Corruption and the New Ethical Infrastructure of Capitalism
Arista Maria Cirtautas

Consistent with the recent recognition by international organizations, such as the IMF and World Bank, that markets without states will not function properly, increasing attention is now paid by these bodies to substantive questions of "good governance." As an overarching concept, "good governance" focuses not only on the appropriate parameters of liberal capitalist institution building but also on the standards of appropriate conduct within these institutions. Accordingly, the international development community is devoting ever more rhetoric and resources to the problem of corruption, given the extent to which corrupt practices can subvert the formal institution-building process by undermining professionalism, administrative efficacy, and, ultimately, democratic legitimacy. Moreover, corruption, as the OECD secretary-general noted in 1996, "fosters criminal elements; wastes public resources; slows economic development; distorts trade." All of which represent a "problem for established democracies as well as new democracies" (quoted by Bart Edes, in "Ethics in Government Gains Higher Profile," Public Management Forum 2, no. 5 [1996]).

Although the local costs of corruption were presumably just as onerous in the days of the Duvaliers and the Idi Amins, if not more so considering the violence of such regimes, the end of the Cold War and the integrative dynamics of globalization have created new and different conditions and contexts. In a contemporary milieu, the corrosive effects of corruption are even less palatable to international organizations precisely because they are less containable. As a consequence, and in response to the interdependent dimensions of the problem, the "fight against bribery and corruption," as the OECD puts it, has assumed global proportions. The campaign extends beyond the organization's own 1999 Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, to include efforts undertaken by the European Union, the Council of Europe, the Organization of American States, the IMF, the World Bank, the World Trade Organization, the United Nations, the International Labor Organization, and even the Open Society Institute (OECD, Observer, September 2000). Extensive monitoring and training programs have been established under the auspices of these organizations to promote public-administration reforms, strengthen control mechanisms, and, most importantly perhaps, to educate both elites and publics in affected countries that the "cancer of corruption," as it was described by World Bank President James D. Wolfensohn in his 1996 annual-meeting address, is a serious matter.

An impressive, almost missionary effort, in the form of anticorruption campaigns and international conventions, is underway to convert the hearts and minds of people around the world to a universal set of norms and principles defining ethical and professional public conduct. While the international organizations promoting this new "climate of civic responsibility and ethics" (World Bank, Warsaw Office, Corruption in Poland: Review of Priority Areas and Proposals for Action [October 1999], p. 6) are often supported locally by concerned citizens and public officials, it is clear that the heavily promoted, supposedly universal standards, derived mainly from idealized Western standards, are meant to supersede completely local customs and practices. The OECD Convention, for example, states that bribery is an offense regardless of the "value of the advantage, its results, perceptions of local custom, the tolerance of such payments by local authorities, or the alleged necessity of the payment." Even seemingly harmless "common practices, such as gift-giving to employers, superiors, et al., in positions of influence, are inherently inimical to procedures such as formal tendering" (Edes). In order to reject such customs and common practices, otherwise unconcerned local elites and publics must be convinced not only of the desirability and propriety of alternate customs and practices, derived from the "universal" standard of public conduct but also that they are capable of implementation.

Perhaps nowhere is this internationally orchestrated "clean hands" campaign more evident than in the efforts to combat corruption in Eastern Europe and the former Soviet Union. Due to geographic proximity and growing economic interdependence, not to mention pending European Union membership for at least four or five countries in the region (Poland, Hungary, the Czech Republic, Estonia, and Slovenia, the likely candidates), the dangers posed by the "contagion of corruption" (Edes) have spurred Western efforts to promote anticorruption measures throughout the region. Since these measures have not yet met with overwhelming success, the European Union, as the most concerned Western organization, continues to voice its reservations, most recently in the annual progress report (http://europa.eu.int/comm/ enlargement) for candidate countries published in November 2000:

Apparently, not even the inducements of EU membership have constrained the spread of corruption, a point echoed by a recent World Bank report that also found top candidate countries like Poland experiencing rising, as opposed to falling, rates of corruption (World Bank, Anticorruption in Transition: A Contribution to the Policy Debate [2000]). Given the attention focused on this "fight against corruption," especially in Eastern Europe, and the orchestrated international effort behind it, how can the ongoing failures be explained?

