Ethically Impermissible: An Analysis of Corruption from Welfare, Virtue, and Freedom Perspectives

By John Delurey

My friend and I had somehow gone an entire day without paying a bribe. We were riding across Zanzibar, Tanzania on motorcycles and assumed that we would be easy targets for the notoriously corrupt police force. Sure enough, a police officer flagged us down towards the end of our journey and proceeded to explain why we owed him money for pulling over on the wrong side of the road. I felt as though the officer was being unethical in that I was being used as a means to an end and that I had my freedom greatly restricted in the process. In addition to this, I felt as though this officer had reduced the overall welfare of the island of Zanzibar. I would likely curtail my spending in the local economy to make up for the unexpected loss and had formed a slightly less positive opinion of Zanzibar culture in response to this act of corruption. The repercussions of this corrupt act are still being felt – you, the reader, are currently making your own judgments about Zanzibar that may or may not have negative impacts down the line.

While not all acts of corruption are as cut and dry as bribery from a state official, this example does stress the multifaceted ethical impermissibility of corruption. Michael Sandel explores different faces of justice and ethical permissibility in his book Justice: What’s the right thing to do? To do this, Sandel filters the most relevant literature and theorists into three fairly broad themes: welfare, virtue, and freedom (Sandel, 2009). This paper explores the issue of corruption using the same demarcations to address whether corruption could be ethically permissible within any of these three frameworks. After concluding that only radical libertarian ethics could possibly permit corruption, this paper offers solution that fit within each of Sandel’s three ethical categories. Finally, suggestions for effectively and ethically reducing corruption in modern society are drawn from the available solution space.

 

Definition

Corruption is the misuse of power for personal gain. Typically, this power comes from public office and most definitions of corruption reflect this commonality. Gray and Kaufmann, as quoted in Everett, Neu & Rahaman, argue that corruption is the “misuse of public office for private ends or private gain” (Everett, Neu & Rahaman, 2006). This definition is limiting, however, and should be expanded to those who hold private office. Is insider trading – using private knowledge and power for private gain and public loss – not corrupt? Expanding the definition of corruption makes it easier to address the ethical parameters of corruption without becoming disoriented in the individual nuances and manifestations of the phenomenon.

 

Ethical Framework: Welfare

Sandel’s welfare approach is essentially consequentialism; the notion that every decision should be made in light of the potential consequences (Sandel, 2009). In this ethical framework, the ends can justify the means if the action passes a cost-benefit analysis and it is clear that it served the “greater good” (Sandel, 2009). Sandel invokes the utilitarian theorists John Stuart Mill and Jeremy Bentham to illustrate this ethical conception.

Corruption rarely passes the utilitarian examination of a welfare-based ethical perspective. According to utilitarian scholars, an action is morally permissible if the resulting consequences create more benefit than cost, more happiness than sadness, or more pleasure than pain (Sandel, 2009). In examining corruption, then, the question becomes whether or not corruption is worthwhile on the “greater good” scale. Most scholars who operate in this utilitarian framework – particularly economists – attempt to approach the topic of corruption using empirical evidence. Through complex calculations and measurements, economists intend to prove that the overall impact of corruption is either beneficial or detrimental. If it were to be beneficial, then it would be deemed ethically permissible.

In Selcuk Akcay’s perspective, this divides the relevant scholars between efficiency enhancing and efficiency reducing factions. While Akcay acknowledges that arguments have and can be made in either group, his empirical collection and analysis of human development data as it relates to corruption indices shows that corruption is most often negatively associated with human development (Akcay, 2006). In most of the 63 countries observed there was a pattern that greater corruption levels correlate with slower human development rates. This was true regardless of status in the global economy; both developed and developing nations of varying economic strength were measured. The correlation seen in this study is strong, but the author wrongfully invokes causality in this study by claiming that “corruption in all its aspects retards human development” in the last sentence (Akcay, 2006). This cannot be drawn from the data – it could just as easily prove to be the case that sluggish human development, caused by other factors, creates corruption. As other scholars argue, corruption can actually be both the cause and the effect  (Everett, Neu & Rahaman, 2006).

