Development as Freedom (46 page)

Second, some regulational regimes encourage corruption by giving discretionary power to the officers who can grant favor to others—businessmen in particular—that may be worth a lot of money to them. The overcontrolled economy (the “license Raj,” as the system
is called in India) is an ideal breeding ground for corruption, as the experience of South Asia particularly demonstrates. Even if such regimes were not counterproductive in other respects as well (as they frequently are), the social cost of corruption can be reason enough to shun such arrangements.

Third, the temptation to be corrupt is strongest when the officers have a lot of power but are themselves relatively poor. This is the case at lower levels of administration in many overcontrolled economies, and explains why corruption reaches down all the way in the bureaucratic system, encompassing petty officers as well as senior administrators. Partly to deal with this problem, many bureaucrats in ancient China were paid a “corruption-preventing allowance” (called
yang-lien
) to give them incentive to remain clean and law-abiding.
⁵⁴

These and other inducements can have effectiveness, but it is hard to make the prevention of corruption turn entirely on financial incentives. Indeed, each of the three lines of attack just outlined has its own limitation. First, systems of catching thieves often do not work, since supervision and inspection are not always effective. There is also the complex issue of providing the right incentives for thief-catchers (so that they are not bought off). Second, any system of governance cannot but give some power to the officers that is worth something to others who may try to offer inducements for corruption. The reach of such power can certainly be reduced, but any substantive executive power can be potentially open to abuse. Third, even rich officers often try to make themselves richer still, and do so at some risk, which may be worth it if the stakes are high. There have been plenty of examples of this in recent years from different countries.

These limitations should not prevent us from doing what can be done to make the organizational changes effective, but an exclusive reliance on incentives based on personal gain cannot fully eliminate corruption. Indeed, in societies in which corrupt behavior of the standard type is quite unusual, the reliance is, to a great extent, on compliance with codes of behavior rather than on financial incentive to be noncorrupt. This forces attention on the norms and modes of behavior that respectively prevail in different societies.

Plato suggested in the
Laws
that a strong sense of duty would
help to prevent corruption. But he also noted, wisely, that this would be “no easy task.” What is at issue is not just the general sense of dutifulness, but the particular attitude to rules and conformity, which has a direct bearing on corruption. All this comes under the general rubric of what Adam Smith called “propriety.” Giving priority to rules of honest and upright behavior can certainly be among the values that a person respects. And there are many societies in which respect for such rules provides a bulwark against corruption. Indeed, intercultural variations in rule-based behavior are among the most striking diversities in the contemporary world, whether we contrast business modes between Western Europe and South or Southeast Asia, or (
within
Western Europe) between Switzerland and parts of Italy.

Modes of behavior are not, however, immutable. How people behave often depends on how they see—and perceive—others as behaving. Much depends, therefore, on the reading of prevailing behavioral norms. A sense of “relative justice” vis-à-vis a comparison group (in particular, others similarly placed) can be an important influence on behavior. Indeed, the argument that “others do the same” was one of the more commonly cited “reasons” for corrupt behavior found in the Italian parliamentary inquiry that looked into the linkage between corruption and the Mafia in 1993.
⁵⁵

The importance of imitation—and of following established “conventions”—has been emphasized by those commentators who felt moved to study the bearing of “moral sentiments” on social, political and economic life. Adam Smith noted:

In the reading of “established rules of behaviour,” importance may be particularly attached to the conduct of people in positions of power and authority. This makes the behavior of senior civil servants especially important in installing norms of conduct. Indeed, writing
in China in 122
B.C
., the authors of
Hui-nan Tzu
put the problem thus:

There is, I believe, sense in this piece of ancient wisdom. Corrupt behavior in “high places” can have effects far beyond the direct consequences of that behavior, and the insistence on starting at the top does have reasoning behind it.

I am not trying to propose here an “algorithm” for eliminating corruption. There are grounds for paying special attention to the possibility of altering the balance of gains and losses through organizational reforms such as those discussed earlier. But there is also room for addressing the climate of norms and behavioral modes, in which imitation and a sense of “relative justice” can play an important part. Justice among thieves may not look like “justice” to others (just as “honor among thieves” may not seem particularly honorable), but it certainly can have that appearance to the protagonists.

For a fuller understanding of the challenge of corruption, we have to drop the presumption that only personal profits move people, and values and norms simply do not count. They do count, as is well illustrated by the variation of behavioral modes in different societies. There is room for change, and some of it can cumulate as well as disseminate. Just as the presence of corrupt behavior encourages other corrupt behavior, the diminution of the hold of corruption can weaken it further. In trying to alter a climate of conduct, it is encouraging to bear in mind the fact that each vicious circle entails a virtuous circle if the direction is reversed.

