Corruption and the Social Contract of the Welfare State

New research shows that issues related to various forms of malpractice in the implementation of social policies have a huge impact on the possibility of gaining citizens’ support for social policies. While the extension of social policies in different countries can be explained by referring to variation in political mobilization, there is also an argument for understanding this from a social contract approach. Even if a majority of citizens understand that they stand to gain from a more universal and encompassing system for social protection, a lack of trust may prevent them from transforming the demand to actual political support for such a system. Lastly, a universal and encompassing system is likely to have a positive effect on the general level of social trust and creates a sense of loyalty towards the state, which in turn is likely to lower the inclination to take part in corrupt exchanges.

Auditing, Trust, and the Social Contract

The relationship between trust and auditing can be described as a paradox. In the social contract that forms the basis of modern societies, extensive trust issues arise. How can citizens trust that what is promised in the contract will also be provided? Elections should work to put politicians who do not deliver according to the social contract to be voted out of their position. Empirical research shows that this often does not work, hence the need for an auditing body. Empirical results have shown that national auditing institutions work towards reducing corruption and other forms of malfeasance, and are thereby vital to creating a working social contract. A high-quality system for auditing also has a much stronger effect on reducing corruption than is the case for democracy. Auditing turns out to be an undervalued instrument that not only complements but in some ways proves even more effective than representative democracy.

Getting to Sweden I

How and why some countries were able to make the historical transition from a patrimonial, nepotistic, and corrupt bureaucracy to a relatively clean and professionalized one is still an understudied topic in the literature on corruption. This chapter presents original data on such a transition in the case of Sweden, drawing on court hearings of cases of malfeasance among public officials in the period 1720–1850. An important explanation for why the Swedish bureaucracy was able to break out of the collective action trap of corruption relates to Charles Tilly’s theory of the importance of war for state making. This chapter pinpoints the importance of having lost a significant war—in the Swedish case, the war against Russia in 1808–9—and the constitutional and regime changes this set in motion. Drawing on comparative data on malfeasance, the similarities in this regard between the Swedish and Danish cases are highlighted.

A New Strategy for Anti-Corruption

Corruption in its various forms has turned out to be a resilient, sometimes well-organized, and well-entrenched enemy. It is difficult to trace any major results from the “good governance” programs the World Bank and other organizations have launched since the mid-1990s, the bulk of which have almost exclusively been guided by an economic approach called “the principal-agent” theory. It is argued that this theory is particularly ill-suited to the corruption problem. An alternative theory is presented based on the social contract tradition in political philosophy. This implies that corruption should be understood as a problem of collective actions which leads to very different policy recommendations for how countries can get corruption under control. The corruption problem is neither based in the historically inherited culture of a society, nor its legal system. Instead, most of the problem of corruption exists in what in organizations theory is known as “standard operating procedures.”

Gender Equality, Impartiality, and Meritocracy

A substantial number of studies show that increased gender equality is one important factor behind getting corruption under control. Men are hugely overrepresented in serious criminality and since most corruption is illegal, we should expect the same gender bias in this area. Also, impartiality in the exercise of public power has a powerful effect on lowering corruption and meritocracy and gender equality will increase competence in the public administration. This implies that there is a causal link between impartiality, gender equality, and control of corruption. Going from these results to policy recommendations is fraught with many difficulties. One is how to handle problems of legitimacy in the implementation process for various forms of preferential treatment of discriminated groups. Meritocracy may be far from an ideal solution for lowering corruption and thereby promoting human wellbeing, but it may be the least bad of existing alternatives.

The Social Contract and the Indirect Approach to Anti-Corruption

We have to find some compromise between extreme contextualism and complete universalism. We cannot operate with one theory of corruption per country, or region, or village, or “one-size-fits-all” approaches. General knowledge that is useful for anti-corruption policies must be applied according to the specific circumstances in each case. The social contract approach necessitates a dialogue between those who are doing basic research and those who are area or country specialists. Taking inspiration from military theorist Basil Liddell Hart’s indirect approach strategy, it is argued that decision makers should focus on policies that can change the basic social contract, instead of relying solely on measures that are intended to change incentives for corrupt actors. The indirect approach does not emphasize any single instrument, instead, the means depend on the case at hand. The main goal for the indirect approach is to change the opponent’s psychological willingness to resist change.

Religion, Corruption, and the Social Contract

Religion is one of the most commonly cited explanations for cross-country variation in corruption. In particular, Protestantism, and the cultural values that follow from its doctrine, has been identified as particularly beneficial for getting corruption under control. Nevertheless, micro-level studies provide little evidence for religion producing norms and values conducive to good institutions. An alternate explanation for the observed macro-level variation is presented in this chapter, namely the historical systems for financing religious practices. The medieval parish system in Northwestern Europe, where members collectively paid for and administrated religious services as public goods, is compared with the Ottoman Empire, where such goods were normally provided through endowments from private individuals and tax collection was comparatively privatized. It is shown that these different systems can be seen as two very different social contracts that have had long-lasting implications for accountability, transparency, and representation.

Universal Education

Widespread education has been linked to lower levels of corruption. This chapter shows a surprisingly strong correlation between levels of mass education in 1870 and corruption levels in 2010 for 78 countries. This correlation remains strong when controlling for change in the level of education, GDP/capita, and democracy. A model for the causal mechanism between universal education and control of corruption is presented. Firstly, societies with more equal education gave citizens more opportunities and power for opposing corruption. Secondly, universal education leads to other factors that seem to promote decreased corruption, such as a high level of generalized trust, and a sense nationalism leading people to identify with an entire country rather than with specific sects, clans, or ethnic/religious groups. Thirdly, losing wars seem to have led elites to strive for increased state capacity and was a strong motivation for the introduction of universal education in many countries.

Getting to Sweden II

Issues about corruption and other forms of bad government have become central in the social sciences. An unresolved question is how countries can solve the issue of transformation from systemic corruption to the quality of government. Based on Elinor Ostrom’s theory of common pool resource appropriation, a new theoretical model for explaining this type of institutional change is developed. Sweden during the nineteenth century is used as an illustration by showing how the country made a transition from being largely patrimonial, nepotistic, and corrupt to a modern, Weberian, efficient, and impartial state structure. In addition to the “national trauma” of losing a major war, this chapter stresses the importance of three additional factors in Sweden: previous changes in courts and the legal system; recognition of the problem by the main contemporary political actors; and the new liberal ideology that made an important impact on the Swedish political scene.