Donnatella della Porta

Alberto Vannucci

Corrupt
Exchanges
Actors,
Resources,
and Mechanisms
of Political
Corruption

[J Routledge
j j j ^ ^ Taylor Si Francis Group
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L i b r a r y o f Congress Catalog N u m b e r : 2012013859

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Della Porta, Donatella, 1956-

C o r r u p t exchanges : a c t o r s , r e s o u r c e s , a n d m e c h a n i s m s o f p o l i t i c a l
c o r r u p t i o n / Donatella della Porta and A l b e r t o V a n n u c c i .
p. cm.
I S B N 978-0-202-30600-1
1. P o l i t i c a l c o r r u p t i o n . 2. P o l i t i c a l c o r r u p t i o n - - I t a l y . I . V a n n u c c i ,
Alberto. II. Title.
JF1081.D45 2012
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2012013859

I S B N 13: 978-0-202-30600-1 ( p b k )

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 To Alessandro Pizzorno,
who inspired our research
''Bribe it," Yossarian said.

"Bribe it!" Milo was outraged and almost lost his balance and broke his neck again.
"Shame on you!" he scolded severely, breathing virtuousfiredown and upward into
his rusty mustache through his billowing nostrils and prim lips "Bribery is against
the law, and you know it. But it's not against the law to make a profit, is it? So it
can't be against the law for me to bribe someone in order to make a fair profit, can it?
No, of course not!" He fell to brooding again with a meek, almost a pitiable distress.
"But how will I know who to bribe?"

"Oh, don't you worry about that," Yossarian comforted him with a toneless snicker
as the engines of the jeeps and ambulance fractured the drowsy silence and the vehi­
cles in the rear began driving away backward. "You make the bribe big enough and
they'll find you. Just make sure you do everything right out in the open. Let every­
one know exactly what you want and how much you're willing to pay for it. The first
time you act guilty or ashamed, you may get into trouble. "

Joseph Heller, Catch 22, London, Corgy Books, 1964, p. 283

 Contents

Acknowledgments xiii

1 The Market for Corrupt Exchange:

An Introduction 1

1. Corruption and Democracy 4

2. A Theoretical M o d e l for U n d e r s t a n d i n g
Political C o r r u p t i o n 16
3. H o w to Study Political C o r r u p t i o n 24

2 The Resources of Corruption 33

1. C o r r u p t i o n as a M a r k e t f o r P o l i t i c a l Rents 35
2. The C o m m o d i t i e s of C o r r u p t Exchange 39
3. Political Protection 45
4. T h e C o r r u p t e r ' s Resources 50
5. T h e "Business o f P o w e r " 54
6. T h e Resources o f C o r r u p t i o n :
A Summary 61

3 The Business Politicians 69

1. T h e E m e r g e n c e o f the Business P o l i t i c i a n s 71
2. S k i l l s i n I l l e g a l i t y a n d P o l i t i c a l Careers 76
3. N e t w o r k i n g Abilities and Corruption 78
4. H o m i n e s N o v i , P a t r i m o n i a l i s m , a n d the
M o r a l Costs o f C o r r u p t i o n : A C o n c l u s i o n 85

4 Political Parties and Corruption 93

1. T h e " H i d d e n " Structures o f the Parties 96

2. T h e Role o f the P a r t y i n C o r r u p t Exchanges 102

ix
X Contents

3. Parties, C o r r u p t i o n , a n d P u b l i c Policies 107

4. Party Connivance: C o r r u p t i o n and Consociation 111
5. P o l i t i c a l Parties, t h e Costs o f P o l i t i c s , a n d C o r r u p t i o n :
Comparative Remarks 117

5 Political Corruption, Bureaucratic Corruption,

and the Judiciary 129

1. Political C o r r u p t i o n a n d Bureaucratic C o r r u p t i o n 132

2. C o r r u p t i o n a n d the Magistracy 139
3. C o r r u p t i o n and Controls: Comparative Remarks 145

6 Brokers and Occult Power 153

1. B r o k e r s i n the I l l e g a l M a r k e t s 156
2. The D o m a i n of Covert Power 165
3. H i d d e n Powers and Corruption:
Some C o n c l u d i n g R e m a r k s 170

7 The Market for Corruption and the Economic System 177

1. C a r t e l s a n d Bribes 181
2. The Political Protection of Entrepreneurs 185
3. A T y p o l o g y of Protected Enterprises 188
4. T h e " M o r a l C o s t s " f o r the C o r r u p t e r 195
5. The Adverse-Selection of Firms 198
6. T h e E l e v a t i o n o f Costs 202
7. T h e B r i b e r 's D i l e m m a 204
8. The C o r r u p t i o n Market:
Concluding Remarks 208

8 Politics, the Mafia, and the Corruption Market 217

1. The C o r r u p t Politician and Organized C r i m e 221

2. O r g a n i z e d C r i m e a n d Business 228
3. C o r r u p t i o n , the Mafia, a n d Public Contracts 232
4. Conclusion:
Organized C r i m e a n d Politics 236
Contents xi

9 The Dynamics of Political Corruption:

A Conclusion 245

1. C o r r u p t i o n as a n E m e r g e n t N o r m a t i v e S y s t e m 249
2. The "Vicious Circles" of C o r r u p t i o n 255
3. T h e F a l l o f a C o r r u p t System:
Lessons f r o m t h e I t a l i a n Case 265

List of Archival Documents from Court Records and

Government Investigations (in Order of Investigation) 277

References 283

Author Index 303

Subject Index 309
 Acknowledgments

T h i s b o o k r e p o r t s o n three d i f f e r e n t pieces o f research: the first research

w a s c o n d u c t e d b y D o n a t e l l a d e l l a P o r t a at the E u r o p e a n U n i v e r s i t y I n s t i -
t u t e i n Florence; the s e c o n d constitutes A l b e r t o V a n n u c c i ' s P h . D . a n d p o s t
P h . D . research at the f a c u l t y o f P o l i t i c a l Science o f t h e U n i v e r s i t y o f Pisa;
a n d the t h i r d w a s l e d j o i n t l y b y t h e t w o a u t h o r s u n d e r t h e s p o n s o r s h i p o f
t h e C o n s i g l i o N a z i o n a l e d e l l e Ricerche, u n d e r t h e Special P r o g r a m o n the
P u b l i c A d m i n i s t r a t i o n . D o n a t e l l a d e l l a P o r t a w o r k e d o n the f i n a l r e v i s i o n s
o f the b o o k d u r i n g a sabbatical y e a r at t h e W i s s e n s c h a f t s z e n t r u m i n B e r l i n
w i t h a g r a n t f r o m t h e A l e x a n d e r v o n H u m b o l d t S t i f t u n g . W e w i s h to t h a n k
a l l these i n s t i t u t i o n s f o r t h e i r l o g i s t i c s u p p o r t , a n d o u r colleagues a n d
m e n t o r s Sabino Cassese, R a i m o n d o C u b e d d u a n d A l e s s a n d r o P i z z o r n o
for t h e i r scientific a d v i c e .
S o m e results o f o u r research h a v e b e e n d i s c u s s e d at the f o l l o w i n g m e e t -
i n g s : the Joint Sessions o f E u r o p e a n C o n s o r t i u m f o r P o l i t i c a l Research i n
L e i d e n ( A p r i l 1993); t h e conference o n "Illegalità-legalità e ceti e m e r g e n t i
n e l c a m b i a m e n t o d e l l e società e u r o p e e " o r g a n i z e d b y the I s t i t u t o d i soci-
o l o g i a i n t e r n a z i o n a l e i n G o r i z i a (October 1993); t h e i n t e r n a t i o n a l confer-
ence o n " C o r r u p t i o n a n d D e m o c r a c y " at the O b s e r v a t o i r e d u C h a n g e m e n t
Social e n E u r o p e O c c i d e n t a l e i n P o i t i e r ( N o v e m b e r 1993); the Conference
o n " T a n g e n t o p o l i e l a c r i s i d e l sistema p o l i t i c o i t a l i a n o , " o r g a n i z e d b y t h e
R o b e r t S c h u m a n C e n t e r at the E u r o p e a n U n i v e r s i t y I n s t i t u t e i n Florence
(January 1994); the Conference o n " R e c o n s t i t u t i n g I t a l y : Sources o f P a t h o l -
o g y a n d Forces f o r R e f o r m , " at t h e C e n t e r f o r E u r o p e a n Studies at H a r v a r d
U n i v e r s i t y ( F e b r u a r y 1994); the w o r k s h o p o n " L a c r i s i d e i p a r t i t i i n I t a l i a , "
o r g a n i z e d b y the I s t i t u t o G r a m s c i o f T u r i n ( M a y 1994); the A n n u a l m e e t -
i n g o f the A s s o c i a t i o n f o r t h e S t u d y o f M o d e r n I t a l y ( L o n d o n , N o v e m b e r
1994); t h e I n t e r n a t i o n a l Conference o n " D e m o c r a c i e s b e t w e e n C r i s i s a n d
R e f o r m . C o m p a r i n g I t a l y a n d B e l g i u m " h e l d i n Brussels (September 1995);
the I n t e r n a t i o n a l w o r k s h o p o n " P o l i t i c a l C o r r u p t i o n " i n N o t t i n g h a m
( M a y 1996); t h e I n t e r n a t i o n a l Conference o n " P o l i t i c a l C o r r u p t i o n " at t h e
U n i v e r s i t y o f S a l f o r d ( N o v e m b e r 1996); t h e I n t e r n a t i o n a l Conference o n
"Political C o r r u p t i o n i n Western Europe: Austria, Belgium, Italy and
Franco C o m p a r e d " i n Brussels ( D e c e m b e r 1997); the J o i n t Sessions o f the
E u r o p e a n C o n s o r t i u m f o r P o l i t i c a l Research i n W a r w i c k ( M a r c h 1998); the
I n t e r n a t i o n a l Conference o n " P u b l i c T r u s t a n d G o v e r n a n c e i n the T r i l a t e r a l

xiii
xiv Acknowledgments

D e m o c r a c i e s " i n the B e l l a g i o S t u d y a n d Conference C e n t e r o f t h e R o c k -