Most obviously, one may blame the vested interests local politicians and civil servants have in resisting the anticorruption measures, which would reduce their opportunities for graft and rent-seeking. This is clearly the answer favored by many Western experts and advisers who bemoan the lack of political will in the transition countries (see, for example, the various World Bank reports). Additionally, one could point to the resiliency of the customary practices of local communities where corruption functions not just as an instrument of exclusion and privilege but also as a mechanism of individual survival and resistance to imposed rules of conduct. Just as the United States' war against drugs, so called, has run aground, in part, over the intransigence of drug-producing communities, whose livelihood depends on the drug trade, so, too, the fight against corruption will be resisted not just by corrupt elites, but by ordinary people. The latter might realize the problematic nature of their conduct but may still depend on corrupt practices simply to get by. While both explanations are doubtlessly relevant, a third factor may also provide some insight into why Western anticorruption campaigns have not been as efficacious as hoped in Eastern Europe and elsewhere. Along with the practices and vested interests of the targeted populations, it could well be that the paradoxes and inconsistencies of the anticorruption efforts themselves have also served to diminish their impact.

At first glance the current campaign appears quite comprehensive and well laid out. For example, having learned from the mistakes of the past, international organizations are now quite cognizant of the need to bring civil society into the campaign against corruption rather than relying solely on elites who can too readily bend anticorruption campaigns to their own purposes. Accordingly, organizations from the World Bank to the OECD and the European Union are all in agreement that "as stakeholders in the quality of governance and as intermediaries for communication between the populace and the institutions of the state, the organizations that comprise civil society can be essential in constraining corruption" (Anticorruption in Transition, p. xxiii). On a similar note, the World Bank's report on Poland concludes that the assistance of civil society is essential in establishing "priorities and modes of operation. And it will also be important to tackle public apathy if anti-corruption efforts are to have any credibility and command the support they need to be successful" (Corruption in Poland, p. 30). In building anticorruption coalitions, international advisers are energetically pursuing-as necessary and desirable- partnerships with civil-society organizations. These relationships are regarded as crucial, not just for the constructive synergy that can result from state-society interactions but because the widely recognized public apathy, especially in Eastern Europe, regarding these matters represents a formidable stumbling block.

In addition to engaging the social dimension, international anticorruption strategies have also become more multifaceted, going beyond legal and technical enforcement mechanisms in the attempt to create a culture of rectitude and "integrity-based ethics management" (Janos Bertok, "Ethics Management Calls for Balanced Approach," Public Management Forum 4, no. 1 [1998], p.1). Bertok elaborates: the "starting point" in this effort is the need to redefine "ethical principles and standards to reflect modern principles of democratic governance, and the citizens' expectations" (ibid). This view is entirely consistent with the OECD's position that "public ethics are a prerequisite to, and underpin, public trust and are a keystone of good governance" (OECD, Observer, September 2000, p. 6). Through legislation and professionalization programs, the international community hopes to change not just the institutionalized incentives that facilitate corruption but also the "ethics infrastructure," that is, values and orientation of elites and publics. Remarkably, nothing less than a fundamental "human transformation" appears to be at stake, one in which "cultures of hypocrisy" are to be transformed into cultures of probity and professionalism (Corruption in Poland, p. 6). Perhaps realizing that markets require not just states but also civilized conduct and, in Burkean terms, the prior existence of "manners" and the "natural protecting principles" grounded in the "spirit of a gentleman" (quoted in Albert O. Hirschman, Rival Views of Market Society [Viking, 1986], p. 43), the international community is now intent on promoting such apparently indispensable "protecting principles" as public duty and professional calling.

Nonetheless, it must be said that, while more encompassing and ambitious than past anticorruption efforts, the current campaign is flawed in both design and implementation. At the most obvious level, of course, both design and implementation are immediately subverted by the obvious double standard: whereas Western states are simply invited to overhaul their fundamentally sound systems of governance, East European states, by contrast, are told they must engage in substantive reforms as a condition of membership in the Western club as represented, for example, by the European Union. Qualitative differences in governance certainly exist between Eastern and Western Europe, but given the recent, very public, problems of corruption in Italy, France, Germany, and the European Union itself, not to mention the atmosphere of electoral fraud and disenfranchisement surrounding the last American presidential election, greater attention could be devoted to the shared problems of political corruption and weakened democratic legitimacy. Otherwise, the East European public is likely to be amused but hardly converted by the blatant hypocrisy of Western anticorruption pronouncements. One need only recall the spectacle of Microsoft sponsoring a self-serving "clean hands" campaign in the Czech Republic while facing antitrust charges at home, to realize the fragile basis upon which the hoped for human transformation rests.