Corruption will rarely result in “greater good” outcomes because it represents an equilibrium that lacks pareto efficiency. Pareto efficiency is a term borrowed from game theory, the field of study that explores decision-making when dealing with multiple imperfectly rational and self-interested individuals. Pareto efficiency occurs when the involved individuals or groups reach a stable outcome that creates the greatest possible overall good. One of the most famous thought experiments in game theory, the prisoner’s dilemma, occurs when there is an incentive to choose an option other than cooperation. In other words, while there is a benefit to cooperation, there is an even stronger benefit for that person to defect if the other cooperates. Unfortunately, because the actors in the dilemma cannot communicate with one another, they will almost always end up in a situation that is worse off for all parties involved – one that lacks pareto efficiency (Dixit & Nalebuff, 2010).

To use a practical example, it is widely known that traffic would flow much quicker without people changing lanes. Whenever traffic gets dense, drivers begin shifting lanes more often to try to find the lane that offers the fastest commute. Unfortunately, everybody else is also looking for the fastest lane and is switching at the same time. Not only does this decrease overall happiness by frustrating individual commuters, it also creates a slower commute for all individuals involved in this large-scale prisoner’s dilemma. If everyone were to stay in their own lane, it is likely that the average driver would arrive at their destination faster.

This is corruption. If everyone were to cooperate and be entirely lawful and just in their actions and interactions, it is likely that the utilitarian “greater good” would be improved. Instead, we are left with an outcome lacking pareto efficiency due to a personal incentive (or even need, as will be discussed in later sections) to defect and perform a corrupt act. This person then has the advantage over others, creating an inequality that fosters a system expecting corruption, thereby creating greater incentive to be corrupt because cooperation is not trusted or recognized. Eventually, the social contract disintegrates as the trust between state and citizen erodes.

Social contract theory, most famously explored by Jean-Jacques Rousseau, takes the principles explored in game theory and applies them to the modern nation-state. In order to escape the “state of nature” and rise above it in a just and civilized society, the citizenry must have a government structure that is for and by the people (Friend, 2004). Each individual relinquishes the same freedoms for the sake of an orderly and safe existence but is also expected to submit to the same restrictions (Friend, 2004). According to Rousseau, the only way to have a virtuous social contract is for these restrictions to apply to those in public office and people with authority as well. When it doesn’t, as is the case with most forms of corruption, then it is appropriate and expected of the citizenry to hold the government accountable. The French interpreted this virtue as cause for revolution – a more modern democratic approach would be to vote out the corrupt and vote in the righteous. The bitter injustice of corruption is that reform is not quite this easy. The corrupt remain in office through fraudulent elections and cronyism. The righteous tend to disappear.

 

Ethical Framework: Virtue

If corruption fails to meet the virtue-based stipulations of a just society, it holds even less water when each act and actor is examined using Emmanuel Kant’s categorical imperative. The categorical imperative suggests that a moral agent should consider if the action is universalizable – that if everyone adopted the action it would not lead to a worse off condition (Sandel, 2009). Using this rule, the moral agent would have to imagine a scenario where everyone was corrupt. A state of complete and universal corruption would create rifts in social and political fabric and a collapse in the state. Corruption actually requires non-corrupt individuals to be effective, so corruption fails to meet Kant’s rule of virtuous actions. The categorical imperative exists in the narrow space between the golden rule and utilitarianism but has applications beyond each of these notions. For example, the categorical imperative requires that the means are also appropriate and virtuous rather than just the corresponding ends (Sandel, 2009). This brings a different aspect of corruption to closer examination: could corrupt means to a beneficial end be ethically permissible and even virtuous? This requires a closer view of the means that corruption takes.

Nearly all corruption is based around self-interest in some form. Whether an individual commits a corrupt act for subsistence or for excess, it requires using another person as a means to an end. Kant would argue that this is ultimately unethical, even if the overall benefit outweighed the immediate pain caused by the corruption. Corruption is unethical because it cannot be made a universal rule and because it devalues humans. It is ethically impermissible even when a wealthy individual pays a bribe to a low-income government employee with hungry children. The very process of corruption is unethical regardless of the consequences because of the relationship it builds between humans. Freedom-based theories, on the other hand, might permit exceptions to this rule for the sake of preserving individual liberties.

 

Ethical Framework: Freedom

Some ethical authorities posit that all ethics are relative and that each individual person has the right to decide what to do with his/her person and property. It is only within this framework – of pure, unadulterated freedom – that corruption might be ethically permissible. Staunch supporters of individual liberty argue that we cannot restrict a person’s freedom in any way (Sandel, 2009). The actions they take will be harmonious with their own moral code and there cannot be any external force regulating what is and is not moral. This form of strict freedom-based ethics borders on anarchism and rarely takes serious form in ethical discussions. Instead, most loyalists to freedom-based ethics take a libertarian approach and suggest that there must be a governing force in place to ensure that people do not inflict any direct harm to one another and that contracts are upheld (Sandel, 2009).

