Anti-Corruption: A Big-Bang Theory

Abstract

In policies for economic development, anti-corruption measures have received increased attention. It is now possible to speak of an international "good governance" regime supported by many national and international aid organizations and their research institutes. The policy advice from this "regime" is to a large extent geared towards incremental change by finding institutional solutions that will set in motion a "virtues circle". The argument in this article is that this is the wrong way to think about possible policies for curbing corruption and establishing "good governance". On the contrary, it is very unlikely that small institutional devices can set in motion a process towards establishing "good governance" in countries were corruption is systemic. Based on an understanding of corruption as a "social trap", it is argued that what is needed to establish a new equilibrium of social and economic exchange is a "big-bang". Moreover, it is argued that incremental policies which now tend to dominate the policy agenda are likely to worsen the problem and make corruption and similar practices more ingrained. The argument is illustrated by an historical case-study of how corruption was eradicated in 19th century Sweden.

Keywords: Corruption, Good Governance, Path-dependency, Interactive rationality, Social Traps, Sweden

JEL Classification: G38, H11, H41