(Cross-posted on 3 Quarks Daily, where it has received many comments.)
Public corruption is often defined as the misuse of public office for private gain. It tends to thrive when discretionary power is vested in officials amid a weak architecture of deterrence. A persistent feature of all societies, public corruption is today considered a problem of the developing world. Examples include politicians, bureaucrats, and other officials taking bribes to influence outcomes in business licensing, awarding contracts, registering property, citing traffic violations, disbursing education funds, and so on.
The stakes rise dramatically with neoliberal reforms, when the state begins to transfer public assets to private firms—such as land, mines, and airwaves—usually under weak regulatory, supervisory, and legal frameworks. For instance, the big Bofors scandal of pre-reforms India of the 1980s involved $25 M, whereas the 2G telecom scam last year may have cost the exchequer $39 B. It is said that as developing countries turn into developed nations, bribery turns into another means of influence: lobbying.
It is widely believed that public corruption hurts macroeconomic growth. However, research on the impact of corruption on growth is not conclusive. China, among the most corrupt countries, has one of the highest growth rates. Perhaps China's GDP would have grown even faster without corruption, but that's a conjecture; theoretical explanations for China cut both ways. Some researchers now favor the view that the impact of corruption on macroeconomic growth depends on the nature of the regime and the kind of corruption there is. Some kinds can align in favor of growth, others against. Corruption of course has wider implications beyond growth. Various studies have shown its adverse impact in the microeconomic realm. Higher corruption reduces entrepreneurial activity, allocates talent less efficiently, and worsens services integral to human development. Finally, public corruption also eats away at social institutions, undermines the rule of law, erodes social trust, and can jeopardize public safety and hurt the environment.
It seems to me that most fights against public corruption, including in India, strive to make the system function "as advertised". They strive for transparency and accountability in the system. They tend not to challenge the rigged rules of the system itself, including the investment priorities of the country, or its response to socioeconomic disparities. But this is not necessarily a shortcoming. Tactical prudence may require such focus, and these latter concerns, related and complementary in nature, may sometimes be best left to other concerned citizens.
Reducing corruption, to be clear, may do nothing for equitable distribution —unless significant redistributive programs and safety nets already exist in a country. Indeed, in such cases, the clearest adverse impact of corruption occurs in the delivery of social services to the marginalized—food, schooling, medicine, employment assistance, etc. The more programs for socioeconomic justice that exist in a country, the bigger the obstacle that corruption poses for their delivery. This then is the context in which a fight against public corruption is also a promoter of socioeconomic justice, even if as a byproduct. The big question then becomes: how does one go about reducing corruption, especially in India?
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