A less obvious, but critical, inconsistency in the design of the international anticorruption undertaking is the disjuncture between the stated intention of involving society at large in the effort and the continued emphasis on the role of elites. For example, the transition from the vicious circle of monopolistic rent-seeking, "in which pervasive corruption reduces public revenues, undermines public trust, and weakens the credibility of the state," to the virtuous circle of diminished control rights and limited discretion, transparency and accountability, is assumed to rest almost entirely on the shoulders of "decisive political leadership" capable of pushing through the necessary reforms (Anticorruption in Transition, p. xiv). Since these same political leaders remain located within the unreformed structures highly conducive to corruption, it is, of course, not surprising that the required anticorruption leadership has not been forthcoming in Eastern Europe. Even in a country like Poland, where the media and the public are quite well informed about the existing levels of corruption and where every effort is being made to pass all of the right laws mandated by the international community, the World Bank is still waiting for "decisive" leadership to move beyond formal compliance to a substantive transformation of the system of governance.

Rather than waiting for a deus ex machina committed to battling corruption from the top down, it might be more profitable to focus on bottom-up, socially integrated solutions capable of altering the overall public environment in which elites operate and to which they are accountable. In this connection, Judith Tendler's Good Government in the Tropics (Johns Hopkins University Press, 1997) offers a useful template. Based on case studies of reforms in Ceara, Brazil, her findings show that a tripartite relationship between central and local governments and community- based civil-society actors can, under conditions of mutual interdependence, generate heightened expectations of government performance as well as an increased desire on the part of public servants to meet those expectations. Specifically, her cases reveal

What the central government accomplished in Ceara, international organizations might be able to accomplish in Eastern Europe if they were to focus their efforts less on elites and more on engaging the communities of citizens directly. This type of engagement with social actors, however, would have to be sensitive to prevailing public opinion in Eastern Europe regarding politicians and state administration in general. For the most part, there appears to be a consensus that public officials will always steal, but, at the same time, they should also keep such activities within certain rules or boundaries. Under these conditions, the zerotolerance anticorruption campaign favored by international organizations is likely to be deemed unrealistic, if not hopelessly naive and needlessly rigid. Even if it is true that "low pay is no excuse for illegal or unethical behavior," as the OECD's elaboration of an "ethical infrastructure" asserts, populations facing a struggle for survival are unlikely to be sympathetic to such puritan pronouncements (www.oecd.org/ puma/ethics/infras.htm). It follows that the focus should shift, instead, to provoking a public discussion of what exactly should constitute the self-limiting rules and boundaries in any given institutional setting.

From a sociological perspective, corruption can be analyzed not just in terms of an unethical or criminal use of public office for private gain but also in terms of the bonds of reciprocity and interdependence that structure the interactions between elites and the public. If significant groups in a given society believe a breakdown in these bonds has occurred and that restoring relationships of respect and trust are vital to the stability of government, then international efforts could usefully be directed toward helping to reestablish such bonds. It must be accepted that these will vary from case to case, and, more to the point, will no doubt, deviate from idealized Western standards. If, on the other hand, local social networks are seen as adequate or necessary guarantors of community survival, they are unlikely to be amenable to reform, no matter how corrupt they are deemed by outside observers. Anticorruption campaigns must, therefore, genuinely resonate with local community concerns regarding the extent to which the norms and practices of reciprocity have eroded, thereby posing a threat to the community's very endurance. By tapping into the values of the local "moral economy," anticorruption campaigns could well succeed in diminishing truly harmful corrupt practices over time. This might not occur in the revolutionary led-from-above sense envisioned by today's advisers; but amelioration as an evolutionary development, predicated on social-as opposed to purely political or sweeping cultural- transformations might very well come about.

It seems unlikely, however, that the latest reform trends will allow for a true integration of the social aspects of corruption reform into ongoing policies. The implementation of recent anticorruption measures suggests, in fact, a narrowing of the campaign parameters, aimed chiefly at regulating and controlling the behavior of key elites, especially those that will manage EU funds. This would suggest a corresponding diminishment of the broader emphasis on civil-society partnerships and the development of the overarching ethical infrastructures as envisioned in advisory reports and documents.

