FDI FIFA FOI GCB GDP

Aam Aadmi Party (India) OECD Anti-Bribery Convention Anti-Corruption and Civil Rights Commission (South Korea) Albanian Institute of Science Bharatiya Janata Party (India) Committee for Economic Development Center for Citizen Integration (Mexico) Comprehensive Indicator Matrix for the Measurement of Public Integrity Control of Corruption Indicator, Worldwide Governance Indicators Comprehensive and Progressive Agreement for Trans-Pacific Partnership Coalition for Clean Parliament (Romania) Corruption Perceptions Index, Transparency International Department of Justice (US) Extractive Industry Transparency Initiative École nationale d’administration (France) European Research Centre for Anti-Corruption and State-Building European Union Foreign Corrupt Practices Act Foreign Direct Investment International Federation of Association Football Freedom of Information Global Corruption Barometer, Transparency International Gross Domestic Product

xi

xii

GPA

Rethinking corruption

Agreement on Government Procurement by World Trade Organization GTMI GovTech Maturity Index HDI Human Development Index IAC India Against Corruption IACA International Anticorruption Academy ICIJ International Consortium of Investigative Journalists ICRG International Country Risk Guide IMF International Monetary Fund INTOSAI International Organization of Supreme Audit Institutions IPAB I Paid a Bribe IPI Index of Public Integrity MENA Middle East and North Africa MP Member of Parliament NATO North Atlantic Treaty Organization NGO Non-governmental Organization NIT Nations in Transit (Report) PPP Purchasing Power Parity OECD Organisation for Economic Co-operation and Development OGP Open Government Partnership PANAL Partido Nueva Alianza (Mexico) PRI Partido Revolucionario Institucional (Mexico) SDG Sustainable Development Goals SEC Securities Exchange Commission SIDA Swedish International Development Agency SNTE Sindicato Nacional de Trabajadores de la Educación (Mexico) SOE Sstate-owned Enterprise TI Transparency International T-Index Computer Mediated Transparency Index UAE United Arab Emirates UN United Nations UNCAC United Nations Convention against Corruption UNDP United Nations Development Program

Abbreviations

UNESCO UNODC US USAID V-Dem WGI WTO

xiii

United Nations Educational, Scientific and Cultural Organization United Nations Office for Drugs and Crime United States US Agency for International Development Varieties of Democracy Project Worldwide Governance Indicators World Trade Organization

1. Rethinking how we approach corruption The Greek poet Hesiod, a contemporary of Homer, was the first to give an account of Pandora, the first woman. The essentials are very similar to the much later, but far better-known story of Eve: it is the same story of how the gods choose the woman to tempt and punish the man. Pandora receives a box from the gods, but with instructions not to open it; Eve is created under an apple tree, but God orders her not to touch the fruit. When the lid of the box is opened, all plagues and evils escape: only hope is caught within when the lid falls back. An association of journalists known as the International Consortium of Investigative Journalists (ICIJ) chose the name of Pandora when in 2021 they leaked millions of documents that uncovered financial secrets of dozens of current and former world leaders, including the King of Jordan, the Ukrainian President (the same Volodymyr Zelensky), the prime minister of the Czech Republic and more than 300 politicians and public officials in 91 countries and territories. The files also covered more than 130 of the wealthiest people and families from Russia, the United States and elsewhere. Journalists chose to call these documents from an undisclosed source ‘Pandora Papers’, which they claimed offered ‘an unequalled perspective on how money and power operate in the twenty-first century – and how the rule of law has been bent and broken around the world by a system of financial secrecy enabled by the US and other wealthy nations’ (ICIJ 2021). One year after the documents had been leaked and journalists in over 90 countries had started to unravel their secrets, at least one ruling family lost its power monopoly: the Rajapaksas in Sri Lanka. Additionally, a war had started between Russia and Ukraine, two countries leading in the numbers of oligarchs exposed in such papers, a catastrophic war with the potential to ruin the entire world. The metaphor of Pandora’s box is quite suitable to capture the issue of corruption as it has been increasingly gaining attention in the global public sphere since 1989. It is an issue with the potential to destroy the old world order, but does it really have the potential to offer a new world order? To stay just a little longer with the topic of offshore finance, as Yakov Feygin (2020) argues, instead of viewing offshore finance as a national security threat created by the exploitation of a legitimate financing system by illegitimate actors, the US 1

2

Rethinking corruption

and its allies should realize that the global monetary order based on wholesale money market Eurodollar ‘deposits’ would find itself short of liquidity in their absence. Global capitalism has been thriving because no one asks where the money comes from. Individual sanctions of a few kleptocrats will not solve the problem: what is needed is a structural reform, if one can be designed without bringing on another economic crisis. Similarly, what good does it bring to the Sri Lankans that President Rajapaksa has fled, or are the Algerians better off because of the fall of Abdelaziz Bouteflika in 2019, or do the Egyptians think their current regime is fairer that the one of President Hosni Mubarak before 2011? In Tunisia, the most successful Arab Spring case, a 2015 poll conducted only four years after the uprising found only 52 per cent thinking that the revolution had delivered on its promises (Lekalake 2017). And theirs was an anticorruption revolution, if ever one was, where the people turned against a kleptocratic dictator and his cronies and dismantled his wife’s villa with their bare hands. The leaked Pandora records reveal spectacular deeds. Few are illegal, though. Journalists rather remark on the hypocrisy of the power players who are in the position to bring an end to the offshore system but prefer instead to benefit from it. The $22 million chateau in the French Riviera – replete with a cinema and two swimming pools – purchased through offshore companies by the Czech Republic’s prime minister Andrei Babis is shocking only if people remember that the populist billionaire was elected on an anticorruption ticket (El Idrissi 2022). The man was already very rich before entering politics, promising to sweep away the old ‘corrupt’ political class. The three beachfront mansions in Malibu purchased through three offshore companies for $68 million by the King of Jordan raise no doubt about the origins of the funds; the Hashemite family is very rich. The journalists from ICIJ contrast it however with the Jordanians who filled the streets during the Arab Spring to protest joblessness and corruption (ICIJ 2021). We do not know if Mr. Zelensky and his associates in his media company did anything wrong (like evading taxes) when purchasing expensive London real estate through offshore companies, as there was no real investigation on that. But does this matter? Public opinion has already judged these cases, and the defendants have already lost. The underlying presumption behind these accusations was clearly phrased by ICIJ in the headline: The Pandora Papers reveal ‘the inner workings of a shadow economy that benefits the wealthy and well-connected at the expense of everyone else’ (emphasis added). The ‘corruption’ of the Pandora Papers crowd is perceived as a deviation from a standard of good governance which presumes equality: the rich and the powerful should pay taxes as well as the ordinary citizens who cannot afford tax lawyers, and they should do so even if tax optimization is legal. What is differs from what should be, and this is a definition of corruption as a policy problem.

Rethinking how we approach corruption

3

Once the public integrity standard is clear, the definition can then drill down to the level of corruption, to the specific mission or goal of a public organization or role of a state (e.g., uniform tax treatment across all citizens and businesses; competitive public procurement markets free of favouritism). UNESCO, for instance, has a sound actionable definition of corruption in education as abuse of authority with consequences having a significant impact on access, quality or equity in education (Hallak & Poisson 2007). That definition relies on a clear benchmark (universality of public education) and is measurable by connecting abuse with educational outcomes. However, until very recently corruption has not been conceived similarly across national contexts, nor uniformly dealt with by national legislation. The modern definition of corruption is grounded in the work of the German political sociologist Max Weber (1978). He indicated the separation of private from public interest in the exercise of public power as the border between premodern states (‘patrimonial’, based on traditional authority and allocating public resources via particularism) and modern ones (based on rational-legal authority, where the state operates impersonally due to an officialdom autonomous from private interest, which treats every citizen with equal and impartial consideration). His private power separation in the exercise of public authority has survived as the backbone of all corruption definitions (Nye 1967; Rose-Ackerman 1978). Based on this distinction, control of corruption – a frequently used paradigm – refers to the capacity of a society to prevent those entrusted with public authority from using their office for undue private profit. Similarly, corruption risk indicates the probability that a public authority would use the office for undue private benefit. The variety of corruption understandings across countries and strands of literature (crime, social science, philosophy) has come mostly from the positioning of corrupt acts in the more general rule of law context, that is to say, control of corruption, versus conceiving of them simply as individual acts. In many countries, corruption, regardless of its overall prevalence in society, is treated solely as a deviation from the norm of public integrity and an exceptional individual act. The prosecution of corruption in such contexts tends to be limited to a small number of practices (e.g., bribery, theft or embezzlement of public funds). This understanding of corruption is more procedural or ‘thin’ and can be summed up in the norm that public authority holders are bound by the rules not to extract any undue profit for themselves, regardless of the fairness of regulation and practices and the universality of (non-selective) enforcement. In other countries, however, and due to Pandora Papers-like campaigning in an increasing number of them, the concept of corruption has become increasingly more substantial or ‘thick’. In such environments any infringement of the equality of opportunity principle (not just the regulation, but also the social norm) on the part of those entrusted with public authority is seen as corrupt.

Rethinking corruption

4

Table 1.1  

Thick versus thin approaches to anticorruption Procedural, ‘Thin’ (individual level

Substantial, ‘Thick’ (social context considered)

irrespective of context) Legal

– Expensive gifts in exchange for favours

– Pork barrel – Resort to connections to get public service, job or contract

– Profit from conflict of interest – Nepotism Illegal

– Bribe solicitation and acceptance

– Bribing

– Embezzlement

– Extortion – Various abuses of office – Any diversion of public funds benefitting particular interests – Some profit from conflict of interest

Criminal sanctions also vary across the two understandings (Fisman & Golden 2017), and even under the ‘thick’ version several types of behaviour that are considered corrupt by the public and media are not currently criminalized (see Table 1.1).1 A large variety of acts within the influence-peddling category, for instance, are only regulated by soft law, making analysts speak of ‘legal corruption’ (Kaufmann & Vicente 2011).

AN END OF HISTORY OF SORTS The new emerging benchmark from the ‘thick’ version may not be yet scripted as such in criminal law and is certainly not well covered by public policies in many countries. But this does not make it less official. On 31 October 2003, the United Nations General Assembly (Resolution 58/4) adopted the United Nations Convention against Corruption (UNCAC). UN General Secretary Kofi Annan stated its objectives in his introduction at the time as: ‘The adoption of the United Nations Convention against Corruption sends a clear message that the international community is determined to prevent and control corruption’ (United Nations 2003). The Convention warns the corrupt that betrayal of the public trust will no longer be tolerated. And it reaffirms the importance of core values such as honesty, respect for the rule of law, accountability and transparency in promoting development and making the world a better place for all. Twenty years after, more than 190 parties had ratified UNCAC, including 185 UN member states, the Cook Islands, the Holy See, Niue, the State of Palestine and the European Union (EU), reaching near global unanimity. Unlike its older and more famous antecessor, the Universal Declaration of Human Rights (1948), and the subsequent UN human rights covenants, UNCAC did not meet with official expressions of dissent and claims that it

Rethinking how we approach corruption

5

imposed some form of Western institutional hegemony on the rest of the world. No equivalent exists for UNCAC of the historical reservations made towards the universality of human rights by Saudi Arabia or Iran, which resulted in the separate Islamic version known as the Cairo Declaration on Human Rights in Islam.2 In fact, the latter document lays the ground for UNCAC by stating that ‘All people, whether rulers or the ruled are equal before the law’ (Article 19) and ‘Authority is a trust; it is emphatically prohibited to be despotically practiced; or to be misused’ (Article 23). The 1948 Universal Declaration, although apparently not dealing with corruption, has already included two fundamental provisions for good governance, by stating in Article 7 that ‘All are equal before the law and are entitled without any discrimination to equal protection of the law. All are entitled to equal protection against any discrimination’, and in Article 21 (2) that ‘Everyone has the right to equal access to public service in his country.’ UNCAC itself brings it all together, spelling out from the preamble the principles of ‘proper management of public affairs and public property, fairness, responsibility and equality before the law and the need to safeguard integrity and to foster a culture of rejection of corruption’, to then give them operational substance. UNCAC does not define corruption, but its opposite, the standards of good governance: transparency, accountability, equal access and treatment and participation in decisions that impact one’s life. The UNCAC ratifying parties (of which some are not democracies) thus agreed on the norms of good governance and the goals of such policies, which have become truly universal. Very few people in the world have heard of UNCAC. My public policy students every year are surprised to hear of it, and they find scarce mention, if at all, in their countries’ media. UN conventions are binding formal agreements for the states that have ratified and signed them, even when the means of enforcement do not exist in practice. By 2010 when only about half the countries in the world had joined, there was no evidence of more progress for the ratifying countries compared with the rest. Still, the value of UNCAC resides in had a great value in spelling out of the new global norm and policy goals. This new norm is only at the very beginning of its implementation. But that is the ending point of a far longer Western effort which has advanced against all odds. The generic name of this new norm that has gradually conquered the world is ethical universalism. The notion has been around for about two millennia: Already in 1835, Alexis de Tocqueville (1954, p. 6) wrote, ‘The gradual development of the equality of conditions is therefore a providential fact, and it possesses all the characteristics of a divine decree: it is universal, it is durable, it constantly eludes all human interference, and all events as well as all men contribute to its progress.’ Since those times, the moral principle that all persons ought to be treated with equal and impartial positive consideration

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for their respective goods or interests has simply become the norm. Nobody argues the opposite. Many constitutions, the human rights conventions and in particular UNCAC have truly universalized the principle, if not the practice. While some human rights elements are still controversial (as the rights of women), the right to a non-corrupt government, although not enshrined as such in any treaty, has gained universal acceptance. Regardless of whether a government is elected or not, the promise of fair and non-discriminatory treatment exists in every present constitutional contract. The only remaining reservations are with the handful of countries who had not yet ratified UNCAC at the end of 2021: Eritrea, North Korea, Monaco, San Marino, Barbados, St Kitts and Nevis, St Vincent and Andorra. So, this is the greatest Western success in shaping the world and the end of history, of sorts: some people may resist market institutions or free elections, but after the fall of apartheid, ethical universalism is at least nominally embraced by everyone. This first chapter is a succinct introduction to the trajectory of this moral doctrine across time and its growing salience in public policy from the more specific angle of anticorruption. I argue that the extraordinary success of the West in promoting this Western norm in various forms and guises (state modernization and anticorruption in particular) has still great transformative potential ahead, but also carries some important risks. The first risk is the divorce of the norm from the practice, both in the broader world as well as in the promoting countries: perhaps one reason why this particular UN convention encountered so little opposition was the perception of an easy reputation gain at ratification time and no costs for the further lack of implementation (as no sanctions mechanism exists). Furthermore, the lack of understanding of what the norm entails (what do we actually promote?) has led to a largely inefficient industry of anticorruption efforts coming from donor countries. The second risk is that popular demand for ethical universalism tends sometimes to go further than what is possible and sometimes even good for a democracy. As Baron de Montesquieu (1748) noticed three centuries ago, the principle of democracy may be corrupted, ‘not only when the spirit of equality is extinct’, but also in the opposite situation, when a spirit ‘of extreme equality’ takes hold, so that ‘each citizen would fain be upon a level with those whom he has chosen to command him’. Such a collapse of trust and moral authority of ruling elites has become apparent over more than a decade in both developed and developing countries. Political parties, legislatures and political representatives appear in Transparency International’s periodic Global Corruption Barometer as not only corrupt, but the most corrupt compared to all other associations, groups or organizations. Social media has contributed to subverting trust in traditional elites in the media, government and expertise (as the debate against vaccinations has shown). While other causes may exist that explain

Rethinking how we approach corruption

7

the decay of representative democracy, the rise in the global ‘anticorruption’ demand has likely played a major role.

GOOD GOVERNMENT IS IN THE GENERAL, NOT PRIVATE, INTEREST Ethical universalism is defined as the moral principle that everybody ought to be treated with equal and impartial positive consideration for their respective goods or interests (Gewirth 1978). Three interrelated concepts in political theory meet here: first, that of equity, making people who are equal in respect to contribution also equal in respect to outcomes; second, that of reciprocity, the assumption that fairness should be responded to in kind; and third, that of impartiality, in other words of a judgement free of favouritism and observant of rules only (Wilson 1993, p. 70). At the interpersonal level psychologists discuss the principle as reciprocity, and the game theorists label it reciprocal altruism (Trivers 1971), the inner attribute which makes an individual treat another fairly and cooperatively due to the expectation of reciprocation of such treatment. In the sphere of governance, ethical universalism has been from immemorial times the most basic moral principle, resulting in equality before the law and the development of an impartial and non-selective justice – the basics of what we call today rule of law. Control of corruption, or the capacity of a state to operate autonomously from private interest for the greatest social welfare possible, is the implementation of the same ethical universalism principle in the distribution of public goods and allocation of public resources (Mungiu-Pippidi 2021). Both utilitarianism, the main philosophy underpinning modern public policy, and the doctrine of human rights draw on ethical universalism, as both provide for the equal and impartial consideration of interests (Gewirth 1978). While utilitarianism requires individuals to be weighted equally when adding up their utilities to the greatest possible overall sum of individual welfares, the principle of human rights requires that all persons be treated equally and impartially with the aim to secure their individual entitlement. Of course, the two doctrines clash in the situation when the individual and the collective entitlements do not coincide. But for our purpose here it is enough to notice how their nineteenth-century progress, each along its own separate path, has helped infuse modern governance with the principle of ethical universalism (Mungiu-Pippidi 2021). The Enlightenment saw the massive promotion of ethical universalism based on older, in fact ancient, foundations of the debate on justice and public virtue. Cicero provided the best outline of the argument and thus became the influential source for later thinkers, from theologians to lawyers (Mungiu-Pippidi 2015b, ch. 3). He argued for this moral principle to be upheld basically due to

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its practicality in a republic defined as ‘an association of rights’: ‘by what rule can the association of citizens be held together, if the condition of the citizens be not equal?’ (Cicero 1877, XXXII). We thus endorse ethical universalism because it is the only principle that permits the functioning of a rational human organization, and as such it has become part of what James Q. Wilson (1993) called ‘the moral sense’. The Enlightenment social contract is a clear political formulation of the same old ethical universalism principle coated in emancipatory language. Cicero synthesized previous Greek and Roman thought on the matter when explaining in his De Officiis (On Duties): those who propose to take charge of the affairs of government should not fail to remember two of Plato’s rules: first, to keep the good of the people so clearly in view that regardless of their own interests they will make their every action conform to that; second, to care for the welfare of the whole body politic and not in serving the interests of some one party to betray the rest. For the administration of the government, like the office of a trustee, must be conducted for the benefit of those entrusted to one’s care, not of those to whom it is entrusted. Now, those who care for the interests of a part of the citizens and neglect another part, introduce into the civil service a dangerous element – dissension and party strife. (Cicero 44 BCE/2006, p. 66)

Aristotle had already indicated that the righteous forms of government are those in which ‘the one, the few or the many govern with a view to the common interest: but the governments which rule with a view to the private interest whether of the one, or of the few or of the many are deviations’ (Aristotle Politics 350 BCE/2009, Book 3, Part VII). Thus, corruption has always been central to political philosophy and inseparable from every conceptualization of government, due to the early intuition that unchecked power leads to partiality in the act of governing. The ideas of Cicero had an impressive following in the Middle Ages, passing from Isidore of Seville (c. 560–636) to the highly authoritative Aquinas (1225–74), who further developed the idea that private interest, even that of the ruler, should never be promoted over the common interest: ‘Law should be framed, not for any private benefit, but for the common good of all the citizens’ (Aquinas 2006, as cited in Mungiu-Pippidi 2015b, p. 59). This view of good government as non-partisan government and of the good state as autonomous from private interest has therefore been gradually built up since the Enlightenment to become near general in Europe in the different forms of contract theory and the new ideas of political legitimacy, all including the principle of ethical universalism despite their otherwise many shapes and colours (Mungiu-Pippidi 2021). A historian would probably argue that many legal particularisms co-existed with the rise of the ethical universalistic principle (until

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it became the dominant rule of the game) in both canon and secular European law in this long interval (Middle Ages, Renaissance, early modern times). By the end of the eighteenth century, despite the erosion of the monopolies of privilege by the top estates – nobles and clergymen – European society was still a society of orders, where privilege was prevalent (Hufton 1980, p. 46). If Enlightenment thinkers did not use the term ‘corruption’ more often, or used it more to indicate the decay of morals, it is largely on account of the fact that corruption was institutionalized as privilege (hereditary or status bound), and equality was their chief concern, far more than the venality related to the public function (hereditary or purchasable offices). John Locke for instance does not mention corruption, but defines ‘tyranny’ in fairly Aristotelian terms as ‘making use of the power any one has in his hands not for the good of those who are under it, but for his own private, separate advantage’ (Locke 2003, p. 188). In the New World, Cicero and Montesquieu strongly influenced the understanding of good governance of the American Federalists: despite scant mention of the word ‘corruption’, the American Constitution embeds a ‘structural anti-corruption principle, akin to federalism or the separation-of-powers principle’, being designed, ‘in large part, to protect against corruption’ (Teachout 2009, p. 341).3 The gradual elimination of official privileges, the extension of education and secularization made important headway towards democracy. Among other effects, they facilitated the equalization of political resources, defined by Robert Dahl (1996) as whatever can be used by a specific group of people to influence the decision of a government (Mungiu-Pippidi 2021). The endorsement of ethical universalism by the state is written in all modern constitutions. But the implementation of this principle is highly problematic when political resources remain so unequal. The satisfaction of the ‘fair equality of opportunity’ and ‘impartiality’ (Rawls 1999, section 12; Rawls & Kelly 2001, section 13) proved a very tall order for many countries. A full satisfaction of the ethical universalism principle in governance would far exceed the elimination of any procedural favouritism as the original unequal endowment with political resources remains a subversive factor of universal fair treatment (Mungiu-Pippidi 2021).