feller F o u n d a t i o n (June 1998). W e are g r a t e f u l t o o u r colleagues w h o o r g a -
n i z e d a n d p a r t i c i p a t e d i n those o c c a s i o n s — a m o n g t h e m , A r n a l d o B a g -
nasco, Jean Cartier-Bressons, M a r t i n B u l l , G i a c o m o Costa, A r n o l d
H e i d e n h e i m e r , P a u l H e y w o o d , D a v i d H i n e , Francesco K i j l l b e r g , Jean-
F r a n c o i s M e d a r d , H e n r i M e n d r a s , Yves M é n y , L e o n a r d o M o r l i n o , James
N e w a l , Susan Pharr, B o b P u t n a m , V i n c e n t W r i g h t , L i e v e n de W i n t e r — f o r
v e r y s t i m u l a t i n g discussions.
T h e a u t h o r s are o b l i g e d t o a l l those w h o h e l p e d t h e m collect t h e t h o u -
sands a n d t h o u s a n d s o f pages, m a i n l y j u d i c i a l m a t e r i a l s , o n w h i c h m u c h
o f t h e i r research is based. A m o n g t h e j u d g e s w h o h e l p e d us, special t h a n k s
g o t o G h e r a r d o C o l o m b o , M i c h e l e D e l G a u d i o , A n t o n i o D i P i e t r o , Pier-
c a m i l l o D a v i g o , F i l i p p o G r i s o l i a , Francesco Greco, F a u s t o I z z o , G i o v a n n i
L e o n a r d i , G u i d o L o Forte, L e o n a r d o G u a r n o t t a , M a r c o M a r i a M a i g a ,
Rosario M i n n a , Fabio N a p o l e o n e , G u i d o P a p a l i a , V i t t o r i o P a r a g g i o , L u c a
P i s t o r e l l i a n d O t t a v i o Sferlazza. F o r h e r h e l p i n the c o l l e c t i o n o f p a r l i a -
m e n t a r y sources w e are g r a t e f u l t o D o t t o r e s s a E m i l i a L a m a r o . M o r e o v e r ,
w e are p r o f o u n d l y i n d e b t e d t o t h e d o z e n s o f i n t e r v i e w e e s w h o t r u s t e d us
n o t o n l y w i t h t h e i r t i m e , b u t also w i t h t h e i r confidence.
This w o r k derives f r o m a constant—fruitful and friendly—collabora-
t i o n b e t w e e n t h e t w o a u t h o r s . A l b e r t o V a n n u c c i has c o l l e c t e d a n d
e x c e r p t e d m o s t o f the j u d i c i a l m a t e r i a l s ; D o n a t e l l a d e l l a P o r t a has r u n t h e
case s t u d i e s o f three I t a l i a n cities, m a i n l y b a s e d o n i n - d e p t h i n t e r v i e w s . I n
a l o n g ( a l m o s t endless) p r o c e d u r e , a l l the c h a p t e r s h a v e g o n e b a c k a n d f o r -
w a r d f r o m Florence t o Pisa a n d vice-versa, u n t i l b o t h a u t h o r s w e r e satis-
f i e d w i t h t h e results. For the r e c o r d , D o n a t e l l a d e l l a P o r t a has p r o d u c e d
the f i n a l v e r s i o n o f c h a p t e r s 3, 4, 5 a n d 6; A l b e r t o V a n n u c c i the f i n a l v e r -
s i o n o f c h a p t e r 1,2, 7, 8. T h e c o n c l u s i o n w a s j o i n t l y w r i t t e n . J o h n D o n a l d -
s o n t r a n s l a t e d the w h o l e m a n u s c r i p t w i t h c o m p e t e n c e a n d care. R i c h a r d
K o f f l e r at A l d i n e de G r u y t e r g a v e g o o d a d v i c e ( n o t o n l y l i n g u i s t i c ) a b o u t
the t r a n s l a t i o n o f o u r I t a l i a n p r o d u c t i o n f o r a n i n t e r n a t i o n a l p u b l i c . W e
hope it was worthwhile.
 1
The Market for Corrupt Exchange:
An Introduction

When Bettino Craxi rose to speak in the Chamber of Deputies on July 3, 1992, he
was a political leader in grave difficulty. And yet immediately after the elections of
April 7, Craxi, leader of the Italian Socialist Party (Partito Socialista Italiano, PSI)
since 1976 and prime minister of the longest-lived government in Italy's postwar
history—from 1983 to 1987—had appeared set for a return to the premiership. He
was backed by a political alliance known as the CAP, after the initials of its leading
exponents (Craxi himself, outgoing premier Giulio Andreotti, and the party secre­
tary of the Christian Democrats, Arnaldo Forlani). The CAP, however, turned out to
be a failure, achieving not one of its objectives. To understand why, it is necessary to
take a short step back in time, to February 17,1992. In Milan, Mario Chiesa, Social­
ist city councillor and president of a municipal home for the elderly, the Pio Albergo
Trivulzio, was arrested while accepting a small bribe. The man responsible for the
arrest was Antonio Di Pietro, the Milanese assistant prosecutor who would later
become a national hero. Thirty-five days later, Chiesa began to collaborate with the
magistrates, setting offa chain of confessions that resulted, shortly after the election,
in indictments against a great many businessmen, bureaucrats, and politicians, all
of them closely associated with the country's ruling political elite. As a result of the
massive wave of popular indignation produced by the scandal, Forlani was unsuc­
cessful in his bid to be elected president of the republic (one of the objectives behind
the CAP) and the new president, Oscar Luigi Scalfaro, was persuaded not to offer
Craxi the premiership. In the meantime the "mani pulite" ("clean hands") investi­
gations spread to other cities and ever closer to national centers of power. Although
most of the political parties were implicated in the scandal, Craxi's Socialist party
was from the outset the hardest hit. In the summer of 1992, as the party's Milanese
exponents fell one by one, the investigation approached the national leadership.
Craxi was still an influential figure when he took thefloorof the Chamber on July
3. His speech, to all intents and purposes an act of self-incrimination (the magis­
trates later called it an "extrajudicial confession of the offenses [he had] commit­
ted"), sketched out a political line of defense that he would stick to firmly through­
out the following months and years. In more general terms, his attempt to play down
the significance of the scandal with the generic declaration that "everybody knew"
what was going on came to sound like an indictment of the functioning of the demo­
cratic system itself.
"The political parties," Craxi claimed, "have been the body and soul of our
democratic structures Unfortunately, it is often difficult to identify, pre-

1
2 The Market for Corrupt Exchange

vent, and remove areas of infection in the life of parties.... Thus, under the
cover of irregular funding to the parties cases of corruption and extortion
have flourished and become intertwined.... What needs to said, and which
in any case everyone knows, is that the greater part of political funding is
irregular or illegal. The parties and those who rely on a party machine (large,
medium, or small); on newspapers, propaganda, promotional and associa-
tional activities . . . have had, or have, recourse to irregular or illegal addi-
tional resources. If the greater part of this is to be considered criminal pure
and simple then the greater part of the political system is a criminal system.
I do not believe there is anybody in this hall who has had responsibility for
a large organization who can stand up and deny what I have just said.
Sooner or later the facts would make a liar of h i m / (TNM:87-88) 7

The mani pulite investigations continued and Craxi was backed into an ever
tighter corner until, on January 12 the following year, the decisive blow—in the
shape of afirst,richly documented request to parliament for authorization to proceed
against him—was struck. The testimony of numerous businessmen and members of
his party confirmed the former premier's personal involvement in the administration
of corruption. The party treasurer "presented him with the 'budget' for illegal fund­
ing from business" and "obtained his approval for it." Craxi in person urged party
members holding office in the public administration "not to sit there keeping the seat
warm, making it clear that they were expected to procure votes and funds for the
party from the exercise of their functions. " He reminded one entrepreneur that "'you
had to put two billion on the table to get into the game', 'getting in' referring to the
possibility of being considered for public contracts. " Craxi also gathered information
on corrupt activities of opponents within his own party so that he "could keep them
in line" (CD, 13 January 1993, no. 166, p. 48; CD, 5 March 1993, no. 210, pp. 8,
14). Forced to resign as Socialist party secretary on February 11,1993, and violently
confronted at every public appearance, Craxi took refuge in his villa in Hammamet,
Tunisia, a few months later. He continues to reside there with an international war­
rant for his arrest and prison sentences adding up to twenty-four years hanging over
his head.

I n its d e v e l o p m e n t , t h e " c l e a n h a n d s " i n v e s t i g a t i o n b r o u g h t a b o u t t h e

m o s t serious p o l i t i c a l crisis i n the h i s t o r y o f t h e I t a l i a n R e p u b l i c , q u i c k l y
e x t e n d i n g t o t h e u p p e r m o s t levels o f t h e p o l i t i c a l a n d e c o n o m i c s y s t e m . I n
a m a t t e r o f m o n t h s , t h e m a g i s t r a c y h a d o p e n e d a b r e a c h o n a scene o f cor-
r u p t i o n a n d p o l i t i c a l i l l e g a l i t y w i t h o u t p r e c e d e n t i n t h e h i s t o r y o f the
W e s t e r n democracies, i n v o l v i n g t h e e n t i r e p o l i t i c a l class o f t h e c o u n t r y
a n d b r o a d sectors o f its business c o m m u n i t y . T h e i n v e s t i g a t i o n reached
t h e h i g h e s t levels o f t h e p u b l i c a d m i n i s t r a t i o n a n d affected m o s t areas o f
t h e state's a c t i v i t y . M o r e t h a n five h u n d r e d f o r m e r p a r l i a m e n t a r i a n s w e r e
implicated, m a n y former ministers, five former premiers, thousands of
l o c a l a d m i n i s t r a t o r s a n d p u b l i c f u n c t i o n a r i e s , the a r m y , t h e c u s t o m s ser-
The Market for Corrupt Exhange 3

v i c e (responsible f o r i n v e s t i g a t i n g f i n a n c i a l c r i m e s i n general), the m a i n

