Is Corruption Ever Ethically Permissible?

By Chris Morgan*

The laws surrounding corruption have centered on ethical considerations since society made its first attempt at curbing corrupt behavior. As the laws prohibiting corruption were written, legislators undoubtedly focused on what is morally or ethically wrong to determine what type of behavior constituted corruption. In this paper, I examine ethicality in its relation to corruption and seek to describe circumstances in which corruption would be considered ethical. After defining the two terms and examining Kantian ethics, I determine that whether or not corruption is ethically permissible rests on an assumption that an actor acts out of a duty, not an inclination, toward self-gratification. Then I examine the positive and negative repercussions of corruption, define differing strategies to “deal” with corruption, and then endorse the Integrative Social Contract Theory as an effective measure for reducing corruptive practices.

Is corruption ever ethically permissible?

In contemplating the question above, one must first define the terms “corruption” and “ethically permissible.” While defining both terms is a daunting task, attempting to determine whether corruption can be justified as “ethical” is challenging. Even though “ethical corruption” may be a paradox for many, this paper seeks to rectify the two terms by examining circumstances that are defined as “corrupt” and justifying actions taken in those circumstances as “ethically permissible,” or morally good.

The term corruption is vague  and is not easily defined. Corruption can take on different meanings depending on whether the acts occur in the public or private sector (Eiras, 2003). Corruption can be thought of as embezzlement, fraud, bribery, treason, or acts that constitute a conflict of interest (Everett, Neu, Rahaman, 2006). The unclear term can involve different types of corruption including political corruption, grand corruption, productive corruption, and petty corruption, among others (Everett et al., 2006). Other authors who seek to define the term have included just under sixty different actions that constitute corruption in the manner we think of today (Everett et al., 2006). For purposes of this paper, corruption will be any act deemed illegal due to the belief that it creates an unfair advantage for one party over the other. For example, fraud or embezzlement can be considered corrupt because it places the fraudulent party at a personal advantage over the non-fraudulent party.

The term “ethically permissible” or “ethical” can be just as arduous to define. An ethical act is one that is generally thought of as an act that society has not deemed “wrong.” According to Merriam-Webster, ethics is “the discipline dealing with what is good and bad…” (Eiras, 2003). Ethics is often referred to as the study of morality – what society deems “correct” or “proper behavior;” therefore, what society deems moral can also be considered ethical. But the focus and intent of this paper is not to define ethical behavior based on obvious moral codes; to determine whether something is ethical, one must look to the philosophies that determine “good” or “bad” behavior.

Immanuel Kant, a Prussian philosopher who died not long after the end of the 18th century, defined morality by focusing on intent, not the consequences, of acts carried out in our day-to-day lives (Sandel, 2009). Kant’s focus was on motive “of a certain kind” (Sandel, 2009, p. 111). If a person choses to act a certain way simply because it is right, then, according to Kant, they acted morally. An act is not moral if it only conforms to moral teaching or societal laws; an act is moral if the motivation for acting is rooted in a motive of duty (Sandel, 2011).        If there is any other motive behind an action, then it cannot be considered moral under Kant’s theories. Actions that satisfy our desires or wants, such as self-gratification, are not ethical because an inclination to satisfy our self-interests exists, not a duty.

Take suicide, for example. It is quite easy to develop the commitment not to commit suicide due to one’s love of life or one’s simple desire to live. Kant would indicate that this motive lacks moral worth (Sandel, 2011, p. 114). The person that chooses to stay alive because they love life chooses not to commit suicide from an inclination, not a duty to stay alive. However, when you consider a person who loathes life and chooses not to commit suicide out of duty to stay alive, they have acted morally because they maintain their existence despite the availability of a solution that compliments their dissatisfaction very well. The same goes for a compassionate individual who enjoys altruistic behavior such as donating time and money to a local charity. If she does it for the gratification she feels, her actions lack moral worth. If she does it because it is the right thing to do, the action is moral (Sandel, 2011).

From this very basic description of Kantian ethical theory, one can conclude that certain “corrupt” behaviors may be deemed ethically permissible. This is due in large part to the actions taken, which may arise under a duty and not an inclination toward a self-gratifying or advantageous outcome. For example, consider Bob who works for ABC cooperation. Bob is an accounting executive in Seattle and through his subordinates has almost complete full control of ABC’s cash flow and other assets. Dan is a secretary for ABC in Dallas. Due to the current economic recession, ABC has chosen to downsize its administrative staff in Dallas and Dan is the first and only secretary selected to be terminated. Dan is a single father raising five children in a Dallas suburb. He relies on government aid to provide food and healthcare for his family. Upon learning of the circumstances surrounding Dan’s life and that Dan would be the first and only secretary terminated from ABC’s affiliate office, Bob took action. After long and careful consideration of the illegal nature of his actions, Bob decided the duty to help another outweighed the possibility of future criminal sanctions. While he knew he was committing fraud and that he was engaging in corrupt practices, Bob manipulated ABC’s accounting books to ensure that funds for Dan’s position were available.