ETHICAL UNIVERSALISM GETS UNIVERSALIZED While the development of political thought from the ancients to the moderns has always given virtue and equality a central place, political development itself has mostly been a struggle to build up a practice of governance ever more respectful of ethical universalism. This does not happen in a vacuum, but against the particular interests of privileged groups, who own the most lucrative rents and are endowed with superior political resources translated

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into both superior rights4 and status. The historical advance of ethical universalism is a story of conflict, with the norm (in a Durkheimian sense) evolving faster than the practice (Mungiu-Pippidi 2021). Political challengers used it to advance their power bids. Establishing equality before the law was the first landmark of applied ethical universalism, a battle started by Cicero himself in his anticorruption lawsuit against the Sicilian governor Verres. The next sequence consisted in the elimination of legal privileges in Europe, which meant the special status enjoyed by the aristocracy, the clergy, some towns, regions and various groups of people, which brought them benefits to the detriment of others. Pushed from the top due to the need to increase the tax base and from the bottom due to political emancipation, the battle for privilege elimination was a long and protracted one (Mungiu-Pippidi 2021), with unlikely champions. The Habsburg Emperor Joseph II, a student of the Enlightenment who came to power in 1780, translated the philosophical principle to his administrative acts: 4th. Self-interest of every kind is the ruin of all affairs and the least forgivable vice of a state servant. Self-interest should not be understood solely in monetary terms, but also in terms of all secondary intentions that obscure, cloak, conceal, delay, or enfeeble what is the only true and best, the assigned duty and truth in reports and accuracy in implementation. Anyone who is guilty of this is dangerous and noxious to all further state service, just as the person who knows about it and does not reveal it is in cahoots with him, and either draws his own advantage from that man’s self-interest or is simply waiting for an opportunity to do the same. … 8th. Since the good can only be one thing, namely what concerns the general and the greatest number … .5

Joseph II did manage to eliminate some privileges and forms of discrimination, for instance regarding the serfs, but the impersonalism and disregard for tradition mobilized too many of those standing to lose: from Northern Italy to the Low Countries, resistance was fierce. Both his timing and the choice of location for his reforms had been wrong. The constituency for ethical universalism in the Habsburg Empire was small, and the kind of tabula rasa needed to build an empire based on reason and equality on the ruins of old particularisms was beyond the means even of an absolute monarch (Mungiu-Pippidi 2021). The French Revolution was more efficient in promoting a similar agenda. Two main reasons explain its better performance: the successful propaganda for ethical universalism, which preceded policies by many years and created a public opinion basis (Mornet 1967), and, of course, its absolute ruthlessness. By 1780, France’s historical taxation system was a complex collection of tailor-made arrangements varying across groups and regions, making it an easy target of radical propaganda in favour of ethical universalism. Great public works of the time (like canals) bear testimony that value for money existed

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under the old regime, so the tax system was not a complete failure. More than the burden of taxation itself or the frequent embezzlement of tax farmers, the propaganda focused on the clergy and the particularism of the organically grown system of taxes. The hate of inequality pushed people ‘to destroy all that was left of Middle Age institutions and on the vacated grounds to build a society where people are as similar and the conditions as equal as the humanity would warrant’ (Tocqueville 1967, p. 317). By the end of the nineteenth century, a new type of authority, the rational-legal one, had already emerged from the ruins of the patrimonial and feudal regimes in several European states. By that time various status groups in Western Europe had at least nominally endorsed ethical universalism and government rationalization as the best vehicles to promote prosperity and social peace. The market and capitalism, despite their obvious limitations, have gradually emerged as the main means of allocating resources, replacing the previous discretionary allocation by means of more or less organized violence – at least on the European continent. The colonies were an altogether different story. In Europe, modem bureaucracies already surrounded Joseph II or the Prussian king Frederick Wilhelm (the father of Frederick the Great), but it was Napoleon Bonaparte who promoted state rationalization and ethical universalism in the wake of the French Revolution, from the Italian republics created during the French Directorate (in Milan, Genoa, Naples and so on) to Switzerland and the Rhine states (Gaffarel 1895). The most spectacular success was Switzerland, wrongly credited to have had an independent path to the successful governance it enjoys today (Fischer 1946; Mungiu-Pippidi 2019). By the mid-eighteenth century, privileges and restrictions on economic freedom dominated Switzerland (Tilly 2009). Furthermore, it was plagued by religious, ethnic and political conflict, which would continue for more than a hundred years. Public offices were bought and sold, and the top officials caught embezzling suffered no other inconvenience than replacement (Tilly 2009). Public goods delivery was low to non-existent: there were nearly no public roads, schools or hospitals, very much as in the present poor African countries (Mungiu-Pippidi 2019). However, the Swiss solved their social dilemmas with considerable help (although hardly kind help) from revolutionary France. The first French occupation of Switzerland initiated in 1789 introduced the basics of a revolution in government – equal rights, separation of powers, centralization, bureaucracy – according to the new rational and enlightened philosophy of the time (Mungiu-Pippidi 2019). The First Consul Napoleon Bonaparte introduced ethical universalism himself

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as part of the inevitable advance of history in his letter to the Swiss from 1802, as well as the constitution delivered for them from Paris: The circumstances and spirit of past centuries have made it that some nations are sovereign and others subject. A new environment and mood, changed from that of the past and closer to reason, have established the equality of rights between all parts of your territory. The wish and interest of both you and the states surrounding you, therefore, favor: 1. The equality of rights between your eighteen cantons. 2. A voluntary and earnest renunciation to the privileges from the part of patrician families. 3. A federal organization, so that each Canton organizes itself according to its religion, customs, interests and opinions.6

The French-designed Act of Mediation, or Malmaison Constitution, translated these principles into practice, rendering present-day Switzerland fairly close to its blueprint (Biucchi 1973; Tilly 2009). Ethical universalism was not an easy sell to a society where inequality reigned between town and country, on one side, and patricians and the people, on the other, all complicated by further linguistic, ethnic and religious diversity (Mungiu-Pippidi 2019). But it worked: 20 years later, the nation that had emerged out of the factional, pre-Act of Mediation Switzerland took off economically to level with England, Europe’s first industrial nation, as the most competitive European economy (Biucchi 1973). Although reactionaries and liberals have continued to push such achievements back and forth, Switzerland managed on this foundation to become a benchmark of good governance. The important instrument in the promotion of ethical universalism which survived Napoleon was the Napoleonic Code, which replaced the French organically grown complex body of laws implementing the Enlightenment ideas (Mungiu-Pippidi 2021). It introduced – aside from the main gain of a simplified universal law that anyone could understand – principles such as transparency (laws became valid only after being published) and equality, making all male citizens equal and abolishing primogeniture, hereditary nobility and class privileges (Mungiu-Pippidi 2021). Also, civilian institutions were emancipated from ecclesiastical control and freedom of person, freedom of contract and inviolability of private property were enacted (Tunc 1954). The French influence in much of continental Europe on one side and the qualities of the legal text on the other made the Code spread rapidly throughout Europe and the world and marked the end of feudalism and the liberation of serfs. It was not only adopted in many countries occupied by the French during the Napoleonic War (like Poland), but had a lasting impact on civil law codes in other regions of the world which sought top-down modernization via constitu-

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tions: Eastern Europe, the Middle East where it was combined with the Islamic law and Latin America where its influence has still survived (Mirow 2005). In Britain, the change took over a century and has progressed only gradually (Mungiu-Pippidi 2021). From the elimination of slavery to that of royal privileges the British society travelled a long journey without ever reaching the end. Patronage continued to be the rule in acquiring a public position (including in the colonies and church), while a wild press and a self-assertive class of barristers pushed for equality. It is very tempting today to present a coherent retrospective story of incessant progression with some ‘thresholds’, except that every step forward also shows how deep the problems such as venality of military positions and electoral corruption were.7 It took considerable time and activism for the basic ethical universalism-based practice to catch up, but then the British became its universal promoters, not less zealous than the French. Upon leaving Africa, they tried to establish some foundation for a national autonomous civil service (public service commissions, for instance), but the effort came too late and was subverted by the African governments’ need to nationalize the administration fully (Adu 1965). The US is the only case in the developed world where free elections preceded the creation of an autonomous bureaucracy, hence its interest for developing countries. The Civil War aftermath left an administration dominated by mounting incompetence, graft and corruption. After President James A. Garfield was assassinated in 1881 by a disappointed office seeker, Congress passed a comprehensive civil service bill sponsored by Senator George H. Pendleton. This provided for the open selection of government employees – to be administered by a Civil Service Commission – guaranteeing the right of citizens to compete for federal appointment on an ethical universalism basis, without regard to politics, religion, race or national origin (Hoogenboom 1959). Only about 10 per cent of the positions in the federal government were covered by the new law, but nearly every president after Chester A. Arthur, who signed the bill into law, broadened its scope to eventually cover more than 90 per cent of federal employees (Mungiu-Pippidi 2015b). These British and American reforms enjoyed great reputation, and considerable emulation followed, since the rest of the world tried to copy whatever in the European organization explained its superior prosperity and international influence. Most notably, in 1905 China abolished its traditional Confucian examination system for civil servants that had endured over 1,300 years and reorganized it closer to these Western models (Gilbert 2008). How universal is actually ethical universalism? Some ancient Chinese teachings on political governance also teach impartiality (Mungiu-Pippidi & Hartmann 2019). For instance, two chapters of the ancient eclectic text Lü Shi Chun Qiu (The Annals of Lü Buwei) are entitled ‘Gui gong’ (honouring impartiality) and ‘Qu si’ (dispensing with partiality) (Lü et al. 2000). Despite

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some scholars arguing that ethical universalism exists also in Confucianism or Islamism (which is true for virtue, integrity, trust, social cohesion and other concepts relevant for good governance; Kamali 2010), ethical universalism as such advanced in the rest of the world with the help of modern Western promotion and fairly tied with Western individualism. While a number of remarkable personalities have spoken eloquently against the incompatibility of liberal democracy with religions such as Buddhism, Hinduism, Confucianism or Islamism,8 there is no claim that a governance regime based on equal and fair treatment of every individual, with complete suspension of any privilege, originated anywhere other than the source shown here, the French Revolution and the administrative revolution that followed it. To be clear, this still did not mean the success of the full norm or the practice of equality even in the French Empire: women were excluded from the outset, the French dominions overseas had different rules and the courts hardly treated everybody impartially; it needed the Dreyfus affair and many years of campaigning to create full rule of law (Mungiu-Pippidi 2021). Nevertheless, the Napoleonic Code and the administrative codes deriving from it set the norm of ethical universalism in public life for the most part. Norm and practice then advanced on specific paths country by country: some more radically, others more gradually, some more formally (Latin American and East European countries all adopted very advanced constitutions based on either France or Belgium, but were unable to implement them) and others more substantially (a British colony, New Zealand, became an ethical universalism champion for adopting first in the world the vote for women and addressing more equitably than others the rights of its indigenous population). As to the alleged incompatibility of ethical universalism with any religion, the successful examples of Japan, Uruguay, South Korea and Taiwan show clearly that this is not the case. The Swiss account is thus just the first in a long series of Western ‘interventions’ or attempts to change governance in another country with the self-avowed goal of the promotion or the restoration of ethical universalism (Mungiu-Pippidi 2019). According to the degree of development of the society where the intervention takes place, the goals might range from the abolition of slavery or feudal institutions, as in certain nineteenth-century interventions (some accompanying colonialism), to the restoration of constitutional order or the rule of law. As Emperor Napoleon III, the nephew of the first Napoleon, put it to the Duke of Malakoff, the General Governor of Algeria: ‘We need to persuade the Arabs that we have not come to Algeria to press and spoil them, but to bring them the benefits of civilization. And the first condition of civilization is the reciprocal respect of everybody’s rights.’9 As side effects of colonialism, legal codes based on more advanced versions of the Napoleonic Code and the individual rights based in British common law also spread around the world the doctrine and practice of ethical universalism – the elimination of

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privileges, favouritism and discrimination by authorities and the final aim of producing ‘modern’ government modelled after the Western one everywhere (Mungiu-Pippidi 2019). However, the record of such interventions varies as greatly as the tools employed, despite their indisputable success in setting a universal norm enshrined in constitutions and ethical and administrative codes. Modern constitutions generally stroke off all traditional privileges (like rank or the church tax exemptions) immediately. Of all the elements of ‘modernization’, the impersonality and impartiality of the bureaucracy, or, to put it better, the state’s autonomy from private interest (Migdal 1988) has proved the most difficult to achieve, despite the continuous growth of literacy and urbanization in recent decades. The early models of successful bureaucracies are associated with ‘enlightened despots’, for instance in Denmark, Prussia, the Habsburg monarchy or Napoleonic France, where strong monarchs seeking greater social control, a better performing military and an extension of their tax base developed the merit system as a by-product (Mungiu-Pippidi 2015b, ch. 3). Conversely, where free universal elections preceded the development of bureaucracy, as in the US, modernization of the state took far longer – many decades in the American case – even when the rule of law was present. The reasons for such cases were the politicization of bureaucracy and the slow progress of establishing a merit-based system. The path of democratization and the path of ethical universalism are therefore not entirely congruent, and a trade-off exists with the venality of new democrats replacing the enshrined privileges of the former ruling classes. Alexis de Tocqueville has already warned: In aristocratic governments the individuals who are placed at the head of affairs are rich men, who are solely desirous of power. In democracies statesmen are poor, and they have their fortunes to make. The consequence is that in aristocratic States the rulers are rarely accessible to corruption and have very little craving for money; whilst the reverse is the case in democratic nations. But in aristocracies, as those who are desirous of arriving at the head of affairs are possessed of considerable wealth, and as the number of persons by whose assistance they may rise is comparatively small, the government is, if I may use the expression, put up to a sort of auction. In democracies, on the contrary, those who are covetous of power are very seldom wealthy, and the number of citizens who confer that power is extremely great. Perhaps in democracies the number of men who might be bought is by no means smaller, but buyers are rarely to be met with; and, besides, it would be necessary to buy so many persons at once that the attempt is rendered nugatory. (Tocqueville 1954, Chapter XIII)

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UNFINISHED BUSINESS AND UNINTENDED CONSEQUENCES Corruption started to be acknowledged as an international problem, after being taboo for many decades, in the aftermath of the controversial Washington Consensus reforms in the last decade of the twentieth century, and awareness about it has grown exponentially ever since (Mungiu-Pippidi & Hartmann 2019). Following this increased awareness and individual agency of various kinds, an international normative framework began to develop, followed by proposals for an international corruption court, the specification of the right to be free from corruption as a human right and many others. After the UN General Assembly adopted UNCAC in October 2003 and the convention entered into force in December 2005, in 2009 the UN established a review mechanism aimed at assisting countries to meet the objectives of UNCAC through a peer review process, the Implementation Review Mechanism. Furthermore, in 2015 the UN adopted the Sustainable Development Goals (SDGs). Of the 17 SDGs, Goal 16 aims to promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels (United Nations n.d.). Among the goal’s 12 targets to be achieved by 2030 are promoting the rule of law and ensuring equal access to justice; substantially reducing corruption and bribery; developing effective, accountable and transparent institutions; ensuring responsive, inclusive and representative decision-making; ensuring public access to information; and protecting fundamental freedoms. This is a full repertory of modernization and ethical universalism promotion, which has the great quality of placing corruption in context. In other words, SDG 16 offers a thick version of corruption control. Moreover, adherence to UNCAC or the OECD Anti-Bribery Convention has fast become part of trade treaties and aid conditionality. In principle, these efforts should have helped with implementation of ethical universalism, offering the international support needed to complement domestic demand. Public opinion polls, like the World Justice Project, abound in evidence that citizens are increasingly critical towards their governments and perceive injustice and lack of equal treatment. Transparency International’s Global Corruption Barometer found in the latest two waves, 2017 and 2020 (in about 100 countries), that an absolute majority of this global sample believes that governments do not do enough to control corruption, with 46 per cent perceiving in the 2017–20 edition that corruption is actually on the rise (Transparency International 2017–2021). The Russian invasion of Ukraine led to unprecedented individual sanctions against rich people never proven guilty in a court on grounds that they were too close to Russian President Vladimir

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Putin’s regime and that between their fortunes and the situation of ordinary citizens in their country a defiant gap existed. A US Agency for International Development strategy (USAID 2022) that ends with the call to all nations around the world to emulate Ukraine’s fight and take on each nation’s kleptocrat establishment sounds like a call to revolution. However, despite the increase in both international and national demand, we have little evidence of positive evolution in both subjective and objective indicators since the 1990s. The de jure triumph of ethical universalism in governance has so far not brought a de facto triumph, one of integrity practices, while some unintended consequences of its relentless promotion and growing popularity have become apparent. As the challenges to ethical universalism are quite a few, I shall list them here only briefly. They surely deserve more attention from researchers in the coming years. The first challenge to a thick version of corruption and its corresponding opposite norm, ethical universalism, is its perfect fit with the populist narrative, a topic on which research has only recently started (Kubbe & Loli 2020; Mendilow 2021). In the populist logic, elites are corrupt because they are privileged; no evidence of individual corruption is needed. Instead, people should rule by themselves or through strong, directly elected leaders, like Hugo Chavez, Rodrigo Duterte or Jair Bolsonaro, all of whom were elected on anticorruption tickets. The earlier-mentioned ICIJ leaks covered not only Vladimir Putin, but also former UK Prime Minister David Cameron, the first Western leader to call a global summit against corruption: Cameron’s family was also a fiscal optimizer in tax havens, although no allegation of any illegal act was brought against him. This is evidence enough of unequal treatment if elites can pay lawyers to evade tax, while poorer citizens support the budget. This is considered corrupt by voters, and populists capitalize on it. Populist leaders have corruption issues of their own – Donald Trump and Marine Le Pen even have legal problems – but this does not damage their popularity much as long as they manage to monopolize the populist offer to get rid of a corrupt establishment thriving on privilege. Most populist parties or leaders are newer in politics than the mainstream parties or politicians, so the likelihood that they have as many past corruption scandals to haunt them is low at the start. Generally, problematic issues such as political party funding and lobbying scandals are theirs to exploit at their will, and they do so with various degrees of success. Both populism and anticorruption describe the elite as a parasitical class thriving on undue profit and systematically ignoring the people’s grievances. Corruption closes up ‘political space’, thereby allowing populism to flourish as an alternative to the entire representative democracy establishment, which struggles anyway to keep afloat in the face of innovative social media participation techniques (Betz & Johnson 2004; Fieschi & Heywood 2004). Grassroots critics of governance are not necessarily antidemocrats, but

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their unsatisfied expectations do increase the odds of showing low support for democracy on Global Corruption Barometer data. Eurobarometer data indicates that in the EU itself (except a handful of Northern countries) more than 50 per cent perceive favouritism, and similar to the findings of the Global Corruption Barometer, a majority of EU citizens do not think governments do enough to contain corruption, which seriously feeds mistrust in both politicians and institutions of democracy.10 The second challenge, closely related to the first, is the gradual disappearance of ethical universalism benchmarks. Many people all around the world strive to live in meritocratic contexts, hence the strong correlations between brain drain and corruption (Mungiu-Pippidi 2015a). However, the international anticorruption campaign was also accompanied by dramatic leaks of what used to be confidential banking information – like that released as part of the Pandora Papers – which cast further doubt on the success of ethical universalism in the West, at least with regard to the elite (not) paying their ‘fair share’ of the tax burden. Kleptocrats exist not only in autocracies: the evidence shows that democrats are frequently kleptocrats, too (some stole even funds for democracy promotion from George Soros philanthropies and other international donors), with an increase in total corruption seen during the early stages of democratization due to the growth in the number of people who can take advantage. The revelations of US authors like Janine Wedel (2009) or Lawrence Lessig (2013) in the US who speak of institutional corruption in an American context are very puzzling for the developing world and raise the doubt that public integrity is anything more than a Hollywood-made creation (with Kevin Costner or another like him in the main role). Luckily, Scandinavia exists to provide better role models. But how many people would actually like to live Scandinavian lives, other than buying at IKEA? Here the third pitfall appears. While ethical universalism in social allocation has become such a widely held value due to people’s aspiration for equality, it is not clear that every application of universalism and impersonalism in public policy is popular. Many have not fully processed what it entails to build welfare on the principle of equal treatment from an impersonal state, which does not consider an individual’s particular ties, but judges entirely on a cause’s merit. Scandinavian countries, which have the most developed approach, with clear rules requiring public servants’ decisions to be impersonal and ignorant of a claimant’s background, have run into controversy over their child welfare policies, for instance. Over a few weeks in early 2016, thousands of protesters marched the streets in cities in post-communist countries (but also London, Madrid and Washington, DC). Under slogans such as ‘Norway steals children!’ and ‘Child kidnapping by the Norwegian state!’, participants protested against the Norwegian Barnevernet (Child Welfare Services) and their interference in families, many with immigrant backgrounds, claiming

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that the Services too often removed children from their families. The target of the international protests was, to all intents and purposes, the Norwegian state’s view that the impersonal state is a better judge of children’s welfare than their own families. Since the beginning of the twentieth century, Norway, Sweden and the other Nordic countries all have laws which give the social welfare authorities the power to forcibly remove children from the care of their parents and place them in foster homes or institutions.11 The number of children to have been placed in compulsory foster care in Sweden, Norway, Finland and Denmark are in the hundreds of thousands since World War II, a group of Swedish lawyers wrote in a complaint to the Council of Europe (Nordic Committee for Human Rights 2013). In many instances the removal of children from their natural families and entrusting them to foster care happens to couples of immigrant or mixed ethnic background, whose views of education may differ from Norway’s, which forbids, for instance, the spanking of children and home-schooling (Whewell 2016). Even if some instigation existed from Russian trolls online for these rallies, the idea that impersonal merit should have priority over natural descendance proved not to have such a large following after all. The case of Scandinavian child protection agencies may seem extreme and unrelated to corruption, but it is not. It is about how much impersonalism people can take. Moreover, a lucid calculation of who stands to win from ethical universalism and who stands to lose may also yield surprising results. If everybody is as motivated by justice and fairness as public opinion surveys show, it is hard to grasp why the evolution towards these ideals is so slow. Why do we have about 90 free and partly free countries which are systematically corrupt, but where elections do not change the rules of the game? Social envy makes people crave equality, but victors seldom change the rules of the game; hardly any countries have actually achieved public integrity in the past 30 years, despite the unprecedented international campaign, except a handful of countries in permanent existential danger due to geopolitics (the Baltics, especially Estonia, South Korea and Taiwan) (Mungiu-Pippidi & Johnston 2017a). Patrons may be kleptocrats, but what about their clients? In the many corrupt electoral democracies, each ruling party spends excessively to keep power: clients make up the majority of the voters who accept these benefits. In the thick version of corruption, kleptocrats are only the professionals in a system made to exploit public resources to private benefit, and new elections only bring in new kleptocrats, but do not advance the cause of ethical universalism. Once the dragon is born, one can only ride it; it cannot be returned to its egg. This is what French President Emmanuel Macron tries to do, with far-reaching reforms such as the closure of elite schools like the École nationale d'administration (ENA), the training school for public service in Strasbourg, perceived

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as a hub of networking and privilege, or with the liquidation of the special status for diplomats among public servants (Väisänen 2022). Perhaps radical reform may prevent a populist revolution, although de Tocqueville would probably doubt it. Even if another Switzerland-type success has not emerged in the last decades of global good governance promotion, the emulation of Bonaparte’s transformative ambition is in full swing. The pitfalls and unintended consequences are therefore likely to run their full course before being checked. All attempts to change the world on the Western model, regardless of the extent to which that model actually still fits the West, have always generated counteractions, and the current anticorruption effort, strongly infused with ethical universalism, is no exception. The important thing, however, in order to start mitigating unintended consequences, is to be aware that we are riding a dragon, not a goose. Or many other Spring rebellions may be followed by similar disappointments.

