EPS Blog

Any serious economic-political theory, model and perspective must account for the potentiality and actuality of corruption (at a variety of levels) in a society. The vast and diverse Christian knowledge tradition can and does have much to say on corruption, and not just as a concept of economics. One of the many benefits that I enjoy about the Acton Institute and their Acton University (which is where I am writing this week), is their ability to bring perspective to the realities of economics, free-markets, capitalism and their morality. In other words, there is no "crony capitalism" advocated here. Dr. Alex Chafuen, one of the many great faculty represented at Acton University, says that "crony capitalism is when there is a privatization of gains, socialization of losses."

Chafuen is a native of Argentina, president of Atlas Economic Research Foundation. He is also a trustee of the Acton Institute, and the author of the very informative book, Faith and Liberty: The Economic Thought of the Late Scholastics.

In an interview with Dr. Chafuen, I discuss with him how a Christian theological-philosophical anthropology can help to make sense of corruption (economically and politically) in a society and how that dimension can support the work of economists and other social sciences seeking to interpret the causes, conditions, and consequences of corruption. We also discuss the work of the Atlas Economic Research Foundation, the importance of “intellectual entrepreneurs” in a society and the possibilities and challenges that “think tanks” face.

There is some valuable and fruitful work to be done on the moral and economic realities of corruption, especially when collaborated as interdisciplinary work between philosophers, theologians, economists, and social theorists.

Here is an excerpt from our interview: 

In the arena of ideas, it seems to me that a Christian theological-philosophical anthropology can help to conceptually explain both the reality of genuine freedom and human dignity and also account for the reality of corruption and the fallibility of human desires. Regarding corruption, how would you define it?  What are the moral and economic causes of it? 

I agree with your optimism about the potential contribution of a Christian theological-philosophical anthropology, but only if it’s nurtured and enlightened by good economic analysis.

On one hand, corruption is the action of buying privileges that only the state can “legally” grant, such as favoritism in taxation, tariffs, subsidies, loans, government contracting, and regulation. On the other, corruption is the result of attempts to avoid the restrictions that accompany the use of privileges, taxes, and barriers to free trade.  Corruption within the judiciary influences respect for property rights; corruption within the bureaucracy affects regulation; and the existence of black markets is also an indicator of corruption.

It is much easier to answer you about the economic than the moral factors.  I believe I was the first who came with the idea, and with a Chilean social scientist, then fresh from LSE, Eugenio Guzmán, to correlate the measurements of economic freedom with transparency and corruption indices.  It was the mid 90’s.  Our statistical analysis showed that the more government intervention, and the more discretion by bureaucrats and government officials, the more corruption.

Economists, such as Nobel Laureate Douglass North, have emphasized the importance of institutions, to have something that resembles a rule of law respectful of private property and free markets.  But they have acknowledged that to develop those institutions one needs important moral consensus in society, one needs to develop trust, and economists know very little about that, especially current economists. 

The great founders of economics, from the Late Scholastics to Adam Smith, were primarily moral philosophers.  A good Christian social scientist should pay attention to the empirical analysis which shows that corruption is a reaction to the perverse incentives created by government interventionism, but needs to look beyond.  They need to look at evil, at the possibility that the rules in society are controlled by people who benefit from perverse systems.  Their vote for the corrupt status quo, is an immoral behavior.

A Christian sees corruption as a manifestation of evil, as a manifestation of sin.  But then we get into difficult waters as sin is sometimes referred as “the mystery of evil” so we bring Faith also into our analysis and personal behavior.   My view is that in societies which have had many generations living under perverse incentives, one has to work as much on the moral side as in the economic side.  As an economist, I find it much easier to work in this field rather than in reforming morality.  But both things go hand in hand, and have to start by personal example, especially by the example of those who hold positions of leadership.

You can read the full-text of this interview by clicking here.

Labels: Acton Institute, Acton University, alex chafuen, corruption, economics, interview, philosophical anthropology, political power