p u b l i c l y o w n e d c o m p a n i e s a n d e v e n sectors o f the m a g i s t r a c y itself. T h e
e q u i l i b r i u m t h a t h a d l o n g c h a r a c t e r i z e d I t a l i a n p o l i t i c s w a s s w e p t away.
A f t e r f o r t y - f i v e years o f u n i n t e r r u p t e d g o v e r n m e n t the c o u n t r y ' s largest
single p a r t y , the D C , w a s e c l i p s e d a l o n g w i t h its leaders, a c c o m p a n i e d b y
the o t h e r p a r t i e s o f the r u l i n g c o a l i t i o n , the PSI i n c l u d e d . C r a x i w a s n o t
alone i n f a c i n g c r i m i n a l charges. B o t h F o r l a n i a n d A n d r e o t t i w e r e also
i n d i c t e d , t h e latter f o r association w i t h the M a f i a . A n i d e a o f the sheer size
o f the i n v e s t i g a t i o n can be g l e a n e d f r o m the statistics f o r c o r r u p t i o n a n d
e x t o r t i o n accusations: b e t w e e n 1984 a n d 1991 the average r a n at 252 cases
a year i n v o l v i n g 365 i n d i v i d u a l s ; b e t w e e n 1992 a n d 1995 i t increased t o
1,095 cases i n v o l v i n g 2,085 i n d i v i d u a l s . I n the last o f these years 1,065
accusations w e r e m a d e i n v o l v i n g 2,731 p e r s o n s . B e t w e e n 1992 a n d O c t o -
1

ber 1996, the p u b l i c p r o s e c u t o r s o f M i l a n alone p r o d u c e d 2,319 requests

for j u d i c i a l a c t i o n r e l a t e d t o c o r r u p t i o n c r i m e s ( P r o c u r a d i M i l a n o 1996)
(see F i g u r e 1.1).
I n w h a t f o l l o w s , w e w i l l i n t r o d u c e o u r research based m a i n l y o n the
results o f those i n v e s t i g a t i o n s . I n the first p a r t , w e discuss the r e l a t i o n -
ships b e t w e e n c o r r u p t i o n a n d the crisis o f d e m o c r a t i c v a l u e s , e x p l a i n i n g
also w h y w e focus, a l t h o u g h i n a c o m p a r a t i v e p e r s p e c t i v e , o n the I t a l i a n
case. I n the second p a r t , w e a t t e m p t t o define a n d o u t l i n e the m a i n theo-
retical approaches t o p o l i t i c a l c o r r u p t i o n . I n the t h i r d p a r t , w e present
some m e t h o d o l o g i c a l choices a n d s u m m a r i z e the contents o f the v o l u m e .

Figure 1.1. Official statistics on corruption in Italy, 1984-1995. Elaboration from

ISTAT, Rome.
4 The Market for Corrupt Exchange

1. CORRUPTION AND DEMOCRACY

1.1. The Italian Case in Context

T h e speech b y C r a x i q u o t e d a b o v e c a n be r e a d as a d r a m a t i c a d m i s s i o n o f
d e m o c r a c y ' s f r a g i l i t y i n t h e face o f c o r r u p t i o n . I t w a s m a d e before t h e p a r -
l i a m e n t o f a d e m o c r a t i c state g o v e r n e d b y t h e r u l e o f l a w . A d e m o c r a t i c
state, h o w e v e r , t h a t b o t h t h e m a g i s t r a c y a n d p u b l i c o p i n i o n h a d c o m e t o
suspect o f s y s t e m a t i c a l l y v i o l a t i n g t h e l a w . S o m e c o m m e n t a t o r s h a v e c o m -
p a r e d t h i s speech w i t h t h a t o f M u s s o l i n i o n J a n u a r y 3, 1925, i n w h i c h he
p r o u d l y p r o c l a i m e d his "political, m o r a l , a n d historical responsibility" for
t h e m u r d e r o f t h e Socialist d e p u t y G i a c o m o M a t t e o t t i b y a fascist g a n g i n
June 1924. M a t t e o t t i h a d c o n d e m n e d Fascist e l e c t o r a l f r a u d a n d v i o l e n c e
a n d i t w a s feared t h a t he w o u l d m a k e f u r t h e r r e v e l a t i o n s a b o u t t h e nascent
r e g i m e ' s i l l e g a l a c t i v i t i e s . C o m p a r i s o n s b e t w e e n C r a x i a n d M u s s o l i n i are
n o t n e w . H i s a u t o c r a t i c d i s p o s i t i o n , a r r o g a n t self-confidence, a n d t h e " c u l t
o f p e r s o n a l i t y " h e fostered w i t h i n h i s o w n p a r t y l e d s o m e c a r t o o n i s t s t o
p o r t r a y C r a x i after t h e s t y l e o f t h e d i c t a t o r w h o r u l e d I t a l y f r o m 1922 t o
1943, b l a c k - s h i r t e d , h i s j a w j u t t i n g h i g h a n d f o r w a r d . T h e c o m p a r i s o n
b e t w e e n t h e t w o also reveals a m o r e t e l l i n g analogy, h o w e v e r : b o t h
speeches w e r e s y m p t o m s o f a serious crisis o f t h e d e m o c r a t i c r e g i m e . M u s -
s o l i n i ' s w a s m a d e at a m o m e n t w h e n t h e v e r y s u r v i v a l o f t h e d e m o c r a t i c
m o d e l w a s u n d e r serious c h a l l e n g e a n d i t r e p r e s e n t e d a d e c i s i v e step
t o w a r d the l o n g a n d b r u t a l d i c t a t o r s h i p t h a t I t a l y w a s later t o experience.
C r a x i ' s speech w a s m a d e i n a v e r y d i f f e r e n t context. T h e B e r l i n W a l l h a d
f a l l e n a n d s o c i a l i s m i n E a s t e r n E u r o p e h a d c o l l a p s e d i n 1992. D e m o c r a c y
w a s celebrating its global t r i u m p h . The Western political regime appeared
b o t h i n t r i n s i c a l l y s u p e r i o r a n d a u n i v e r s a l m o d e l f o r p o l i t i c a l life.
Yet at t h e v e r y m o m e n t o f its t r i u m p h t h e d e m o c r a t i c m o d e l is b e i n g
c o n v u l s e d b y a series o f p e r c e i v e d tensions. W e s t e r n g o v e r n i n g elites are
f a c i n g a set o f i n c r e a s i n g l y t h o r n y p r o b l e m s : t h e d e c l i n e o f p o l i t i c a l p a r t i c -
i p a t i o n ; t h e crisis o f t h e p r i n c i p l e o f e l e c t o r a l r e p r e s e n t a t i o n a n d o f t h e t r a -
d i t i o n a l p o l i t i c a l parties; a g r o w i n g l a c k o f c o n f i d e n c e a m o n g c i t i z e n s i n
t h e f u n c t i o n i n g o f t h e p o l i t i c a l s y s t e m a n d i n t h e i r p o l i t i c a l leaders; d i f f i -
c u l t i e s i n c o n t r o l l i n g o r i n f l u e n c i n g m o r e c o m p l e x e c o n o m i c processes; t h e
crisis o f t h e w e l f a r e state; t h e s p i r a l i n g cost o f p o l i t i c a l a c t i v i t y ; a n d t h e
q u e s t i o n i n g o f " d e m o c r a t i c v a l u e s . " C o r r u p t i o n is one o f the m o s t acute
expressions o f t r i u m p h a n t d e m o c r a c y ' s u n r e s o l v e d p r o b l e m s . A t t h e same
t i m e , t h r o u g h its r e v e r b e r a t i o n s i n a n i n c r e a s i n g l y s k e p t i c a l p u b l i c o p i n i o n
i t has c o n t r i b u t e d t o a n awareness o f t h e seriousness o f these p r o b l e m s . B y
p u b l i c l y a d m i t t i n g the generalized nature of c o r r u p t i o n i n political f u n d -
i n g i n h i s speech, C r a x i w a s also c o n f i r m i n g t h a t the g o v e r n i n g elite h a d
b o t h k n o w n a b o u t a n d p a r t i c i p a t e d i n t h i s u b i q u i t o u s i l l e g a l i t y . T h e cease-
less s c r a m b l i n g f o r m o n e y d o m i n a t e d t h e d a y - t o - d a y a c t i v i t i e s o f m a n y
Corruption and Democracy 5

p o l i t i c a l leaders t o s u c h a n e x t e n t t h a t i t is necessary t o c o n s i d e r the cor-

r u p t i o n m a r k e t i n order to understand the real m o t i v a t i o n s b e h i n d p u b l i c
p o l i c y a n d a c t i o n i n I t a l y i n recent decades. I n t h i s sense c o r r u p t i o n
2

a p p e a r s b o t h a cause a n d a n effect o f t h e serious p o l i t i c a l crisis t h a t beset

I t a l i a n d e m o c r a c y i n the e a r l y 1990s. A l t h o u g h c e r t a i n l y u n i q u e i n t h e size
o f t h e p h e n o m e n o n a n d its p o l i t i c a l repercussions, I t a l y is n o t a n i s o l a t e d
case. C o n c e r n a b o u t the p r o b l e m o f c o r r u p t i o n has e m e r g e d i n a n increas-
i n g l y large n u m b e r o f c o u n t r i e s i n these years.
These processes o f d e g e n e r a t i o n h a v e caused a crisis i n t h e d o m i n a n t
p a r a d i g m i n b o t h academic a n d p o l i t i c a l c o n s i d e r a t i o n s o f c o r r u p t i o n .
U n t i l recently, i n fact, c o r r u p t i o n w a s p r e s e n t e d as a p h e n o m e n o n charac-
teristic o f d e v e l o p i n g c o u n t r i e s , a u t h o r i t a r i a n r e g i m e s , or, at the o u t s i d e ,
3 4

