WEEK ONE

Corruption affects us all and every day millions of people around the world protest against it.
What is corruption? How do we know it when we see it? This module is designed to give you
an understanding of both the definition and the key components of corruption. Youll learn
about the general and legal definitions of corruption, how to measure it using the Corruptions
Perceptions Index, examine the history of corruption and evaluate where corruption takes
place in the world. You'll also learn three major theories that attempt to explain the current
"Eruption in Corruption" we are facing today. By the end of this module, youll be able to
explain what corruption is, how it is measured, the costs of corruption, and how corruption
spreads so that you can begin identifying and measuring corruption where it affects you.

Learning Objectives

Define Corruption

Breakdown How Corruption is Measured

Explain How Corruption Spreads

INTRODUCTION

Hello, welcome to this course on Corruption, this is Week 1 Lecture 1. Today were going to
introduce ourselves to the subject of corruption. The outline of this course as follows, in Week
1 we're going to talk about what corruption ism what constitutes corruption. In Week 2, we're
going to talk about the large effects of corruption, the meta-effects, the effects at the level of
society. And in Week 3, we're going to go down to the micro-effects. The effects at the level of
the individual and of a business firm. And finally, in Week 4, we'll get to the subject that some
people find most interesting. And that's how do we control corruption? How can we try to
control this phenomenon.

Outline of course
What is corruption?
Societal level effects
Individual/firm level effects
Corruption control

Why study corruption?

This is why: people are tired of corruption. And not just in South Africa, where this picture was
taken.
In the last few days, 1,000 people have protested in the city square in Guatemala City,
Guatemala. Thousands of people have protested across Iraq. A million people in the last few
days, gathered to protest against corruption in Brazil. And millions of people have taken to the
streets to protest corruption in India. I don't know when you're watching this, obviously it's
being recorded at a different time than when you're actually watching it. But I am willing to bet
that whenever it is you're watching this, somewhere in the world, somewhere at this very
moment, a person, people are risking their lives to protest against corruption. They're standing
in the rain, they're standing in the snow, they're standing in the dark, they are standing under
the sun. They're willing to be beaten, they're willing to risk their jobs, they are willing to risk
everything, to protest against corruption. People are tired of corruption and it's not just people.

Governments are scrambling to try to understand how do we control corruption. How can they
deal with this problem? I'm really lucky, I get to work with some of these governments.
Governments that you might not suspect, governments of which you might be cynical, they
honestly and sincerely trying to understand how can we get a grip on this. How can we start to
control this phenomenon that our people despise and that's undercutting the viability of our
government and businesses, businesses all over the world.

Businesses are not blind to the costs imposed by corruption or to the popular discontent that is
engendered by corruption. And so, businesses are asking themselves, how is it that we can
control that employee, that agent, that representative of our firm who thinks they're taking
shortcut, who thinks they're doing something that will get them ahead or will get our firm ahead,
which is actually destroying the profitability, the viability and the reputation of our firm.

There are a lot of things that are really important in the world, a lot. And there are a number of
things that we need to understand to understand the world. But right now, it is impossible to
understand the world, to understand this world, as it is, without understanding corruption. I've
been studying corruption for 20 years, which is hard to believe. But my job for the next four
weeks is to take all the material that we know about corruption and try to condense it, try to
make it easy to understand. So that over the next four weeks we can all get a general
understanding of this phenomenon so that we can better understand the world.

If you're from the United States I also invite you to take a look at my Tedx talk. If you're not
from the United States it might not be very interesting so I'm not going to include it in the
sessions that we have together over the next four weeks. But if you are, I invite you to take a
look. The URL is right there. You can find it on TEDxPenn.
So corruption, critical in understanding the world. What we're going to do over the next four
weeks is get an overview of what corruption is, what it does and how to control it. Thank you,
and I really look forward to our time together.

Corruption
Critical in understanding the world
Overview of what it is, what it does,
and how to control it

What is corruption?
Hello, and welcome back. This is Week 1 Lecture 2 of our course on
corruption. Today what we're going to talk about is, what is corruption? Can
we find some kind of definition of corruption?