In either approach – anarchism or libertarianism – it could be interpreted that corruption is a natural course for society and should not be regulated. Some libertarians view corruption as a sign that there is freedom and entrepreneurship in the private sector and that the market will be able to settle out any undue corruption (Jang & Hodgson, 2006). If the prices are unfair or the corruption unjust, then the competitive free market will set in and somebody will provide a less corrupt alternative. The tenets of modern libertarianism revolve around the notion that it is ethically impermissible for the government to restrict individual liberty. Many suggested solutions to corruption involve increased control and regulation – mechanisms incompatible with libertarian ethics (Nichols, 2009). While there might exist ethical permission for corrupt acts within a freedom-based moral code, it is often seen that practicing libertarians are against corruption.

In practical application of freedom ethics, libertarians are against corruption for two main reasons: they believe that corruption can cause direct harm to contracts and individuals and that corruption can limit freedom in the markets. Both reasons rely on a definition of corruption that is focused on public offices and government rather than the holistic definition that includes the private and social sectors (Eiras, 2003; Hodgson and Jang, 2006). With this fairly limited definition in mind, libertarians suggest that government is the cause of corruption. The first reason is the fault of the government for not upholding the rule of law (for not being controlling enough) and the second reason is to be pegged on cumbersome and inefficient regulations and unnecessary bureaucracy in the government (for being too controlling). Ana Isabel Eiras from the ­Heritage Foundation, a primarily libertarian think tank, argues that corruption is the result of restricted economic freedom. When freedom is restricted due to regulation (lengthy permitting processes) or inefficiencies (bribery), citizens will turn to an informal market that is naturally predisposed for corruption (Eiras, 2003). Whereas the strict libertarian or anarchist might see corruption as ethically permissible as part and parcel of individual freedom, the practicing libertarian would view corruption as limiting freedom and would actively seek out a solution to the corruption problem.

 

Solutions

Corruption is effectively ethically impermissible in all three major perspectives of justice and ethical conduct. As such, each perspective has a corresponding approach to reducing corruption and creating a more just society.

 

Welfare: Control Solutions

In order to maximize welfare and create a situation that results in the greatest good for the greatest number, those that take a welfare-based approach would favor what Everett, Neu, & Rahaman describe as “control solutions” (Everett, Neu & Rahaman, 2006). These solutions most often involve both state and non-governmental organizations pushing for increased control and regulation of activities that either qualify or cause corrupt acts. Through the rule of law, reform, and command-and-control regulation, all aspects of corruption (public, private, social) can be reduced. Control solutions are comprehensive but by no means easy and require concerted effort from all major societal stakeholders to ensure that trust is rebuilt in the state’s authority and that credibility is restored in the private sector.

 

Virtue: Voice Solutions

Those that view corruption as ethically impermissible because it is morally reprehensible for each individual to commit a corrupt act or use corrupt means would likely favor “voice solutions” (Everett, Neu & Rahaman, 2006). Voice solutions require increased accountability and transparency in business, governance, and society as a whole. By tracking and exposing corruption, virtue theorists expect that corruption will be eradicated as it becomes better understood. In exposing injustice, they intend to create societal shifts that will call for a less corrupt system – power through knowledge.  Transparency International has been keeping a Corruption Perception Index that red flags corrupt institutions with the hopes of shifting the flow of money and influence. A government with a high corruption score on one of these indices might lose aid funding or votes and a business with a high score might lose clients or investments (Everett, Neu & Rahaman, 2006). In addition to these organizational countermeasures, voice solutions include increased freedom of press and citizen information campaigns. All of these initiatives intend to empower those that are on the receiving end of corrupt acts and measures.

 

Freedom: Exit Solutions

Subscribers to a freedom-based code of ethics, or at least those that view corruption as a limit to freedom rather than an expression of it, support “exit solutions” (Everett, Neu & Rahaman, 2006). These solutions revolve around the libertarian hypothesis that government is entirely to blame for corruption. If government is the problem, than exit solutions advocate for the reduction of government to the bare necessities of maintaining an orderly state. Libertarians suggest reallocation of government resources so that the state becomes more effective at enforcing the rule of law and less effective at controlling the free market. This will shift business and public outreach to the formal economy, thereby reducing the corruption capacity that currently lies in the informal economy.