" M e d i t e r r a n e a n " societies i n w h i c h the v a l u e s y s t e m f a v o r e d c l i e n t e l i s m ,

v e r t i c a l r e l a t i o n s h i p s , o r n e o p a t r i m o n i a l i s m . I n s u c h a context, a c c o r d i n g
5

t o the s t r u c t u r a l f u n c t i o n a l i s t p e r s p e c t i v e , c o r r u p t i o n has a n u m b e r o f p o s -
itive functions: "greasing" bureaucratic a n d political mechanisms that
w o u l d o t h e r w i s e b l o c k d e v e l o p m e n t , m o d e r n i z i n g the p o l i t i c a l s y s t e m ,
lessening recourse t o p o l i t i c a l v i o l e n c e , a n d f a v o r i n g social i n t e g r a t i o n
a n d economic capital formation. I t follows that i n more developed coun-
6

tries c o r r u p t i o n s h o u l d be m a r g i n a l , caused b y a f e w " b l a c k s h e e p " o r a

g a p b e t w e e n r e s t r i c t i v e l a w s a n d m o r e p e r m i s s i v e practices, a n d s h o u l d
h a v e f e w serious consequences. I n a d v a n c e d d e m o c r a c i e s i n p a r t i c u l a r , the
m e d i a ' s f u n c t i o n i n i n f o r m i n g a n d c e n s u r i n g , a n d the p o l i t i c a l c o n t r o l
exercised b y citizens s h o u l d p r e v e n t c o r r u p t i o n f r o m e x c e e d i n g c e r t a i n
physiological thresholds.
I n recent years, h o w e v e r , t h e thesis o f a n i n v e r s e c o r r e l a t i o n b e t w e e n
c o r r u p t i o n a n d e c o n o m i c a n d p o l i t i c a l d e v e l o p m e n t ( a n d therefore d e m o -
cratic " m a t u r i t y " ) has b e e n f r e q u e n t l y a n d c o n v i n c i n g l y c h a l l e n g e d .
C o u n t r i e s w i t h a l o n g d e m o c r a t i c t r a d i t i o n s u c h as the U n i t e d States,
France, B e l g i u m , a n d G r e a t B r i t a i n h a v e a l l e x p e r i e n c e d a c o m b i n a t i o n o f
h e a d l i n e - g r a b b i n g scandals a n d smaller-scale cases o f m i s a p p r o p r i a t i o n . 7

C o r r u p t i o n i n c r e a s i n g l y appears a p r o b l e m c o m m o n t o m o s t i f n o t a l l
democracies. P o p u l a r c o n t r o l has p r o v e d ineffective a n d the p e r c e p t i o n
t h a t c o r r u p t i o n , w h i l e concealed, is w i d e s p r e a d has f u e l e d a g e n e r a l d i s -
t r u s t o f a n d d i s s a t i s f a c t i o n w i t h p o l i t i c s , p u b l i c i n s t i t u t i o n s , a n d the g o v -
e r n i n g elite. T h e T r a n s p a r e n c y I n t e r n a t i o n a l ' s c o r r u p t i o n i n d e x t h a t
r a n k e d f i f t y - f o u r c o u n t r i e s a c c o r d i n g t o t h e degree o f d i f f u s i o n o f c o r r u p t
practices (see F i g u r e 1.2) f o u n d t h a t a n u m b e r o f d e m o c r a t i c c o u n t r i e s
( a m o n g t h e m Italy, B e l g i u m , S p a i n , a n d Greece) w e r e i n the h i g h l y c o r r u p t
g r o u p o f c o u n t r i e s a n d t h a t m a n y others (France, Japan, A u s t r i a , a n d t h e
U n i t e d States, f o r e x a m p l e ) w e r e i n t e r m e d i a t e . 8

M o r e o v e r , p o l i t i c a l c o r r u p t i o n a p p e a r s t o be o n t h e rise. T h i s c a n be
o b s e r v e d , f o r instance, l o o k i n g at the p a t t e r n s o f t h e e v o l u t i o n o f c o r r u p -
t i o n practices i n s o m e o f these c o u n t r i e s , a c c o r d i n g t o T r a n s p a r e n c y I n t e r -
 S? û5 <L> C T3
o

¡OI
9,00 '

8,00 '
O C e (ü =i
Ü_ «5 o - K -Q
7,00 ' 0(5
O
"i_
e '55 <
6,00 '

5,00 - "5 oí
O3 «5
ài
1
M «3 > , - 0 c

4,00

3,00

2,00

1,00

Figure 1.2. Perceptions of the degree of corruption in 1997 (from 10, clean; 0, completely corrupt). Data from Trans-
parency International and Göttingen University 1997)
Corruption and Democracy 7

Corruption ranking trends: 1980-1997

Figure 1.3. T.I. corruption ranking trends from 1980 to 1997 (from 10, clean; 0,
completely corrupt).(Data: elaboration from Transparency International & the
University of Göttingen 1997)

n a t i o n a l r a n k i n g s , as r e p r e s e n t e d i n F i g u r e 1.3. I t appears t h a t c o r r u p t i o n
has i n c r e a s e d — t a k i n g o n n e w f o r m s — r a t h e r t h a n decreasing o r b e i n g
e r a d i c a t e d , i n s i n u a t i n g itself i n t o the i n c r e a s i n g l y c o m p l e x relations
b e t w e e n state a n d m a r k e t , f e e d i n g off the c h a n g i n g needs created b y n e w
m e c h a n i s m s o f p o l i t i c a l consensus f o r m a t i o n ( " p o l i t i c s as spectacle") a n d
the crisis o f p o l i t i c a l a c t i v i s m , a n d t a k i n g a d v a n t a g e o f n e w techniques o f
m e d i a t i o n a n d m a n a g e m e n t o f the f i n a n c i a l resources for c o r r u p t i o n . 9

T h e recent d e m o c r a t i z a t i o n o f Eastern E u r o p e a c t u a l l y appears t o h a v e

created a n increase i n c o r r u p t i o n (e.g., Russia, H u n g a r y ) , w i t h m a n y o f
t h e m m o v i n g closer t o the h i g h l y c o r r u p t g r o u p . A l s o i n L a t i n A m e r i c a
(e.g., B r a z i l , A r g e n t i n a , C h i l e ) c o r r u p t i o n has a p p a r e n t l y increased its
scope after the m o v e t o w a r d d e m o c r a c y t h r o u g h o u t the r e g i o n , s o m e t i m e s
c h a n g i n g its features w i t h the i n c l u s i o n o f p r i v a t e businesses as a n e w
c o m p o n e n t i n a n o l d n e t w o r k o f p o l i t i c a l c l i e n t e l i s m ( L i t t l e 1992; R e h r e n
1997). I n r e l a t i o n t o the d e m o c r a t i c t r a n s i t i o n i n Eastern E u r o p e , Rose A c k -
e r m a n notes t h a t

democracy and the free market are not invariably a cure for corruption. A
shift from authoritarian to democratic rule does not necessarily reduce pay-
offs. Rather it redefines the country's norms of public behavior. A country
that democratizes without also creating and enforcing laws governing con-
flict of interest, financial enrichment, and bribery, risks undermining its frag-
ile new institutions through private wealth-seeking. A country that moves to
8 The Market for Corrupt Exchange

liberalize its economy without a similar reform of the state, risks creating
severe pressures on officials to share in the new private wealth. (1996:365, see
also 1994)

I n a d d i t i o n , d u r i n g transitions to democracy

the newly prescribed rules are too complex to be enforced, and thus "ritual-
ization" and re-interpretation in practice differs from what is written. Ritu-
als and imitations of exemplars from modern countries are highly devel-
oped, but cultural patterns are based on friendship and family ties, not on
rational choice and legal provisions. Actually, without re-interpretation, the
state cannot function; thus, this is the way the society adapts the abstract
proclamations to reality. (Kregar 1994:57)

I n t h i s s i t u a t i o n , the v e r y d e f i n i t i o n o f c o r r u p t i o n is t h e object o f s y m b o l i c
s t r u g g l e s t h a t i n v o l v e " c o n f l i c t s over: t h e b o u n d a r i e s b e t w e e n p u b l i c a n d
p r i v a t e roles, i n s t i t u t i o n s , a n d resources; t h e b o u n d a r i e s b e t w e e n state
a n d society; the d i s t i n c t i o n b e t w e e n i n d i v i d u a l a n d c o l l e c t i v e interests
a n d r i g h t s ; the d i s t i n c t i o n b e t w e e n p o l i t i c s a n d t h e a d m i n i s t r a t i o n ; a n d
conflict o v e r the p r o p e r e x t e n t a n d l i m i t s o f m a r k e t , b u r e a u c r a t i c , a n d p a t -
r i m o n i a l processes o f a l l o c a t i o n " (Johnston 1996:333).
T h e m a r k e t a p p r o a c h t h a t d o m i n a t e d i n t h e eighties does n o t suffice t o
r e d u c e p o l i t i c a l c o r r u p t i o n . I n fact, t h e v e r y privatization o f p u b l i c enter-
prises p r o d u c e s occasions f o r c o r r u p t i o n (Rose A c k e r m a n 1996). Some
characteristics o f t h e n e w t e n d e n c y t o w a r d a " l i g h t state"—such as t h e
lack of t r a i n i n g or guidelines i n decentralized management or b u d g e t a r y
r e s p o n s i b i l i t i e s , t h e o p p o r t u n i t y offered b y p r i v a t i z a t i o n a n d m a n a g e r i a l
d i s c r e t i o n , t h e pressure for o u t p u t - l e d p e r f o r m a n c e , the d e v e l o p m e n t o f a
m a n a g e m e n t c u l t u r e w i t h i n a p u b l i c service c o n t e x t — m a y e n d a n g e r p u b -
lic ethics. C o n c e r n has b e e n expressed " t o ensure t h a t t r a d i t i o n a l p u b l i c
sector v a l u e s are n o t n e g l e c t e d i n t h e effort t o m a x i m i z e e c o n o m y a n d effi-
c i e n c y " ( D o i g 1996:47-48). M o r e o v e r , m a r k e t globalization increases the
n u m b e r o f i n t e r n a t i o n a l transactions i n w h i c h

expedients that foster corruption are numerous: protectionist regulations

that the exports seek to circumvent... in which political or administrative
authorities are in a position to cash in; obligation when obtaining a contract
to use the service of brokers who are too often concerned with creaming off
a compulsory "commission/' tied loans, obliging the recipient state to use
these funds in the creditor country; intervention of the public authorities in
the negotiation and conclusion of contracts, especially when supplier and
client are themselves members of the public sector in their respective states.
(Many 1996:317)

