Institutionalized corruption: Is corruption inbred in the "kleptocratic" state?

Pages286-288

Page 286

Corruption is widely viewed as individual acts that undermine the efficient functioning of a society. In a paper originally presented to the Conference of the International Society for New Institutional Economics and recently released as an IMF Working Paper, Joshua Charap of the IMF African Department and Christian Harm of the University of Münster challenge this view. Their paper, Institutionalized Corruption and the Kleptocratic State, argues that corruption is an integral part of the political system from which it springs. Their study focuses on the organization and activities of the rudimentary state that emerges from anarchy and examines the role of the bureaucracy and corruption in that state. While the predatory nature of the rudimentary state's hierarchy may be alarming, Charap and Harm suggest that anticorruption efforts may do more to destabilize the country than address the roots of corruption.

IMF Survey: Corruption is commonly viewed as an aberration, but your work takes an entirely different view. What is your theory?

Charap and Harm: In this paper, we have tried to explain social aggregation. We have started from the most primitive state and asked how a structure evolves from pure anarchy. Much of the economics literature assumes-magically-the existence of some mechanism to enforce property rights. Thus, the literature discusses economic behavior under a rule of law.

We have tried to start from an earlier point in evolution. Let's say we have a society in which some people are farmers, but others decide to steal grain rather than raise it: the Hobbesian "Each against all." We argue that the first step of societal evolution is the creation of gangs and mafias. We look at the preferences and choices made by gang leaders and the trade-offs these leaders face in balancing the risk of "palace" (those within their gang) and "peasant" (everyone else) coups. We asked how they weigh their "take"-the amount they will extract from their populace. And we looked at their sharing rules-that is, what the leaders will share with other members.

Taking the logic of a mafia or a predatory gang forward, we try to explain how that gang takes the next step and what happens when two gangs come into conflict with each other. We argue that it is optimal for the winning gang to subjugate-not exterminate-the losing gang. If this gang expands its territory by subjugating other gangs, it eventually reaches an optimal hierarchy that is...

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