When we think about the word corruption in everyday parlance, in the way
people use it basically for time immemorial, it depicts a kind of
transformation of something from good, or functional, workable, working,
into bad, or not functioning, or not workable, or not good. From delicious apple to an apple that
doesn't look quite so delicious.

Now that's an old way of using the word

corruption but we still use it that way.
Today we don't really talk about apples
being corrupted, but we do talk about
files being corrupted, or hardware being
corrupted, or programs being corrupted.
We still think of corruption in that
particular way.

The problem with this kind of definition for people who are trying to study corruption or trying to
craft solutions to corruption, or dealing with corruption as a policy matter is that this definition is
just too general. It's too large, it's too big. Too many things fit within this definition. And there
may be hundreds, thousands of causes for things around the world becoming bad, people
becoming bad, systems becoming nonfunctional. So a definition like that really doesn't help us
understand a particular phenomenon and it doesn't help us craft solutions to that phenomenon.

Social scientists and policymakers have developed a general definition of corruption. When I
say general definition, I want to make sure that we understand it's different from a legal
definition. A legal definition has to be very precise, because it needs to inform an individual
about behaviors that they can and cannot engage in as well as let a person understand what
they need to defend themselves against, or let a government know what they, exactly, what
they need to prosecute. A general definition is just a shared understanding that's precise
enough to allow for meaningful conversation. And also precise enough to allow policymakers to
understand what it is they're trying to get at. And the definition that's been kind of created and a
consensus is built around over the last six years something is like this.

Abuse or misuse of power or trust for personal benefit,

rather than the reasons for which that power or trust was
given.
Okay, abuse or misuse of power or trust for personal benefit, rather than the reasons for which
that power or trust was given. Now even though this is a general definition and is meant to be
immediately useful, there's some parts of it I want to push down on a little bit. I want to look at
more closely. And the first of these is power or trust.

Power or trust can mean many kinds of things. It doesn't necessarily mean that a person is an
employee. It doesn't even necessarily mean that a person is paid. Some of the most important
people in policymaking are unpaid advisors, or unpaid monarchs, or people who are just very
influential. Power may reside in a clerk who has virtually no power other than the power to
stamp a document, or to issue a license. Power and trust may reside in a contracting agent
who isn't necessarily an employee of a firm, but who represents that firm, and who's entrusted
with contracting in the most advantageous way for a firm. So we think of power or trust broadly
and not necessarily an employee or a master.

Abuse or misuse is an interesting term because it has a very general meaning, but it's also
locally defined. What constitutes abuse or misuse in one place might not constitute abuse or
misuse in another place. For example, if, and this is a very large if, a country said in its laws it
is okay for a minister to take a bribe. Then in that particular country, and no country like this
exists in the world, it's very much a hypothetical, but in that particular country, taking a bribe
would not be abuse, or misuse of power. At a more realistic level, if a non profit organization,
that, say, trucked food to disaster areas, said to its volunteers, you have power and we've
entrusted you with these trucks. But you can use them for your own personal benefit when we
don't need them for disaster relief, then use of those trucks wouldn't be abuse or misuse. But
another organization that said you may not use these trucks for personal use, then use of
those trucks would be abuse or misuse. What I want you to understand is that abuse or
misuse, even though these are general terms, are really locally defined.

Finally, personal benefit rather than the reasons for which that power or trust was given. Older
definitions of corruption sometimes were so precisely written that using one's power or trust to
get paid in a normal way would have been considered corruption, and that clearly is not the
case. What we're talking about is personal benefit rather than the reasons for which power or
trust was given. And so let's go back to that contracting agent. The contracting agent takes a
kickback, all right. If the contracting agent gets a personal payment from a supplier, right, in
exchange for the contracting agent, contracting with that supplier. That's a personal benefit that
should have gone to the firm in the form of some kind of discount on that particular good or
service. But that contracting agent is taking it for herself instead of passing it on to the firm that
she represents. And that constitutes a personal benefit instead of the reason for which power
or trust was given.