NOTES 1. 2. 3.

4. 5.

6. 7.

For instance, two German members of Parliament resigned in 2021 over making a profit from the sale of sanitary masks at prices above that paid by the federal procurement agency, but their behaviour was not illegal under German law. Entered in June 1993 Vienna UN Conference on Human Rights documents as A/CONF.157/PC/62/Add.18. Available at http://​hrlibrary​.umn​.edu/​instree/​ cairodeclaration​.html. Zephyr Teachout (2009) documented the corruption concerns at the Constitutional convention and their transposition in the final document in her paper ‘The anti-corruption principle’. Chapter 3 of my Quest for Good Governance (2015) connects Cicero to Thomas Jefferson. As Rousseau (2012) puts it in Social Contract, ‘The strongest is never strong enough to be always the master, unless he transforms strength into right, and obedience into duty’ (Book I, Chapter III. The Right of the Strongest). The Austrian Central Administration, Section 2: Von der Vereinigung der Österreichischen und Böhmischen Hofkanzlei bis zur Einrichtung der Ministerialverfassung (1749–1848) [From the Union of the Austrian and Bohemian Chancellery to the Establishment of a Ministerial Constitution (1749–1848)]. Vol. 4: Die Zeit Josephs II. und Leopolds II. (1780–1792) [The Era of Joseph II and Leopold II (1780–1792)]. Documents. Edited by Friedrich Walter. Vienna: Holzhausen, 1950, pp. 23–32. Reprinted in Helmut Neuhaus, ed., Zeitalter des Absolutismus 1648–1789 [The Era of Absolutism, 1648–1789], Deutsche Geschichte in Quellen und Darstellung, edited by Rainer A. Müller, volume 5. Stuttgart: P. Reclam, 1997, pp. 438–52. Letter of Napoleon Bonaparte, First Consul and President to the representatives of the Cantons of the Helvetic Republic, St Cloud, 10 December 1802, as cited in Dufour et al. (2003). The progress of state modernization of the UK is the best documented in the world. Some notable examples are North & Weingast (1989), Acemoglu & Robinson (2005) and Fukuyama (2012). However, after each ‘threshold’ we have enough archival, media and literary evidence (like Anthony Trollope’s

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chronicles) to check if the presumed deep-seated change of norms did indeed take place. 8. A symposium on democracy as a universal value can be read in Diamond & Plattner (2009), with answers in the positive from many distinguished scholars, politicians and even the Dalai Lama (pp. 289–399). 9. Extracts from the letter of Emperor Napoléon III, 6 February 1863, as cited in Séguin (2014). 10. Global Corruption Barometer (Transparency International 2017); European Commission (2017a; 2017b). 11. 2 § LVU. Vård skall beslutas om det på grund av fysisk eller psykisk misshandel, otillbörligt utnyttjande, brister i omsorgen eller något annat förhållande i hemmet finns en påtaglig risk för att den unges hälsa eller utveckling skadas. Lag (2003:406). (Law with special Provisions on the care of young persons (1990:52)).

2. The policy analysis of corruption problems Once we agree that ethical universalism is the good governance benchmark that twenty-first century societies seek to accomplish, framing corruption as a policy problem is simple. The problem of corruption is the difference between ethical universalism (as applied across public spending, public services, law) and whatever governance a country has. The distance between universalism and particularism can be conceptually mapped and measured, resulting in clear policy targets. Sadly, even in developing societies, corruption is seldom seen from this angle, but it is rather framed as a legal problem, a variety of crime, which can be solved by law enforcement. However, to even discern when legal enforcement could solve a corruption problem and when not, policy analysis is necessary. The policy analytical path that I introduce in this chapter is thus structured like a minimal questionnaire, which can be used for the diagnosis of any policy problem. Each analyst can take a particular case and walk it through to emerge with the answers. It starts at country level, for reasons that I explain in the next section, then it can drill down at sector level and end at the organization level.

THE CONTEXT: INDIVIDUAL EXCEPTION OR SOCIAL PRACTICE? What is the context of your corruption problem? When Google Maps loses accuracy, the app asks us to open the camera on our phone and point it through our window towards our neighbourhood, in the hope that the scenes surrounding us will help it identify the location better. The context surrounding the observer is needed to place one on the map. Presume we do just that and look around. Let’s imagine two pictures. Picture A is an ad for a vacuum cleaner robot: on a perfectly laid out new wooden floor a circular self-propelled robot appears to be navigating towards a few bits of dirt, threatening to absorb them. In picture B, a vast beach near the ocean is submerged in trash for miles, so the shoreline cannot even be distinguished. Surely both images show dirt, no doubt about it, but the difference is more than one of size. If we only have a bit of dirt, we can confidently handle it, even assuming we do not have an expensive robot to take care of it automatically. But the cute robot – or even 22

The policy analysis of corruption problems

23

a fleet of them – would not be able to clean the littered beach, which is a picture of corruption as a policy problem. That is a different landscape altogether, different in kind as well as size. In the latter case does it make much sense to do what one would do in the former, that is, picking the dirt up bit by bit, taking it to a lab to see if it contains damaging material or breaks the admitted environment limits, then investigating who left it there and eventually opening thousands of lawsuits to punish the culprits? Rather what would do the deed is a massive clean-up, disinfection, fencing off the beach and only after you can install some surveillance cameras. So, what you see over your window – picture A versus picture B – is the first essential step in diagnosing your corruption problem and starting to address it. Any individual instance of corruption thus occurs in a broader governance context which strongly determines corruption risk. Understanding it is the preliminary step of any inquiry into a problem of corruption. The context also shapes the solution, because the causes of corruption are different in context A than they are in context B and any sound solution will seek to address the causes, not just the manifestations of corruption. To understand the risk context, we need to figure out whether corruption is the exception or the norm. To phrase the question in public perception terms, does a person who engages in that activity (say, apply for a driver’s license) expect that she would have to pay a bribe based on the previous experience of others who sought such licenses? Is an approximate cost publicly known? Is anyone in jail for selling drivers’ licenses? If the answers are yes, yes and no, then corruption is very likely a norm and an anticorruption effort based on arresting the examiner is likely to fail: the next examiner will do the same. Instead, broader reforms are needed. If we formulate the question in policy terms, the two contexts are easily distinguishable. Context A has scant corruption, and that can happen only in areas of hidden social impact because there is no way that the public will tolerate partial treatment: the police need informants, and the public needs whistle-blowers and investigative journalists to document corruption cases that remain hidden from view, for instance companies engaged in money laundering. In context B, due to the frequency of the practice, corruption is observable either directly (policemen stop all cars going from Yerevan to Tbilisi, and after collecting a fee let them go without a receipt) or indirectly through its consequences. Favour and discrimination are in plain view, and due to power inequality, nothing much can be done about them. Everybody knows – there are no secrets. Public money leaves thick trails of state capture because they lead to favoured individuals or companies with tremendous gain from public funds and nowhere else. The mansions, cars and yachts of winners of such arrangements strike us in the face. While even under context A ethical universalism is not fully accomplished (connections and reciprocal favours are

24

Rethinking corruption

still used over impersonal transactions on many occasions), in context B the consequences of favouritism distort both public policy (with issues of limited access to services or preferential legislation) and the market (even in competitive sectors an oligopoly exists which wins all public contracts and holds all major concessions). A systematic overview of the differences is presented in Table 2.1. To what level does this context apply? Public service, town, country, organization? The correct answer is all of the above, but the evidence indicates that the country context is the most important, and the other contexts can hardly diverge positively (a more frequent occurrence due to particular causes is the negative divergence, with a particular service or town more corrupt than the country as a whole). Three categories of evidence exist to prove the importance of the national context. First, there is an entire econometric literature at country level on causes of corruption showing highly significant results (e.g., the association between press freedom and corruption) (for a review, see Treisman 2007). The weakness of this literature is that it uses as dependent variables only perception indicators. However, there is a second category of evidence which finds national context significant on the basis of concrete indicators, for instance the number of Foreign Corrupt Practice Act litigations by country, weighted by its exports (Escresa & Picci 2017), or the enabling and disabling factors of corruption treated as a latent variable through principal component analysis (Mungiu-Pippidi & Dadašov 2016). Both measures capture a large variation at country level, are consistent with one another and are largely consistent also with the causes of corruption literature based on perception indicators. Finally, experimental evidence exists. Psychologists Gächter and Schulz (2016) tested the variation across contexts in cross-societal experiments from 23 countries around the world and found a robust link between national contexts, which differ in the prevalence of rule violations (based on country-level data from the year 2003 on corruption, tax evasion and fraudulent politics) and individual intrinsic honesty. Their results show that individual intrinsic honesty is stronger in subjects from countries with low prevalence of rule violations compared to those in countries with widespread rule violations. This is also consistent with research based on Gert Hofstede’s theory of countries as specific cultural contexts where certain sets of values prevail, which in its turn confirms Weber’s original theory. Countries high on collectivism and where social status is very important (power distance, in Hofstede’s terminology) are significantly associated with more corruption: these values explain about half the country variation (Husted 1999; Hofstede 2011; Mungiu-Pippidi 2015b). Altogether, these different streams of literature show that the national (societal) level factors – structural and policy – explain over two-thirds of corruption variation at country level, so individual and sector factors matter a lot less.

The policy analysis of corruption problems

Table 2.1

25

Corruption: individual exception versus social norm and practice

 

Risk context A:

Risk context B: Norm

Indicators

Hidden individual

Observable as social

Lifestyle of public

behaviour or

practice (favours and

officials explainable by

conspiracies; detection

discrimination) and

their income?

or whistleblowing

consequences

Value for public money?

Concentrated asymmetry

Political office turnover

Impunity culture

Any government

Exception Observability

needed Power concentration and

Pluralism, diffuse

pluralism

asymmetries

Rule of law context

Strong

politician indicted for any crime or resigned after allegations? Lawsuits exist against the government that the government actually can lose? Social allocation

Public services largely

Preferential with clear

State capture (public

based on ethical

patterns of favouritism

procurement,

universalism

and capture

concessions of rents, subsidies) Issues of access and equity in public services Monopolies or oligopolies in economic sectors dependent on government (favourites)

Autonomy of state from

Strong: pockets of

Weak, with state

Bureaucrats and

private interest

‘grand’ corruption

infiltrated by relatives,

magistrates influential

related to political

cronies; politicized

and tenured in context A

parties’ funding needs, ‘enabling’ private industry

Rethinking corruption

26

 

Risk context A:

Risk context B: Norm

Indicators

Exception Public–private

Sharp; possibly some

Poor; conflict of

Revolving doors

separation

‘networking’, ‘old boys

interest ubiquitous; no

(separation broken over

club’, etc.

incompatibility enforced

time) in context A

between office holders

Conflict of interest

and profit from office

(potential and active) situations simultaneously in context B Nepotism

Solution

Principal–agent tools

Collective action tools

(top-down monitoring

(social accountability,

and sanctioning, legal

group monitoring,

proceedings)

losers’ coalitions)

Transparency

Transparency an

self-enforces

enabler, but does not

 

solve problem

Corruption does vary across subnational units of a country, mainly according to the degree of development (Charron et al. 2014), and within public services, largely due to differences in administrative discretion across sectors (e.g., distributing pensions versus justice), but this variation is much smaller than the variation across countries. Simply put, the sets of causes which determine the degree to which societies control corruption, from structural to human agency and policy factors, tend to be at societal level; they are the result of a country’s history, old as well as recent. The more the histories of the regions within a country differ (e.g., a past in the Habsburg Empire versus the Ottoman one), the more subnational variation can exist (Becker et al. 2016). When intra-state variation exists, it is largely explained by different historical trajectories of subnational units, for example, south versus north of Italy (Putnam 1993), but the unification of regions with different historical backgrounds might lead in time to a spill-over of corruption. While the quality of public services in Italy varies with development, some allegedly cleaner northern regions are no less corrupt, and Mafia-infiltrated than the southern ones (Calderoni 2011). Max Weber’s chief unit of analysis on patrimonialism and corruption was also the entire society. Weber described permanent or structural (although not unchangeable) features of social organization, what today institutional theory calls institutions, that is, formal (laws) and informal rules of the game (norms). The most important indicator he designated was the separation of private from public interest in the exercise of public power. This distinguishes premodern states (‘patrimonial’, based on traditional authority, and allocating public resources by particularism) from modern ones (based on rational-legal

The policy analysis of corruption problems

Table 2.2

27

Variants of corruption and its opposites in literature

Author

Context A

Context B (systematic corruption)

Max Weber (1922/1968)

Universalism; impersonality of

Patrimonialism; patriarchalism

bureaucracy Thompson (2005)

Institutional integrity

Institutional corruption

Mungiu-Pippidi (2006;

Ethical universalism

Particularism

Open access order

Limited access order

Rothstein & Teorell (2008)

Impartiality

Favouritism/discrimination

Acemoglu & Robinson

Inclusive institutions

Extractive institutions

Impersonalism

Personalism

2015b) North, Wallis & Weingast (2009)

(2012) Fukuyama (2014b)

Source:

Adapted after Mungiu-Pippidi & Hartmann (2019).

authority, where the state operates impersonally on the basis of ethical universalism via an officialdom autonomous from private interest, which treats every citizen with equal and impartial consideration). Most contemporary governance theories place countries between the two ends, with one where power discretion reigns and violence and corruption make social allocation completely particularistic and another where rational, objective and impartial government exists. Table 2.2 renders a simplified overview for the various conceptualizations of this continuum in the last hundred years, which seem to indicate some convergence across disciplines, if not language. On one end, we find context A: ethical universalism and public integrity (Mungiu-Pippidi 2006), open access order (North et al. 2009), impartiality (Rothstein & Teorell 2008), inclusive institutions (Acemoglu & Robinson 2012) and impersonalism (Fukuyama 2014b). At the opposite end, we have the features of context B: particularism, favouritism, extractive institutions, limited access order and so forth. Of course, context A and context B are ideal types, and countries may fall closer to one end or another, with some ‘borderline’ cases where the two norms compete for supremacy. By and large, from classical to current theory and from sociological to psychological evidence, the level of the entire society has proven to have the largest effect on shaping the quality of governance. While corruption is like water, taking the shape of every empty receptacle it can fill, shapes are not categories. The many ‘types’ of corruption discussed in practice and literature (petty, grand, bureaucratic, etc.) often tend to confuse the issue captured by the simple institutional approach pictured in Table 2.2, of governance quality as a continuum where the distance from ethical universalism can be measured and turned into a policy target. The attempts to insulate corruption at the level of small groups (see Jackson & Köbis (2018)

28

Rethinking corruption

for a review) is also misguided. Corruption is about the intersection of state and society, so the adequate level to study the norms of interpersonal exchange is neither the individual level, nor the small group unless the group is placed in the broader social context, as in the classic work of Eisenstadt and Roniger (1984). Treating corruption as norm versus exception is however beneficial at organization level, for both national and international organizations. The most known is the work of Dennis Thompson (2005) and Lawrence Lessig (2013) at organization level in the context of the US Congress, later extended to other US sectors, like the pharmaceutical industry. Their conceptual language is closer to law and political theory and thus quite distinct from the Weberian historical sociology approach and the institutionalist language in Table 2.2. In this terminology, institutions are defined as organizations with a public role, not as rules of the game, that is to say, exactly the opposite of economic and political science institutionalism. However, ‘institutional corruption’ is defined as a policy problem: the difference between what the mission of such an organization should be in a democracy and what its role is in practice when captured by private interests. The mission described is specific to each organization and to democracies; the authors do not generalize to ethical universalism and do not propose a universal theory. The consideration that an entire institution, for example, Congress, in a democracy can become corrupt belongs with the ‘thick’ concept of corruption. This organization-level approach is in fact quite compatible with the core institutionalist theory, despite the confusion of terms. The problem starts when this theory is not distinguished from the core ‘institutionalist literature’, without clarifying that two different meanings exist, that they operate at different levels (organization versus society) and that they have a different degree of generalization (as in Ceva & Ferretti 2018). An effort to unify conceptual language across disciplines and ground it soundly at the right inference level would help to universalize meanings and applicability. Corruption students from India risk otherwise being at a loss how to relate a US Congress characterized by institutional corruption with their own house of representatives, which is filled with enough candidates who have promised voters to allow them to steal electricity from the grid, so after each election electricity thefts and loss go up (Min & Golden 2014). A specific type of organization is the inter-governmental one, where countries have equal membership and voting rights: the United Nations, the International Federation of Association Football (known by its French abbreviation, FIFA), the Council of Europe and the European Union institutions. Remote from a normal constituency and generally enjoying some form of diplomatic immunity, these organizations create their own rules of the game with few constraints. Corruption scandals are therefore frequent enough to raise the question whether corruption is exception or norm; sometimes these

The policy analysis of corruption problems

29

scandals lead to reforms. The United Nations had to make reforms after the UN Oil-for-Food scandal, the European Parliament made the entire EU Commission (EU’s executive) resign on the grounds on mismanagement and corruption,1 and FIFA reorganized after having some officials convicted of bribery and mismanagement.2 The impetus for investigation and reforms has always come from a minority of member states such as the US and some of its allies. The 1995 Oil-for-Food Program is the most telling example of institutional corruption. Created to protect the Iraqi people from the unintended consequences of the oil embargo imposed by the UN after Saddam Hussein’s 1990 invasion of Kuwait, the programme allowed Iraq to sell its oil in the global marketplace on the condition that funds were spent for the needs of the population alone: food, medicine and other humanitarian aid. In 2003, however, the programme was discontinued after news of a scandal broke. External investigators appointed by the UN found generalized fraud and corruption, including even the son of the UN president (Kofi Annan at the time) with scores of Western companies partaking. Only kickbacks to the Iraqi government reached about $1.8 billion. Called the biggest humanitarian programme since the Marshall Plan, the programme became instead a symbol of the UN’s unbounded corruption, after Paul Volcker, the former chairman of the US Federal Reserve who became the chairman of the Independent Inquiry Committee, reported systematic self-dealing.3

WHAT EXPLAINS CONTEXT? ENABLERS AND DISABLERS Why does the societal context matter so much? The power of the context is grounded in the individual’s propensity to conform and the scarcity of dissent (Asch 1956; Sunstein 2005). Individuals are part of a culture and tend to conform to the norms and social behaviour of that culture, even if variation can exist among individual values and attitudes. If corruption is widespread in a poor society, most people will treat it as the socially accepted norm and conform to it; the opposite applies to developed countries, where corruption is an exception (Sardan 1999; Mungiu-Pippidi 2006; 2015b; Persson et al. 2013). The new literature using experimental approaches, which tries to model individual choice by manipulating social pressure, presumes that social pressure did not exist prior to the start of the experiment, and it is up to the experimenter to set its level. But context is all about social pressure – either in favour of ethical universalism or in favour of particularism. How individuals behave is already shaped by what government they have – corrupt or the opposite. There is very little individual choice. If the context is one where social advancement is due to political connections versus merit, individuals will seek political

30

Rethinking corruption

connections and not invest in work (Acemoglu 1995). If the government offers incentives for integrity (being itself a non-corrupt government), the problem is mostly solved already. What remains can be cleaned by the robot vacuum cleaner. Yet unlike in the 1990s, when sociological research dominated corruption studies, in the first two decades of the twenty-first century, following the general development of political science, lab-controlled experiments or even limited natural ones became the main tool to study corruption. Although they vary wildly in scope and quality, the common goal seems to be how to motivate individuals to be honest or just comply more with the rules, and therefore all are grounded in the thin corruption concept. For context B, the question becomes absurd: do we really want the Tunisian street vendor who started the Arab Spring to be more compliant (he was a tax evader in a crony economy)? Does the context A presumption that dominates this literature, that is to say, that individuals engage in rational cost-benefit analysis to make an autonomous choice on what conduct they should assume, even apply in context B? Or are not the two contexts fundamentally different (as shown, for instance in Eisenstadt & Roniger 1984), with context A based on individualism and horizontal interpersonal relations and corruption a result of individual free choice, and context B with dominant collectivism and a system of exchanges based on domination, submission and reciprocity, with almost no choice? Perhaps the disregard for the context explains why we have so many successful experiments reported in journals set in countries like Uganda, while Uganda itself gets worse and worse. Context cannot be presumed, and yet experiments do exactly that. Universal strategies for public integrity cannot be built more than we can open a sardine tin just by presuming the existence of a can opener as they have to solve power asymmetries specific to each society. Corruption is profit from the abuse of power, so any remedy other than a revolution should start from the group in power; that group cannot be conceived as a principal who is a benevolent manipulator of group incentives, when in fact the ‘principal’ is the one distorting the fairness of social allocation and enforcing extractive institutions. If by some twist of fate some reformers would come to power in Uganda and would start dismantling the rent system, no special nudges would be needed to lure most Ugandans into a more equal and rule-based society. Simple political will would do it. Furthermore, public integrity does not exist by default; what exists by default is the individual inclination to enhance one’s profit (utility), including by cheating (see also Fukuyama 2018). Public integrity thus needs to be built politically and socially over time as a public good, with expansion of society’s capacity to constrain its rulers to cater for greater social welfare over narrower profit. This is bound to be a complicated process, as no public good comes

The policy analysis of corruption problems

31

easily, facing challenges of free riding or of institutional status quo winners resisting change (Persson et al. 2013). Aside from conformity, the second basic social psychological law applicable to corruption is reciprocity. Favouritism and all its derivates (e.g., clientelism) work on the basis of reciprocity, which is a way to organize bilateral, interpersonal and social relations (in networks), as anthropologists have long shown (Mauss 1950). Any accepted gift constrains the recipient, and the relations of obligation thus created personalize social exchanges (Graycar & Jancsics 2017). Remember the precious whale tooth gift of Jack London’s South Pacific tales, which – once accepted – obliges the tribe’s leader to grant the request of the giver, that is to say, to kill a white missionary and thus bring the white man’s repression upon his tribe? As not conforming to the obligation is inconceivable, the solution that each chief finds is to pass the gift to another. By contrast, public integrity is an impersonal affair and raises emotions only when associated with social envy – populists are the masters of electoral anticorruption when they point to corrupt elites and treat others as kleptocrats. Whereas reciprocity creates personal ties, the rule-based exchange denies them (Mauss 1950). If the dominant social norm is particularism, those who stand to lose from this institutional arrangement are in general poorly associated, while those in favour of the status quo are more networked. To challenge the rules of the game, the disparate mass of losers has to become a group with a common cause (ethical universalism) and engage in an adventure with an uncertain end, hence the difficulty of generating collective action in corrupt societies (Mungiu-Pippidi 2015b; see also Chapter 6). This is the bottom-up path when rulers do not lead themselves towards more inclusive institutions. The top-down driven evolutions (the enlightened despots of the nineteenth century) used classical principal–agent tools, like monitoring and sanctioning. The reforms undertaken by the King of Denmark in the early nineteenth century or by Napoleon in Switzerland by eliminating privileges and building merit-based systems are good models (Mungiu-Pippidi 2015b; 2019). For most other cases, though, ethical universalism advanced only if and when it was in the best interest of a critical mass, being promoted by coalitions of interest groups which sought to advance their own selfish interests (Mungiu-Pippidi 2016). As Adam Smith once wrote, ‘By pursuing his own interest [one] frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good’ (Smith 1776/2007, Book II, Chapter V). Prevalent corruption signals the failure of a society to prevent its rulers from using their public office mostly in their private interest. Corruption becomes visible when the balance is broken between the interest of the rulers, on one hand, and those of broader social interests, on the other. A vast academic literature on causes of corruption, reviewed in Treisman (2007), Mungiu-Pippidi

32

Rethinking corruption

(2015b) and Escresa and Picci (2020), tested the circumstances which create this imbalance across countries and explained the differences across different contexts. Table 2.3 offers a succinct summary of this literature organized in the two overarching categories of enablers and disablers. The enabling circumstances are power asymmetry, the degree of formalization of the society and economy, as well as its ethnic fractionalization and the existence of concentrated rents (in the form of natural resources or aid funds). The disabling circumstances are the autonomy from the government (and therefore strength) of oversight organizations (judiciary, auditors), media and civil society. These factors shape a state–society model of corruption control, where normative constraints from society are as powerful as or even more so than constraints exercised by the judiciary and law enforcement, which are often endogenous. The two categories should balance one another in an optimal equilibrium where constraints manage to control opportunities. If they do not, and opportunities are too high or constraints too low, or both, a suboptimal equilibrium results where corruption (or a degree of it) becomes a regular feature of governance. These factors all depend on a country’s level of development – although not all to the same extent.