T h e v i c t o r y o f t h e d e m o c r a t i c p o l i t i c a l m o d e l o n a w o r l d scale has b e e n
p a r a l l e l e d b y t h a t o f the free m a r k e t e c o n o m i c m o d e l . A l t h o u g h d e m o c -
Corruption and Democracy 9

r a c y a n d the m a r k e t are o f t e n c o n s i d e r e d coessential, c o r r u p t i o n is a

s y m p t o m o f s u b t e r r a n e a n f r i c t i o n b e t w e e n t h e t w o . E v e r y state sets
b o u n d a r i e s b e t w e e n internal a n d external p o w e r , the first d e r i v e d f r o m the
l e g i t i m a t e exercise o f l e g a l a u t h o r i t y , t h e second f r o m c o n t r o l o f m a r k e t
resources: " c o r r u p t i o n is t h e n d e f i n e d as a c t i v i t y w h i c h t e n d s t o o v e r s t e p
or m o v e t h e l i n e " ( P i z z o r n o 1992:14). W h a t is c o r r u p t i o n , after a l l , i f n o t
t h e a p p l i c a t i o n o f m a r k e t l o g i c t o r e l a t i o n s h i p s w h o s e t e r m s are f i x e d ,
according to democratic procedures, b y p u b l i c authority? H o w e v e r , the
e x t e n s i o n o f t h e p r i c e s y s t e m t o l e g a l p r o c e d u r e s a n d r i g h t s is n o t o n l y
c o n t r a r y t o d e m o c r a t i c v a l u e s , i t also obstructs t h e correct f u n c t i o n i n g o f
t h e m a r k e t itself. A s A r r o w notes,

[The] course of the law itself cannot be regarded as subject to the price sys-
tem. The judges and police may indeed be paid, but the system itself would
disappear if on each occasion they were to sell their services and decisions.
Thus the definition of property rights based on the price system depends
precisely on the lack of universality of private property and the price system.
(Arrow 1972:357)

W h e n t h e l a w , c o n f l i c t r e s o l u t i o n , t h e p r o t e c t i o n o f r i g h t s , a n d a l l those
o t h e r p u b l i c g o o d s t h a t are a necessary c o m p l e m e n t t o t h e m a r k e t s y s t e m
themselves b e c o m e the object o f c o r r u p t d e a l i n g a n d exchange, t h e n t h a t
m i n i m u m o f p r e d i c t a b i l i t y a n d r e g u l a r i t y t h a t a l l o w s e c o n o m i c actors t o
p r o f i t a b l y engage i n t h e i r business is r e m o v e d .
F u r t h e r , c o r r u p t i o n (to be f o u n d i n a n y p o l i t i c a l system) u n d e r m i n e s a
n u m b e r o f d e m o c r a c y ' s f u n d a m e n t a l p r i n c i p l e s . A s P i z z o r n o notes, "cor-
r u p t i o n t e n d s t o act u p o n those c o n d i t i o n s o f p o l i t i c a l a c t i v i t y w i t h o u t
w h i c h d e m o c r a c y is n o t d e m o c r a c y at a l l : the p r i n c i p l e o f transparency,
a n d w h a t m i g h t be c a l l e d e q u a l i t y o f p o l i t i c a l r i g h t s , e q u a l access t o the
state f o r a l l c i t i z e n s " (1992:17). C o r r u p t i o n is secret b y d e f i n i t i o n a n d p u b -
lic decisions affected b y i t therefore v i o l a t e t h e p r i n c i p l e o f transparency.
A s a result, c o r r u p t i o n u n d e r m i n e s t h e p o l i t i c a l c o n t r o l exercised b y c i t i -
zens, w h i c h " d e p e n d s p r e c i s e l y o n t h e greater o r lesser e x t e n t t o w h i c h t h e
actions o f t h e s u p r e m e p o w e r are offered t o t h e p u b l i c , are v i s i b l e , k n o w -
able, accessible, a n d therefore c o n t r o l l a b l e " ( B o b b i o 1980:186). F u r t h e r -
m o r e , t h e a r b i t r a r y decisions o f c o r r u p t agents p r o d u c e i n e q u a l i t y o f
access t o t h e benefits o f state a c t i o n a n d " c i t i z e n s w i l l feel t h e y c o u n t o n l y
insofar as t h e y know someone or can contact someone w h o w i l l r e n d e r access
to t h e m a c h i n e r y o f state p o s s i b l e " ( P i z z o r n o 1992:21, e m p h a s i s a d d e d ) .
A s w i l l b e c o m e clear f r o m o u r research, m o r e o v e r (see p a r t i c u l a r l y
C h a p t e r s 2 , 3 , a n d 4), c o r r u p t i o n t e n d s t o m o d i f y t h e n a t u r e as w e l l as t h e
o u t c o m e o f the c o m p e t i t i o n f o r v o t e s t h a t lies at t h e h e a r t o f the d e m o c r a -
tic process. I t encourages t h e selection o f p o l i t i c i a n s f o r t h e i r l a c k o f s c r u -
ples a n d the s k i l l t h e y d i s p l a y i n r e i n v e s t i n g t h e resources a c c u m u l a t e d
t h r o u g h i l l e g a l a c t i v i t y : m o n e y , e l e c t o r a l s u p p o r t , t r u s t , i n f o r m a t i o n , etc.
10 The Market for Corrupt Exchange

M o n e y plays an increasingly i m p o r t a n t role i n m o d e r n , postideological

p o l i t i c s , a n d i t is f r e q u e n t l y t h e c a n d i d a t e w i t h t h e m o s t t o s p e n d o n a n
electoral c a m p a i g n r a t h e r t h a n t h e one w i t h t h e w e i g h t i e r p o l i t i c a l p r o -
g r a m w h o t r i u m p h s . M o n e y f r o m p a y o f f s a n d i l l e g a l c o n t r i b u t i o n s c a n be
e m p l o y e d i n a c q u i r i n g votes, t h e r e b y s e t t i n g off a n i n f l a t i o n a r y s p i r a l t h a t
intensifies the f i n a n c i a l pressures o n all p a r t i c i p a n t s i n t h e p o l i t i c a l contest,
encourages recourse t o c o r r u p t i o n , a n d r e w a r d s those able t o g a i n access
to p o s i t i o n s o f p o w e r , w h i c h p e r m i t t h e m t o a u g m e n t e v e n f u r t h e r t h e
resources t h e y d e r i v e f r o m c o r r u p t i o n . F o r these reasons, c o r r u p t i o n in a
d e m o c r a c y is a l w a y s the c o r r u p t i o n of a democracy, s o m e t h i n g n o t t r u e o f
o t h e r p o l i t i c a l systems.
T h e n e g a t i v e consequences o f c o r r u p t i o n are felt t h r o u g h o u t society. A s
w i l l be seen later (see p a r t i c u l a r l y C h a p t e r s 5, 6, a n d 7), c o r r u p t i o n gives
rise t o a w h o l e succession o f social costs. Some o f these are easily a m e n a b l e
to d i r e c t m e a s u r e m e n t i n e c o n o m i c t e r m s , s u c h as the i n f l a t e d cost o f p u b -
lic w o r k s a n d services, i n e f f i c i e n t c o n t r a c t o r selection, a n d the w a s t e o f
those resources u s e d i n c o n c e a l i n g i l l e g a l a c t i v i t i e s a n d o b t a i n i n g p o l i t i c a l
rents (or " r e n t s " o b t a i n e d t h r o u g h p o l i t i c a l decisions a n d p r o t e c t i o n ) .
Besides these m o r e easily m e a s u r a b l e ones, c o r r u p t i o n also has o t h e r l o n g -
t e r m n e g a t i v e consequences. O n t h e one h a n d , t h e s p r e a d o f c o r r u p t i o n
w i t h i n the p u b l i c service i n t r o d u c e s e l e m e n t s o f inefficiency, w h e r e t h e
p r i m a r y p u r p o s e o f a n o p e r a t i o n b e c o m e s the g e n e r a t i o n o f p a y o f f s . O n
the other, the confidence o f those i n a n o r g a n i z a t i o n n o t d i r e c t l y i n v o l v e d
i n c o r r u p t i o n is u n d e r m i n e d , l e a d i n g t o g e n e r a l i z e d inefficiency. A t t h e
l e v e l o f the p o l i t i c a l s y s t e m as a w h o l e , t h e s p r e a d o f c o r r u p t i o n erodes t h e
s u p p o r t a n d t r u s t o f citizens i n d e m o c r a c y , i n p u b l i c i n s t i t u t i o n s i n g e n -
eral, a n d i n the p o l i t i c a l class i n p a r t i c u l a r (Johnston 1986:142,1982:172ff.).
Italy, p r o b a b l y the c o u n t r y t h a t has suffered t h e m o s t w i d e s p r e a d c o r r u p -
t i o n i n E u r o p e , has r e g u l a r l y a n d easily t o p p e d t h e p e r i o d i c c o m p a r a t i v e
o p i n i o n p o l l s c o n d u c t e d b y E u r o b a r o m e t e r o n levels o f dissatisfaction
w i t h t h e f u n c t i o n i n g o f t h e p o l i t i c a l s y s t e m (see F i g u r e 1.4). D i s t r u s t , as
10

p r e d i c t a b l e , increased w i t h the b e g i n n i n g o f t h e mani pulite i n v e s t i g a t i o n s

on corruption
A n analysis o f t h e d y n a m i c s o f c o r r u p t i o n ( d e v e l o p e d i n C h a p t e r 9 i n
p a r t i c u l a r ) f u r t h e r i n d i c a t e s t h a t t h i s i l l e g a l a c t i v i t y feeds o f f itself: " t h e
c r i t i c a l a t t i t u d e t o w a r d s t h e n o n - c o r r u p t i n a c o r r u p t society is a m a i n
m e c h a n i s m b e h i n d t h i s s n o w b a l l effect" (Elster 1989a:268). W h e r e t h e r e is
c o r r u p t i o n t h e n o n c o r r u p t are l e d t o c o l l u d e w i t h i t , o r at least accept i t , i n
o r d e r t o o b t a i n p o l i t i c a l a d v a n t a g e . T h e g e n e r a l i z a t i o n o f s u c h practices,
a n d the v e r y attempt to combat t h e m t h r o u g h denunciations of the " c l i -
m a t e o f c o r r u p t i o n " ( M y r d a l 1968:409), s t r e n g t h e n s the i d e a t h a t w h e r e so
m a n y others are d o i n g so, i t m u s t be correct t o engage i n c o r r u p t i o n . C o r -
r u p t agents d e l i b e r a t e l y i n t r o d u c e c o n d i t i o n s o f u n p r e d i c t a b i l i t y a n d inef-
ficiency i n t o p u b l i c affairs i n o r d e r t o facilitate c o r r u p t i o n . These c o n d i -
Figure 1.4. Dissatisfaction ("not very satisfied" and "not at all satisfied") with the functioning of democracy.
Elaboration from Eurobarometer trends, 1974-1995, Brussels.
12 The Market for Corrupt Exchange