So what we've got if we put all of these parts together is abuse or misuse of power or trust for
personal benefit, rather than the reasons for which power or trust was given. Most people,
when they hear or learn of this definition think right
away of bribery. But bribery is only one iteration of
this definition. A bribery of course consists of quid pro
quo, the explicit exchange of some kind of personal
benefit in exchange for the abuse or misuse of power,
all right. And we see bribery all over the world.

People like Michael Johnston, Susan Rose-Ackerman

have pointed out we often confuse bribery with the
larger definition of corruption. But there are more
kinds of corruption, there's more iterations of corruption.

Types of Corruption
Bribery
Extortion
Theft
Embezzlement
Nepotism
17

For example, extortion. Extortion occurs when someone who has the power says I'm going to
use this power to harm you, or I'm going to use this power to deny you something to which you
are entitled unless you give me a personal benefit.

Theft, theft's very common. That occurs when someone whose been entrusted with something,
or someone who has power over something takes it against the rules.

Embezzlement is very similar to theft, but embezzlement occurs when someone is acting within
the rules and still abuses their power or their trust to take something that they shouldn't have
taken.

And then of course there's nepotism. Nepotism is the most difficult of any of these iterations to
deal with. It's a little bit different than the rest. And nepotism consists of favoritism based on
affinity, rather than on merit. The most common form of nepotism, of course, is favoring one's
offspring or favoring one's relatives. But nepotism also occurs in other affined groups. Favoring
people that one went to school with, favoring people who are within the same political clan or
tribe. Nepotism is a little bit different because sometimes the damage that's caused by
nepotism, and there is damage caused by nepotism, is outweighed by the ease with which
transactions can occur because people are familiar with one another. Nonetheless it is
damaging and it is included in the iterations of corruption.

There's one other kind of corruption that's so important that we need to talk about it for just a
moment. Even though it falls outside of this definition and that kind of corruption is undue
influence.
 Undue Influence
Now undue influence doesn't necessarily involve an abuse of power directly for some kind of
personal benefit. But undue influence still is considered by most people in the world to be
corrupt. An undue influence occurs when a person, through some kind of relationship, whether
that relationship has to do with affinity or whether that relationship has to do with some kind of
transfer of benefits, can move policy, can move decisions, can move the way that things
happen in ways that other people can't. Undo influence is making a large campaign donation
and then being able to talk to a congress person when other people can't. Undo influence is
when a person, because of the position they were born in, can nudge the way that a country is
developing, or a country unfolds. Undue influence is access that a person doesn't really earn
through merit, that they don't really earn because they should have that influence. And yet it's
an influence they exercise when other people can't. And undue influence is one of the things
that people are out there in the squares protesting against around the world.

All right, the takeaway for today, what we should remember in terms of understanding
corruption is that social scientists and policymakers have developed a general definition of
corruption. And that definition is the abuse of misuse of power or trust for personal benefit,
rather than the reasons for which that power or trust was given. Thank you and I look forward
to seeing you again for the next lecture.

How Much Corruption?

Hello, welcome back. This is corruption, week one, lecture three. Today, we're going to ask the
question, how much corruption is there in the world?

Now, there are three ways we can think about how much corruption. One is just how frequent
is this abuse or misuse of power or trust for personal benefit, rather than the reason for which
the power or trust was given. Another way of measuring how much corruption is the amount
that the abuser or misuser gains. And then, finally, we might think about how much value is
lost.