GOVERNMENT OR MARKET FAILURE? Once the context of a problem is known and its causes deconstructed, the time has come to look more in depth at the economic or public sector area where it occurs and account more specifically for that problem. When a policy problem exists – corruption or anything else – people call on the government to solve it. This is what makes them policy problems – the market or civil society cannot handle them by themselves. The peculiarity of corruption policy problems is that more often than not the problem stems from the government itself. Vladimir Putin was very active in his early presidential years against corruption, conceived as the monopolization of rents by the oligarchs of the previous regime. He created an Ombudsman for businesses, which really tried to help firms avoid extortion by regulatory agencies. In time, however, Putin centralized this kind of anarchic corruption and created his own oligarchs. Supporting Putin to solve the issue of kleptocracy is an evident absurdity. Putin may be an extreme example, and yet most donor-driven anticorruption efforts build on the assumption of context A, that is to say, that the government wants to be clean but just cannot control its renegades. Under that scenario, regulation should solve most problems, and, if nothing changes once it is in place, the next assumption is its lack of enforcement. By ignoring context, the anticorruption industry produces implementation gaps on a large scale. In international transactions we tend to blame private companies (supply side of bribing), but corruption is the attribute of sovereign states. Notwithstanding

The policy analysis of corruption problems

Table 2.3

33

Causes of corruption in the equilibrium model

Category of corruption causes

Indicators

Enablers (generating corruption resources or opportunities) Power discretion (political, administrative)

Administrative burden and red tape, low quality of regulation (existence of legal privileges, absence of private–public minimal separation), lack of transparency, lack of enforcement of individual rights

Natural resources and weight of energy

% contribution to GDP

sector Fragmentation (ethnic, linguistic, racial,

Division of the state by ethnic lines (e.g., Lebanon, Bosnia)

etc.) or any non-universalistic sectarianism Informality (prevalence of informal

Vulnerable employment

institutions versus formal)

Number of official subscribers to national social security

Other material resources (e.g.,

Foreign direct aid (or EU funds) as % of GDP

non-transparent aid money) Disablers (preventing or holding to account abuse of office) Judiciary and oversight

De jure and de facto autonomy from government of organizations with the constitutional role of ensuring horizontal accountability

Media and social media

Freedom, sustainability and integrity of the media sector

Civil society

Economically autonomous, digitally literate voters; whistle-blowers; associations, formal groups or informal social media groups

the rather exceptional sanctioning of Russian oligarchs due to war, the international community cannot ordinarily reach out to punish those who organize a privatization deal in Uzbekistan (where a Swedish company bribes to get the contract) or Greece (where a German company bribes to build an airport). It punishes the Swedish company and the German company (rightfully so) but leaves it to the recipient countries to punish their own. If those taking bribes are indeed part of a system, nothing happens, and future bidders need to pay bribes as well. The well-intended regulatory regimes designed to enforce public integrity have multiplied exponentially since the 1990s. Unfortunately, they had less influence than hoped, because they were designed for context A and applied to context B. In a study on the implementation of the OECD Anti-Bribery Convention (ABC) in Vietnam, the authors found that bribing decreased for actors under the convention’s jurisdiction, but increased among those not part of it, with the total volume of bribes staying largely the same (Chapman et al. 2021). This is an example of how the national context ‘rules’ and why corruption is primarily the fault of the bribe asker, not of the bribe giver, even

34

Rethinking corruption

if the latter contributes to it. The corruption literature from the Bretton Woods organizations such as the World Bank has defined ‘state capture’ around the bribe giver because governments (including the corrupt ones) are the board members of these organizations; academia, by contrast, especially scholars of political development and sociology, endorse a state capture version where the incumbent rulers are the captors, not the private sector (Grzymala-Busse 2008). The most detrimental forms of corruption are diversion of public spending, embezzlement, profit from conflict of interest or any form of abuse of public office, because government officials, from the top one to the bottom (since there is no autonomy of the state apparatus in systematic corruption) direct the public resources from the many to the few, legislate to their own advantage and enforce rules selectively (Mungiu-Pippidi 2006). The broadest understanding of corruption as government failure is thus state capture by ruling elites or dictators, which can range from mild regulatory capture in developed economies with some favouritism to the predatory capture of poor countries where the state is entirely the patrimony of incumbents and rents are violently fought over between kleptocrats. Systematic corruption and state capture always involve government failure. The government failure concept has however a more specific meaning in the scholarly literature. It is largely grounded in ‘public choice’ theory, which introduced the distinction between profit-seeking and rent-seeking, with the former based on merit (providing a product or service that consumers would be willing to pay more for than the opportunity cost of the resources used) and the latter based on coercion by preventing others from competing equally or by forcibly taking their wealth (Buchanan et al. 1980). Unlike profit-seeking by market means, rent-seeking by political means does not create wealth; it merely transfers it from one party to another and wastes resources (those used to get the rents), because these are invested to produce an outcome in which nothing of value is created (Mungiu-Pippidi & Hartmann 2019). Furthermore, acquiring rents through political connections distorts the operation of the market process, impinging on interest rates and the prices of goods and services (Buchanan et al. 1980). Societies allocate rewards between productive and unproductive activities (such as rent-seeking): allocations of past generations, as well as expectations of future allocations, influence current rewards and the society may get trapped in a ‘rent-seeking’ steady state equilibrium (Acemoglu 1995). The transaction costs theory by Ronald Coase (Nobel Prize 1991), completes this picture, by explaining why markets are unable to deliver an optimal social allocation if the government fails to keep transaction costs – costs to register and operate businesses including the rule of law environment and an effective justice system – low (Coase 1987). Transaction costs theory is at the basis of the World Bank Doing Business measurement, which tries to

The policy analysis of corruption problems

35

monitor transaction costs for businesses (World Bank 2004). This indicator is significantly correlated with government favouritism, although it explains only about a fifth of the variation (see Figure 2.1). As Shleifer and Vishny (2002) argued, corrupt governments act like ‘grabbing hands’ crafting bad rules and policies purposely to extract rents, as heavy and arbitrary taxes retard investment, bad regulations enrich corrupt bureaucrats, and state firms eat up, not add to national wealth. However, other ideas advanced by the Bretton Woods economists, for instance that greater spending favours corruption, have not been confirmed, as evidence exists that European welfare states are also the most universalistic (Persson & Rothstein 2015). In fact, even in Sub-Saharan Africa the scant good governance examples are associated with more public spending, not less (Mungiu-Pippidi 2015b). Evidence exists only that the nature of the spending matters more than the volume: universalistic spending (e.g., all children with top grades in mathematics receive scholarships).

Note: Government favouritism coded 1–7 with 7 least corrupt; Administrative burden coded 1–10 with 10 least red tape. Source: World Economic Forum (2017), Favoritism in Decisions of Government Officials indicator; Index of Public Integrity (www.corruptionrisk.org/datasets/).

Figure 2.1

The association between red tape and government favouritism

36

Rethinking corruption

Although based on a solid tradition and mainstreamed by the World Bank, this corruption as government failure view has been in fact marginal in corruption studies and especially in practice. The reasons are that the field is dominated by advocates of the thin version of context A for whom ‘institutions’ are ‘organizations’ and that development literature and political corruption literature from developed countries such as the US do not communicate well. Furthermore, international organizations think it less provoking to discuss the business environment than corruption, so that what UNCAC calls prevention is hardly mentioned by Bretton Woods institutions, and anticorruption efforts are reduced to what happens after the corruption act has taken place. The failure to address the question whether a corruption problem results from market failure, from government failure, or from both leads directly to the ineffectiveness of anticorruption efforts for the simple reason that pure government failure (intervention to fix a market failure which makes the problem worse) is solved by the removal of the regulation, while market failure is solved by adding regulation. The source of failure question can only succeed, not precede, the previous one on the context. Context B (systematic corruption) is inseparable from government failure, captured in the equilibrium model by some power discretion items, but this does not mean that market failure could not also coexist alongside government failure. A few examples will help. One example is the corruption in energy production, which has evolved into a major security issue. The energy sector is often associated with market failure, as in both production and distribution monopolies frequently exist. The government intervenes to break up the monopolies and keep prices down. The cartelization of energy producers to cheat government regulation is corruption based on market failure. But that is just one form of corruption. Usually politically connected companies set up a distribution firm, which buys from the state-owned production monopolist cheaply and sells to the state-owned industry expensively, taking advantage of liberalization of distribution. This was what happened in Ukraine before the 2014 Revolution of Dignity (Maidan Revolution). The state-owned monopolistic producer has a politically appointed leadership, like Petrobras does in Brazil, who takes care that some money is siphoned towards the campaign of the government party who appointed him. The electricity grid is state owned, and ancient, and the quality of the service low; many people do not subscribe at all, but, taking advantage of the antiquated meters, they connect illegally and steal electricity. When the controller comes, they bribe him. Due to too little income, the producer cannot modernize the grid and crack down on evaders, so shortages are rife, with entire cities stinking of putrid meat from dead refrigerators. A partial privatization attempt will in all likelihood end with a rigged bidding process, where the higher bribe offer wins the contract. But nothing much changes

The policy analysis of corruption problems

37

afterwards, as the private owner has to continue to fund the government party and has no means to prevent people stealing from the grid. A study on India found that electricity stealing is actually correlated with elections: politicians pay for electoral support by allowing people to steal public electricity and therefore do not change the bad regulation or enforce the good one to change things (Min & Golden 2014). My students are always tempted to say this is market failure due to the existence of a monopoly, but is it? What market is that? Until privatization, the energy producer and distributor in this unnamed country was a state-owned enterprise and a monopolist. Many countries consider energy resources to be public property, even enshrine it in their constitutions, and this is the case here. This monopoly exists because the government decided so. The US government decided otherwise as early as 1906, when it brought a lawsuit against the monopolistic Standard Oil, a private company, under the Sherman Antitrust Act of 1890, forcing the company to break up in 1911. Pressed by international donors, this developing state in the end decided to privatize, first by keeping a majority stake of shares. The government has no reason to let the company out of its influence and enable a real market. Markets do not come from space and cannot exist in the energy sector unless enabled and enforced by the state. So such examples hardly speak of market failure. To be certain, markets exist which have proved unable to self-regulate integrity standards. See the case of the automotive industry, whose actors often collude to get a bigger profit. In Germany, for example, the industry was proven to have colluded repeatedly over costs, suppliers and emissions since the 1990s. In Europe, the control of emissions was practically left to companies themselves (Gude et al. 2015). In the US, more than one opioid drug producer lied about the drugs’ addictiveness in order to get the drug approved, then lied systematically to doctors through deceptive advertisements, offered other incentives for their drug to be prescribed and failed to rein in doctors they knew were overprescribing (Knauth et al. 2022). There are other examples of corruption resulting from both government failure and market failure. For instance, let’s take the case of a medicine like insulin, whose inventors basically gave the patent away for free only to have producers engage in price gouging one hundred years later (Belluz 2019). By 2020, in the US, the cost of the four most popular types of insulin had tripled over the previous decade, and the out-of-pocket prescription costs patients faced had doubled. One of the reasons why the cost of insulin has kept rising around the world is the limited number of licensed producers (WHO 2021). But it is up to governments to license more or, in the case of the US, open the market to Indian producers. So, not even these three examples of clear market failure can be isolated from government failure. In the case of insulin, the producer oligopolies could be dissolved by legislators, who could pass legislation to open the market, but

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the pharmaceutical industry increases its lobbying annually to prevent exactly that (Martyn 2020). The pharmaceutical industry is very competitive and particularly rent-seeking, with a variety of scandals like the opioid epidemic around the world to show that regardless of how public health is organized and who has the decision over what medicines to buy and how to prescribe them (from ministry to the individual doctors), some companies will always offer substantial bribes (Harvard School of Public Health 2022; Humphreys et al. 2022). The car industry, which has been riding from one scandal to another, is also both competitive and rent-seeking. Even if the auto industry may not directly bribe politicians in Germany, conflict of interest and more subtle forms of undue profit exist anyway. Former politicians sit on company boards, and as the car industry is a big employer, with numerous employees as well as suppliers, the government has allowed for many years an oversight system where the industry itself selected their evaluators. In other words, the government(s) let the market fail rather than face the politically and economically more damaging fallout (Gude et al. 2015). By and large, some differential diagnosis using policy analysis is needed to decipher such cases (see Table 2.4). This needs to establish what ‘should be’ compared to ‘what is’. Since the new public management revolution took hold in the 1980s, some developed country governments outsourced many public services to the private sector, so the public–private distinction lost its edge, and we need to check carefully what is the source of the problem. Who should deliver, the market or the government? And is the role of the government really necessary (does its absence create the problem), or is its intervention actually only a source of extortion and creates the problem of corruption in itself? The government increasingly has a role to play in the quality of many private goods, such as education, which is done by specific interventions, in the form of licensing, accreditation, certification, etc.; but if the government is corrupt, such interventions may themselves actually be the source of the problem. Do we have market failure features, that is to say, monopolies, oligopolies, externalities, or public goods related to the corruption problem that we are trying to solve? Why does the market not manage to solve them (by market means, i.e., competition, or by self-regulation or some form of social accountability)? Is this a new problem or an old one? If old, why did the government not try before to regulate, tax, sanction, impose transparency or employ any of the other tools that governments have to solve market failures? Or, in fact, is it perhaps not the market that is accountable for this problem at all, since the problem is one of corruption in public service delivery? Anticorruption fighters are rarely educated in public policy and go around in circles to find one culprit and designate him for arrest, when such problems need careful diagnosis and public policy reforms, some classic ones, like taxing externalities. Even when the market is clearly to blame for causing

The policy analysis of corruption problems

Table 2.4

39

Market and government failure mechanisms of corruption

 

Market failure

Government failure

Benchmark (who should normally

Market

Government

Absence of regulation

Restrictive regulation creating

provide the service/goods?) Corruption cause

scarcity and access problems, gatekeeping, favouritism Rent seekers

Private sector actors and their

Incumbent public officials and the

‘captives’ among regulators,

official rent holders (e.g., hospital

enforcers

managers)

Capture

Regulatory capture by private

Capture by rulers

Solution

Introduce regulation to allow

Remove regulation to dismantle

equal competition and break

legal privileges in the economy

monopolies

and public services, red tape,

Tax externalities

extortive controls

Enforce conflict of interest rules,

Enforce conflict of interest rules,

transparency

transparency

sector

a problem, it is still the government that has the last word, as it is the government which has the tools to solve such problems. And this brings us to the last element of this analysis.

WHEN THE SOLUTION IS THE PROBLEM: THE ISSUE OF POLITICAL WILL Public integrity is a public good. While everybody can contribute to it – by being honest, playing by the rules, exercising an oversight role over officials and so on – in the short run it is the government, in fact, which should provide public integrity and has the best means to do so. All the branches of the government – the executive, the legislative, the judiciary – should act to establish and sustain public integrity as the norm and reduce corruption to an exception by preventing and repressing corruption when it happens. If systematic corruption exists, it is a clear sign that the government has failed to deliver public integrity. And here is where anticorruption starts, and unfortunately where it also ends because it asks corrupt governments to cure themselves. But why would the captors in government, the winners of the current institutional arrangements, kill their rents? Why would they stop when they are the ones winning? We come here to the famous problem of ‘political will’ that diplomats and development agencies implementing five-year corruption plans always mention in their reports, but seldom consider when making

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their plans and their budgets. This is a problem of endogeneity: simply put, if something is problematic (the judiciary is not independent and accountable), that something cannot be the solution to the problem (corruption in a country). The problem has long been dismissed with the help of the (untested) presumption that rulers (the ‘principals’, who have most of the power) are not to blame and their preference is indeed for ethical universalism: it is the fault of their agents (bureaucrats or magistrates), who do not implement their will properly. In this way, we do not have a problem of government failure, but just one of administrative (bureaucratic) corruption, which seems so much easier to solve. The argument favouring a merit-based bureaucracy, autonomous from private interest, as a solution to corruption (which is due precisely to the absence of an autonomous state towards private interest) originally took off to explain another failure, that of economic ‘Washington consensus’ reforms in the 1980s and 1990s. Looking for an explanation why the countries which followed the Washington consensus advice underperformed the ‘developmental states’ in East Asia (Stiglitz 1998; Rodrik 2006), Evans and Rauch (1999) argued that growth was impossible in the absence of a modern bureaucracy, selected and promoted on merit alone. Their rediscovery of Weberian concepts went on to be adopted by the World Bank as an alternative growth theory via the World Development Report (Chhibber et al. 1997). This resulted in donors funding civil service and public sector reform in corrupt countries in the hope that a modernized state apparatus will bring about economic growth. However, as shown in Figure 2.2 and countless evaluations of donors’ work (starting with the World Bank ones), the quality of bureaucracy did not take off after this injection of trainings and ethical codes since the fundamental causes of its lack of integrity were not addressed by this approach. Only some Gulf monarchies improved in bureaucratic quality in this interval (Qatar, UAE), but to what extent that modernization is comparable to the nineteenth-century one Weber described is less clear (Mungiu-Pippidi 2017b). Of democracies, after 1989 only two clear-cut successes exist: Estonia and Georgia, both in the aftermath of a revolution. Economic growth, in fact, proved easier (on behalf of India and China largely) than creating an impersonal bureaucracy, therefore the latter can hardly be conceived as a solution to the former. The first observer of the rationalization and depersonalization of the state and the role played by such processes in the development of a capitalist economy, Max Weber had indeed never treated bureaucracy as the prime cause of anything: he saw it as a tool of power and explained its consequences by the goals of that power, which can only be understood in a broad societal context (Mungiu-Pippidi 2020). While Weber considered that a competent bureaucracy with a predictable career ensures a better infrastructure for capitalism, he also warned that the consequences of bureaucratization depend upon the direction which the power using the apparatus give to bureaucracy (Weber

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Note: N = +120 (1984–1998), 140 (1999–2015) countries; recoded 1–10, with 10 best bureaucratic quality and least corruption. Source: The PRS Group (https://www.prsgroup.com/wp-content/uploads/2012/11/ icrgmethodology.pdf); adapted from Mungiu-Pippidi (2020).

Figure 2.2

Trends in the evolution of bureaucracy and corruption

1991). Therefore, a sound ‘theory of public administration means … a theory of politics also’ (Gaus 1950, p. 168). The scaling up of Western type bureaucracies in societies around the world emulating Western modernization has resulted in few successes (Anglo-Saxon commonwealth, Japan). Bureaucracy might be the needed companion of the market but does not deliver market by itself (Mungiu-Pippidi 2020). In his The Politics of Bureaucracy, analysing the nature and limitations of bureaucratic structures, Tullock (1965) argued against the over positive view of bureaucrats as necessarily servants of the public good by remarking that the incentives and information deficiencies faced by bureaucrats are such that their actions will often produce perverse outcomes, coordination and planning problems, especially when compared to the market mechanism as a means of allocating resources. Of course, the meritocratic recruitment of civil servants, as opposed to political appointment, is associated with better control of corruption in empirical analyses (Dahlström et al. 2012). The problem is that civil service meritocracy is endogenous to control of corruption, as the bureaucracy’s lack of autonomy from private interest is in fact part of the definition of corruption. In principle, the autonomy of the bureaucrat prevents the abuse of power from the politician, while the bureaucrat is subjected to accountability by peers (Dahlström & Lapuente 2017). But the bureaucrats never get to autonomy in developing or

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Table 2.5

Governance context and political will

 

A. Corruption as exception

B. Corruption as norm

Government prefers

Reforms to increase participation,

Institutional overhaul (Estonia under

change

expand definitions of integrity,

Mart Laar with justice system closed

eliminate remaining privileges (France

and new judges hired)

under Macron) Government prefers

Integrity maintenance based largely

Inflation of public accountability

status quo

on self-enforcement, normative

legislation and agencies, growing

constraints, transparency

implementation gaps, selective

(Finland, Australia)

enforcement hurting the most vulnerable (Uganda)

poor countries: this is why they are corrupt in the first place. How many countries have managed in their history to build a bureaucracy which corresponds to the Weberian definition of a ‘state autonomous from private interest’, as Migdal (1988) labels it? Hardly any. In fact, the literature on the developing world abounds with evidence on the lack of autonomy of public administration, characterized by government favouritism of every kind and high turnover: only Botswana and Mauritius from Sub-Saharan Africa get citations for the reasonable autonomy of their bureaucracies from the political factor; in Eastern Europe also, politicization of the state apparatus is the rule rather than the exception (Goldsmith 1999; Meyer-Sahling 2011; Mungiu-Pippidi 2019). Furthermore, evidence exists at least for developing and transition countries of collusion between politicians and their bureaucrats for rent creation to provide concentrated and significant benefits to the national elites and losses to the rest of the society (Mbaku 1996). Fixing corruption by meritocratic recruitment is hardly a solution because rulers appoint relatives and other loyalists to stay in control of rents. The problem cannot be the solution. A simple typology of how the governance context is shaped by political will is shown in Table 2.5. The (lack of) autonomy of the bureaucracy from the private interest of the rulers is part of the definition of corruption, so of course we find them associated. But this does not mean that the problem can be a solution or that the same leaders who appoint their relatives or henchmen to deliver what they wish from their government will switch to merit-based systems once enlightened on the issue. The quality of public administration is part of the same complex of societal factors that generate a certain quality of government and is therefore endogenous (Mungiu-Pippidi 2020). A great reset can happen only if a revolution brings a new regime after the one of systematic corruption, a new government which comes to power that really opts for an ethical universalism-based system and away from extractive institutions. This is the case of the Estonian centre-right nationalist governments in the

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early 1990s (with Mart Laar as a prime minister) or the regime of President Mikhail Saakashvili in Georgia, after the Rose Revolution. In such countries, revolutionary leaders organized a full institutional overhaul (both at the level of regulation and of individual ‘vetting’ of every bureaucrat or magistrate) to change the situation that preceded them (Mungiu-Pippidi 2015b).