 

Discussion and Conclusion

Control solutions are the best option for reducing corruption. They rearrange the incentive structure in ways that the other two solution strategies cannot. People are not always corrupt because they are unethical. Corruption is often circumstantial and the other two solutions do very little to rearrange or change these circumstances. As seen in game theory and social contract theory, increased communication or a governing body are needed to create the incentive for cooperation in a society that has already experienced corruption.

Exit solutions are especially passive in their altering of the incentive structure. They believe that the state will naturally drift towards fairness and ethicality if the barriers to freedom are removed (Everett, Neu & Rahaman, 2006). Regardless of whether or not government and public institutions caused corruption, removing them is not going to alleviate it. The equilibrium without pareto efficiency that is a corrupt state might be imperfect, but it is stable. Corruption will maintain the default once it becomes the norm – corruption begets corruption. Slackening regulations will not help the system find a less corrupt equilibrium.

Similarly, voice solutions lack the authority or assertiveness needed to rearrange the incentive structure of a corrupt state. They come a step closer than exit strategies by opening communication and transparent flow of information but do not eliminate the incentive to defect. Voice solutions would be analogous to having a conference call among all commuters on a highway. Everyone could communicate with everyone else and come to the universal conclusion that they should not shift lanes. However, if there is a history of self-interested lane shifting and an individual benefit in doing so, there might not be the trust needed to uphold this sort of informal agreement. Agreement does not guarantee cooperation, and suspicion could easily lead back to massive defection and a pareto inefficient equilibrium. In the case of voice solutions, even if people became more aware of corruption and there was greater accountability for corrupt decisions, certain people (out of greed or need) might use corruption to maximize their utility. Voice solutions can increase the social pressures that denounce corruption but cannot eliminate it, especially if there is already a lack of trust.

Control solutions must be used to rebuild the social contract thereby ensuring that the public and private sectors are working for the people by the people. These will rearrange the incentive structure by either punishing actions that are corrupt or by rewarding cooperation. Any control solution will need to be especially mindful of the fact that corruption is most often circumstantial and a response to need – it should be nuanced to accommodate these circumstances (Nichols, 2009). However, as seen in the prisoner’s dilemma, the greatest total benefit comes from cooperation.

Control solutions do not rely on but are tolerant of virtue- and freedom-based reasons to avoid corruption. While Kant might take issue with the notion that acting virtuously is incentivized in that this might dilute the deontological duty for acting, the individual can still act out of duty and happen to receive a reward for doing so. For those that choose not to or cannot afford to use Kant’s virtue-based rational for avoiding corruption, control mechanisms will provide instrumental incentive and comply with the “greatest good” emphasis of utilitarian ethics. These solutions even comply with some of the more relaxed elements of libertarianism. While these rules and regulations might reduce freedom in the short term, they will ultimately increase individual freedom by improving the rule of law and decreasing the restrictive nature of corruption. Hardline libertarian policies and deregulation might be effective once confidence in the state has returned, the social contract has been mended, and society has been reminded of the benefits of universal cooperation.

 

References

Akcay, S.: 2006, ‘Corruption and Human Development’, CATO Journal 26(1), 29–48.

Dixit, A., & Nalebuff, B. (2010). The art of strategy. New York, NY: W. W. Norton & Company.

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

Everett, J., Neu, D., & Rahaman, A. S. (2006). The global fight against corruption: A foucaultian, virtues-ethics framing. Journal of Business Ethics65, 1-12. doi: 10.1007/s10551-005-8715-8

Friend, C. (2004, October 15). Social contract theory. Retrieved from http://www.iep.utm.edu/soc-cont/

Jang, S., & Hodgson, G. M. (2006). The economics of corruption and the corruption of economics: an institutionalist perspective. Retrieved from https://uhra.herts.ac.uk/dspace/bitstream/2299/2002/1/900691.pdf

Nichols, P. (2009). Multiple communities and controlling corruption. Journal of Business Ethics88, 805-813. doi: 10.1007/s10551-009-0320-9

Sandel, M. (2009). Justice: What’s the right thing to do?. New York, NY: Farrar, Straus and Giroux.

 

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