A Theory of Corruption

By Osvaldo Schenone

There is no greater scourge that affects the proper functioning of any economic system than corruption. Tragically, corruption is pervasive in developing nations. It is found often on the part of public officials who delay the issuance or processing of public documents unless a monetary inducement is offered. It is found in the typical mismanagement and appropriation of national budgets toward the personal gain of political leaders. And it is found in ordinary individual transactions in the form of fraud, price gouging, and organized crime. The effects of corruption also have legal ramifications, often undermining the rule of law. But fundamentally, corruption falls squarely in the moral realm because it is symptomatic of the original sin that marks the heart of every person. This monograph offers a theological and economic examination that puts into question many of the uncritically accepted assumptions held about corruption.

• Language: English
• Publisher: Acton Institute
• Release date: Mar 12, 2012
• ISBN: 9781880595954

Book preview

A Theory of Corruption

The Theology and Economics of Sin

Osvaldo H. Schenone

Samuel J. Gregg

Christian Social Thought Series

SMASHWORDS EDITION

Copyright © 2012 by Acton Institute

An imprint of the Acton Institute for the Study of Religion & Liberty

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CONTENTS

Foreword

I. Introduction

II. The Theory of Corruption

III. The Economics of Corruption

IV. Toward a Culture of Integrity

V. Conclusion

Notes

References

About the Authors

FOREWORD

This last essay of the 2003 Christian Social Thought Series is dedicated to the subject of corruption. Similarly to our previous issue titled Inhabiting the Land—on the subject of immigration—the focus of concern remains fixed on the developing world. One of the principal causes for emigration from a home country is corruption. Whenever citizens are subject to political oppression, when they suffer of political or religious persecution, when they can no longer trust that their safety or property will be protected, when all economic activity is fettered and the rule of law is absent—each and all of these are symptomatic of systemic corruption. No good stewardship of one’s assets and vocation can occur in a society in which systemic corruption reigns. Let us consider three alternatives.

The first is to try to change things in the direction of the common good, morality, and the rule of law. This alternative is always preferable if one can make such contributions and commit to these for the long run. Not everyone, unfortunately, can survive the wait in the same status quo of chaos in the interim. The second alternative is to participate in a revolutionary war, but the futility of this avenue has already been demonstrated in developing countries by guerrillas, applied theologies of liberation, and civil wars. More chaos seems to always follow such revolutionary attempts. The third alternative is to emigrate, and many believe that this is the most efficient way to distance one’s good efforts from futility in the home country. Herein lies the relation between corruption and immigration.

The efforts of two scholars have come together for this essay. Osvaldo H. Schenone is a prominent economist in Argentina who has developed a body of work in institutional corruption. Samuel Gregg is a scholar of Catholic social thought and ethics in public policy, who departed from his native Australia to join the Acton Institute. Their joint efforts in this essay bring together, on the one hand, Christian theology as a foundation for the understanding of corruption and, on the other hand, economic theory as the instrument for analysis of the incentives, costs, and effects of corruption.

The problem of corruption is particularly difficult to eradicate because the costs that would be involved to achieve this are very high. The authors suggest that perhaps we should aim at minimizing corruption by means of personal involvement, and institutionally by means of limiting the discretionary powers of state authorities. The former places the responsibility of the fight against corruption upon each individual in a society, especially those in which corruption is rampant. The latter points to the rule of law and the necessity of checks and balances for agencies of the state.

The founders of the United States Constitution were very aware that temptation afflicts every man and that state officials are no different from any other person insofar as all
men share the frailties of man’s fallen nature. In fact, they assumed that it is imperative to watch the watchman himself, perhaps even more than ordinary citizens. As Lord Acton so poignantly reminded us, Power tends to corrupt and absolute power corrupts absolutely. Those in power are, then, at the greatest risk of surrendering to temptation. This applies not only to state authorities with power, but also to the powerful in corporations, the authorities in religious organizations, the officers and directors of any private business venture and all those who have power without being accountable to those they lead. Clearly, the unveiled corruption in corporations such as Enron demonstrates this. But this case also demonstrates that private institutional corruption cannot be sustainable in the long run. Profits will drop,