NOTES 1. 2.

3.

See the full narrative here: https://​multimedia​.europarl​.europa​.eu/​en/​video/​ history​-fall​-of​-the​-santer​-commission​_V001​-0004. The corruption in FIFA made headlines again on the occasion of the World Cup 2022 in Qatar due to allegations of bribery over the choice of this location, but evidence points to widespread particularism, not an isolated bribe. See BBC News (2015). See the UN press statement of the time at https://​press​.un​.org/​en/​2005/​sc8492​ .doc​.htm.

3. Rethinking actionable measurement THE PUZZLE The ancient Greek historian Herodotus tells us the story of how the wealthy and powerful noble family of Athens, the Alcmaeonids, bribed (ἀνέπειθον) the oracle Pythia to tell all visiting Spartans to attack Athens and set it free from the rule of their rivals, the Peisistratids (Bosman 2012, p. 5). The ancient Greeks, who coined the concepts that we still use when discussing civic virtue, thus knew corruption in all its forms. So did the Romans. Cicero rose to fame during the Roman Republic by prosecuting the infamous governor of Sicily, Gaius Verres, who had been extorting people under his rule and buying his support in Rome with stolen art. Corruption is the classic explanation (amongst many others) of the decay and fall of Rome. The most frequent example given is the corruption of the legions, who selected the Emperor from their military leaders based on the size of the bribe offered, but failed to defend the borders. But despite the prominence of such arguments made famous by Machiavelli or Gibbon it is quite impossible to assess whether Imperial Rome was in fact more corrupt than Republican Rome. We also cannot state whether Greece was more or less corrupt than Rome by the time that Rome conquered it. This is not due only to our distance in time from such events. The historian Ramsay MacMullen (1988) in the Corruption and the Decline of Rome tries to assess with scarce statistical ‘hard’ evidence how significant corruption was in Rome and if indeed it was to blame for the Roman’s decline and fall. Given that most testimonials are subjective, partial and therefore unreliable,1 the most objective historian cannot but struggle to make an evidence-based diagnosis. Putting together indirect and incomplete pieces of evidence, MacMullen concludes that by the fourth and fifth centuries corruption had become the norm in Rome: no longer abuse of a system, but an alternative system in itself. ‘Ghost’ legions, paid for but never recruited in a corrupt state, can, of course, explain why a defence which had held well the previous centuries no longer worked, although similar on paper. Welcome to the problem of corruption measurement. To measure corruption across countries (Rome versus Greece) or across time (Republican Rome versus Imperial Rome) has always been and remains a serious challenge. The same goes for comparing the United States under Theodore Roosevelt (when 44

Rethinking actionable measurement

45

the anti-trust law was enforced with great effect) with the US under Obama and Trump (when some economists claim the return of monopolies). Even comparing the US with Mexico is not as easy as it seems. It is in many ways like trying to measure happiness by household instead of by individuals. In what proportion should the different degrees of happiness be aggregated across individuals in a household (males, females, aged, young, masters, servants) or across areas of life (happy with career, but not with sex life)? Though the most invoked obstacle to measuring corruption is that it is hidden and not observable, the primary reason why we struggle to assess corruption is simply that the issue is too broad. Corruption is not that hidden, except in the handful of societies where modesty and austerity are universally held values and rule of law reigns, and corruption is close to zero there, so there is not much we can measure anyway. Otherwise, corruption can be (and it actually was) measured by number of yachts or other fancy properties, including those owned by earners of public incomes, as well as by a variety of observable consequences: lack of value for money, lack of meritocracy, immunity and lack of accountability when a crime is committed and so forth. All these are observable phenomena, and they create over time a certain reputation. The first generation of corruption indicators, including Transparency International’s well known Corruption Perceptions Index (CPI), sought to measure this reputation. Changes in reputation, for instance for Greece as its sovereign debt crisis took off in the late 2000s, led to immediate changes in corruption rankings. Previously considered a non-corrupt country, in the aftermath of its financial crisis Greece collapsed in the CPI rankings calculated based on the ‘expert’ scores of a variety of financial institutions and think tanks. More than just showing how feeble corruption measurement was, Greece’s collapse in the CPI punished a new government that was struggling to fix the problems and build integrity, unlike its predecessor that had consolidated a wasteful patronage system with the help of European Union (EU) funds (Mungiu-Pippidi 2019). A country’s reputation is hardly unfounded, as in the old saying that there’s no smoke without a fire. Still such measurements are no more precise than that; otherwise Qatar, which waited until the twenty-first century to separate the ruler’s personal budget from the state budget, would not be ranked by the CPI above Spain. In a similar vein and contrary to sociological methods, an EU Eurobarometer survey (European Commission 2012) asked respondents to rank EU countries by how corrupt they were (basically by reputation) without inquiring whether they had ever travelled to those countries; the resulting ranking was nearly two-thirds similar to the ranking where national respondents rated only their own country. Especially for the countries on the top and the bottom of the ranking, there was near consensus, as their reputation had reached even people who had not travelled there.

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Rethinking corruption

Such are the strengths and the limits of governance indicators based on hearsay and reputation. They are not entirely off the mark, and they do get the big picture. But comparing them over years does not provide certainty of change and surely does not indicate why change happens. The historical solution for improving the objectivity of these subjective indicators was to aggregate all of them into one average or principal component. The most recognized such aggregates are the above-mentioned CPI and the Worldwide Governance Indicators (WGI), in particular the Control of Corruption (CoC) dimension. They both aggregate – without a theoretical model – various individual expert scores, in their turn with low specificity and transparency (Lambsdorff 2006; Hawken & Munck 2009; Andersson & Heywood 2009; Thomas 2010). Such aggregate indicators have the great merit of covering scores of states and entities, but what they gain in coverage they lose in depth. Primary data collection in the field of governance, which includes corruption, is extremely rare because of problems with conceptualization and the inability to meet the real costs of quality data production. Consequently, aggregate governance indicators come close to the equivalent of ‘derivatives’ in finance. The aggregator packs a big package from some smaller packages which in their turn, like Russian dolls, contain some non-transparent and non-specific original expert scores computed without real data collection by some country risk analyst, usually sitting in a financial institution, who has never done research per se. These original indicators are then standardized and normalized to fit together. The aggregation itself, while binding together several sources, creates unintended consequences in the form of resulting statistical noise, which has proven often stronger than change across years (Treisman 2007). Moreover, the content of the original expert scores that are eventually aggregated is strongly based on human judgement influenced by ideology or severely constrained by the limited opportunity to make direct observations. The recent case of Greece already showed two major problems with such perception indicators. First, they are non-specific, merely a reputation estimate; second, even this estimate has an imprecise time lag (Treisman 2007, p. 220). The World Bank researchers Kaufmann and Kraay (2002, pp. 13–14) calculated transparently that about half the variance over time in the WGI aggregate indicators for Rule of Law and Control of Corruption resulted not from evolution of scores within individual data sources but from changes in the sources used and the weights assigned to different sources. Nevertheless, they later argued that certain changes over longer periods are indeed significant (Kaufmann et al. 2006). While aggregate indicators do allow assessment of corruption across countries, albeit with high imprecision and without great specificity,2 they cannot be used across time on a yearly basis because they have different time lags.

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47

To make any progress in controlling corruption another type of indicators is needed. Ideally, corruption should be measured by indicators which are specific (i.e., refer to an observable and identifiable feature of corruption that can be changed) and are sensitive to change over time. Such indicators could then be monitored before and after a policy intervention (or any occurrence), allowing the impact of reforms to be traced. Rather than reviewing the present state of the art, which has been done elsewhere (Mungiu-Pippidi & Fazekas 2020), this chapter thus introduces the reader to the already existing solutions to these classic problems. In this way the door is opened to the future state of the art, in particular some of the conceptual and analytical work to develop objective measurements of corruption at national level undertaken in recent years by my research team and the United Nations Office for Drugs and Crime (UNODC) task force group on measuring corruption.

THE STAKES Perception indicators, especially Transparency International’s CPI, have played an important role in raising awareness about corruption. Based on reputation, they themselves have contributed to reputation and been intensively used by the media and opposition all over the world to denounce corruption and demand changes. In time, the need to complement them with more granular and specific indicators that could enable action has come to be widely acknowledged. The World Bank was the first to answer by offering its Doing Business survey. Developed by a team led by Simeon Djankov in the late 1990s, this project was grounded in the transaction costs theory of Ronald Coase and the accurate observation that power discretion is enabled by red tape, often manipulated by bureaucrats to extract rents. For more than two decades countries struggled to improve their performance on this indicator by reducing the number of administrative steps or the overall time to register, license or operate a business (with performance improving on average). In 2021 it was found that the World Bank’s top management had pressured the research team to change post factum the methodology and manipulate rankings to make some (potential) big funders of the likes of China and Saudi Arabia look better (Machen et al. 2021). The scandal, which led to the project’s termination, was a severe blow to the credibility of fact-based governance indicators: if one can manipulate such simple things (e.g., adding Hong Kong performance data to that of mainland China to upgrade the latter), what makes it different from the non-transparent expert scores captured in ‘derivatives’? Why invest in real data collection if the treatment of data cannot be trusted? And if the World

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Rethinking corruption

Bank does not have the financial resources to fund such an exercise and guarantee its impartiality, who does?3 These are especially problematic realities, since by 2020 the questioning of the established analytical framework based on lagging, non-specific and imprecise perception indicators gained a new sense of urgency. One immediate reason, on top of the old ones, is that such indicators signal the lack of success of international anticorruption efforts to really impact the world after 30 years. In 2021, Transparency International (2021) reported an unchanged global average for corruption perception for the tenth year in a row, at just 43 out of a possible 100 points, with 131 countries having made no significant progress against corruption in the last decade and two-thirds of countries scoring below 50. Some countries blame the indicators and their lack of sensitivity to change. In answer to these criticisms and the demand of the UN Convention against Corruption (UNCAC) Article 61 to ‘develop and share statistics, analytical expertise concerning corruption and information on best practices to prevent and combat it’ (paragraph 2), as well as ‘monitor their policies and measures to combat corruption to assess their effectiveness and efficiency’, the G20 called on its member states to develop a fact-based system to monitor corruption. In response, the UN Office on Drugs and Crime (UNODC), the UN agency in charge of tackling the threats of crime and corruption, has set up an expert group to address this task and provide an instrument to be piloted by volunteer countries. Civil society has not waited for governments which lacked political will to trace corruption. Since 2000, in tiny, poor Albania an NGO, the Albanian Institute of Science (AIS), has built a commerce register and a public procurement e-portal raising red flags by scraping official data and organizing it so as to detect corruption; the government did not offer any alternative. In Chile, which experienced a backslide after being a good governance achiever, a group of IT experts ranked government agencies by the strength of the ‘captcha’, interpreted as an obstacle to transparency and oversight. For 15 years, the Romanian Academic Society, a think tank, operated Romania’s only system for monitoring compliance with public entities’ obligation to post an annual report; shared with the World Bank and eventually the government, the system disappeared after 2015 without the government creating its own monitoring of such accountability reports. Funded by crowdfunding and US, Scandinavian and sometimes EU donors, NGOs around the world have created a variety of rankings for naming and shaming, all of which are measurements of corruption of great impact. An anticorruption activist does not necessarily need to measure corruption at country level. As noted in previous chapters, corruption is a policy problem and can be mapped as a policy problem, that is to say, ‘what is’ compared to ‘what should be’, by sector or by organization. Corruption can be measured

Rethinking actionable measurement

49

in a variety of ways according to purpose if the concept is clearly defined and bounded and if the integrity benchmark is specified either in law or in norm. In 2003 my team pioneered a measurement of fiscal favouritism simply by dividing the funds disbursed for natural disasters, after deducting allocations for regions where disasters had in fact occurred (a minority of cases), according to the political allegiance of the mayors receiving the funds (Ionita et al. 2011). It quickly became obvious that mayors affiliated with ruling parties encountered natural disasters (or better put, natural disaster funds) significantly more often than other mayors. The exercise just needs a benchmark (the official destination of funds) and sufficient budget transparency and can be performed in any country: many people emulated it using other variants of budgetary or extrabudgetary funds. It is easier to measure corruption if we limit it to certain organizations or sectors, as we can observe their outputs against their goals. Parliamentary corruption is flourishing in new democracies due to low normative constraints and great power discretion for elected officials. In Transparency International’s Global Corruption Barometer, political parties and parliaments have been perceived for many years as the most corrupt institutions. In a survey that the Romanian Academic Society conducted in 2002, 80 per cent of respondents indicated members of parliament (MPs) and political parties to be the most corrupt actors and checked on a list of what they considered corrupt behaviours (Mungiu-Pippidi 2015b). The list included wealth out of tune with the official income source, nepotism, political migration from one party to another repeatedly to the higher bidder and overall impunity culture: they were above the law even when driving over someone. Once a definition existed of corruption, clearly listing the norm and the deviation, an instrument to measure corruption at the level of parliament could be conceived. The Coalition for Clean Parliament (CPC) from Romania agreed on clear benchmarks based on the above perceptions. CPC then monitored all the candidates for parliamentary seats based on media sources, carefully triangulated and referenced (Mungiu-Pippidi 2015b). The result was a very influential ‘blacklist’ where parties were ranked by number of candidates ‘not meeting the integrity criteria’ (the country had a proportional list system). This was a de facto measurement of the integrity of candidates for parliament. As this integrity ranking proved very influential, CPC kept doing it for the next four rounds of elections; this allowed them to see how parties evolved and how many problematic candidates managed to get elected over time, and thus have a direct measure of how corruption in parliament evolved with every election. In this interval, parliament eventually legislated to make nepotism and the incapacity to justify one’s fortune by one’s income illegal, limited moves from one party to another and created an organization (Romanian National Integrity Agency) to officially undertake the monitoring of financial assets and conflict of interest for elected officials. The tremendous publicity generated forced par-

50

Rethinking corruption

liament to adjust its practices to the public norm. The advantages of blending measurement and action are thus very great, as the impact of intervention can be assessed in real time. Corruption in parliament may seem an odd concept to measure, would it not be for the fact that parliaments and political parties are identified as the most corrupt organizations in all in public opinion polls in the majority of democracies. This came with the expansion of democratization in the fourth wave, which in many cases remained an unfinished business. As Guillermo O’Donnell (1996, p. 42) observed, ‘In many countries of the global East and South, there is an old and deep split between the pays réel and the pays legal’. A real gap may then exist between formal (de jure) laws and informal (de facto) norms, a distinction important to the concept of the rule of law and anticorruption legislation (Mungiu-Pippidi & Dadašov 2017; Gutmann & Voigt 2020), where formal rules (laws) do not necessarily translate into outcomes (independence of the judiciary or less corruption). To assess whether institutions (‘rules of the game’) matter and adjust policies to increase impact we need to be aware of, and thus measure real (de facto) governance, not just de jure. For this, the introduction becomes necessary of a conceptual distinction between institutions (such as formal and informal rules regarding conflict of interest) and non-institutions or organizations, such as a Parliament (Voigt 2013). Actionable indicators thus need to capture both dimensions, de jure and de facto, and should be directly observable, transparent and grounded as much on a moral consensus as on the law. The academic debate frequently passes over such indicators, which have sprung up in many countries for a variety of sectors (public spending, procurement, public employment, health and education, to name but a few), as a real gap exists between the interest of social scientists (to get published in top ranking journals) and the policy world (to solve the problem of corruption). So, for example, V-Dem, the Varieties of Democracy project at the University of Gothenburg in Sweden, is highly popular because scholars feel the need to ‘test’ contemporary theories using econometric analysis on historical data. V-Dem produces scores on democracy extending back to 1900 for most countries in the world, and for a selection of countries back to 1789 (Coppedge et al. 2021), using experts to rate countries according to a questionnaire going back 200 years. Among others it offers a score of corruption, based on a wide sample of countries which vary wildly in the quality of their historical records. Yet weak conceptualization and the challenge of direct observation make difficult any such ratings based largely on expert judgement. Furthermore, measuring corruption makes sense if it helps indicate how to reduce it: what buttons should be pressed to improve the quality of governance? The remainder of this chapter explains these problems and presents innovative indicators

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that show how to solve them, before introducing a full analytical matrix for a fact-based assessment of corruption across time and countries.

INNOVATING TO OVERCOME DEFINITION AND SPECIFICITY PROBLEMS: THE IPI Governance at national level is more difficult to measure than corruption in a parliament or a hospital not only because it is more complex, but because it is often loosely defined and poorly bounded. Take state capture: at least two different definitions exist, one presuming that the external firm is the captor, the other that the incumbent office holder is; in other words, the principal differs. Or let us examine institutional quality, one of the objectives of Goal 16 of the UN Sustainable Development Goals (SDGs). In line with the World Bank and the (neo)institutionalist literature (e.g., Acemoglu & Robinson 2012) we presume this to mean the quality of ‘rules of the game’, the written and unwritten codes prescribing behaviour. And yet it may also mean (and many interpret it as such) the quality of organizations (for instance, the strength of a supreme state audit agency). Needless to say, these are two completely different approaches (economists versus lawyers), not only concepts, and would require totally different approaches to measurement as well. Or take kleptocracy, which came under the spotlight with the Russian invasion of Ukraine: there are few criteria to explain why Roman Abramovic is a kleptocrat and Leonard Blavatnik is not. And presuming we manage to establish when an oligarch becomes a kleptocrat on some objective basis,4 does it help to count oligarchs and kleptocrats as a measure of national corruption, and what is preferable, to have more or fewer? Or take rule of law. While there was clarity enough in the classic definition of the rule of law as coined by Bingham (2011, p. 8), the concept has become stretched in recent years – from the classic proceduralist definition (‘bound by the law’) or the basic political one offered by Francis Fukuyama (2010) (politicians not attempting to retrospectively change the law) to a concept which includes social and even ‘nature’ rights – so much so that measurement becomes impossible (Venice Commission 2011, paragraphs 34, 68–69). The so-called ‘thick’ version of the rule of law concept is like a basket where various items are lumped together. The World Justice Project counts nine factors. The Venice Commission of the Council of Europe counts six, but adds also on top some ‘challenges’ like corruption and conflict of interest (Venice Commission 2016). The practical solution for monitoring rule of law has therefore been equally large baskets of indicators. The difficulty then becomes how to interpret them when they are not consistent in their evolution. A sound measurement of corruption depends on how clear, well bounded and internally consistent its definition is. Corruption occurs in a myriad of forms which vary

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in the difficulty to observe directly and are equally difficult to pack on top of one another, but corruption as a policy problem tends to occur under certain conditions that we can aggregate in a latent variable. We can thus conceptualize control of corruption as the capability of a society to deter its public officials from abusing public authority for private interest and to enforce public integrity in government, governing for the broadest social welfare possible and not in their narrow interest. Using this operational definition, we can organize the vast academic literature on the causes of corruption, which includes contributions from micro to macro factors that may be very confusing at first (Mauro 1998; Treisman 2007; Mungiu-Pippidi 2015b). But, as hinted at in Chapter 2, using this definition as a theoretical yardstick sorts all tested factors into two categories: enablers, which create resources for corruption, and disablers, which constrain it. The dimension of corruption risk results from the balance between such opportunities/resources for corruption (i.e., power discretion and material resources, like oil or non-transparent public money) and constraints that autonomous organizations (i.e., the judiciary, media), groups (civil society) and individuals (voters, whistle-blowers) can use to prevent power holders from abusing office in their own interest (Mungiu-Pippidi 2015b). Enablers and disablers depicted in Figure 3.1 can form various equilibria, many suboptimal, according to their levels, hence the variation in national-level corruption. Public integrity is the public good resulting from the behaviour of most power holders and citizens if they do not engage in corrupt acts and power abuse benefiting private parties. Corruption risk is low where public integrity is high. This model is confirmed by econometric analysis: enablers and disablers interact in statistical models and their proxies form a strong principal component explaining most variation (Mungiu-Pippidi & Dadašov 2016, 2017). Corruption is thus a latent variable, and the context created by enablers and disablers can be both measured specifically through each component and aggregated to have a ranking. The resulting Index of Public Integrity (IPI) measures corruption risk, that is, the probability that constraints can limit corruption acts, and is an indirect, although specific measurement of corruption. What are the advantages of this approach over an aggregate of expert opinions or a survey directly asking the population how corruption affects them, especially since the latter can also measure experience, which is a direct measurement? First, there is added value in specificity. The experts’ opinion is like a black box: only they can read it; nobody else knows what is inside. Since both people and firms are differently exposed to corruption according to status, rank, occupation and sector, surveys of specific populations dealing with a specific public service (e.g., truck drivers regarding customs) are preferable over ‘representative’ national samples, which are not representative for corruption experiences. But such surveys are almost never carried out

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Source:

53

Corruption Risk Forecast, www.corruptionrisk.org.

Figure 3.1

Modelling public integrity versus corruption at national level

since a one-time national representative sample is cheaper, although far less informative and even misleading. Rather than collecting perceptions based on partial experiences and being unable to aggregate them in a reliable whole, it is actually easier to measure at the indirect level by selecting reliable proxies for each societal feature enabling or disabling corruption. The most difficult proxy is always judicial independence, as no simple direct observable fact exists to supply at least the basic information. Judicial statistics are notoriously scarce, and no international organization collects them, for the good reason that national statistics offices do not. If they did, possible proxies for judicial independence could include, for instance, the number of lawsuits against the government that the government actually loses. The second advantage of measuring corruption through its determinants is its analytical superiority. It fits the so-called opportunity theory from criminology, which posits that the level of crime depends on the number of targets and their level of protection (Felson 1998). It adapts the individual model of deterrence of Gary Becker (1968) to the national level and is easily adjustable to subnational levels of analysis as well. As long as corruption is conceived as a result of a misbalance between opportunities and constraints, the theoretical model allows the calculation of a similar index for various policy sectors and regions, as some scholars have already done (Drápalová 2016). Instead of ‘black box’ corruption, we have a mechanism, and once we have a causal mechanism it is easier to understand and plan against corruption.