Frequency
Amount gained
Value lost
Of the three ways of thinking about how much corruption there is, the one that has been
measured the longest and for which there's probably the most accurate measurements is
frequency. And with respect to frequency, the most respected and clearly the most well-known
is the Corruption Perceptions Index which is published every year by Transparency
International. Now, I love Transparency International, they're an amazing organization, they are
publishing the CPI later, and later, and later every year. And so it is generally not until
December that we get that year's iteration, which is why I'm using Corruption Perceptions
Index from 2015. The Corruption Perceptions Index brings together sources such as risk
evaluation, survey, business polls, business evaluations, government evaluations,
competitiveness index. And amalgamates them all into one comparable index. It gives polities
a score from 100, which would mean that country was clean as could be, that there was no
perception of political corruption at all in that particular polity, to zero, which means that there is
a perception that every single interaction involving that particular polity also involves
corruption.

On this map, you can see by color code the scores that various polities have gotten. And the
yellow would be the cleaner countries, the red and the dark red would be those countries for
which there's a perception of more corruption. What you'll notice on this map is that there is lot
of red.

Unfortunately, Transparency International reports that around two-thirds of the polities that they
measure -and they measure most of the polities in the world-, say about two-thirds are either
corrupt or endemically corrupt. And we can break that down and take a look at some of the
countries at the top, in the middle, and the bottom.

The top, you tend to have countries like Singapore, Scandinavian countries, Canada and they
are coming in with scores in the 90s and the high 80s, down to Uruguay which is really taking
care of a lot of these kind of issues, which gets a score of around 74.
The middle is always very interesting, because we are looking for the point out of 170 or so
countries in any given year, the number varies every year. We're looking for the point at which
we get the score of 50. Above 50 means a polity is perceived to be cleaner than it is corrupt.
Below 50 means that a country is perceived to be more corrupt than it is clean. And for this
year that comes in at around 54. So 54 countries are cleaner than they are corrupt. And from
54 to 170 or so, I think this year it's a 167, countries are perceived to be more corrupt than they
are clean. A lot more polities are perceived to be more corrupt than they are clean, and that's
true every single year.

We get down to the bottom of the table, of the index for this year and we see scores like 8, 11,
12, 15. When we're talking about scores like that, we're talking about a perception that there's
an extremely high frequency of corruption.

Now, Transparency International's Corruption Perception Index reached the entire polity. But of
course, the frequency of corruption is lumpy. So let's take a look at this map. This is a map
produced by Michael Johnston and Oguzhan Dincer. They spent a long time bringing together
from, again, a variety of sources the frequency of corruption in one particular country, and that
country is the United States. And on this map, the lighter color once again means that state is
cleaner, that there's lower frequencies of corruption. And a darker color means that there's
more frequent incidences of corruption. And you can see that it's lumpy, that there's some
states right next to states that are completely different colors, right?

So when we look at Transparency International's Corruption Perceptions Index, we want to

understand it's a very coarse grained index. We can get a finer grain by looking discreetly at a
country. And I'm willing to believe that within the United States, if we mapped it out by county or
by city, we would get an even finer, and yet still differentiated map of the frequency of
corruption.

Now to answer any questions before they come up, there is one state down in the bottom
center, it's called Louisiana, for those of you who are not familiar with United States, that's red.
And there is an interesting story behind that and I urge you to read the entire story. But
basically what the investigators found was that Louisiana had such a high frequency of
corruption, that the very sources of information about corruption were unreliable. And so, they
merely say there's a lot of corruption here, but it's difficult to actually measure the amount.
Here's some URLs if you want to get deeper into this kind of information. I strongly encourage
you to spend some time looking at the methodology and at the results.

http://www.transparency.org/cpi2015
http://ethics.harvard.edu/blog/measuring-illegal-and-legal-corruption-
american-states-some-results-safra

Really interesting bottomline, there's a tragic and high frequency in terms of incidence of
corruption around the world and within polities, today.