t i o n s t h e n s p o n t a n e o u s l y r e p r o d u c e because those i n i t i a l l y h o s t i l e t o s u c h
practices are e x c l u d e d . M o r e o v e r , a " b a d " c o l l e c t i v e r e p u t a t i o n o f p u b l i c
a d m i n i s t r a t o r s creates " m o r e i n c e n t i v e s t o engage i n c o r r u p t a c t i v i t i e s
t h a n i f they h a d always behaved honestly," d e t e r m i n i n g even for n e w -
c o m e r s a v i c i o u s circle " w h e r e t h e n e w g e n e r a t i o n s suffer f r o m t h e o r i g i -
n a l s i n o f t h e i r e l d e r s " (Tiróle 1996:3). T h e m o r e w i d e s p r e a d t h e p h e n o m -
e n o n becomes, n a t u r a l l y , t h e greater the e c o n o m i c a n d social costs
s h o u l d e r e d b y the e n t i r e c o m m u n i t y f o r the e x c l u s i v e b e n e f i t o f a s m a l l
c l i q u e o f c o r r u p t i n d i v i d u a l s . A s s h o w n b y the I t a l i a n case, c o r r u p t i o n c a n
b e c o m e a p e r v a s i v e p h e n o m e n o n , m u l t i p l y i n g its p e r v e r s e effects a n d
l e a d i n g a c o u n t r y t o a serious p o l i t i c a l , i n s t i t u t i o n a l , a n d e c o n o m i c crisis.
T h e m u l t i p l i c a t i o n o f p o l i t i c a l scandals p r o d u c e d a n increased s e n s i t i v -
i t y t o the issue o f c o r r u p t i o n . I n 1993, T r a n s p a r e n c y I n t e r n a t i o n a l , a n i n t e r -
n a t i o n a l N G O , w a s created w i t h the task o f r e p r e s e n t i n g f o r t h e f i g h t
against c o r r u p t i o n w h a t A m n e s t y I n t e r n a t i o n a l has r e p r e s e n t e d f o r the
s t r u g g l e against h u m a n r i g h t s v i o l a t i o n . T h e basic a s s u m p t i o n o f Trans-
p a r e n c y I n t e r n a t i o n a l is t h a t c o r r u p t i o n is m a i n l y e x p o r t e d f r o m t h e " F i r s t
W o r l d " t o the d e v e l o p i n g c o u n t r i e s . A s its p r e s i d e n t w a r n e d : " C o r r u p t i o n
has b e c o m e one o f the m o s t d e v a s t a t i n g obstacles t o e c o n o m i c a n d social
d e v e l o p m e n t i n t h e d e v e l o p i n g c o u n t r i e s " ( E i g e n 1994:65). M u l t i n a t i o n a l
f i r m s h a v e b e e n accused o f s p r e a d i n g p o l i t i c a l c o r r u p t i o n t o t h e T h i r d
W o r l d , i n p a r t i c u l a r " t h r o u g h the e x p e c t a t i o n s o f officials i n t h e l o w cor-
r u p t i o n e n v i r o n m e n t . I f t h e y are q u i c k t o l e a r n t h a t these f i r m s k n o w t o
bribe, and m a y p a y y o u i f y o u have some valuable i n f o r m a t i o n or deci-
s i o n - m a k i n g p o w e r , t h e i r c h a n g e i n b e h a v i o r m a y be r a t h e r s u d d e n "
( A n d v i g 1996:20). A n u m b e r o f i n t e r n a t i o n a l c o n f e r e n c e s — a m o n g o t h e r s ,
seven I n t e r n a t i o n a l A n t i - C o r r u p t i o n conferences a n d f i v e Ethics i n P u b l i c
Services conferences—testify t o the g r o w i n g c o n c e r n w i t h p o l i t i c a l m a l -
practice. T h e s t r u g g l e against c o r r u p t i o n w a s the m a i n t o p i c o f t h e p r e s i -
d e n t i a l o p e n i n g speech at t h e I M F - W o r l d B a n k A n n u a l m e e t i n g a n d is
u n d e r e x a m i n a t i o n i n s u c h i n t e r n a t i o n a l b o d i e s as G 7 , the E u r o p e a n p a r -
l i a m e n t , a n d the E u r o p e a n C o m m i s s i o n ( C o m m i s s i o n e d e l l e C o m u n i t à
E u r o p e e 1997). Recently, s o m e c o u n t r i e s , a m o n g t h e m G r e a t B r i t a i n ,
a d o p t e d a l a w s i m i l a r t o the U.S. F o r e i g n C o r r u p t i o n Practices A c t , w h i c h ,
a p p r o v e d i n 1977, w a s subject t o h a r s h attacks i n t h e eighties ( R o s e n t h a l
1989). I n 1996 the I n t e r n a t i o n a l C h a m b e r o f C o m m e r c e ( I C C ) a d o p t e d n e w
rules of conduct o n e x t o r t i o n a n d bribes i n i n t e r n a t i o n a l transactions (ICC
1996). T h e f o l l o w i n g year the O r g a n i z a t i o n f o r E c o n o m i c C o o p e r a t i o n a n d
Development (OECD) approved a Recommendation o n Bribery i n Inter-
n a t i o n a l Business Transactions, w h i c h calls o n m e m b e r c o u n t r i e s t o m a k e
the b r i b i n g o f p u b l i c officers a c r i m e ( O E C D 1 9 9 7 ) . 11

I n o u r research, w e u s e d t h e I t a l i a n case t o a n a l y z e those i n t e r l i n k e d fac-

t o r s t h a t i n f l u e n c e the s p r e a d a n d characteristics o f c o r r u p t i o n i n d e m o c -
ratic r e g i m e s . O u r focus o n I t a l y is j u s t i f i e d n o t o n l y b y the l a r g e d i m e n s i o n
Corruption and Democracy 13

t h e p h e n o m e n o n reached i n t h i s c o u n t r y , b u t also b y its u n p a r a l l e l e d p u b -

lic e x p o s u r e t h a n k s t o t h e j u d i c i a l i n q u i r i e s . Besides d e n o u n c i n g w h a t b o t h
m e d i a a n d p o l i t i c i a n s h a v e c o m e t o describe as t h e crisis o f the " F i r s t I t a l -
i a n R e p u b l i c , " s u c h j u d i c i a l i n q u i r i e s p r o v i d e i n fact a n e n o r m o u s a m o u n t
o f m a t e r i a l f o r t h e analysis o f w h a t can be d e f i n e d — p a r a p h r a s i n g B a c h r a c h
a n d Baratz (1970)—as t h e " o t h e r face o f p o w e r . " R e v i e w i n g t h e i n f o r m a -
t i o n t h a t has e m e r g e d f r o m t h e mani pulite i n q u i r y since 1992 a n d t h a t
s l o w l y a c c u m u l a t e d i n earlier j u d i c i a l i n q u i r i e s , i t is possible t o r e c o n s t r u c t
c e r t a i n aspects o f t h a t " i n v i s i b l e " l e v e l o f I t a l i a n p o l i t i c s t h a t has h a d s u c h
a n i m p o r t a n t i n f l u e n c e o n t h e " v i s i b l e " one. T h e I t a l i a n case c a n therefore
be c o n s i d e r e d as a s o r t o f m a g n i f y i n g glass f o r the analysis o f m o r e g e n e r a l
p a t t e r n s o f c o r r u p t i o n i n d e m o c r a t i c systems. N o t w i t h s t a n d i n g t h i s focus
o n a s i n g l e n a t i o n a l case, w e w i l l use the a v a i l a b l e scientific research o n
o t h e r d e m o c r a t i c c o u n t r i e s t o d e v e l o p cross-national c o m p a r i s o n s . 12

1.2. The Roots of Italian Corruption

T h e past f i f t y years o f I t a l i a n h i s t o r y has b e e n m a r k e d b y n u m e r o u s sen-

s a t i o n a l scandals ( G a l l i 1991; T u r o n e 1992), t h r o u g h w h i c h c o r r u p t i o n has
b e e n b r o u g h t t o l i g h t ( o n l y t o be s w i f t l y c o v e r e d u p a g a i n i n m a n y cases).
T h e f r e q u e n c y a n d m a g n i t u d e o f these scandals has n o t i c e a b l y increased
i n t h e past t w e n t y - f i v e years, c u l m i n a t i n g i n the recent p o l i t i c a l u p h e a v a l s
caused b y the mani pulite c o r r u p t i o n i n v e s t i g a t i o n s , w h i c h h a v e p r o d u c e d
t h e deepest p o l i t i c a l crisis i n t h e h i s t o r y o f t h e I t a l i a n r e p u b l i c . T h e per-
ception of widespread illegality i n administration of public p o w e r b y Ital-
i a n b u r e a u c r a t s a n d p o l i t i c i a n s has t h u s f o u n d s i g n i f i c a n t c o n f i r m a t i o n .
T h e e x p o s u r e o f w h a t h a d b e e n the " h i d d e n face" o f p u b l i c p o w e r d e m o n -
strates t h a t t h e m a r k e t f o r c o r r u p t i o n has, f o r m a n y years, represented the
d e t e r m i n i n g factor f o r a v a s t r a n g e o f ( f r e q u e n t l y i l l e g a l ) a c t i v i t i e s b a s e d
o n t h e a p p r o p r i a t i o n o f p u b l i c resources b y state f u n c t i o n a r i e s , a g r o u p o f
e n t r e p r e n e u r s b e n e f i t i n g f r o m p o l i t i c a l p r o t e c t i o n , a n d actors f r o m t h e
criminal world.
A s t h e scandal a b o u t the c o v e r t m a s o n i c l o d g e P2 (see C h a p t e r 6) h a d
a l r e a d y b e g u n t o r e v e a l i n t h e eighties, the concealed d i m e n s i o n o f p u b l i c
a c t i v i t y , a n d c o r r u p t i o n i n p a r t i c u l a r , has e x e r t e d a c r u c i a l i n f l u e n c e o n
p u b l i c p o l i c y since t h e i m m e d i a t e p o s t w a r p e r i o d . I n t h e 1950s, r e l a t i o n s
w i t h l e a d i n g p o l i t i c i a n s a n d t h e h i g h e r echelons o f the b u r e a u c r a c y w e r e
m o n o p o l i z e d b y Confindustria (the i n d u s t r i a l e m p l o y e r s ' association) a n d
t h e electric c o m p a n i e s , w h i c h g e n e r o u s l y f i n a n c e d p r o - W e s t e r n p u b l i c
e x p o n e n t s . A sort o f c o m p e t i t i o n t o o b t a i n a p r i v i l e g e d p o s i t i o n t h r o u g h
c o r r u p t i o n d e v e l o p e d t h e n b e t w e e n the p r i v a t e a n d p u b l i c sectors o f
i n d u s t r y . E u g e n i o Cefis, f o r m e r p r e s i d e n t o f E N I (Ente N a z i o n a l e I d r o c a r -
b u r i , t h e p u b l i c b o d y responsible f o r i n d u s t r i a l p o l i t i c s i n the o i l m a r k e t ) ,
has since stated:
14 The Market for Corrupt Exchange