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Rethinking corruption

The third advantage of this model is thus its actionability. Both the current levels of the individual components and their trends over time offer essential information for a roadmap for change. The only setback is the dependence on human development for some elements, for example, the number of digitally empowered citizens, but even that is actionable: both governments and civil societies can act to increase Internet literacy and the number of Internet household connections. Even if some factors of control of corruption are more easily transformed by human agency in the short term than others, once anticorruption policies focus on them rather than on their result, that is to say, corruption, the reforms that governments undertake – on fiscal and administrative transparency, for instance – become visible from one year to another. This solves the time lag problem, creates incentives for change and indicates exactly on account of what factor change does not happen. In other words, the model empowers a theory of change which can inform a more evidence-based anticorruption strategy. An application of this theoretical approach is the 2015–2022 Index of Public Integrity (IPI), which uses proximate measures for factors identified in research as impacting corruption risk for 115 countries (Mungiu-Pippidi & Dadašov 2016). It is a composite index consisting of six proxy components. The original proxies for opportunities were administrative burden, trade openness and fiscal transparency (2015, 2017 and 2019 editions); and for constraints, judicial independence, e-citizenship and freedom of the press. Starting from the 2021 edition, IPI gave up administrative burden and trade openness due to the 2021 closure of the World Bank’s Doing Business project and replaced them with administrative transparency and online services. The components of IPI strongly correlate despite measuring apparently different things. This shows that they all measure in fact a latent variable: the capacity of a society to control corruption and enable public integrity. IPI was designed as an actionable index, based solely on factors that are regularly measured and can be changed by human action. It is not the only possible combination resulting from the literature on causality, as not all the factors identified by research as causes of corruption can be modified by human agency, and not all suitable proxies can be easily and practically measured. In the former case, both multiethnicity and an abundance of mineral resources can multiply opportunities for corruption, but policy can hardly change them. Another example is the informal economy, which also provides ample opportunities for corruption. As we have seen in Peru during the COVID-19 pandemic, patients had to come to hospitals with their own oxygen containers, as the public system collapsed when an entire population, 70 per cent of whom were informally employed, turned to it all of a sudden. In the case of Peru, the opportunities for corruption provided by the informal economy are paramount and only partially captured by measures of, for example, administrative

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burden: indeed, all the administrative reforms that Peru made to join the OECD only touched the surface, leaving both red tape and corruption levels stagnant. In the end, vulnerable workers frequently need to bribe if they want to access public services. As apparent as these circumstances are, however, adding an informal economy component to the IPI is not practical, as it is very difficult to measure and approximating one informal entity by another would not advance the cause of fact-based measurement. Despite excluding the informal economy, natural resources and multiethnicity, which every country analyst should add to the balance on the side of opportunities, and restricting the model to agency-driven factors, the IPI has high internal and external validity since proxies were selected only after comprehensive tests. The internal consistency of the index extracted from principal component analysis was and remains very high.5 IPI results also correlate at values between 60 per cent and 80 per cent with a variety of corruption measurements: subjective ones such as Global Corruption Barometer’s ‘Most officials are corrupt’, Transparency International’s CPI, the Global Competitiveness Report’s Government Favoritism or WGI’s Control of Corruption, but most importantly, objective ones such as the Public Administration Corruption Index (Escresa & Picci 2017) or procurement red flags (for a correlation between subjective and objective indicators, see Mungiu-Pippidi & Kukutschka 2018). The IPI’s components cluster together, but also interact (e.g., judicial independence with administrative burden, e-citizens with fiscal transparency, press freedom with any form of transparency, opportunities and constraints; see Mungiu-Pippidi & Dadašov 2017). The components are standardized to ensure that the IPI does not depend strongly on the component with the greatest dispersion. A country can score badly for one component, but still do well on the overall IPI. Similarly, progress on just one component is insufficient for the positive evolution of public integrity. Despite the slight changes in components in 2021 and 2022, the principal components continued to explain most variation. And tracing the components across years can explain why a country has or has not changed. A linear association of WGI’s CoC with IPI highlights the difference – albeit small – between the two indicators’ rankings (see Figure 3.2). The explicit inclusion of political components such as freedom of the press and judicial independence in the IPI leads to outliers such as Qatar, Rwanda, Botswana and Lesotho (above the regression line), which are far better ranked by the CoC (as well as the CPI) and far worse by the IPI. IPI thus corrects some of the biases of perception indicators, which granted good scores to countries where foreign investors paid bribes infrequently, regardless of their structural corruption. For instance, in Rwanda, the most recent African ‘achiever’, private firms belonging de facto to the ruling party participate in tenders and win (Bozzini

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Rethinking corruption

Note: N=114; WGI CoC rescaled 1–10, with 10 best control. Source: Kaufmann & Kraay (2022), Control of Corruption dimension; Index of Public Integrity (www.corruptionrisk.org/datasets/).

Figure 3.2

The association between Control of Corruption indicator and Index of Public Integrity

2014). Treating the public integrity framework by its determinants thus does more justice.

MEASURING REAL, NOT JUST LEGAL CONCEPTS: THE T-INDEX The next example comes from the field of transparency, famously labelled by US Judge Louis Brandeis as the chief anticorruption tool: ‘Sunlight is said to be the best of disinfectants; electric light the most efficient policeman’ (Brandeis 1913, p. 10). Transparency is explicitly mentioned among the list of outcome targets of Goal 16 of the UN’s SDGs as in ‘developing effective, accountable and transparent institutions’ and ‘ensuring public access to information’, although it is implicit in the other targets as well. It also features prominently in the UN Convention against Corruption.6 The first international NGO which took up the task to advocate against corruption assumed the title of ‘Transparency International’ at its creation in 1993, further brand-

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ing transparency in relation with anticorruption. Eastern Europe and Latin America made transparency the cornerstone of their administrative reform (Mungiu-Pippidi 2010; Michener 2015). In 2011, US President Barack Obama led eight countries in launching the Open Government Partnership to enhance transparency, accountability and public participation in government: by 2022, 77 countries and 106 local jurisdictions had joined alongside thousands of civil society organizations. However, the long-presumed relation between corruption and transparency has hardly been scientifically proven. The chief obstacle to the convincing test of this relationship has been the absence of direct and fact-based measurements of both corruption and transparency: most tests so far have been based on experiments, with results that are mixed and hard to generalize (Kosack & Fong 2014; Porumbescu et al. 2021). However, the rise of the Internet and the digitalization of government offers new opportunities for the direct measurement of transparency and thus enables more representative tests (Mungiu-Pippidi 2022). The latest example of how we can move from general, non-specific indicators to directly observable, actionable ones taking advantage of e-government is the T-index, a measure of real transparency. What is the presumed mechanism by which transparency limits corruption? Transparency is influential on both sides of the control of corruption equilibrium (see Figure 3.3). Transparency automatically decreases resources for corruption, as it eliminates the monopoly of information that officials exploit as a rent in itself or that is conducive to other rents (Klitgaard 1998; Stiglitz 2002). The publication of government data, from basic demographic and property data to health or environment data, ends the monopoly over such information and enables citizens to both pursue their daily interests with reduced costs (and less need to solicit such information) and control their government. Transparency can thus reduce power asymmetries and opportunities for rent seeking and improve access to public services. On the side of constraints, transparency is also of invaluable help for magistrates, auditors, journalists, and ordinary citizens to assemble information against potential public office abusers at low cost, to diagnose practices and to create benchmarks (Mungiu-Pippidi 2022). Public corruption trials cannot be hushed up. Scandals about corruption in the media can prompt the judiciary to act even against less visible officials in a government; and citizens and NGOs can themselves use public information to rally against corrupt behaviour, bring lawsuits or vote the corrupt out of office, as information enables them to assign responsibilities for performance of the government and administration and assess them objectively. Transparency enables collective action, facilitates mass protests and empowers the citizenry (Hollyer et al. 2015). Entire forms of corruption can disappear with the introduction of transparency: for instance, if the list of teachers who are supposed to be teaching in a school is published on

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a website, there can be no ‘ghost teachers’ on the payroll, a pathology widely encountered in Sub-Saharan Africa and Latin America.

Source:

Mungiu-Pippidi (2022).

Figure 3.3

Transparency’s influence on public integrity

Government transparency should thus offer to the public that reliable, relevant and timely information about the activities of government that enables it to defend itself from discrimination resulting from favouritism and abuse of power (either due to connections or monetary inducements). The most common legal instrument of governmental transparency is ‘freedom of information’ (FOI) which implies a right of citizens to request information and an obligation of governments to either provide that information or explain why they will not (Roberts 2008). Some authors use FOI (its existence in place, age and comprehensiveness) as a proxy on corruption. After some initial optimistic findings (Islam 2006), the effect diminishes as more countries are added (Costa 2013; Mungiu-Pippidi 2015b; Vadlamannati & Cooray 2017). FOI laws seem to be more effective when civil society is strong (Mungiu-Pippidi & Dadašov 2017; Kossow & Kukutschka 2017). Furthermore, in the age of Internet and e-government, transparency often becomes computer intermediated, with the generalization of smartphones raising access to unprecedented levels (Margetts 2011; Lourenço 2015). If instead of FOI regulation the proxy for transparency is the UN e-government index, which measures online service provision (e-services) and openness (e-participation), transparency seems to affect corruption perception more (Andersen 2009; Choi 2014; Starke et al. 2016; Nam 2018; Elbahnasawy 2014). Park and Kim (2020) remark on the basis of another panel study that UN-measured e-government ‘significantly’ reduces corruption in countries enjoying rule of law. In large review studies, Cucciniello and colleagues

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(2017) and Chen and Ganapati (2021) report that evidence exists only for a weak impact, especially for fiscal and e-transparency, on subjective (perception) indicators of corruption, but not on objective indicators. On top of these quantitative studies the experimental and case study evidence is rich, although diverging in results The receptacle of the most cited experiments, Uganda, has never improved in governance charts, showing the difficulty of generalizing from controlled settings and even limited natural experiments (in one city or sector) to the macro, society level (Mungiu-Pippidi 2022). How can this challenge be addressed? Measures of real transparency in a comprehensive, comparative format are hard to find (Mungiu-Pippidi 2022). The only way to assess de facto transparency is to observe directly the existence of such data, its accessibility and its coverage, in other words, the practice of transparency rather than just the legal provision of it or its formal presence. To measure transparency and its effect on corruption we need two sets of indicators: one for de jure transparency and the other for de facto. The advantage of collecting both is that we can also test to what extent regulation produces the expected outcome, in this case delivers transparency. Can this challenge be addressed? First, we need to bound the concept better. The concept of transparency is used in at least three different meanings (Ball 2009), of which the one defined as disclosure of data which provides citizens and other public stakeholders ‘with the information needed for judging the propriety and effectiveness of the conduct of the government’ (Bovens 2007) is the closest to my scope. This book defines transparency as the available and accessible (cost free) minimal public information required to deter corruption and enable public accountability in a society. What this definition includes on top of Bovens’ is the possibility, often ignored, that corruption is deterred to a great extent not by planned campaigns against it, but by the capacity of everyone to defend themselves from being abused and discriminated (Mungiu-Pippidi 2022). Corruption in a democracy often results in discrimination, as few states dispose of unlimited resources such that favours granted to some individuals or companies would not result in the deprivation of others of similar merit (Warren 2004). If citizens were able to defend their own interest from abuse of office, their defence would be a major contribution to anticorruption. Next, we need to hypothesize a de jure–de facto relation. In line with the argument that a gap might exist between law and practice (Mungiu-Pippidi & Dadašov 2017), it is possible, then, that the situation concerning transparency is similar and that, for instance, the observed weak effect of FOI law in many countries is explained by an implementation gap if we manage to measure the two components. First, the de jure transparency can be measured by the existence and comprehensiveness of regulation. The most used transparency measures rely on adopted FOI acts, from simpler to more complex measures.

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EuroPAM.eu, for instance, assesses the comprehensiveness of transparency legislation for 35 European countries, resulting in a numerical score which allows both country ranking and institutional specificity, that is to say, what a law includes or misses. Other relevant rules and conventions with key transparency provisions exist and are broader than just Europe in focus: the Extractive Industry Transparency Initiative (EITI), UNCAC, the Anti-Money Laundering Convention and the OECD Anti-Bribery Convention (officially the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions). Countries pledge transparency also when joining the Open Government Partnership. While international treaties generally have weak enforcement mechanisms, all the above do have clear monitoring mechanisms, unlike other pledges for transparency that countries make (for instance, associated with free trade agreements). Such conventions and treaties can help therefore to assess de jure transparency, and they provide the national and international transparency benchmarks that a country adheres to. The measurement of de facto transparency at national level is, of course, the real challenge, although in times of e-government the task is easier than ever before. De facto transparency can be observed directly: whether public data exist, how accessible the data is, and what it covers. But what specific information should be monitored, as the universe of unclassified information relevant for corruption that governments should share is practically infinite? The answer to this has already been given in the main by the UNCAC and SDG 16, which list the basics for control of corruption and transparency (Mugellini et al. 2021). Table 3.1 lists essential indicators selected to prevent corruption and abuse of office for both categories, de jure and de facto transparency. All the elements required by the UNCAC are captured in the de facto index, apart from non-universal categories such as websites that disclose party finances (important only for democracies), which could decrease country coverage too much. Although this list covers the basic data that a government could share to enable public participation in combatting corruption, it can also grow ad infinitum, as transparency is not a finite concept (Mungiu-Pippidi 2022). Environment data, food safety data, health and education data, various kinds of archival data and communications within government all may prove important to preventing corruption in one situation or another, even if UNCAC does not make explicit reference to them. However, by assessing primarily financial and public procurement transparency, the coverage of the highest risk areas is ensured, while preserving the feasibility of broad country coverage. The de facto T-index thus has 14 components, which cover the main administrative, judicial and anticorruption areas.7 The first edition of the T-index (2022) reported here included 129 countries. The 2023 edition increased coverage to 143 countries. A trichotomous system of coding is used.8 Details on the methodology of the T-index has been published in Mungiu-Pippidi (2022).

Rethinking actionable measurement

Table 3.1

61

Components of T-index de jure and de facto dimensions

De jure transparency (laws and treaties) UNCAC ratification Membership to Open Government Partnership (OGP) FOI act present in national legislation Adhesion to scope-limited conventions or initiatives including transparency provisions* Part of the Financial Action Task Force against Money Laundering or other anti-money laundering initiative De facto transparency (open, free and comprehensive data) Online information about Supreme Courts’ hearing schedules and agenda, enabling participation in public sessions Online Supreme Courts’ decisions with motivations in sentencing (including abuse of service or corruption sentences) Online searchable database of legislation (official gazette or legal repository) Online detailed publication of past expenditure (from previous fiscal year) Online detailed publication of current public expenditure (budget tracker) Online public procurement portal including tender announcements and award notices Online disclosure of international aid (ODA) allocation (either as recipient or donor, or both) Online disclosure of existing mining concessions Online disclosure of building permits at least for the country’s capital city Online searchable land register with ownership information for all properties Online searchable register of commerce with public shareholder information Online disclosure of financial declarations for public officials Online disclosure of conflict of interest declarations for public officials Online reports of the Supreme Audit Institution (at least an annual report) offering detailed information on audit results

Note: *This item draws on a few treaties and initiatives which are either regionally or sector limited, such as the OECD Anti-Bribery Convention; the World Trade Organization Agreement on Government Procurement (GPA); Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP); membership in EITI. Other trade treaties which do not have provisions for extensive transparency are not included. The adhesion to any of these conventions and treaties grants the maximum 1-point score; a score of 0 is granted if the country does not participate in any of these initiatives. Source: Mungiu-Pippidi (2022).

The total repertory represents the basic transparency menu for preventing corruption, with each category having its separate theoretical importance which cannot be statistically tested against the whole. Equal weighting is the most common scheme used in the development of composite indicators (Bandura 2008; OECD 2008). We assign equal weights to aggregate components into an index of qualitative variation (IQV) (Agresti & Agresti 1978). The availability of the 14 resources in full is considered the de facto target for our concept of

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transparency, and each component adds up equally to fulfil it to 100 per cent, which is the equivalent of the maximum score of 14 points. The same logic is applied to the de jure and the total T-index scores. A country’s T-index score represents the percentage to which the target (19 items) is fulfilled. The resulting index is then a combination of a rule-based and an outcome-based measurement, designed to eliminate the reported problem of an implementation gap (Kaufmann & Kraay 2008, pp. 5, 8). The pairwise correlation between the de facto and de jure indicators returns a Pearson coefficient of 0.66, showing a strong and statistically significant correlation (at the 95 per cent confidence level), with the difference indicating the presumed implementation gap (Mungiu-Pippidi 2022). The general pattern displayed by the transparency gap metric sheds further light on which side of the scale the imbalance lies: de jure transparency outperforms de facto transparency by a mean value of roughly 26 points on the 100-point scale. Indeed, fulfilment in the de jure dimension is higher than in the de facto dimension for 124 out of the 129 countries for which the T-index was computed (Mungiu-Pippidi 2022). As Figure 3.4 shows, the differences across regions are highly significant. Sub-Saharan Africa and MENA have the lowest real transparency in the world (33 to 32 degrees of fulfilment, respectively), although Sub-Saharan Africa has far a larger implementation gap (38 to 28, respectively). Europe and North America show the highest fulfilment on both de jure and de facto transparency, but the region’s implementation gap (23) is 2 points higher than that of Asia and the Pacific (21). The Eastern Europe

Note: N=129; regions’ classification adapted after the World Bank with Western Europe and North America aggregated; average value by region in 1–100 scale. Source: Mungiu-Pippidi (2022).

Figure 3.4

Transparency and implementation gap across regions

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and Central Asia region is closely comparable with Latin America on real transparency (59 and 56, respectively), but its implementation gap is but half that of Latin America (15 compared with 26). Finally, de jure transparency predicts in a bivariate regression for only 41 per cent of the variation of the de facto transparency. According to our hypothesis, which is therefore confirmed, a ‘transparency implementation gap’ exists with 79 per cent of countries fulfilling the de jure transparency criteria, but only 53 per cent fulfilling the de facto criteria (Mungiu-Pippidi 2022). The global average score for the de facto component is 7.5 (out of total 14), and the average for the total T-index (de jure and de facto aggregated) 11.4 (of 19). Table 3.2 shows the external validation results of the T-index, which correlates at 69 per cent with the UN Survey Online Services indicator (which measures digitalization of public services), at 66 per cent with the same UN Survey’s E-participation indicator (which measures transparency as feedback and consultation offered by government websites) and at 66 per cent with Budget Transparency, a 12-item fraction of the Open Budget Index used as a component of the Index of Public Integrity (Mungiu-Pippidi 2022). The Table 3.2

Pairwise correlations of T-index and indicators of transparency and enabling factors

 

T-index total score (0–100)

UN Online Services (N=128)

0.69*

UN E-Participation Index (2020) a) (N=127)

0.71*

Budget Transparency (component of IPI 2019) b)

0.66*

a)

(N=114) HDI c) (N=129)

Note: Source:

0.64*

*95% statistical significance; Pearson coefficients. a) United Nations (2022); b) Mungiu-Pippidi (2022); c) UNDP (2021).

T-index is also strongly associated with the Human Development Index (HDI), largely by its de facto component, as the implementation of transparency requires both a certain level of income and a good level of education (both components of HDI). As expected, the relationship between the T-index and corruption perception indicators (CPI, the World Bank’s Control of Corruption (CoC) indicator and V-Dem’s corruption measure, scaled inversely than the other two) shows a statistically significant correlation between higher transparency and lower corruption (see Table 3.3), but the coefficient is only at 51–53 per cent due to the many outliers (Mungiu-Pippidi 2022). The correlating with the Global Corruption Barometer indicator (corruption perceived as increasing versus

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Table 3.3

Pairwise correlations of T-index and indicators of corruption

Measurements

T-index

CPI

CoC

IPI

(1) T-index

1.000

 

 

 

V-Dem  

(2) Corruption Perceptions Index (CPI)

0.529*

1.000

 

 

 

(2021) a) (3) Control of Corruption (CoC) (2021) b)

0.515*

0.993*

1.000

 

 

(4) Index of Public Integrity (2019) c)

0.692*

0.864*

0.859*

1.000

 

-0.528*

-0.897*

-0.894*

-0.742*

1.000

(N=114) (5) Corruption V-Dem (2021) d)

Note: N=129 unless otherwise indicated. Source: a) Transparency International (2021); b) Kaufmann & Kraay (2022); c) Mungiu-Pippidi (2022); d) Coppedge et al. (2021).

decreasing) is also significant and sizable at 39 per cent, and robust when the development indicator life expectancy is added as control. The relation is intuitive, with countries with higher transparency having fewer people who perceive that corruption has increased. The most fact-based corruption indicator, the IPI has the strongest association with transparency, explainable in part since both indexes include budget transparency (from different sources and differently computed).9 The association of transparency with corruption remains constant across all indicators, although it is not consistent across different income groups (GDP-PPP), with the stronger relationship on behalf of the lowest income group. However, when GDP-PPP is introduced as a control in a linear relationship model both components of the T-index and the total index remain significantly robust (Mungiu-Pippidi 2022). Transparency has spread considerably in the world, but still remains insufficient. As shown in Figure 3.5, countries increasingly publish court sentences and hearing schedules, and national auditors (controllers) are publishing their annual reports on corruption in about half the countries, as UNCAC requires. The efforts of the donor community to make aid transparent have also borne fruit, with almost half of countries fulfilling this criterion in full (Mungiu-Pippidi 2022). E-procurement portals and mining concessions websites have also proliferated, but information is still missing exactly in the countries that need it most to prevent corruption. The situation worsens when it comes to fiscal transparency, especially for current as opposed to past tracking of public expenditures and the transparency of ownership of businesses or land; most countries with corruption problems have very low fulfilment on the latter. A paradoxical situation exists for direct oversight tools to prevent officials’ corruption, with just a minority of countries actually disclosing the assets and conflicts of interest for officials. Some middle-income countries which fight corruption in Latin America and the Caribbean or Eastern Europe are

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far more transparent than advanced OECD economies. Finally, few countries publish construction permits online, although some superb benchmarks exist (for instance, the city of Paris where an application map shows both approvals granted and those denied); corruption in relation to building permits is, accord-

Note: Source:

N = 143. Corruptionrisk.org/transparency, updated July 2023.

Figure 3.5

De facto transparency by component: share of countries achieving each level of fulfilment

ing to the Global Corruption Barometer and other surveys, and remains a truly universal problem. The 2022 version of the T-index shows how more general problems in corruption measurement can be solved (Mungiu-Pippidi 2022). First, it introduces the distinction between de jure and de facto transparency and shows that an implementation gap exists between the two, with the practice of transparency lagging behind legal commitments, particularly in less developed regions of the world. Second, it shows that direct observation is now in the realm of the possible for a large number of countries. Third, it addresses directly the trust problem, as the index is transparently published with every component linked to a public webpage (www​.corruptionrisk​.org/​transparency) to enable feedback and updating through crowdsourcing. Unlike the now defunct Doing Business project, everyone can check on this index. Finally, the T-index shows how measurement can serve an actionable purpose. It creates clear benchmarks in the field of government transparency, giving visibility to best practices and exposing implementation gaps.

