This article first appeared in Forum, The Edge Malaysia Weekly on September 5, 2022 - September 11, 2022

The causes and consequences of corruption, maladministration and ethical lapses are complex, but not less deleterious for the way that they undermine cohesion and stability, erode trust in the state and society and retard economic expansion. At the base of these problems is the permissibility of corruption, which is arguably worse than corruption itself. This permissibility is usually driven by emulation, and the manipulation of identity politics for personal or in-group gain.

Strict economistic explanations of rent-seeking or market distortion are all well and good if one considers “the economy” as something disembedded from society, and if economic rationalism was the only way to understand or explain the world. There is a whole body of work by economists on the topic. The one example that readily comes to mind is Gary Becker’s argument that the economic approach can provide “a unified framework for understanding all human behaviour”.

Becker’s postulate is philosophically, theoretically and methodologically problematic — never mind the challenges of public policymaking in dynamic and diverse societies … That’s a discussion for another time. 

Orthodox economics can only imagine explaining the totality of human endeavour, an imaginary construct shaped by a belief that economics is a science, like physics. This physics envy is influenced by a cognate belief that it is possible to build models that are as predictive as those in physics and has, in turn, created a false sense of mathematical precision in the field. The beauty of models cannot be mistaken for truth, as Paul Krugman wrote after the most recent crisis of global capitalism in 2008. But let’s set orthodox economics aside. 

The problem of corruption is fundamentally social in the sense that it originates in society, and is rendered permissible by social relations, emboldened as it is by an often deep-seated sense of entitlement, exceptionalism, of insider-outsider politics as much as it is by greed, avarice and egregious lapses in ethical behaviour. Under such conditions, corruption becomes culturally assimilated and considered as normal, and part of widespread behaviour. 

I always come back to my visits to southern Italy, especially Sicily, and the refrain, “tutti colpevoli, nessuno colpevole” (when everyone is guilty, then no one is guilty). Put another way: if you arrest one person for doing something wrong, you might as well arrest the entire village. This has to do with permissibility as much as it has to do with emulation which will be discussed below. Parenthetically, we should be clear that there is nothing intrinsically corrupt about Sicilians — or any racial, ethnic or religious group for that matter.

Speaking of Italy, the city state of Mediaeval Venice, which 500 years ago was the most powerful entity in the Mediterranean, was run by an oligarchy of aristocrats who were at the time fairly open to new ideas and people. Openness and competition made possible innovation, expanded economic and financial exchange, raised wealth and prosperity and expanded justice in La Serenissima (the serene). To understand the fall of Venice, if I may be so bold, we may want to look at the time when the elite became dominated by family ties, and shut out newcomers or “outsiders” from economic opportunities at the beginning of the 14th century.

The lesson here is that this type of enclosure of opportunities, access and limitation of competition effectively emboldens families and groups of people (“in”-groups based on ethnic, linguistic, tribal or any number of affiliations and solidarities) who imagine themselves entitled. This sense of entitlement has the power to render corruption of the in-group permissible.

One unintended consequence of in-group politics and enclosure is a type of emulative effect that ripples up and down and across families, communities and society. For instance, this emulation starts when children see what their parents do and then emulate them. If parents can get away with unethical behaviour, it becomes easy for children to test the boundaries of permissibility. When community leaders, prelates or educators act in shameful ways, their followers and students may believe that such conduct is permissible — and they, too, push the boundaries of good or ethical behaviour a little further. The same may be said about business people, politicians, elected leaders and public servants who pursue material gains unethically. They set examples for ordinary folk to emulate.

The basis of this permissibility of corruption and of emulation lies precisely in notions of exceptionalism, exclusivity or in tribal, racial, ethnic or religious solidarities. These solidarities have been on display in places like South Africa (the place where I was born and raised) where corruption led to a circling of wagons among those implicated in graft, and the indefensible becomes permissible — and everyone (in the in-group) wants a piece of the action, so to speak.

This permissibility, at least in South Africa, has its origins in the crude belief propagated by members of the ruling alliance (the African National Congress, South African Communist Party and the Congress of South African Trade Unions) that the struggle against apartheid was not a struggle “to be poor”, and that it was, now, “our turn to eat”. In fairness, this attitude gained momentum after the retirement of Nelson Mandela and is associated mainly with the rise of Jacob Zuma, when he was deputy president under Thabo Mbeki (Mandela’s successor). The hollowing out of the state began when Zuma became head of the ANC in December 2007, and eventually president of the country in 2009.

That was when the floodgates of corruption, maladministration, expanding patronage and nepotism were opened wide. The state had become hollowed out by what we came to know as State Capture; when a loose affiliation of friends of the ruling alliance, in some cases linked directly to Zuma, raided the country’s coffers and left the country on its knees.

By the time he left office, in February 2018, Zuma faced a range of charges; from bribery to fraud, racketeering and money laundering, and stood accused of turning the state into his personal piggy bank. Since his departure from the presidency, Zuma has managed to avoid imprisonment. In June 2021, he was sentenced to jail for 15 months for contempt of court after he ignored instructions to be part of a corruption inquiry. After he handed himself over to the authorities on July 7, his supporters, family and members of this ethnic group allegedly prompted what became the worst violence of the democratic era. He finagled his way out of spending time in jail on spurious claims of ill health. He remains free.

One way to understand the solid support Zuma enjoys is to recognise the way that identity politics is manipulated, how in-group members are considered to be inherently and eternally innocent, and how they deflect blame and responsibility by (among others) blaming “politicisation of the judiciary” or raising conspiracy theories. At the worst end of a spectrum of manipulation of identity politics is the scapegoating of “outsiders”. We should be clear, there is no harm in celebrating one’s heritage, religion, ethnicity or culture — with the caveat that culture is dynamic and changes over time — but when identity is used as a weapon, or as a fig leaf for misdeeds, it becomes a danger to society. Anyone who considers their own identity as superior, or inherently innocent, renders any wrongdoing (corruption) by in-group members as permissible. It is difficult for orthodox economics to explain the social and cultural permissibility of corruption.

Anyway, as the classical economist Alfred Marshall said late in the 19th century, after he moved away from mathematical formalism and became more interested in moral philosophy and ethics (I paraphrase): People in every era and every age should address their problems in their own ways and based on their own unique conditions. 

I assume he meant that societies differ across time and place, and that analyses of sometimes discrete social phenomena and practices (like corruption) may not always fit bog-standard economic models.

What we cannot escape is the deleterious effects of corruption across state, society and the political economy.

Dr Ismail Lagardien is a visiting professor in the Faculty of Management at Multimedia University. He was executive dean of Business and Economics Sciences at Nelson Mandela University, and worked in the Office of the Chief Economist of the World Bank.

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