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Professor Susan Rose-Ackerman Opens “In the Company of Scholars” Series

Susan Rose-Ackerman (Ph.D. ‘70 Economics), the Henry R. Luce Professor of Jurisprudence at Yale Law School and Professor of Political Science, gave this year’s first “In the Company of Scholars” lecture on October 31, 2006.  The lecture, on “Corruption and Democratic Transitions,” was the first of four in the current Dean’s Lecture Series.

Rose-Ackerman has written extensively on the topic in recent books, including Corruption and Government: Causes, Consequences and Reform, and From Elections to Democracy: Building Accountable Government in Hungary and Poland. She has been a fellow at the Center for Advanced Study in the Behavioral Sciences and at Collegium Budapest, where she co-directs a project titled “Honesty and Trust in Post-Socialist Societies.”

The following are excerpts from Rose-Ackerman’s talk, as printed in the December 2006 Yale Graduate School Newsletter: 

“I’m interested in studying corruption in developing countries and in countries making the transition to democracy, without forgetting that this is a problem that occurs elsewhere, including in the state of Connecticut. Those managing transitions to democracy have often emphasized electoral systems, and rightly so, but have put less emphasis on democratic accountability and legitimacy and on the way policy is made inside the government. Elections alone are not sufficient.

 “Corruption can be defined in many ways, but I use it to mean the misuse of political power for private or political gains by officials, firms and individuals. I’m particularly talking about bribery, fraud, conflicts of interest, and illegal campaign contributions….

“You have to be opportunistic to do empirical work in the field of corruption studies. You can look for situations where there are two sets of books to compare or surveys from which you can deduce something useful. You can’t measure corruption directly, but you can infer that if public works are inefficient, funding is probably going into various pockets, both public officials and private firms, instead of into actual physical improvements....

 “There is a good deal of research on the consequences of corruption. Measuring the size of bribes is not a good way to determine their impact. The bribe itself is just a transfer from one pocket to another, but what you really want to know is what the bribe is buying. For example, bribes might buy an inefficient distribution of the benefits of a public program, or benefits might go to people who don’t deserve them. Bribes give officials incentives to create extra red tape so that people will have to pay more bribes to get around these restrictions. Bribes may lead government to spend too much on procurement or to give out concessions at too low a price. On the private side, corruption increases the cost of doing business and can limit competition. On the public side, it devalues the legitimacy of the state.

 “During transitions to democracy, the incentives for corruption change. In an autocratic state, corruption may be a way of getting around oppressive and rigid rules. Take the former Soviet bloc, for example, with their centrally planned economies. People paid bribes to soften the rules that were supposed to govern the economy. When that system broke down during a transition period, suddenly there was a very different set of incentives for corruption that didn’t come from excessive rigidity, but from excessive fluidity. No one knew quite what the rules were supposed to be, so people paid bribes in their scramble to live and to get some advantage out of the shifting situation. In the long term, corruption shows up in all democracies and market systems as a way around some of the uncertainties of the system and a way of taking advantage of those uncertainties. The important issue is how democratic institutions can check or constrain corruption.…

“There’s a happy story: elections act as a check on corruption. Officials can be punished by voters, if the system gets too corrupt. On the other side, candidates and parties need funds to contest elections, which can encourage quid pro quo arrangements. An important issue that every democracy has to face is how to regulate campaign finance. What is going to be called corrupt under the law, and what is going to be the perfectly legal transfer of money to candidates? In new democracies, relationships between individuals and officials may be carried over from the past system into the present, in a way that leads people to expect their votes to be bought….

 “One interesting questions is whether the form of a democracy has an impact on the level of corruption. This is a vexed and complicated issue. In joint work with a graduate student, we found that presidential systems were more corrupt than non-presidential systems. Systems with proportional representation (in other words, people vote for political parties, not individuals, and the seats in the legislature are distributed in proportion to the way in which people voted) are also more corrupt. Strong party systems offer very little incentive for party members to challenge the person at the top, because the leader is in charge of where they are on the party list. The most important thing that we found is that the mixture of a presidential system and proportional representation was particularly subject to corruption. In that situation, the president is in control of many things of value to society; political parties are relatively strong organizations; there is weak monitoring of individual candidates, and people don’t have someone who is accountable to them as their representative.…

“Beyond elections and the regulation of campaign finance, new democracies need to consider other institutional and legal reform. These include conflict-of-interest rules, a freedom of information law, routes for citizen complaints and participation in policy, streamlined procedures for nongovernmental organizations to register and raise funds, and a legal system that protects and perhaps rewards those who “blow the whistle” on corrupt practices. Finally, however, efforts to limit corruption will be counter-productive unless the legal system provides a way for people to defend themselves against false accusations of corruption and malfeasance. Otherwise, the temptation will be great for politicians to use the club of a corruption investigation to neutralize their political opponents.”