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THE FUTURE MEASURES WELL Measuring transparency and corruption in a more analytic, specific and transparent way (without expert assessments) is thus possible. National think tanks and international organizations have been innovating and testing new instruments for many years. A data repository developed with EU funding, Opentender.eu and sustained by the Government Transparency Institute, offers not only public procurement data in 35 jurisdictions, but also an app to trace corruption risk (Fazekas et al. 2016). The World Bank endorsed an enlargement of the repository to cover more countries.10 The World Bank additionally supports a comprehensive measure of digital transformation in the public sector (not specific to corruption), the GovTech Maturity Index (GTMI) for 198 economies.11 Development banks on all continents have been steady supporters of measuring corruption by both surveys and new procurement-based measures. If measurements such as the T-index are not more widespread (although at country level many things exist), it is because few countries, if any, collect the relevant data to trace corruption across time. Anticorruption agencies and civil society scramble for data to write yearly reports. Only organizations which produce the data themselves – the International Budget Partnership for fiscal transparency, the World Justice Project for rule of law, the Open Contracting Partnership and Government Transparency Institute for procurement data, the European Research Centre for Anti-Corruption and State-Building (ERCAS) for transparency and integrity as shown in this chapter – produce regular data comparable at country level. Imagine if the governments themselves would collect the data relevant to assess UNCAC implementation. Following a call from G20 to do just that, the UNODC assembled a task force. This concluding section briefly describes the underlying theory and measures piloted by the task force.12 Given the many forms that corruption takes, its multiple enabling and disabling factors and the variety of consequences that it has, a single indicator is insufficient to offer an effective, actionable way to monitor it. For this reason, an actionable measurement framework which can be used for comparison both across countries and over time should account for the various definitions of corruption and the different behaviours that are often labelled as such. UNCAC does not include, but seeks to ‘achieve common definitions, standards and methodologies’ (Article 61 paragraph 2). It also offers a list of the most problematic behaviours (for instance, illicit enrichment) and sectors (e.g., public procurement), which can be a starting point for a system of indicators.13 Using these elements, which cover many key aspects and forms of corruption, a matrix of indicators was developed. This pilot UNODC matrix

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67

– Comprehensive Indicator Matrix for the Measurement of Public Integrity (CIMMPI) – incorporates both direct and indirect measurements to capture specific manifestations of corruption and the circumstances that enable or help control it. While it may seem optimal to always measure corruption directly, direct measurement is often not possible due either to the context (i.e., corruption as the exception versus corruption as the dominant rule) or the nature of the sector (e.g., high levels of secrecy or opacity that make it difficult to investigate). For example, if cases of corruption are an exception, there is nothing to measure, and detection is needed to identify the few instances where corruption occurs. If a sector is by its nature hidden from the public (like financial transactions, defence or areas involving privacy) direct measurement through a survey, for instance, would not help because the public would have no direct experience to report. Finally, as many direct measurements depend on the performance of control agencies, if those are weak, the result would not be representative (e.g., an audit agency reviewed 10 per cent of public expenditure and found 5 per cent irregularities). Indirect measurements are thus essential for mapping corruption, regardless of its prevalence. In fact, measuring the context which allows corruption to happen versus the one which deters corruption provides the vital information for action and response. The CIMMPI uses columns to capture the analytic building blocks that describe corruption, the factors that enable it and the capacity to constrain it (see an example in Table 3.4). The mechanism of corruption captured in vertical categories allows integration of different types of measurement (direct, indirect), while also monitoring the relevant risks based on enabling and disabling circumstances for corruption, that is to say, the opportunities and constraints, as well as the official legal or regulatory and law enforcement responses. Risk indicators measure the context in which corrupt acts occur, the balance between enabling and disabling factors, as discussed in Chapter 2. They are modelled on the theory described earlier in this chapter, but aim to have components which are produced more by countries themselves, to replace international expert scores. As risk varies across societies, so do the responses of governments. The response indicators in the CIMMPI are also indirect measurements. They can be grouped under a de jure category (ratification of UNCAC, for instance) and a de facto (implementation) category. Here the methodology is closer to the T-index, even if transparency itself (or rather, lack of it) belongs with the category of risks under opportunities. The de jure category can be further quantified by the use of a benchmark (e.g., comprehensiveness of conflict of interest regulation, as EuroPAM.eu codes legislation) and the measurement of each country against it. The de facto category is conceived to cover two main areas: the prevention of corruption, which is stressed in UNCAC, via administrative actions, and the repressive response via criminal sanctions. The

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Rethinking corruption

de jure and the de facto are separated because, as explained already in this chapter, evidence shows that important implementation gaps exist and that the countries with the most comprehensive regulation are not necessarily the least corrupt, or improving the most. The official response to corruption is determined by the context of a country (e.g., if those who gain from corrupt arrangements are the rulers, the response would be weak), but it can also influence the risk context. The separation between the risk and response conceptual categories draws on the institutional approach. We assess human agency (as in media, civil society, organizations such as the judiciary or the audit institution) under risk, and we rate rules and their outcomes under response. A strong audit institution would thus be included under risk as a constraint, and the legislation it operates under would be listed under de jure response, while the result (the number of controls and the number of sanctions) would be found either in de facto response, in direct measures or in both. The rows in the matrix are reserved for the various definitions or forms of corruption that a researcher is interested in. For the UNODC exercise we privilege, of course, those listed by UNCAC. One feature or manifestation or type of corruption, say, favouritism in public procurement as in the example in Table 3.4, is thus monitored by all direct measurements and indirect ones. The implementation gap can also be calculated between the de jure response and the de facto one, allowing each row of the matrix to be a full analytical tool by itself. When duly filled in, the matrix can provide, at a single glance, a better picture of the prevalence of a specific type of corruption (through measurements), as well as an overview of the disabling and enabling circumstances and the adequacy of the response. This also allows for a highly adaptable framework that can be replicated at the subnational level or for specific sectors. The CIMMPI is context sensitive, acknowledging that a country with high risk will need a different response than a country with low risk. A country where corruption is rather exceptional may have less de jure legal equipment and score worse on a de jure fulfilment scale against a benchmark. One corruption feature/country should thus be read horizontally across indicators, and the comparison between countries should involve all indicators, not just one. The horizontal reading thus enables both analytical evaluation and comparison. The indicators proposed are of two types: nominal (in kind) and numerical (in size). The presence or absence of a law, organization or information that the government should by law disclose (e.g., the annual report of the supreme audit institution, as in the T-index) results in nominal information, which can be turned into a numerical data point, a 1 versus 0, that can be further built into a more complex number and treated by statistical methods (as the website EuroPAM.eu does).

Rethinking actionable measurement

Table 3.4

Corruption

69

Comprehensive Indicator Matrix for the Measurement of Public Integrity (CIMMPI): public procurement measures Direct measures

Feature

Indirect measures RISK

RESPONSE

Opportunities

Constraints

(enabling

(disabling

circumstances)

circumstances)

De jure (regulation)

De facto (implementation)

Favouritism

Incidence of

% coverage of

Strength of

Comprehensiveness

Number of

in public

bribery in the

public contracts

Supreme Audit

of public procurement

criminal

allocation

award of public

on e-portal from

Institution

regulation, %

convictions related

of public

sector contracts

total public

according to

fulfilment maximum

to procurement

contracts

(business survey)

procurement

INTOSAI

scale from europam.eu

Number of

(PC) and

% of firms that

Same in % volume

% redress

procurement score

administrative

concessions

admit to relying

% of total public

contestations

sanctions and

(PPP)

on bribes or

contracts allocated

accepted by

dismissals

(UNCAC

connections

without a call for

courts from total

of head and

Article

to win public

tender in the past

contestations

members of public

19:1, 2)

contracts

12 months

Existence of

procurement

(surveys

Same as % of total

independent

boards at

like Flash

PP spending

reports on quality

contracting

Eurobarometer

Single Bidder:

of procurement

authority levels

business,

% of contracts

Number of

previous year

BEEPS)

awarded without

journalists jailed

competition in

on criminal

numbers and %

media offenses in

volume total

previous year

% renegotiated price of total awards % contracting authorities which entrust over a third of their number of public contracts or volume to one supplier

Source:

Mungiu-Pippidi & Kukutschka (2022).

Benchmarks can be built by country averages, or normatively as fulfilment indexes (a strong law or audit institution is considered to require a certain number of provisions which can be set to represent the 100 per cent target; individual scores are calculated against this benchmark). The benchmarks can be set either as the average of a region or an income group of countries (as the Index of Public Integrity compares countries) or as a target (as INTOSAI, the International Organization of Supreme Audit Institutions, rates the strength of their members). What is important is that the information is collected accu-

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70

rately and on unitary criteria, with later treatment offering many possibilities according to the interest of users. Both government and civil society can collect the data for the matrix. In fact, many countries have civil society watchdogs which monitor public spending, for example, one NGO which is a member of the International Budget Partnership which computes the Open Budget Index, another which cooperates with the World Justice Project, a third which works with Open Contracting, etc. When fully assembled, the matrix has over 130 indicators only for the UNCAC list (which does not cover sectors where additional measurements may be needed, e.g., public health, police or customs). It is probably more practical to keep this matrix just for the general UNCAC articles and organize every year a special focus – for instance, health during pandemics – for which countries could invest in special research to generate direct measurements. But even in their absence, a statistical office can collect sufficient data to map corruption risk in the respective country. The actionable nature of such indicators, should countries commit to collecting and publishing them, would truly create great reform opportunities. Creating, monitoring and enforcing a complete set of integrity and performance indicators in public procurement – from unitary costs standards to procedural red flags – is a commitment that some countries already made to the World Trade Organization in the pilot project Agreement on Government Procurement (GPA). Aggregating a simple capture indicator (for example, per cent of public contracts or volume of funds awarded to a single supplier by a contracting authority) would point to the level of accountability of the contracting authorities, even allowing a ranking. It would then be up to the executive to monitor and sanction, thus preventing corruption instead of waiting for each case brought to justice to pass through the extremely lengthy judicial process after corruption has already happened.

NOTES 1.

2. 3.

The accounts were also contradictory to a dazzling extent. In each and every period of the Roman Republic and Empire we seem to have had simultaneously some thinkers who explained the superiority of Roman institutions over the rest of the world and some others who deplored their degeneration compared to the past and warned of imminent decay. Although we can always presume corruption is defined as bribing, since most sources come from the business sector. In the European Union, the process of elaborating rule of law reports is by design political, with various Commission directorates intervening in the original text of experts and the European Council and Parliament adopting it with their own comments. The report is not peer reviewed. Basically, it is a bureaucratic document.

Rethinking actionable measurement

4.

71

Bill Gates in fact defended Carlos Slim when Acemoglu and Robinson (2012) tried to make the Mexican oligarch the example of how to get rich exploiting a monopolistic license and, according to Gates (2013), compared Slim unfavourably to ‘meritocratic’ Gates. In their response to Gates’ review, Acemoglu and Robinson (2013) deny placing Gates in a positive light at all. 5. Kaiser-Meyer-Olkin index of 0.80. 6. UNCAC includes a clear international transparency requirement under ‘preventive measures’, one of the five areas included in the treaty. The Convention specifies from Article 1 the obligation of all the state parties to govern on the basis of transparency and goes on to spell out transparency as a key principle of public sector organization and function (Article 7, § 1a), political finance (Article 3), conflict of interest prevention (Article 4), public procurement (Article 9, § 1), public finance management (9, §§ 2 and 3), public reporting and proactive disclosure of information, including on policy formulation (Article 10), ownership of private entities (Article 12, § 2c) and any information enabling oversight, and ‘the freedom to seek, receive, publish and disseminate information concerning corruption’ (Article 13, § 1d). 7. The reference links to each website observed is published alongside the index, so that any error or change can be publicly observable and the feedback from public viewers, as well as officials can be integrated promptly 8. We code our observations of de facto transparency in a trichotomous way: the resource is publicly and freely accessible with all essential information – criteria satisfied in full (1 point); the resource exists, but information is either partial (in content or coverage) or access is restricted in some form (e.g., payment required, only certain categories of users can access) – criteria satisfied in part (0.5 points); the resource does not exist or is clearly insufficient in substance to be useful for citizens in a meaningful way (e.g., available data is too general or outdated) – criteria not fulfilled (0 points). 9. The T-index has two items on budget transparency based on the current existence of websites with past and current itemized public expenditures. The IPI uses 12 questions from the Open Budget Index questionnaire which refer to procedures of publicizing in a readable format the budget draft and final copy. 10. procurementintegrity.org. 11. https://​www​.worldbank​.org/​en/​programs/​govtech/​gtmi. 12. This author developed this instrument with the invaluable help of Roberto Martinez Barranco Kukutschka, PhD, a senior research officer at Transparency International and an ERCAS associate. 13. Under public sector corruption, it includes items such as bribery (UNCAC Article 15), influence trading (UNCAC Article 18), revolving doors (UNCAC Article 12), non-merit based public hiring (UNCAC Article 7 1a, 7:2), illicit enrichment and profit from conflict of interest (UNCAC Article 20 and Article 7:2), embezzlement, misappropriation, or diversion of public funds (UNCAC Article 17), independence and integrity of the judiciary and law enforcement agencies (UNCAC Article 11:1), favouritism in public spending (UNCAC Articles 12 d and 19:2), abuse of functions (UNCAC Article 19), diversion of public funds for undue profit (UNCAC Article 17), extortion (UNCAC Article 19) and favouritism in public allocation of contracts and concessions (UNCAC Article 19:1, 2). Under private sector, it includes favouritism in granting import-export licenses or similar (UNCAC Article 12d); bribery in cross-border transactions (UNCAC Article 16); and fraudulent and collusive practices (UNCAC Article 12). Finally,

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under political corruption it includes electoral corruption (UNCAC Article 7:2) and party funding corruption (UNCAC Article 7:3).

4. Rethinking corruption and democracy CORRUPTION BY POLITICAL REGIME Two different ways exist of framing the 2022 Russian invasion of Ukraine and the war that ensued. The first approach is the ‘realist’ one: a traditional war over borders and global influence between Ukraine supported by the West, on one side, and on the other, Russia endorsed by dictatorships and opponents of a unipolar world order. However, Ukrainian officials and civil society, alongside their US supporters, promote an alternative vision. They strongly argue that this is a clash of values, with Ukraine battling on behalf of democracy and Russian ‘orcs’ defending a kleptocratic state model. In this perspective, Ukraine’s democratization and anticorruption efforts have been at least as much a threat to Russia as the NATO expansion: a successful Ukraine could become a model for other countries to organize anti-kleptocratic revolutions (Kaleniuk & Haluschka 2021; USAID 2022). Anticorruption has thus emerged as the most recent frontline where democracies confront autocracies. The National Security Study Memorandum of US President Biden (2021) states that ‘corruption threatens United States national security, economic equity, global antipoverty and development efforts, and democracy itself … [B]y effectively preventing and countering corruption and demonstrating the advantages of transparent and accountable governance, we can secure a critical advantage for the United States and other democracies.’ As this latter position is grounded on the presumption that democracies are cleaner than autocracies, the merit of this assertion is worth examining. We know that public corruption is mostly the result of government actions: in the process of transferring resources from one actor to another, it creates rents for bureaucrats, induces a misallocation of resources and increases the size of the bureaucracy (Acemoglu & Verdier 2000). But what political regime is better at intervening to prevent market failure, without creating government failure in its place? As some economists have long argued, intervening to solve market failures comes with the cost of taking decisions over social allocation that increase the discretionary power of the government (Mills 1986). Why would such power discretion not be used by those who govern to enhance their control and personal profit? Why would autocrats need corruption more than democrats, who are ever insecure of their control and need to be re-elected? 73

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As noted in Chapter 1, the historical examples of non-corrupt governments – Denmark, Sweden, the Austro-Hungarian Empire, Prussia – were not democracies. While their rulers – more or less constitutional monarchs (in fact largely autocratic by present standards) – built clean and effective bureaucracies, democracies built their parties and states largely by way of patronage and clientelism, as Max Weber already remarked in his work on bureaucracy (Weber 1991). Merton (1968, p. 128) argued that corruption has been largely a humanizing and bond-creating factor in US history, and Huntington (1968, p. 70) that ‘patronage from above … has contributed directly to the building of the most effective political parties and most stable political systems’. While some autocracies (e.g., the Ottoman Empire and czarist Russia) had the reputation of being corrupt, others, like the Habsburg Empire, had created a well-respected modern administration. Even today, when communities on both sides of the long-gone Habsburg border have been sharing common formal institutions for a century (after 1989 as democracies), the historical Habsburg affiliation is associated with higher trust in institutions and lower perception of corruption in courts and police (Becker et al. 2016). In Northern and Central Europe, enlightened monarchs contributed significantly to delivering the essentials of rule of law and control of corruption, although this proved far more difficult in the rest of Europe and the world at large. However, the attempts to transfer enlightened despotism to other continents, as Emperor Maximilian of Habsburg tried in Mexico, ended in absolute disaster. While the current world has an unprecedented number of democracies, it has regressed on democracy, instead of progressing on corruption control, especially since the economic crisis of 2008. As already noted in Chapter 3, Transparency International (2021) reported that 131 countries have made no significant progress on corruption in the last decade and two-thirds of countries score below 50 on a 0–100 scale with 100 the best control of corruption. The majority of these countries hold elections: autocracies are a minority in this group. According to the V-Dem Project (Hellmeier et al. 2021), only 34 countries (home to only 13 per cent of the world population) still qualified as liberal democracies in 2021, down from 42 in 2012. The World Justice Project (2021) also reported that 74 per cent of countries covered, accounting for nearly 85 per cent of the world’s population, saw declines on their rule of law index (which also includes corruption) for 2021. To date, there has been no attempt to connect these two separate occurrences: the failure to progress on quality of governance, especially in democracies (Chu et al. 2020), and the backslide in democracy itself. We do not know if a connection exists: but surely this is worth examining. Is the persistence of systematic corruption a threat to democracy? While the black and white image of Tolkien-like pure elves versus kleptocratic orcs is very tempting, this brings another empirical question, which might need re-examining. Do democracies

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75

really control corruption better than autocracies? By what mechanism? Before exploring these questions in greater depth, we first revisit the definitions of corruption and democracy as a crucial preliminary step.

CONCEPTUALIZING CORRUPTION AND DEMOCRACY To study the causal relationship between corruption (and its opposite, public integrity) and democracy, the two concepts should largely be independent from one another. No universally accepted definition exists for either of them, so the choice of one is essential for studying their relationship. Some scholars and think tanks still define democracy by the ‘minimalist’ standard of Joseph Schumpeter (1942, p. 250) as a political system in which individuals acquire the power to decide on behalf of others through a competitive struggle for their vote. Others endorse a more comprehensive definition of democracy along the lines of Robert Dahl’s ‘polyarchy’. In the latter interpretation, democracy requires not only free, fair and competitive elections but also the freedoms that make them truly meaningful such as freedom of organization, freedom of expression, the existence of alternative sources of information and the political freedoms necessary for political debate and electoral campaigning (Dahl 1971). Larry Diamond (2002, p. 22) distinguishes between electoral democracy and liberal democracy alongside four other regime types; three of them hold some form of elections, and the fourth one is fully authoritarian. The Varieties of Democracy (V-Dem) project, introduced briefly in Chapter 3, describes varieties of democracies rather than types, which adds to a baseline ‘electoral democracy’ enhanced with free media (present in each variety), the supplementary features of liberal (rule of law), participatory, deliberative and egalitarian democracies (Teorell et al. 2016). The oldest institution to offer a regular measurement of democracy, Freedom House, differentiates between ‘electoral’ and ‘liberal’ democracies, as Diamond did. Electoral democracies must reach a high threshold in terms of electoral process and meet some minimal standards for other political rights and civil liberties, but liberal democracies must go beyond this to have relatively high scores on the full array of political rights and civil liberties (Freedom House 2022d). Based on its cumulative score for civil and political rights, Freedom House ranks regimes in three categories: free, partly free and non-free. In its survey, free countries typically qualify as both electoral and liberal democracies. By contrast, some partly free countries qualify as electoral, but not liberal, democracies (Repucci & Slipovitz 2021). Aside from the complexities of defining democracy, the notion of democratic backsliding itself and its evidence also need some revisiting, as there is no consensus regarding them either (Lührmann & Lindberg 2019; Skaaning 2020; Waldner & Lust 2018; Cianetti & Hanley 2021).

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76

Table 4.1

Corruption across political regimes

Political regime

Minimal democracy

Substantive democracy

Control of corruption

(contested elections)

(polyarchy+)

Autocracy

Thin (state apparatus autonomy

Varies

Yes

Varies

No

Yes

No

from private interest) Thick (ethical universalism-based procedures and practices)

As discussed in earlier chapters, corruption has also proved a difficult phenomenon to define and classify. Its conceptualizations range from very narrow or ‘thin’ ones that limit the concept to specific acts (e.g., bribery or embezzlement of public funds) to very broad or ‘substantial’ notions that equate control of corruption to distributive justice and impartiality (Rothstein & Varraich 2017). At national level, corruption control can thus be defined as a society’s capacity to prevent those entrusted with public authority from using their office for undue private profit and enforce public integrity. However, corruption is not necessarily conceived similarly across national contexts, nor uniformly dealt with by national legislation. Corruption is a core challenge both to the minimalist and the more comprehensive views of democracy. Samuel Huntington described democratic systems as those where the ‘most powerful collective decision makers are selected through fair, honest, and periodic elections in which candidates freely compete for votes’. However, the fairness, freedom and integrity of elections are frequently disputed: in many countries that hold elections regularly, votes are commonly sold, extorted or expropriated (Mares & Young 2016). Even when violence or corruption is not obvious, fairness should not be taken for granted: for instance, in his first two terms, Viktor Orban, the Hungarian Prime Minister enjoying a large majority, reportedly enacted hundreds of legislative changes to the electoral system to craft super-majorities for his party (Bozoki & Hegedus 2021). The number of such ambiguous regimes has grown exponentially with the so-called third wave of democratization, as many newcomers in the democracy category adopted de jure electoral democracy forms, with regular, competitive, multiparty elections but without the de facto substantive democratic practices. In practice, the gap between minimal democracy and substantive democracy has largely been filled by the quality of democracy, governance or corruption (Diamond & Morlino 2005; Mungiu-Pippidi 2006; Norris 2012). In relation to the formal (constitutional) institution of democracy, corruption has proved to be subversive, when not actually a substitutive, informal institution (Helmke & Levitsky 2004; Wedel 2009). Therefore,

Rethinking corruption and democracy

77

Note: N=193; Freedom in the World values from 0 to 100 (most free), rescaled to 1–10 scale; WGI ranges from approximately -2.5 (weak) to 2.5 (strong), rescaled to 1–10. Source: Freedom House (2022c), Aggregate Category and Subcategory Scores, 2003–2022; Kaufmann & Kraay (2022), Control of Corruption dimension.