Bob’s decision was corrupt and ethically permissible. Bob’s manipulation of ABC’s accounting books was corrupt given that it was a fraudulent act and, while it may be a stretch, may also be considered embezzlement. Determining that his actions were ethically permissible, or moral, rests on the assumption that Bob acted only out of the duty to help others, not an inclination that would give him any sense of gratification or alleviate guilt. In this hypothetical situation, Bob received no gratification and would have actually felt happy about losing an unnecessary secretary; he definitely would not have experienced guilt. Like the altruistic actor in Sandel, Bob chose to help someone based on the duty to help. Therefore, his corrupt actions were moral and ethically permissible.

How should a society deal with corruption?

Corruption has far-reaching impacts throughout differing cultures and regions of the world. While some economists such as Chiung-Ju Huang argue that corruption may increase economic growth in some areas of the world, the majority of opinions assert that corruption has “profound damage” on society as a whole (Nichols, 2009). Many recent attempts to prevent the desire for corruption have failed due to an emphasis on “narrow legalism” that provide only criminal sanctions that seek to control corrupt behavior (Kaufmann, 2005). The best approach for “dealing” with society’s inclination toward corruption is to focus on Integrative Social Contract Theory while keeping an eye on other solutions labeled as control, exit, and voice strategies.

According to Huang, corruption decreases a company’s competitiveness and economic growth, but some scholars opine that corruption may be attributed to positive economic growth. While income inequality is worsened by corruption, some countries can experience an increase in economic growth primarily due to the fact that corruption lessens the time needed for transactions, simplifies administrative procedures, and also increases the efficiency of bureaucracy (Huang, 2012). For example, bribery in a nation’s legislature may produce incomplete legislation that results in less rigid laws regulating business transactions.  This is somewhat paradoxical considering shortly, I will discuss authors who opine tight regulations are one of the largest contributors to corruption in the first place.

According to Nichols, “corruption inflicts profound damage on society” (p. 806). Corruption increases child and infant mortality rates, distorts roles of governments, reduces funding for health and education, increases military spending, distorts markets, depreciates national currency, and slows down long-term domestic and foreign investments. The social effects of corruption may include decreasing the legitimacy of governments, especially democratic government, and can possibly lead to uprisings by undemocratic leaders. Businesses are affected by increased costs, degraded administrative support, and decreased capabilities of enforcing agreements (Nichols, 2009).

If the focus of “dealing with corruption” is to strive for its eradication, there are several theories concerning the proper approach. Eiras proposes less regulation on the market while Nichols focuses on the Integrated Social Contract Theory. Everett, Neu, and Rahaman described three different strategies labeled as control, exit, and voice strategies. After describing all of those listed, I will endorse and further discuss the Integrated Social Contract Theory.

Control, exit, and voice strategies are three differing approaches that focus on institutional systems, availability of substitutes, and active participation of civil society, respectively (Everett et al., 2006). Control strategies place emphasis on improving legal, electoral, and educational systems through systems of control, for example, stricter laws. These laws can be tax reforms, strengthening regulation agencies (auditors, etc.), and protecting whistle-blowers. These strategies increase regulation and state intervention, which is, quite often, viewed negatively. Therefore, there is a preference for exit strategies over control strategies (Everett et al., 2006). These strategies are based on the idea that alternatives must be in place so that when the potential for corruption arises, actors have other available options to choose from. Proponents of this theory argue that lowering trade barriers, abolishing subsidies, and reducing regulations will reduce opportunities for corruption because it increases available options for actors. Voice strategies are founded on the idea that civil society can actively combat corruption. It is concentrated on the idea that society knows the causes and effects of corruption and therefore must be involved in any attempt to eliminate it. This can involve NGOs, public surveys, information campaigns, and other avenues for the public voice (Everett et al., 2006).

According to Eiras with The Heritage Foundation, corruption is not the root of the problem but a symptom of overregulation (p. 1). Due to the lack of economic freedom, an “informal economy” develops, takes a larger share of GDP, and fosters unethical behavior. As a result of increases in regulatory measures, small to medium investors and business owners find it difficult to operate and engage in ethical behavior. In an informal economy, business owners are able to negotiate terms of employment that are tied to performance, and not controlled by rule of law. Much like the exit strategy described above, Erias and The Heritage Foundation advocate for less regulation based on the assertion that less regulation will foster a more conducive environment where small and medium businesses can prosper without corrupt behavior (Eiras, 2003).

Corruption presents an ethical dilemma because it involves an assurance problem; however, it can be mitigated or possibly remedied by adopting strategies that incorporate Integrative Social Contract Theory. Assurance problems exist when, because one actor has cheated, other members of a group are immediately disadvantaged. According to Nichols, if one member of a group cheats, the other members of the group are disadvantaged if they do not cheat and advantaged if they do (p. 805). If all actors in a business environment act according to the rules, all are equally benefitted. After one deviates from the rules, the environment almost demands that others act corruptly in order to survive. Those that steadfastly adhere to the rules will more than likely suffer and may be driven out of business (Nichols, 2009). In a corrupt environment, criminal sanctions are inefficient deterrents due to the ability to “purchase favorable decisions rather than suffer the actual penalty” (p. 807). Therefore, it is essential that those who seek solutions closely examine Integrative Social Contract Theory.

