Corruption as an Institution: Rethinking the Nature and Origins of the Grabbing Hand

Abstract

The predominant view of corruption within political science and economics today is the principal-agent model. Corruption is modeled as criminal behavior on behalf of some agents entrusted to act on the behalf of some principals. According to this view the criminal behaviour of corruption could be made to disappear by fixing the incentive structure or the institutional setting. The purpose of this paper is to question this way of conceptualizing endemic corruption. By modelling corruption as an institution in itself, rather than as some form of illicit behaviour, both the causes and consequences of corruption appear in a different light. Most importantly, whereas the principal-agent model stresses a vertical dimension of conflict produced by and reproducing corruption, that between rulers and ruled or electors and elected, an institutional view of corruption instead stresses horizontal conflicts between different sectors of society which may benefit or loose from corruption. An application of this perspective is sketched in which corruption is seen as a regressive tax, which opens up for applying a set of theoretical models of distributional conflict to the study of corruption in relation to economic inequality and democracy.