Figure 4.1

The association between democracy and corruption

high-quality democracy includes public integrity, as substantive democracy is incompatible with the infringement of ethical universalism. A substantive democracy is, by definition, free of government favouritism and encounters corruption only in the ‘thin’ meaning introduced in Chapter 1, that is, individual abuse of office for private profit (Warren 2004). As seen in Table 4.1, within both minimal democracy and autocracy, great variation exists in the quality of governance, particularly in control of corruption: the only common baseline is that they do not fulfil the ethical universalism criterion. Autocrats are not necessarily kleptocrats: from the nineteenth-century Kingdom of Denmark to the twenty-first-century city-state of Singapore, autocracies have shown that they can build states largely free of corruption in the ‘thin’ meaning. Rwanda, the latest anticorruption achiever in Sub-Saharan Africa, according to Worldwide Governance indicators, has managed to eradicate bribery while turning increasingly authoritarian (Bozzini 2014). Figure 4.1 shows the outliers of the corruption–democracy association

78

Rethinking corruption

as measured by countries’ control of corruption scores in the Worldwide Governance Indicators and Freedom House’s Freedom in the World assessment. We find a group of monarchies, diverging on both scores, but all placed in the lower right quadrant (United Arab Emirates, Qatar, Brunei, Bhutan, Jordan, Saudi Arabia, Bahrain, Malaysia), which alongside other non-democracies like Turkey, Kazakhstan and Cuba boast better control of corruption than their democracy score would predict. Prior empirical literature reported that only older, consolidated and affluent democracies are associated with accomplished control of corruption (CoC). While some empirical studies of the relationship between corruption and democracy found that corruption falls as democracy matures (Treisman 2007), other scholars have found an inverted U relationship between the two in time series models (Montinola & Jackman 2002; Sung 2004; Rock 2009). Figure 4.1 confirms that a curvilinear relationship is observable with more recent data, with older democracies better on corruption. The association explains about half the variation among countries; in other words, we can predict how one in two countries fares on corruption if we know their Freedom in the World score. Countries like Georgia, Bhutan and Singapore are major outliers, with a far better control of corruption than their political conditions would predict.1 Samuel Huntington (2017) was the first to remark that the early process of political modernization often came with an increase in corruption, not a decrease as in earlier European modernizations. More individual rights do not seem to bring about a more rational, objective and impartial government in many young democracies. What is the explanation? Corruption increases in young democracies compared to the patriarchal regimes preceding them because political competition in the absence of legal-rational authority becomes a game of exploitation of public resources in the interest of the incumbents (Mungiu-Pippidi 2006; Keefer 2007; Grzymala-Busse 2008). Political parties act as ‘spoiling machines’, on the one hand, depleting public resources for their own profit and as particularistic distribution machines, on the other hand, channelling resources to their clients in exchange for political support (Scott 1969). Only the societies that manage to diminish such power asymmetries and particularistic distribution of resources evolve towards ethical universalism as the main governance norm (Mungiu-Pippidi & Johnston 2017). In fact, the process informing the transition from a society based on particularism to one based on ethical universalism seems to rely less on the de jure institutions of democracy and more on the equalization of political resources (as defined by Robert Dahl (1996, p. 639)), or in other words a reduction in power asymmetry. Clear evidence exists for the assertion that reduced power asymmetry, rather than the existence of elections, influences control of corruption. The personal autonomy index, computed by Freedom House as part of its composite freedom score, predicts half of the variance in the WGI CoC dimension for 188

Rethinking corruption and democracy

79

countries, while the physical integrity rights index (Cingranelli & Richards 1999) also predicts about a third for 123 countries. By contrast, the Legislative Index of Political Competitiveness2 is a poor determinant of corruption (Mungiu-Pippidi 2015b, ch. 4). Using their own components from the V-Dem project, V-Dem researchers examined 173 countries from 1900 to 2012 to find that the introduction of elections actually increases corruption, that judicial constraints have a negative linear relationship and that the freedoms of expression and association exhibit inverted curvilinear relationships with corruption (McMann et al. 2017). Using a panel with data from 1998 to 2012, Jetter and colleagues (2015) identified income as the key intervening variable between democracy and corruption. According to them, democracy reduces corruption only in economies with a GDP per capita above US$2,000 (in 2005 US$), and may even lead to an increase in corruption below this threshold. The evidence, thus, seems to point to elections playing a lesser role in controlling corruption than the human development infrastructure, which shapes the capacity for collective action in a society (Norris 2012; Mungiu-Pippidi 2015b; Uslaner & Rothstein 2016). How much a democracy should age to reach the degree of power resource equality that is optimal for deterring corruption is open for discussion, with optimists finding that just 10–12 years might suffice (Rock 2009) and realists warning of the chronic consolidation of corrupt electoral democracies (Keefer 2007). We find even more evidence about how democracy and corruption are related if we replace the WGI’s Control of Corruption indicator with the Index of Public Integrity (IPI) introduced in Chapter 3 (see Figure 4.2). If the association between perception indicators such as CoC and democracy scores explains only about half of the variation, the association of democracy indexes with the IPI returns a higher explanatory power and much better linearity. The deconstruction of corruption into a public integrity framework allows for a better understanding of the source of the overlap between democracy and corruption control. As explained in Chapter 3, the chief ‘disablers’ of or constraints on corruption (determinants negatively associated with corruption) consist of judicial independence, freedom of the press and e-citizenship. Not only are these variables far higher in democracies compared to autocracies, but they are robustly associated with control of corruption in cross-sectionals as well as time series (Brunetti & Weder 2003; Mungiu-Pippidi 2015b; Escresa & Picci 2020). Changes in ten years of judicial independence (an item in the Global Competitiveness Report) explain 20 per cent of the variation for changes in control of corruption; changes in freedom of the media (also a Freedom House score) explain 12 per cent. These two determinants are also a part of the definition of a liberal, rule of law-based democracy, so public integrity is endogenous to democracy, explaining why IPI scores predict 65 per cent of scores for Freedom House’s Freedom in the World ratings

80

Rethinking corruption

Note: N=114; Freedom in the World values from 0 to 100 (most free), rescaled 1–10; Index of Public Integrity, scaled 1–10, with 10 high public integrity. Source: Freedom House (2022c); Index of Public Integrity (www.corruptionrisk.org/ datasets/).

Figure 4.2

The association between democracy and public integrity

(Mungiu-Pippidi 2022). Autocracies do exist (e.g., Singapore) with high judicial independence and, even to some extent, with many digital citizens (although not freely associated by social media, which is under state control in countries with developed Internet, such as China), but freedom of the media is high only in democracies. Democracies thus, especially affluent ones, control corruption mostly by the high constraints they establish over time, while autocracies, where rulers are submitted to far fewer checks and balances, control corruption by manipulating opportunities more. Singapore, for example, has long been famous for controlling corruption by its very low transaction costs for business, before Rwanda, Georgia and some Gulf countries adopted this model (Chan 2000). Table 4.2 shows that countries rated by Freedom House as free form the clear majority (47 of 80) of the tercile group enjoying the best control of corruption (CoC). In the middle group with average control of corruption scores, almost half are free countries, but more than a third are only partly free. The most corrupt group, i.e., those in the CoC lower tercile, is composed mostly of partly free (34) and not-free (33) countries.

Rethinking corruption and democracy

Table 4.2

81

Democracy status by corruption terciles, 2020

Freedom House

CoC lower tercile

status

(least control of

CoC middle tercile

CoC upper tercile

Total number of

(best)

countries

corruption = most corruption) Free

1

32

47

80

Partly free

34

24

6

64

Not free

33

11

4

48

Total

68

67

57

192

Source: Freedom House (2022c), Country and Territory Ratings and Statuses, 1973–2022; Kaufmann & Kraay (2022), Control of Corruption dimension.

Table 4.3

Public opinion on corruption by political regime

Question (N=countries)

Free %

Partly free %

Not free %

Most officials are corrupt (41)

27

40

39

Corruption increased compared to last

39

49

56

52

51

57

42

43

40

year (41) Disapproves of how the government handles corruption (35) Approves of how the government handles corruption (34)

Source: Transparency International (2017–2021); Freedom House (2022c), Country and Territory Ratings and Statuses, 1973–2022.

The Global Corruption Barometer, a survey organized by Transparency International, also shows that respondents in countries rated by Freedom House as free rate the integrity of their officials better and are more optimistic about how corruption is developing (see Table 4.3). People living in partly free countries, some of which can be categorized as electoral democracies, perceive as much official corruption as citizens of not-free countries (the autocracies), but they rate their governments’ efforts somewhat more indulgently and are less negative about the trend. However, there is no significant difference between free and partly free countries when rating government actions against corruption, with absolute majorities in both groups being negative. Hence, although a clear progression exists from more to less freedom, the disapproval of governments’ anticorruption policies receives absolute majorities on all the three groups’ averages, showing to what extent corruption has risen as a challenge for public policy across all political regimes. In short, the evidence shows that a consistent group of old democracies control corruption far better than autocracies and that autocracies as a rule

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fare worse than most democracies at controlling systematic corruption. But that leaves a middle group of democracies and hybrid regimes in the group of partly free countries where the difference in corruption control performance versus the not-free countries is relatively small.

CORRUPTION AND DEMOCRACY BACKSLIDING The current context of democracy backsliding rekindles consideration of the incompletely answered questions on the relation over time between democracy and corruption. From the 1980s to the Arab Spring, when democracy kept expanding, corruption largely stagnated. Has the lack of success in tackling corruption in new democracies contributed in any way to their backsliding? This is a largely unstudied area, not in the least because of the difficulty of answering these research questions by econometric means. But first, there are conceptual issues. As shown earlier, liberal democracy is largely synonymous with ethical universalistic treatment, generating major issues of endogeneity which cannot be bypassed by statistical means. The inverted U curve simply tells us that the present older democracies (the liberal democracies) are of a different kind (ethical universalism based) than the younger ones, which are electoral democracies where particularism is the norm, not the exception. If democracy is deconstructed into ‘varieties’, with liberal democracy distinct from electoral democracy, the curve disappears, and we are left with questions about the causal relationship over time and what drives what. Deconstructing both democracy and corruption may offer some more answers, but also raise the doubt that these generic concepts may be too broad to answer such research questions. Second, the quality of measurements is poor. Even if we can state that the democracy indicators are specific and capture change, the governance indicators are notoriously imprecise and lagging (Treisman 2007). Third, some indispensable controls for backsliding (e.g., political violence) are not easy to capture by one or two variables as they range from civil wars to drug cartel infiltration: overly general indicators, such as the WGI’s Political Stability dimension (Kaufmann & Kraay 2022), would bring back the endogeneity problems as they would also include instability caused by corruption. Quantifying the allegedly corrupting influence of Russia or China risks being quite imprecise as well. To solve these issues, this chapter resorts to a more experimental approach. We divide countries in groups, using the Freedom House classification of political regimes and the already introduced classification of corruption into terciles, to compare their evolution over time. The hypotheses tested in this section are in line with the argument that corruption prevents democratic consolidation (Diamond 1999; Acemoglu & Robinson 2001). More specifically the evidence focuses on democracy back-

Rethinking corruption and democracy

83

sliding to test whether the more advanced the extent of corruption, the higher the risk of backsliding on democracy, all other things being equal (hypothesis 1), and whether the longer the entrenchment of poor governance (stagnation in the extent of corruption), the higher the risk of democracy backsliding (hypothesis 2). The literature has been understandably concerned mostly with positive evolutions toward both public integrity and democracy and far less with involutions. However, three decades after the momentous transitions beginning in 1989, the democracy trends are no longer positive, although their level of negativity is a matter of debate. Scholars have not yet agreed on a single definition for democracy backsliding. Backsliding can be seen as a deterioration of qualities associated with democratic governance within any regime: in democracies, as a decline in the quality of democracy and, in autocracies, as a decline in human rights, for instance (Waldner & Lust 2018). However, are such declines in size (of ratings or place in rankings) also declines in kind? Huntington (1991, p. 15) defined a wave of democratization as ‘a group of transitions from nondemocratic to democratic regimes that occur within a specified period of time and that significantly outnumber transitions in the opposite direction during that period of time’. The negative transition – toward de-democratization or autocratization – could thus be alternatively defined as a significant increase in the number of autocracies relative to the number of democracies. Furthermore, the literature on democracy backsliding draws on two types of data: numerical and continuous, in the form of ratings like Freedom House or V-Dem, and nominal and dichotomous, as, for instance, in the case of coups. The use of one data type or a combination of both (as democracy versus autocracy cannot always be defined precisely) leads to different interpretations of the same data (Skaaning 2020). The global average scores for democracy computed by Freedom House, electoral democracy according to V-Dem and the Control of Corruption dimension calculated by WGI changed little between 2006 and 2022, indicating that diverging trends have cancelled one another out. While the averages obviously miss individual developments, they are still indicative of no major ‘wave’ in either direction for this interval. However, if the examination considers the Freedom House categories (the in-kind classification), changes between the categories become evident, with the number of free countries clearly declining (see Figure 4.3). This suggests that further analysis should be pursued with both the continuous data and the regime categories, with the results corroborated in the next phase. The examination of the data by size (number of countries) misses the qualitative judgement (‘when does an electoral democracy become some variant of a hybrid regime?’), but the one in kind, while more specific, is also quite imprecise: categories are separated by thresholds so that a country could move to a different category either from

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Note: N=206–210 (slight variation by year). Source: Freedom House (2022c), Country and Territory Ratings and Statuses, 1973–2022.

Figure 4.3

Freedom House status over time, 2006–2022

near the threshold or after more substantial changes. Furthermore, a country can backslide to a lower freedom category (as Hungary) without immediately losing its status of electoral democracy. In its turn, corruption has mostly stagnated during this interval of democracy backsliding, despite adopting the UNCAC in 2004. An association of the average CoC score in 1996, the first year this measurement was introduced, with the most recent score in 2020 shows that past corruption is nearly the sole determinant of current corruption, with few outliers that have changed significantly during these 25 years (e.g., Eritrea, Georgia, Rwanda, Estonia, among others). The bulk of countries stagnated at whatever quality of governance they had in 1996 (see Figure 4.4). This further justifies our research question on stagnation: if corruption can affect democracy backsliding, it may not show just in the extent of corruption, but also in its effect over many years, the entrenchment of poor governance more generally. The presumed causes of democracy backsliding have varied across time and the type of literature. Freedom House (2021) attributed the reversals to the shift in the international power balance with the decline of the US as the

Rethinking corruption and democracy

Note: Source:

85

N=187; ranges from -2.5 (weak control) to 2.5 (strong), rescaled to 1–10. Kaufmann & Kraay (2022), Control of Corruption dimension.

Figure 4.4

Evolution of corruption, 1996–2020

main promoter of democracy and the rise in the influence of China and Russia, considering the pandemic an aggravating factor. Diamond (2019) blamed the democratic regression of the G-20 on the US decline, the rise of populism and, like Freedom House, the rise of Russia and China as global powers. Waldner and Lust (2018) tried to bridge between such immediate explanations and the broader theories of regime change in general, dividing the causes by the theories of political agency, political culture, political institutions, political economy, social structure and international actors. Corruption is under-studied as a potential cause, although many notorious populists or autocrats have risen due to anticorruption campaigns or making anticorruption promises: Brazil, Mexico, the Philippines, and Tunisia are just a few recent examples of countries where this has happened. Hugo Chavez was initially elected in Venezuela as an anticorruption president (Kovaleski 1998). In the US presidential elections of 2016, Donald Trump profited from the discontent with the Washington elite viewed as corrupt and aloof. To establish to what extent changes in democracy are related to corruption, we observe changes in the regime status as rated by Freedom House across two types of groups: first by the free/not free/partly free classification (regime

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86

Table 4.4 Freedom House

Change in political regime by corruption terciles CoC lowest tercile

CoC middle tercile

CoC highest tercile

Total

(best CoC)

status change (2006–2020) / CoC tercile (2020) Regression

15 (22%)

11 (16%)

Stagnation

48 (71%)

50 (75%)

55 (96%)

153

5 (7%)

6 (9%)

2 (4%)

13

68 (100%)

67 (100%)

57 (100%)

192

Progress Total

26

Source: Freedom House (2022c), Aggregate Category and Subcategory Scores, 2003–2022; Kaufmann & Kraay (2022), Control of Corruption dimension.

status change) and then by the classification of electoral democracies versus the rest. Among the countries that do well on corruption control none has regressed on democracy (see Table 4.4). In the group with only a moderate ability to control corruption, however, we find eleven cases of regression and in the group with the lowest level of corruption control, 15. Overall fewer countries progressed than regressed (13 to 26). The negative change of status follows the hypothesized progression, with the most corrupt countries being the most unstable regimes. The countries in the lowest corruption control tercile that also regressed on democracy are Afghanistan, Burundi, Central African Republic, Congo, Djibouti, Dominican Republic, El Salvador, Gabon, Mali, Mexico, Nicaragua, Uganda, Ukraine (before the war), Venezuela and Yemen. The list includes only four electoral democracies: Dominican Republic, Mexico, El Salvador and Ukraine. Freedom House (2021) considers corruption an important factor in all these countries, with Mexico and El Salvador having the additional problem of fighting drug cartels and gang violence. Before the Russian invasion of 2022, Ukraine was regressing on Freedom House scores (Králiková 2022). The 11 countries in the middle corruption group that slid back on the Freedom House rating include: Benin and Senegal (where the presidents have started to use anticorruption as an issue against their political opponents, harming judicial independence), Ethiopia, Hungary, India, Indonesia, Jordan, Montenegro, Serbia, Sierra Leone, Thailand, Tunisia and Turkey. Of these, Indonesia, Turkey and Benin actually lost the status of electoral democracy, whereas Hungary and Senegal still enjoyed it at the end of 2022 despite backsliding. Corruption and lack of transparency are problems in all these countries.3 As some of the backsliders are not electoral democracies, the regress of electoral democracies is further compared to the behaviour of autocracies. Among countries that changed their freedom status between 2006 and 2020, 21

Rethinking corruption and democracy

Table 4.5

Corruption level

87

Backsliding democracies versus autocracies by corruption status Electoral democracies that

Autocracies that regressed 2006–2020

regressed 2006–2020 CoC lowest tercile

3 (27%)

15 (71%)

CoC middle tercile

8 (73%)

6 (29%)

Total N (%)

11 (100%)

21 (100 %)

Source: Freedom House (2022c); Kaufmann & Kraay (2022), Control of Corruption dimension.

cases were autocracies and 11 were electoral democracies. Autocracies exhibit greater instability. As shown in Table 4.5 focusing only on the countries that regressed, we observe a greater frequency of regime status change in the CoC lowest tercile for autocracies (71 per cent of the 21 cases of regression) compared to electoral democracies (27 per cent of 11 cases). The group of autocracies with the highest level of corruption is, therefore, the most prone to backsliding in Freedom House scores. Turning to those that progressed, five of the 13 cases come from the worst corruption tercile. The most successful in the regime status improvers group are islands that have come to enjoy free status (e.g., Cabo Verde, Tonga, Solomon Islands and the Maldives), the Balkan state of North Macedonia and the Asian monarchy of Bhutan. Serbia and Tunisia both proved to have sustainability issues, but they did reach electoral democracy status. Some progress on the freedom scale has been made since 2006 in countries such as Nepal, Zimbabwe, Pakistan, Ivory Coast and Togo, though their scores remain well below those necessary to attain the status of electoral democracy. Both progress and regress in democracy status seem related to corruption status, with more corrupt countries consistently performing worse on democracy than expected. The changes in the two scores (Freedom House and WGI CoC, 2006–2020) are significantly associated (see Figure 4.5), allowing us to observe outliers among the nearly 200 cases. We do not pursue a multivariate panel regression due to endogeneity problems. The countries with the worst backslide are those in the lower left quadrant of Figure 4.5, which regressed on democracy or corruption, or, if they fall closer to the regression line, on both. Examples include countries such as Venezuela, Turkey, Burundi, Nicaragua, Eritrea, Yemen and Hungary. We further compare electoral democracy backsliders against non-backsliders among electoral democracies for the time interval 2006–2020 using a logistic regression model. The condition to be met for ‘backslider’ is, thus, the loss of status of electoral democracy during the 15-year period of observing democ-

88

Rethinking corruption

Note: N=185. Source: Freedom House (2022c), Aggregate Category and Subcategory Scores, 2003–2022; Kaufmann & Kraay (2022), Control of Corruption dimension.

Figure 4.5

Association between changes in corruption and democracy, 2006–2020

racy backsliding. This lowers the sample to 17 democracy backsliders and 103 electoral democracies that did not lose their status. On average, a backslider is far poorer (one-sixth of the average income of the electoral democracy group), has twice the contribution of mineral resources to GDP and is 15 per cent more corrupt, according to their CoC score, at the beginning of the interval compared to the average of the rest of democracies. After turning to autocracy status, the backsliders register a further slight decline in the CoC score. To fully test our original hypotheses that, one, the more advanced corruption is, the higher the risk of democracy backsliding and, two, the longer poor governance is entrenched, the higher the risk of backsliding, we use as dependent variable the loss of electoral democracy status between 1996 and 2020 (coded 1, versus the countries which keep this status, 0). Alongside the extent of corruption (terciles of CoC) we use as independent variable also the stagnation in the lowest tercile (a categorical variable, coded 1 if a country remains in the bottom corruption tercile between 2006 and 2020, 0 otherwise). For controls, we use real GDP per capita (PPP), the resource curse (the presence of natural

Rethinking corruption and democracy

Table 4.6

89

Explaining the backslide of electoral democracies (1)

(1) Control of

-3.652***

Corruption

(0.310)

(2)

(3)

(4)

(5)

Full Model -3.015*** (-0.496)

(2) CoC

3.143***

stagnation

(0.210)

1.230*** (-0.323)

(3) GDP per

-0.000120***

-0.0000229

capita (PPP)

(-0.0000149)

(-0.0000209)

(4) Natural

0.0498***

-0.0127

resources as %

(0.0108)

(-0.0216)

of GDP (5) Civil

2.085***

2.427***

conflict

(0.192)

(-0.266) -4.337***

Constant

-4.030***

-3.172***

-1.183***

-2.759***

-2.750***

(0.236)

(0.123)

(0.141)

(0.106)

(0.0958)

(0.437)

Observations

1,820

1,853

1,777

1,809

2,093

1,744

Pseudo R-sq

33%

21%

16%

2%

8%

42%

Note: Logistical regression panel model with ‘democratic backslide’ coded 1, else (electoral democracies) 0 as the dependent variable; *** p