It was decided after the war that the state-owned sector had to compete on
an equal footing with the private sector. The private sector financed the polit-
ical parties, and how! They even used the contributions we in the state sec-
tor paid to Confindustria. You understand, they used our money to obtain
decisions that favored them and damaged us. Were we supposed to just
stand back and watch? (L'Espresso, 22 November 1991, p. 41)

M o r e o v e r , I t a l y ' s h i s t o r y presents t h e c i r c u m s t a n c e o f a p o w e r f u l m o n -
e t a r y input o r i g i n a t i n g a b r o a d . I m m e d i a t e l y f o l l o w i n g t h e w a r , I t a l y w a s
contested t e r r a i n b e t w e e n t h e t w o d o m i n a n t w o r l d p o w e r blocs a n d i t w a s
f r o m t h e m t h a t the t w o p r i n c i p a l I t a l i a n parties, t h e C h r i s t i a n D e m o c r a t s
(Democrazia Cristiana, D C ) a n d the Italian C o m m u n i s t Party (Partito
C o m u n i s t a Italiano, PCI), took their political lead. H u g e sums of m o n e y
a r r i v e d f r o m b o t h t h e U n i t e d States a n d t h e Soviet U n i o n t o finance t h e
p o l i t i c a l life a n d electoral a c t i v i t i e s o f the parties ( C o l b y a n d F o r b a t h
1981:86-87). T h e d r y i n g u p o f A m e r i c a n s u b v e n t i o n s t o t h e D C a n d t h e
a d v e n t o f t h e center-left i n t h e 1960s c o i n c i d e d w i t h t h e b e g i n n i n g s o f t h e
p o l i c y o f large-scale n a t i o n a l i z a t i o n a n d g r o w i n g p u b l i c i n t e r v e n t i o n i n
the economy. F r o m then o n , covert activities concentrated o n this field of
p u b l i c a c t i o n , i n w h i c h t h e curbs a n d c o n t r o l s o n a n a d m i n i s t r a t i o n g e a r e d
t o the (often o p e n l y i l l e g a l ) a c c u m u l a t i o n o f p o l i t i c a l f u n d i n g w e r e
steadily being eroded. Their deposits abroad a l l o w e d the m a i n parties to
d e v e l o p s t r o n g a n d c o s t l y apparatuses, w i t h a n e t w o r k o f l o c a l h e a d q u a r -
ters, p u b l i c a t i o n s , a n d p a i d p e r s o n n e l , c r e a t i n g i n t h i s w a y e c o n o m i c
needs t h a t c o u l d n o t be easily r e a b s o r b e d . Part o f t h e b u d g e t o f p u b l i c e n t i -
ties therefore b e c a m e t h e " p r o p e r t y " o f g o v e r n m e n t e x p o n e n t s , w h o n o m -
i n a t e d t h e i r o w n m e n t o t h e p o s i t i o n s o f c o m m a n d . I n these years o f
n o t a b l e e x p a n s i o n i n t h e area o f p u b l i c e n t r e p r e n e u r i a l a c t i v i t y , a b o u n t i -
f u l flow o f b r i b e s a r r i v e d f r o m m a j o r p u b l i c enterprises s u c h as E N I a n d
I R I ( I s t i t u t o p e r la R i c o s t r u z i o n e I n d u s t r i a l e , t h e p u b l i c b o d y i n charge o f
i n d u s t r i a l d e v e l o p m e n t ) . F r o m its c r e a t i o n i n 1952, E N I w a s a g e n e r o u s
f i n a n c i a l benefactor o f p r o m i n e n t p o l i t i c a l f i g u r e s . T h e p a r a d o x i c a l s i t u -
13

a t i o n t h u s arose o f p u b l i c agents s p e n d i n g p u b l i c m o n e y o n o t h e r c o r r u p t
p u b l i c agents, t o o v e r c o m e the h i d d e n i n f l u e n c e o f p r i v a t e e n t r e p r e n e u r s .
E N I i n t h i s w a y m a n a g e d " t o c o n d i t i o n e v e n the m o s t p r o m i n e n t m e m b e r s
o f t h e p o l i t i c a l class a n d t o d e t e r m i n e i m p o r t a n t g o v e r n m e n t a l decisions
i n i n t e r n a l a n d f o r e i g n p o l i c y , i n exchange f o r s u b s t a n t i a l p a t r o n a g e o f
g o v e r n m e n t offices, p o l i t i c a l factions o r m e m b e r s o f p a r l i a m e n t , C h r i s t -
i a n - D e m o c r a t o r o t h e r w i s e " (Perrone 1991:33). 14

T h e concealed a c c u m u l a t i o n o f f i n a n c i a l resources f o r p o l i t i c a l a c t i v i t y
was intensified, then, t h r o u g h the ( m a l ) a d m i n i s t r a t i o n of p u b l i c power.
T h e " l e g i t i m a t i o n " f o r d e m a n d i n g (greater o r lesser) k i c k b a c k s also
d e p e n d e d o n electoral results, t h u s c r e a t i n g i n c e n t i v e s t o spare n o f i n a n -
cial effort i n t h a t area. W i t h t h e e a r l y scandals c o n c e r n i n g I R I ' s secret
Corruption and Democracy 15

f u n d s , m o r e c a u t i o n w a s r e q u i r e d i n the u t i l i z a t i o n o f p u b l i c resources i n
the 1970s. Confindustria w a s b e c o m i n g a n i n c r e a s i n g l y a r t i c u l a t e d o r g a n i -
z a t i o n a n d w a s n o l o n g e r capable o f h a n d l i n g b o t h r e l a t i o n s h i p s w i t h the
p o l i t i c a l w o r l d a n d t h e clandestine l o b b y i n g o f the b u r e a u c r a t i c a p p a r a t u s
i n a m a n n e r satisfactory t o a l l enterprises. O n the o t h e r h a n d , the e x p o -
n e n t i a l g r o w t h o f p o l i t i c i a n s ' f i n a n c i a l needs—at the l o c a l l e v e l as w e l l ,
f o l l o w i n g r e g i o n a l d e c e n t r a l i z a t i o n — d e m a n d e d ever greater resources.
Payoffs c l i m b e d t o a s t r o n o m i c a l levels: f r o m the 7 b i l l i o n d o l l a r s trans-
f e r r e d b y the Banco A m b r o s i a n o t o a secret account o f the PSI i n 1981, t o
the 150 b i l l i o n p a i d t o p r i n c i p a l g o v e r n m e n t e x p o n e n t s i n the e a r l y 1990s
for the E n i m o n t a f f a i r . 15

To a u g m e n t the flow o f f i n a n c i a l resources a n d d i m i n i s h the risks,

p o l i t i c i a n s e n t e r e d d i r e c t l y i n t o the r u n n i n g o f p u b l i c agencies, f u r t h e r
e x t e n d i n g t h e i r sphere o f d i r e c t p o l i t i c a l c o n t r o l . T h u s , a c c o r d i n g t o Cefis,
b e g i n n i n g i n the 1970s "the n e w g o v e r n m e n t p h i l o s o p h y [ t o w a r d E N I ]
w a s t o get d e e p l y i n v o l v e d i n its r u n n i n g (even i n t e r v e n i n g i n the a p p o i n t -
m e n t o f t o p m a n a g e r s ) a n d n o t s i m p l y t o p r o v i d e general d i r e c t i v e s a n d
effectuate the necessary c o n t r o l s " (L'Espresso, 6 June 1993, p . 6 8 ) . T h e sys- 16

t e m o f b r i b e s seems t o h a v e e x p a n d e d d r a m a t i c a l l y b e t w e e n the e n d o f the

