Welcome back, this is the course on Corruption. Week 1, Lecture 4. Today, we're going to talk about how corruption became so widespread. Why is there such a frequent expression of corruption? Now [COUGH] we know that corruption has existed for a long time, probably as long as there's been human social structures that would allow for something like corruption. And we know this because when we look at some of the oldest writings about political structures, political theory, we see references to corruption. The Code of Hammurabi, the Babylonian Code from around 1750 before the current era, the Code of Hammurabi explicitly makes reference to corruption and prohibits corruption in government officials. Mencius, Mengzi, probably the most well-known proponent of Confucianism, in 300 or so before the current era he also writes about corruption, and vigorously condemns government officials who take bribes. So we know that corruption has been around for a long, long time, but we often think of corruption as being endemic forever, and that's just not the case. When you look at people with lots of global interactions and people who focus particularly on issues of corruption, they will tell you that there has been an eruption of corruption in the last 30, 40, maybe 50 years. People like George Moody Stewart and his brother Mark, both of whom are incredibly active and prolific in global business, and both of whom eventually turned their attention to understanding corruption. People like Daniel Kaufmann who at the World Bank was an economist who studied development, and eventually turned his attention primarily to corruption. And then of course, people like Moises Naim. And Moises Naim, the former Editor of Foreign Policy, he invented the term Eruption of Corruption in a wonderful article that he published in International Journal, published by Brown University. They all tell us that there's been some kind of change, and that change has led to higher frequencies of corruption, and larger amounts of value being lost to corruption. So why is that? Well, there are three major theories about the kind of spread of and growth in corruption, and those theories are weak institutions led to more corruption, that's something that I call the virus theory. It doesn't have an official name, but that the corruption was spread primarily by business people from North America and Western Europe. And finally, there's an authoritarian regime kind of theory about the spread of corruption. So let's talk about each of those. Weak institutions, in the 1950s, 1960s, the way the world is put together was profoundly changed. After the Second World War, and after a very short period of reconstruction, the European countries, which had occupied much of the world, parts of Latin America is still by then, most of Africa, much of Southeast Asia, South Asia, they essentially de-occupied those territories. And from the de-occupied territories a great number of new countries sprang up. A similar phenomenon happened at the very end of the 1980s and the beginning of the 1990s, with the end of the Cold War, the standoff between the NATO allied countries and the COMECON allied countries. Particularly with the dissolution of the Soviet Union, a great number of countries, either completely changed the way they were governed or came into existence that hadn't existed at all before. So in the 1950s, 1960s, 1980s, 1990s, one of these two surges of new countries, or polities, or new ways of governing countries or polities, through no fault of their own. These countries, of course, had institutions that were inexperienced, that were staffed with people who didn't have a lot of knowledge or experience. Again, no fault of their own, a natural consequence of these very profound changes. But because this institution were new, were inexperienced, were untried, because the people who staffed these institution were new and inexperienced and didn't have a lot of knowledge about these places, the institutions are something that we would call weak. Not a judgment, just an observation. Weak institutions, now institutions are a primary way in which people interact with one another, which people form relationships with one another. And so institutions are integral to almost everything they gets done. A business relies entirely on institutions. Governance relies on institutions. Interpersonal relationships rely on institutions. Institutions are endemic, ubiquitous, and absolutely critical to what we do. When institutions are weak, they are vulnerable. They are vulnerable to exploitation and they're vulnerable to abuse or misuse. Remember, our definition of corruption is abuse or misuse of a position of power or trust, for personal benefit rather than the reason that that power or trust was conferred. So in other words, these institutions are vulnerable to that exact kind of behavior. So the theory, and this theory is promulgated by some really, really, really sharp social scientists, is that a natural consequence of these profound changes in the 1960s, 1950s, 1980s, 1990s is corruption. It flows from these weak institutions. That's a fine theory, but there are more. Another theory is what I call, there is no official name for this, but I call it the virus theory [COUGH] and the virus theory looks at a very similar phenomenon. The 1950s, 1960s when the European nations and some others, but when the European nations, primarily, stopped occupying all these territories around the world these territories opened up to a broader range of commercial and trade relationships. They were no longer part of this mercantilist fiefdom of these European nations. And so in the 1950s, the 1960s and then again in the 1980s and 1990s, there were all kinds of new places for businesses to go where they hadn't been before. Unfortunately, just as is true in the case of institutions, these business didn't have extensive experience in working in these places. They were inexperienced, they didn't have knowledge. They were, in a sense, weak. And so they looked for expedient, or familiar, or convenient ways of interacting in these new places. And unfortunately, one of the expedient, or familiar ways of interacting was corruptly, primarily through the offer bribes or undue influence. There's a movie that was filmed in the United States, released worldwide, called Indecent Proposal. It starred Robert Redford, Woody Harrelson, and Demi Moore. And in this movie Robert Redford became obsessed with Demi Moore, and he wanted to have a relationship with her. Now, Demi Moore was married to Woody Harrelson. And Woody Harrelson, of course, of course said, no, you can't have a relationship with my wife. Robert Redford's character was fabulously wealthy. And so he offered Woody Harrelson $1 million to have an inappropriate relationship with Woody Harrelson's wife, Demi Moore. Woody Harrelson looking $1 million in the face said, yes, have an inappropriate relationship with my wife. And that's very similar to what some people think happened with this virus, with this convenient, expedient way of interacting that was spread through Western European and North American businesses. They came to these newly opened, newly formed polities with what in those polities would amount to an irresistible sum of money, or an irresistible personal benefit, and asked them to behave corruptly. And faced with that irresistible enticement, the bureaucrats, the people with power, the people who've been entrusted, the business leaders, yielded. Well, that's another really good theory, but there's a third theory and that theory is the authoritarian regime theory. We again go back to the profound changes that occurred in the 1950s and the 1960s, and then again in the 1980s and the 1990s, and we look to what these places are changing from. And by and large, the from in the 1960s, 1950s and the from in the 1980s, 1990s is authoritarian regimes. Regimes in which regular people had very little power and had to interact with regimes that exerted a great deal of power, that stifled everyday life. Now in everyday life, people are going to get done what they need to get done. This has been true time immemorial. One of the ways the people procured the room, the space, to get done the things that they wanted or needed to get done was through the payment of bribes. Most people who have traveled to authoritarian regimes see this in daily life. They see the black market. They see the quiet payment to the policeman on the corner to turn the other way, all right? And it occurs in the larger scales too. The payments to ship in consumer goods, when consumer goods are prohibited in that particular regime. What happened after the transitions in the 1950s, 1960s, 1980s, 1990s was that parents taught their kids this is how you interact with government. That business people who'd grown up during the authoritarian regime continued to behave the way that they behaved before. That people faced with a new form of governance, or a new country where no country had existed before, thought, well, this is the natural way of doing things. And so these practices that began as defensive practices, as practices that are necessary under authoritarian regimes, continued after the regimes had changed, or after a regime came into existence. And that too is a theory that's embraced by really, really good, really clever social scientists and that's another theory that's worth considering. So, which of these three is the theory that explains? Well, the social scientists who promulgate these theories will vigorously defend their individual theory. I'm guessing that it's possibly all three. If a person is to look at a particular country, or a particular polity, it's possible that one means of the spread of corruption outweighs the other two. But if we look at the whole world, there's a lot of vitality to all three of these different theories. And each of them is worth recognizing and understanding. Because recognizing and understanding each of the three is going to help us in a couple of sessions later, when we talk about how we might think about controlling corruption. So, possibly all three. And the three are the weak institution theory, the virus theory, and the authoritarian regime theory. Thank you, and I look forward to seeing you for the next lecture.