With respect to the amount gained from corruption, those measurements are far, far, far more
difficult. But very serious social scientists have been doing some really interesting work to try to
figure out if we can put some value next to how much the abuser or misuser is gaining from the
abuse or misuse of office of trust or authority, just with respect to business in the United States
and it'd be great if we had this data for the entire world but we don't. So just with respect to
businesses in the United States, the amount of gain that employees or agents have accrued
each year through the form of corruption defined as theft, the research suggests is anywhere
from $6 to $60 billion per year, $6 to $60 billion. Thats a pretty wide variance and part of the
variance is due to the decade that separates the really good studies that have been done on
this. But another part of the variance is also due to the better ways of getting at behaviors that
people try to hide. We've learned a lot over the last 15 years or so about how to ask questions,
how to get at this kind of information, what to look at when we investigate these kinds of things.
So, $6 to $60 billion have been gained, that's what the people who steal have got in, just within
the United States.

Around the world that numbers are probably staggering. The World Bank has tried a number of
different ways and with growing accuracy to determine how much people have gained, have
accrued by taking bribes. Their estimate based on surveys, based on extrapolation from
interviews with bribe taking officials, based on extrapolation from investigations into World
Bank projects and the projects based on or related to World Bank Projects is that the amount
that has been accrued, the amount gained through bribery exceeds $1 trillion. In other words,
people have made over a trillion dollars just by taking bribes. And again, that's probably a low
estimate. Our accuracy, the way that we can figure these kinds of things out, is improving every
year. And each time it improves, that number goes up.

Amount Gained

U.S. Businesses
US$ 6-60,000,000,000
Thomas & Gibson (2003); US Retail Fraud Survey (2015)

Global Bribes
US$ >1,000,000,000,000
World Bank (2004)
With respect to the value lost, again, very difficult to measure. A very common measurement, a
number that gets thrown around a lot is that global corruption costs around $2.6 trillion, US
dollars every year. Around 5% of the global economy.

Now, I want to caveat this particular number with a bit of caution. The methodology with which
this number was developed involves a lot of speculation. It's speculation based on really good
experience. And it's speculation based on some pretty defensible assumptions about how
corruption works and about how corruption manifest itself in the global economy, but it still
involves some assumptions and some questions. Most people who spend a lot of time working
with corruption think that this is probably a low estimate, and it's a low estimate because it's
very difficult to measure how corruption affects in a secondary, and a third, and a fourth level.
We know that the effects of corruption ripple out, but the causal link and then the definite
number next to that causal link, very, very difficult to measure. So we're left with a commonly
accepted but still questioned estimate of a global cost of around $2.6 trillion every year.

Now, the European Union did a much, because they had a much smaller group to work with,
did a much finer study. And their study found that corruption within the European Union cost
the people of the European Union that they lost the value of about $120 billion every year. That
again represents a fairly large percentage of the value, the entire value of the European Union.

Finally, the Organization for Economic Cooperation and Development, the OECD, which is a,
essentially, a policy making platform, a platform for these countries to interact on economic
issues, they did an extensive study on contracts within the public sector, so public contracts.
Their study found that somewhere between 20 and 25% of the value of these contracts is lost
to corruption, primarily bribery. 20 to 25% of public contracts is a very large percentage and
that's a value that's not being used for more productive things.

Value Lost

Global corruption
US$ 2,600,000,000,000
World Economic Forum

European Union
$ >120,000,000,000
World Bank (2004)

Public contracts
20-25%
OECD
All right, so how much corruption is there in the world? Well, we know that corruption occurs
frequently. In some places more frequently than others. No places it not occur at all, but
generally around the world, corruption now occurs quite frequently. We know that corrupt
actors are gaining billions of dollars. Billions of dollars by abusing or misusing their power or
trust. By acting in ways that we don't want them to act, they're gaining billions of dollars that
they don't deserve. And finally, we know that at the societal level, we are losing trillions of
dollars. Trillions of dollars of value are locked away, are taken away from us because of
corruption.

How Much Corruption?

Occurs frequently
Corrupt actors gain billions
Societies lose trillions
Thank you and I look forward to seeing you for the next lecture.

How did corruption

spread?
Welcome back, this is the course on Corruption. Week 1, Lecture 4. Today, we're going to talk
about how corruption became so widespread. Why is there such a frequent expression of
corruption? Now we know that corruption has existed for a long time, probably as long as
there's been human social structures that would allow for something like corruption. And we
know this because when we look at some of the oldest writings about political structures,
political theory, we see references to corruption.