Most notable in this regard is the OECD-EU shift in focus toward the development of financial control mechanisms, such as auditing and financial management. SIGMA, the joint OECD-EU program of Support for Improvement in Governance and Management in Central and East European Countries, has been ordered by the EU Commission to curtail and streamline its projects in Eastern Europe. According to Matthias Ruete, Director of Phare, Directorate General for Enlargement, as of 2001,

Because the EU's Phare programs for civilsociety development in Eastern Europe had earlier come under critical scrutiny and been subjected to budget cuts, the EU's capacity and will to develop state-society partnerships evidently have been curtailed, especially in the most ostensibly developed East European countries. Instead, as the date of enlargement draws nearer, concern has shifted toward establishing the proper "control environment" in the leading candidate countries in order to promote sound financial management via internal supervisory and auditing procedures. The practical need for such management techniques is evident given the imminent disbursement of EU cohesion and structural funds. However, in narrowing the focus of anticorruption efforts to control mechanisms, there is a danger of establishing a plethora of rules, accounting procedures, and surveillance techniques that will further undermine administrative efficacy as well as generating low morale throughout the targeted bureaucracies. As Frank Anechiarico and James Jacobs warn in their case study of corruption controls in New York City, the "pursuit of absolute integrity" can come at a high price (see their The Pursuit of Absolute Integrity [University of Chicago Press, 1996]). While, in general, the authors are in favor of auditing and accounting mechanisms, they do warn of a likely negative impact when "auditing entities proliferate and carry out multiple audits of the same agency" or when "auditors feel compelled to challenge administrative practice" (p. 201). Since the EU obviously has an interest in insisting on maximum rather than optimal control of the funds given to East European member states, these problems are indeed likely to arise.

The narrowing of the EU's focus to civil service reform may pose additional dangers if the outcome is the creation of closed mandarin-like elites with greater accountability to the EU than to their own citizens. We have already seen the extent to which NGOs in the region can become more accountable to international donors and supporters than to their own communities. Teaching professionalism to East European elites in Brussels and elsewhere in Western Europe or training them in the "twinning" procedures established to provide East European administrators with West European advisers and partners will, no doubt, enhance efficiency and promote merit-based appointments. But whether this type of training will result in administrators responsive to the needs of their citizens is doubtful in the absence of parallel funds and attention paid to the development of social actors who can demand responsiveness. In remaking local elites in their own idealized image, Western organizations may well be forging bonds of respect and trust between international and national elites, which will help to contain the "contagion of corruption." But if this protective firewall for the West comes at the expense of reinforcing the moat that already divides postcommunist politicians and civil servants from their own populations, the social cost in Eastern Europe will be immeasurable.

Although the framers and proponents of the current anticorruption campaign intend to create universal "ethical infrastructure," which applies to all sectors of society, the conduct of the campaign itself ultimately seems to reflect some patterns characteristic of contemporary capitalist development. For example, as Zygmunt Bauman eloquently points out, for the first time in human history, the poor "have lost their social use" in that "they are not the vehicle of personal repentance and salvation; they are not the hewers of wood and drawers of water, who feed and defend; they are not the 'reserve army of labor,' nor the flesh and bones of military power either; and most certainly they are not the consumers who will provide the effective 'market clearing' demand and start-up recovery" (quoted by Douglas Holmes, in Integral Europe [Princeton, 2000], p. 11). In the context of market reforms in Eastern Europe, to the poor-the "truly useless and redundant" identified by Bauman-one can add the economically unproductive and unreconstructed older generations and social groups that are deemed to belong to the past and contribute nothing to the future.

Given the logic of marketization and the conditions of European Union membership, neither East European governments nor the European Union are likely to have an abiding interest in promoting social activism among the "useless and redundant" groups that might contest these larger processes. Under these conditions, the anticorruption campaign naturally and inevitably becomes a narrower, elite-oriented undertaking. Ironically, just as the theoretical realization is growing that states can positively interact with their societies, in order to promote social activism across all strata (see, for example, Theda Skocpol et al., "A Nation of Organizers: The Institutional Origins of Civic Voluntarism in the United States," American Political Science Review 94, no. 3 [September 2000]), both the means and the desire to sustain such partnerships are diminishing under the weight of new economic realities. Against the force of these realities, if an ethical infrastructure is indeed to be developed to temper and civilize the global market, international organizations, including the European Union, will have to go well beyond their current anticorruption efforts.

Arista Maria Cirtautas is assistant professor of government and foreign affairs at the University of Virginia.