According to Nichols, Integrative Social Contract Theory combines two sets of contracts: implicit social contracts, also referred to as macrosocial contracts, and microsocial contracts (p. 807). The macrosocial contract is the type that Locke focused on in his discussion surrounding theories of ethics and social organization. These contracts contain the terms that would be agreed to by “the majority of rational and educated members of a society” (p. 807). Macrosocial contracts contain the normative principles of a society; they are the “oughts.”

Microsocial contracts are a result of free association prescribed by macrosocial contracts and fill in the gaps left out by macrosocial contracts; they embody what “is.” Integrative Social Contract Theory is the unification of the two types. The macrosocial norm that gives smaller communities the right to create rules or standards is referred to as a hypernorm. Any macrosocial or microsocial contract that violates a hypernorm “has no power or legitimacy.” (p. 808). A hypernorm, for example, is the universal belief that corruption should be condemned. Corruption, therefore, violates the fundamental hypernorm of social efficiency and destroys social good.

Nichols posits that microsocial contracts have the ability to reinforce hypernorms by “posting an agreed-upon ‘is’” (p. 809). These contracts will have more details than a hypernorm or macrosocial contract and efficiently addresses the complex behaviors associated with corruption. A simple law forbidding corruption fails to provide adequate guidance and results in a decreased assurance that other actors are cooperating with the rules, which creates a “conundrum” for those faced with a decision between normal or corrupt behavior. Microsocial contracts, at the very least, should provide minimum standards of conduct. For example, the United States’ Foreign Corrupt Policies Act “forbids transnational business-related bribery except bribes paid to facilitate non-discretionary clerical acts” (p. 810).  This microsocial contract establishes a “minimum standard” and actors are obviously able to act with higher standards of conduct if they wish. However, all have agreed to carry out this minimum standard of conduct. Microsocial contracts enable actors to bring everyone to the table for discussion regarding regulations. The act of openly discussing and brainstorming standards of conduct can foster trust and understanding among actors (Nichols, 2009).

This theory is preferred because it brings individuals to the drawing board rather than several independent nations. The problem with nations is that their visions are more idealized than reality; nations are interdependent and unorganized entities. Integrative Social Contract Theory taps into levels of human organization that are unachievable in international law. The theory is also drastically more democratic than international laws (Nichols, 2009).  Separate laws in different countries do not always adequately represent the will and desires of its citizens. Integrative Social Contract Theory ensures authenticity because those that will be governed decide upon the rules (Nichols, 2009). Because international law is unrealistic, eradicating corruption requires a focus on rules that were developed by the actors themselves and focus on the interactions that foster trust and adherence to the rules.

Conclusion

Even though the terms “corruption” and “ethically permissible” can be difficult to define, it is easy to understand the meaning behind each term by looking at examples of corruption and defining ethical behavior based on morality theories enumerated by Immanuel Kant. Corruption can be considered ethically permissible under Kant’s theories if the actor acts out of duty and not a motive that alleviates guilt or results in self-gratification. While some theorists explain corrupt practices can actually result in economic growth, the general consensus is that corruption has overwhelmingly negative implications on societies that have trouble eradicating it. There are many theories that focus on reducing corruption including control, exit, and voice strategies. Exit strategies are much like those proposed by Eiras due to their focus on reducing governmental regulations. Integrative Social Contract Theory is the preferred method for eradicating corruption due to its focus on the conundrums faced by individual actors and its deviation from theories that holistically attempt to prohibit corruption on an international scale.


Works Cited

Eiras, A. (2003). Ethics, corruption, and economic freedom. Heritage lectures, (813),

1-6.

Everett, J., Neu, D., & Rahaman, A. (2006). The global fight against corruption: a foucaultian,

virtue-ethics framing. Journal of business ethics, (65), 1-12.

Huang, C. (2012). Corruption, economic growth, and income inequality: evidence from ten

countries in asia. World academy of science, engineering and technology, (66), 354-357.

Kauffman, D. (2005). Corruption, governance, and security: challenges for the rich

countries of the world. 83-102.

Nichols, P. (2009). Multiple communities and controlling corruption. Journal of business

ethics, (88), 805-813.

Sandel, M. (2009). Justice: What’s the right thing to do?. (1st ed. ed.). New York: Farrar,

Straus and Giroux.

 

*Chris holds bachelor’s degrees in Spanish and international business from the University of Arkansas at Little Rock and currently enrolled in the JD/MPS concurrent program with the UALR Bowen School of Law and Clinton School of Public Service. He has served as an AmeriCorps volunteer with the UALR’s Children International. Chris currently works for ACLU of Arkansas and is interested in international development.

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