The Code of
Hammurabi, the
Babylonian Code
from around 1750
before the current
era, the Code of
Hammurabi
explicitly makes
reference to
corruption and
prohibits corruption
in government
officials. Mencius,
Mengzi, probably the most well-known proponent of Confucianism, in 300 or so before the
current era he also writes about corruption, and vigorously condemns government officials who
take bribes.

So we know that corruption has been around for a long, long time, but we often think of
corruption as being endemic forever, and that's just not the case. When you look at people with
lots of global interactions and people who focus particularly on issues of corruption, they will
tell you that there has been an eruption of corruption in the last 30, 40, maybe 50 years.

People like George Moody Stewart and his brother Mark, both of whom are incredibly active
and prolific in global business, and both of whom eventually turned their attention to
understanding corruption. People like Daniel Kaufmann who at the World Bank was an
economist who studied development, and eventually turned his attention primarily to
corruption. And then of course, people like Moises Naim. And Moises Naim, the former editor of
Foreign Policy, he invented the term Eruption of Corruption in a wonderful article that he
published in International Journal, published by Brown University.

They all tell us that there's been some kind of change, and that change has led to higher
frequencies of corruption, and larger amounts of value being lost to corruption. So why is that?

Well, there are three major theories about the kind of spread of and growth in corruption, and
those theories are: weak institutions led to more corruption, that's something that I call the virus
theory -it doesn't have an official name- but that the corruption was spread primarily by
business people from North America and Western Europe, and finally, there's an authoritarian
regime kind of theory about the spread of corruption.

Three Theories
Weak institutions
Virus
 Authoritarian Regimes

So let's talk about each of those.

In the 1950s, 1960s, the

way the world is put
together was profoundly
changed. After the
Second World War, and
after a very short period
of reconstruction, the
European countries,
which had occupied
much of the world, parts
of Latin America is still
by then, most of Africa,
much of Southeast Asia, South Asia, they essentially de-occupied those territories. And from
the de-occupied territories a great number of new countries sprang up.

A similar phenomenon happened at the very end of the 1980s and the beginning of the 1990s,
with the end of the Cold War, the standoff between the NATO allied countries and the
COMECON allied countries. Particularly with the dissolution of the Soviet Union, a great
number of countries, either completely changed the way they were governed or came into
existence that hadn't existed at all before.

So in the 1950s, 1960s, 1980s, 1990s, one of these two surges of new countries, or polities, or
new ways of governing countries or polities, through no fault of their own. these countries, of
course, had institutions that were inexperienced, that were staffed with people who didn't have
a lot of knowledge or experience. Again, no fault of their own, a natural consequence of these
very profound changes. But because this institution were new, were inexperienced, were
untried, because the people who staffed these institutions were new and inexperienced and
didn't have a lot of knowledge about these places, the institutions are something that we would
call weak. Not a judgment, just an observation.
Weak institutions. Now institutions are a primary way in which people interact with one another,
which people form relationships with one another. And so institutions are integral to almost
everything that gets done. A business relies entirely on institutions. Governance relies on
institutions. Interpersonal relationships rely on institutions. Institutions are endemic, ubiquitous,
and absolutely critical to what we do. When institutions are weak, they are vulnerable. They are
vulnerable to exploitation and they're vulnerable to abuse or misuse. Remember, our definition
of corruption is abuse or misuse of a position of power or trust, for personal benefit rather than
the reason that that power or trust was conferred. So in other words, these institutions are
vulnerable to that exact kind of behavior.

So the theory, and this theory is promulgated by some really, really, really sharp social
scientists, is that a natural consequence of these profound changes in the 1950s, 1960s,
1980s, 1990s is corruption. It flows from these weak institutions. That's a fine theory, but there
are more.
Another theory is what I call, there is no official name for this, but I call it the virus theory and
the virus theory looks at a very similar phenomenon.

