I guess I’m engaging in the “ritual slaying of the elders” in which professors often indulge. Having gone after Paolo Mauro in an earlier post, here I want to take on (a small part) of Robert Klitgaard’s work.
Klitgaard, who is one of the giants of academic anticorruption research over the last half-century, once pithily (and influentially) summed up his perspective on the causes of corruption in a “corruption formula”: C = M + D – A, or (to put this back into words): “Corruption equals monopoly plus discretion minus accountability.” (The formula originally appeared in Klitgaard’s
1975 1988 book, Controlling Corruption. You can find a more recent version here.) Much as I respect Klitgaard’s work, I think this anticorruption “formula” is not merely trite, but affirmatively misleading and therefore dangerous.
I have no quarrel with the claim that some forms of corruption arise when officials are given sole power to make consequential decisions without adequate oversight or control. But that observation doesn’t really get us much further than Lord Acton’s famous (and more elegantly phrased) dictum that power tends to corrupt, and absolute power corrupts absolutely. More significant–and in my view more problematic–are the three causal claims, and associated policy implications, embedded in the “C = M + D – A” formulation:
- The claim that monopoly increases corruption, so therefore more competition (via decentralization or privatization) will reduce corruption;
- The claim that discretion causes corruption, so therefore tight controls based on formal criteria, which leave little room for individual officials to make discretionary judgment calls, will reduce corruption; and
- The claim that accountability reduces corruption, so therefore more accountability (more oversight, or more democratic checks, or what have you) will reduce corruption.
All three of those claims may be true under certain circumstances, but the Klitgaard Formula implies that they are generally true, and I don’t think the best theory or empirical evidence supports that position. Let’s take the three claims one at a time:
- Monopoly: There’s an extensive literature on how reforms that would deprive individual officials of monopolies over particular decisions might affect corruption. Such reforms would include: greater decentralization within the bureaucracy (so that multiple officials can make similar decisions, such as permitting decisions); various forms of federalism or political decentralization (so individuals or firms can shop for the most attractive jurisdiction); and privatization or outsourcing, so that goods or services that might otherwise be supplied by government monopolies are supplied on the competitive market. Without going into details here (though I may in a future post, especially if readers are interested), this research does not conclude that replacing monopolies with competition always lowers competition. Sometimes it does, but sometimes competition can increase corruption. For example, a firm inclined to pay bribes can shop for corrupt bureaucrats. For another, competition among jurisdictions can lead them to compete to offer the most attractive opportunities for corruption. And the record of privatization of government services in reducing corruption is, to put it charitably, spotty.
- Discretion: Government officials who have too much discretion can abuse it. But government officials who have too little (formal) discretion may be more inclined to bend or ignore rules that are seem foolish, inefficient, and contrary to prevailing social norms. In other words, while some forms of corruption involve wrongfully exercising lawful discretion, other forms of corruption involve violating formal constraints on discretion. Making those constraints tighter may reduce the former kind of corruption but exacerbate the latter kind. Moreover, overemphasizing rigid constraints on official discretion may lead to worse decisions (because discretion, despite its costs, also has the important benefits of allowing officials to tailor their decisions to the nuances of particular situations, and to adapt over time). Constraining discretion may also have adverse effects on the sorts of people who pursue careers in government service—which may in turn worsen corruption.
- Accountability: If all we mean by “accountability” is that officials do not abuse their power (so that they are, in a general sense, accountable to the citizenry), then the claim that “more accountability = less corruption” is a banal tautology. But if what we mean by increasing accountability is subjecting officials to more rigorous oversight and control–either by hierarchically superior government officials or by the public (via democratic elections or media scrutiny or whatever other accountability mechanisms we might imagine)–then it is not at all obvious that more accountability necessarily leads to less corruption. Yes, there’s plenty of good evidence that accountability sometimes leads to less corruption—but also plenty of research suggesting that in some circumstances, there can be too much (or the wrong kind of) accountability, and that strengthening accountability mechanisms can sometimes make the corruption problem worse. Again there’s too much to talk about in a brief blog post, but to give a flavor of some of the problems: (1) accountable officials are under pressure to produce visible short-term results, which may create incentives to engage in forms of corruption with long-term costs (like illicit campaign donations) in order to provide such results; (2) when officials are subject to “hyper-accountability”, such that they expect they will be thrown out of office as soon as something goes even slightly wrong (even if it’s not their fault), they might be less constrained by the desire to remain in office (since that’s so unlikely anyway), and more inclined to enrich themselves as much as possible while they can; (3) accountability to bureaucratic superiors can just push the locus of corruption up the hierarchy, and moreover if the superiors (say, the politicians) are actually more corrupt than the subordinates (say, the bureaucrats), then increasing the accountability of the latter to the former might make corruption worse.
In sum, while Klitgaard is indisputably right that some corruption arises because unaccountable officials have the sole power to make discretionary decisions, framing this point as a “formula”—which implies that it is an immutable law—is inaccurate and misleading.