This chapter began with scrutinizing some arguments for skepticism of the idea of reasoned social progress—an idea that is quite central to the approach presented in this book. One argument questions the possibility of rational social choice, invoking in particular Kenneth Arrow’s well-known “impossibility theorem.” It turns out, however, that what is at issue is not the possibility of rational social choice, but the use of an adequate informational base for social judgments and decisions. That is an important understanding, but it is not a pessimistic one. Indeed, the critical role of informational bases was discussed in earlier chapters as well (particularly in
chapter 3
), and the issue of adequacy has to be appropriately assessed in that light.

The second argument expresses skepticism of thinking in terms of intended consequences and focuses instead on the overwhelming importance of “unintended” effects. There is something to be learned from this skepticism as well. However, the main lesson is not the futility of rational assessment of social options, but the need to anticipate the
unintended but predictable
consequences. It is a question of not being overwhelmed by the force of intention, and also of not ignoring the so-called side effects. The empirical illustrations—several of them from the experiences of China—indicate why the failure is not one of causal untractability, but of sticking to a partial vision. Sensible reasoning has to demand more.

The third argument relates to the understanding of motivations. It takes the form of arguing that human beings are uncompromisingly self-centered and self-interested, and given that presumption, the point is sometimes made that the only system that can work effectively is just the capitalist market economy. However, this view of human motivation is not easy to sustain in terms of empirical observations. Nor is it correct to conclude that the success of capitalism as an economic system depends only on self-interested behavior, rather than on a complex and sophisticated value system that has many other ingredients, including reliability, trust, and business honesty (in the face of contrary temptations). Every economic system makes some demands of behavioral ethics, and capitalism is no exception. And values do have very considerable reach in influencing the behavior of individuals.

In emphasizing the possible role of values and norms in individual behavior, it is not my intention to argue that most people are moved more by their sense of justice than by their prudential and material concerns. Far from it. In making predictions of behavior—whether in personal work, private business, or public services—it is important to avoid the error of assuming that people are peculiarly virtuous and desperately keen to be just. Indeed, many well-meant planning exercises in the past have come to grief through overreliance on selfless individual conduct. In recognizing the role of broader values, we must not fail to note the extensive role of intelligent self-seeking, as well as of gross cupidity and greed.

It is a question of having a balance in our behavioral assumptions. We must not fall for the “high-minded sentimentality” of presuming that everyone is intensely moral and value-driven. Nor must we replace that unreal assumption by the equally unreal opposite assumption—what can be called “low-minded sentimentality.” This presumption, which some economists seem to prefer, takes the form of assuming that we are not at all influenced by values (only by crude considerations of personal advantage).
⁵⁸
Whether we deal with “work ethics,” or “business morality,” or “corruption,” or “public responsibility,” or “environmental values,” or “gender equity,” or ideas of “the right family size,” we have to take note of variations—and changeability—in priorities and norms. In analyzing issues of efficiency and equity, or the removal of poverty and subjugation, the role of values cannot but be crucial.

The purpose of the empirical discussions involving corruption (and earlier on, fertility behavior) is not merely to examine issues that are important in themselves, but also to illustrate the significance of norms and values in behavior patterns that may be crucial for the making of public policy. The illustrations also serve to outline the role of public interaction in the formation of values and ideas of justice. In the making of public policy the agency of “the public” has to be considered in different perspectives. The empirical connections not only illustrate the reach of concepts of justice and morality that people entertain, but also point to the extent to which value formation is a social process involving public interactions.

It is clear that we have good reason to pay special attention to creating conditions for more informed understanding and enlightened
public discussion. This has some strong policy implications; for example, those that relate to the freedom of thought and action of young women, especially through expanding literacy and school education and through the enhancement of women’s employment, earning ability and economic empowerment (as discussed in
chapters 8
and
9
). There is also a big role for freedom of the press and the media, in their ability to take up these issues on an extensive basis.

The crucial function of public discussions is sometimes only partially recognized. In China, despite the control over the press in other respects, issues of family size have been widely discussed, and the emergence of a different set of norms regarding family size has been actively sought by public leaders. But similar considerations apply to many other areas of economic and social change, in which, too, open public discussion can greatly help. The lines of permissibility (and of encouragement) in China reflect the priorities of state policy. There is, in fact, something of a conflict here, which remains unresolved. It is reflected in the oddities of partial success in the chosen areas. For example, a reduction of fertility rates in China has been accompanied by an accentuation of gender bias in infant mortality and a sharp increase in sex-selective abortions. A fertility-rate reduction that is achieved not through coercion but through a greater acceptance of gender justice (including, inter alia, the freedom of women not to be overwhelmed by overfrequent childbearing and -rearing) would suffer from less internal tension.

Public policy has a role not only in attempting to implement the priorities that emerge from social values and affirmations, but also in facilitating and guaranteeing fuller public discussion. The reach and quality of open discussions can be helped by a variety of public policies, such as press freedom and media independence (including the absence of censorship), expansion of basic education and schooling (including female education), enhancement of economic independence (especially through employment, including female employment), and other social and economic changes that help individuals to be participating citizens. Central to this approach is the idea of the public as an active participant in change, rather than as a passive and docile recipient of instructions or of dispensed assistance.