The 1950s, 1960s when the

European nations and some
others, but when the
European nations, primarily,
stopped occupying all these
territories around the world
these territories opened up to
a broader range of
commercial and trade
relationships. They were no
longer part of this mercantilist
fiefdom of these European
nations. And so in the 1950s,
the 1960s and then again in
the 1980s and 1990s, there were all kinds of new places for businesses to go where they
hadn't been before. Unfortunately, just as is true in the case of institutions, these business
didn't have extensive experience in working in these places. They were inexperienced, they
didn't have knowledge. They were, in a sense, weak. And so they looked for expedient, or
familiar, or convenient ways of interacting in these new places. And unfortunately, one of the
expedient, or familiar ways of interacting was corruptly, primarily through the offer bribes or
undue influence.

There's a movie that was filmed in the United States, released worldwide, called Indecent
Proposal. It starred Robert Redford, Woody Harrelson, and Demi Moore. And in this movie
Robert Redford became obsessed with Demi Moore, and he wanted to have a relationship with
her. Now, Demi Moore was married to Woody Harrelson. And Woody Harrelson, of course, of
course said, no, you can't have a relationship with my wife. Robert Redford's character was
fabulously wealthy. And so he offered Woody Harrelson $1 million to have an inappropriate
relationship with Woody Harrelson's wife, Demi Moore. Woody Harrelson looking $1 million in
the face said, yes, have an inappropriate relationship with my wife. And that's very similar to
what some people think happened with this virus, with this convenient, expedient way of
interacting that was spread through Western European and North American businesses. They
came to these newly opened, newly formed polities with what in those polities would amount to
an irresistible sum of money, or an irresistible personal benefit, and asked them to behave
corruptly. And faced with that irresistible enticement, the bureaucrats, the people with power,
the people who've been entrusted, the business leaders, yielded.

Well, that's another really good theory, but there's a third theory and that theory is the
authoritarian regime theory.

We again go back to the profound changes that occurred in the 1950s and the 1960s, and then
again in the 1980s and the 1990s, and we look to what these places are changing from. And by
and large, the from in the 1950s, 1960s and the from in the 1980s, 1990s is authoritarian
regimes. Regimes in which regular people had very little power and had to interact with
regimes that exerted a great deal of power that stifled everyday life.

Now in everyday life, people are going to get done what they need to get done. This has been
true time immemorial. One of the ways the people procured the room, the space, to get done
the things that they wanted or needed to get done was through the payment of bribes. Most
people who have traveled to authoritarian regimes see this in daily life. They see the black
market. They see the quiet payment to the policeman on the corner to turn the other way, all
right? And it occurs in the larger scales too. The payments to ship in consumer goods, when
consumer goods are prohibited in that particular regime.

What happened after the transitions in the

1950s, 1960s, 1980s, 1990s was that
parents taught their kids this is how you
interact with government. That business
people who'd grown up during the
authoritarian regime continued to behave
the way that they behaved before. That
people faced with a new form of
governance, or a new country where no
country had existed before, thought, well,
this is the natural way of doing things. And
so these practices that began as defensive
practices, as practices that are necessary
under authoritarian regimes, continued after
the regimes had changed, or after a regime came into existence. And that too is a theory that's
embraced by really, really good, really clever social scientists and that's another theory that's
worth considering.

So, which of these three is the theory that explains? Well, the social scientists who promulgate
these theories will vigorously defend their individual theory. I'm guessing that it's possibly all
three. If a person is to look at a particular country, or a particular polity, it's possible that one
means of the spread of corruption outweighs the other two. But if we look at the whole world,
there's a lot of vitality to all three of these different theories. And each of them is worth
recognizing and understanding. Because recognizing and understanding each of the three is
going to help us in a couple of sessions later, when we talk about how we might think about
controlling corruption. So, possibly all three. And the three are the weak institution theory, the
virus theory, and the authoritarian regime theory. Thank you, and I look forward to seeing you
for the next lecture.