Capitalism and Free Enterprise: The Solution For Corruption In Developing Countries: Jobs are Lives

Abstract

The present system of dealing with corruption (particularly corruption of foreign public officials) is ineffective; Transparency International reports that there is no significant decrease in corruption globally. Meanwhile, in the developing world, where “jobs are lives”, people are prevented from enjoying fulfillment of basic human rights, including jobs, primarily because the governments of these states remain corrupt. They deny entry of companies unless they are willing to pay bribes. Thus, the people are punished twice, firstly by enduring the problems related to corruption by their government, and secondly by being denied human rights to development because of that same government.

The article demonstrates that capitalism and free enterprise provide a way forward on this problem. The article focuses on mining companies, because by obtaining “social licence to operate,” they provide enormous human rights benefits, with particular emphasis on jobs.

While mining companies can help to provide human rights to the people of a developing state, they dare not because bribe demands are usually made by the host state government in order to permit them to enter. Paying the bribe is a criminal offence in most states.

The article proposes that systems be implemented at the domestic level whereby the home state can absolve the company from any liability under anti-corruption law if the government is satisfied that there is sufficient human rights benefit to the host state. This would entail annual monitoring to ensure that the company is complying with obligations imposed on it by the home state as a condition of approval.

It then moves on to suggest that an international tribunal be established for this purpose in the near future.

One of the benefits of this proposal is that through this process, a spotlight will be shone on governments that demand bribes and hopefully this will result in the reduction of corruption globally faster than relying on the current processes.

Keywords: corruption, human rights, capitalism, mining companies, social licence to operate

JEL Classification: K2, K20, K33, K4, M1, M16, M48, F02, F2, F23