CORRUPTION - 1

CORRUPTION

CORRUPTION IS an ancient problem. In a
treatise on public administration dating
back to the fourth century B.C. in India, Kautiliya
writes in his Arthasastra:
Just as it is impossible not to taste the honey
(or the poison) that finds itself at the tip of
the tongue, so it is impossible for a government
servant not to eat up, at least, a bit of
the king’s revenue. Just as fish moving under
water cannot possibly be found out either as
drinking or not drinking water, so government
servants employed in the government
work cannot be found out (while) taking
money (for themselves). (R. P. Kangle 1972,
p. 91)


In a passage of characteristically remarkable
precision Kautiliya states that
there are “forty ways of embezzlement”
and then goes on to enumerate these
ways.
While corruption in one form or another
has always been with us, it has
had variegated incidence in different
times at different places, with varying
degrees of damaging consequences.
While the tenacity with which it tends
to persist in some cases easily leads to
despair and resignation on the part of
those who are concerned about it, there
can be and have been ways in which a
whole range of policy measures make a
significant dent. In this paper, we start
with a discussion of some of the alternative
denotations of the problem of corruption;
we then consider the ways in
which the damaging consequences of
corruption operate in the economy,
while not ignoring its possible redeeming
features in some cases; we pursue
the question of why corruption is perceptibly
so different in different societies;
and finally, we examine the feasible
policy issues that arise. Our
approach in this paper is primarily analytical
and speculative, given the inherent
difficulties of collecting (and hence
the nonexistence of) good empirical
data on the subject of corruption; we
refer in the Appendix to some subjective
ordinal rankings of countries in
terms of corruption that are available in
the international media, for whatever
they are worth.
In common usage the word “corruption”
is used to mean different things in
different contexts. Even if we choose to
confine ourselves only to the economic

context, staying away, for example, from
related issues of political corruption
(i.e., where the ill-gotten gains are primarily
in terms of political power),
there are alternative denotations of economic
corruption. In a majority of cases
such corruption ordinarily refers to the
use of public office for private gains,
where an official (the agent) entrusted
with carrying out a task by the public
(the principal) engages in some sort of
malfeasance for private enrichment
which is difficult to monitor for the
principal. There are, of course, many
everyday cases of other kinds of corruption
some of which may take place entirely
in the private sector. For example,
a private seller sometimes rations
the supply of a scarce good (instead of
using the price mechanism to clear the
market), and we use various ways of
bribing him or an agent to jump the
queue (paying a higher price to a
“scalper” for a sold-out theater show or
a game, tipping a “bouncer” for entry
into a crowded nightclub, using “connections,”
i.e., some form of longrun
gift exchange, to get a job, and so
on).