1970s a n d b e g i n n i n g o f the 1980s. A c c o r d i n g t o the e n t r e p r e n e u r V i n c e n z o
L o d i g i a n i , the s i m u l t a n e o u s presence o f the v a r i o u s circumstances
d e s c r i b e d a b o v e m a d e i t "necessary f o r the parties t o o p e n a d i r e c t T i n e '
w i t h e n t r e p r e n e u r s w h o i n t e n d e d e n t e r i n g the w o r l d o f p u b l i c s u p p l y a n d
c o n t r a c t i n g " ( T N M : 4 1 ) . I n t h i s m a r k e t for c o r r u p t i o n the o p p o s i t i o n t o o
w o u l d s o m e t i m e s be i n v o l v e d i n c o v e r t b a r g a i n i n g , either i n o r d e r t o
a d v a n c e p r o t e c t e d f i r m s or occasionally, i n m o r e recent years, also t o
receive bribes. A s a l e a d i n g p o l i t i c a l a d m i n i s t r a t o r o f D C i n M i l a n , M a u r -
i z i o P r a d a , observes: " T h e d e v e l o p m e n t , g r o w t h a n d r a t i o n a l i z a t i o n o f
t h i s s y s t e m o f i l l e g a l f i n a n c i n g came at the m o m e n t the t r a d i t i o n a l i d e o -
l o g i c a l c o n f r o n t a t i o n b e t w e e n the parties d e c l i n e d a n d the t i m e o f conso-
c i a t i o n a l i s m b e g a n . . . . I t became m u c h easier t o treat f i n a n c i n g p r o b l e m s
together" (PM:25). The system of c o r r u p t i o n b y this t i m e h a d t h o r o u g h l y
i n f e c t e d e v e r y sector o f the state, local, a n d c e n t r a l a d m i n i s t r a t i o n s , p u b l i c
agencies a n d enterprises, the m i l i t a r y a p p a r a t u s , a n d the bureaucracy,
i n c l u d i n g the j u d i c i a l p o w e r .
T h i s clandestine p o l i t i c a l m a r k e t created a s t r u c t u r e o f i n v i s i b l e n o r m s
m o r e p o w e r f u l t h a n the l a w s o f the state (see C h a p t e r 9). T h e latter c o u l d
be v i o l a t e d w i t h i m p u n i t y , w h i l e a n y o n e w h o c h a l l e n g e d the c o n v e n t i o n s
o f the i l l i c i t m a r k e t w o u l d m e e t w i t h c e r t a i n p u n i s h m e n t . Those o c c u p y -
i n g the p r i n c i p a l p u b l i c roles m o v e d a r o u n d easily w i t h i n t h i s p e r v a s i v e
s y s t e m o f h i d d e n exchange, l e g i s l a t i n g a n d d i r e c t i n g the affairs o f the state
a n d o f p u b l i c entities ( d e l l a P o r t a 1992,1996b). A t the same t i m e , t h e y acted
as g u a r a n t o r s for the f u n c t i o n i n g o f the i l l e g a l m a r k e t , w h i c h d i r e c t e d
e v e r y p u b l i c a c t i o n o f a n y e c o n o m i c i m p o r t a n c e . T h e careers o f p o l i t i c i a n s
16 The Market for Corrupt Exchange

a n d p u b l i c f u n c t i o n a r i e s d e p e n d e d o n t h e i r a b i l i t y t o create n e t w o r k s o f
clandestine contacts a n d t o i n v e s t t h e p r o c e e d s o f c o r r u p t i o n p o l i t i c a l l y .
O n t h e o t h e r side o f t h e m a r k e t , c i t i z e n s ' a n d b u s i n e s s m e n ' s l a c k o f t r u s t
i n t h e i m p a r t i a l i t y a n d efficiency o f p u b l i c a c t i o n a u g m e n t e d t h e d e m a n d
for p u r c h a s i n g favors. I n these circumstances, t h e interests o f a l l actors
i n v o l v e d l a y i n a c c e p t i n g t h e status q u o , r e c e i v i n g o r p a y i n g b r i b e s , r a t h e r
t h a n i n d e n o u n c i n g c o r r u p t i o n , despite the fact t h a t s o m e o f t h e m m i g h t
be a w a r e o f the d i s a s t r o u s effects o f s u c h b e h a v i o r o n t h e c o l l e c t i v i t y .

2. A THEORETICAL MODEL FOR UNDERSTANDING

POLITICAL CORRUPTION

2.1. What Is Corruption?

T h e t e r m c o r r u p t i o n has a s s u m e d d i f f e r e n t c o n n o t a t i o n s i n d i f f e r e n t h i s -
t o r i c a l p e r i o d s . I n a classic c o n c e p t i o n , p o l i t i c a l c o r r u p t i o n i n d i c a t e d t h e
d e g e n e r a t i o n o f the p o l i t i c a l s y s t e m i n general: f o r M a c h i a v e l l i , i t w a s t h e
destruction of citizens' virtues; for M o n t e s q u i e u , the perversion of a g o o d
p o l i t i c a l o r d e r i n t o a n e v i l one; f o r Rousseau, t h e i n e v i t a b l e consequence
o f t h e v e r y s t r u g g l e for p o w e r . 1 7
Later, p o l i t i c a l c o r r u p t i o n s t a r t e d t o b e
c o n s i d e r e d a specific p a t h o l o g y r a t h e r t h a n a g e n e r a l disease ( F r i e d e r i c h
1972:135):

[IJronically, as the scope of politics has broadened, our conception of cor-

ruption has narrowed. Society has become secularized and fragmented;
many, are seen more as arenas for contention among groups and interests
than as embodying any coherent system of values; and ethical issues in pol-
itics revolve more around maintaining the fairness of that competition than
around the pursuit of fundamental moral goals . . . "corruption" now refers
to specific actions by specific individuals. (Johnston 1996:322)

I n t h e m o d e r n sense o f t h e w o r d , t h e presence o f c o r r u p t i o n r e q u i r e s a l i m -
i t e d p o w e r : " M o d e r n c o n c e p t i o n s o f c o r r u p t i o n are b a s e d o n t h e i d e a o f
e x p l i c i t l y p u b l i c roles e n d o w e d w i t h l i m i t e d p o w e r s a n d b o u n d b y i m p e r -
s o n a l o b l i g a t i o n s " (ibid.:327). A c c o r d i n g l y , c o r r u p t i o n refers t o t h e abuse
of p u b l i c resources f o r p r i v a t e g a i n , t h r o u g h a h i d d e n t r a n s a c t i o n t h a t
i n v o l v e s the v i o l a t i o n o f s o m e s t a n d a r d s o f b e h a v i o r . 18

To u n d e r s t a n d t h e l o g i c o f c o r r u p t i o n , i t is necessary t o a n a l y z e t h e rela-
t i o n s h i p e x i s t i n g i n a n y o r g a n i z a t i o n b e t w e e n the agent, t h e p e r s o n dele-
g a t e d t o take decisions, a n d t h e principal, o n w h o s e b e h a l f t h a t a g e n t a c t s . 19

There is c o r r u p t i o n :

1. W h e n t h e r e is a secret v i o l a t i o n o f a c o n t r a c t t h a t , i m p l i c i t l y o r
e x p l i c i t l y , specifies a d e l e g a t i o n o f r e s p o n s i b i l i t y a n d t h e exercise o f s o m e
discretionary power.
A Theoretical Model 17

2. W h e n a n agent w h o , against the interests o r preferences o f the prin­

cipal, acts i n f a v o r o f a third party, f r o m w h i c h h e receives a r e w a r d .

A r e l a t i o n o f t h i s k i n d can exist e v e n i n the p r i v a t e sector, f o r e x a m p l e ,

b e t w e e n the m a n a g e r a n d the s t o c k h o l d e r s o f a c o m p a n y : W h e n the m a n -
ager sells secret i n f o r m a t i o n t o a c o m p e t i n g f i r m , w e h a v e a n instance o f
private c o r r u p t i o n . F o c u s i n g o n p o l i t i c a l a n d b u r e a u c r a t i c c o r r u p t i o n i n a
d e m o c r a t i c r e g i m e , w e s h o u l d a d d a t h i r d e l e m e n t o f the d e f i n i t i o n :

3. T h e p r i n c i p a l is the state, or, better, the c i t i z e n r y .

T h e f u n c t i o n i n g o f a d e m o c r a t i c g o v e r n m e n t can i n fact be c o n c e i v e d as
a s y s t e m o f p r i n c i p a l - a g e n t r e l a t i o n s h i p s b e t w e e n electorate, elected o f f i -
cials, a n d b u r e a u c r a t s . T h e " c o n t r a c t " t h a t p u b l i c a d m i n i s t r a t o r s s t i p u -
20

late w i t h the state—and therefore w i t h the citizens t h e state represents—

i m p o s e s respect f o r c e r t a i n r u l e s r e s t r i c t i n g the d i s c r e t i o n a r y p o w e r o f t h e
agent, u n i v e r s a l l y a d o p t e d for l i m i t i n g the p o t e n t i a l conflict b e t w e e n t h e
p r i v a t e interests o f the agent a n d those o f the p r i n c i p a l (i.e., the p u b l i c ) . W e
h a v e a c o r r u p t t r a n s a c t i o n w h e n a p u b l i c agent does n o t respect these
r u l e s because o f the i n t e r v e n t i o n o f a t h i r d p a r t y , the c o r r u p t e r . T h e l a t -
21

ter i n d u c e s the p u b l i c agent t o s u r r e n d e r the resources c o n n e c t e d t o h i s

role (decisional power, p r i v i l e g e d information, protection) i n order to
obtain—or increasing his probability of obtaining—property rights u p o n
a p o l i t i c a l rent. I n exchange f o r these resources, the t h i r d p a r t y offers t o the
p u b l i c agent a q u o t e o f t h e v a l u e o f s u c h p o l i t i c a l rent, t y p i c a l l y i n t h e f o r m
of a b r i b e . C o r r u p t i o n i n v o l v e s a v i o l a t i o n , i n f a v o r o f the c o r r u p t e r , o f the
r u l e s t h a t s h o u l d enforce r e s p e c t i n g the p r i n c i p a l s ' interest.
B e h i n d e v e r y c o r r u p t exchange there are t h e n three subjects: p r i n c i p a l ,
agent, a n d c o r r u p t e r . A s J o h n s t o n says, t h i s a p p r o a c h "shifts the focus o f
analysis f r o m i n d i v i d u a l actions j u d g e d against e x t e r n a l ( a n d , at t i m e s ,
static) s t a n d a r d s t o the significance o f officials a n d c l i e n t s ' c o n d u c t w i t h i n
a n i n s t i t u t i o n a l a n d p o l i t i c a l s e t t i n g " (1996:326). I n o u r analysis, a l t h o u g h
f o c u s i n g o n t h e r e l a t i o n s h i p b e t w e e n p u b l i c agent a n d t h i r d p a r t y i n cor-
r u p t exchange, w e w i l l also address the consequences o f those a c t i v i t i e s
for the p r i n c i p a l , t h a t is, f o r the c o l l e c t i v i t y . E v e n w i t h these specifications,
the t e r m corruption c o n t i n u e s t o be a p p l i e d t o a large v a r i e t y o f p h e n o m -
ena, a n d i t is therefore necessary t o d i s t i n g u i s h b e t w e e n d i f f e r e n t t y p e s o f
c o r r u p t exchange. A s f o r the actors i n v o l v e d , b r i b e r y can i m p l i c a t e p o l i t i -
cians o r b u r e a u c r a t s , at the l o c a l o r at t h e n a t i o n a l l e v e l . M o r e o v e r , the cor-
r u p t exercise o f p o w e r can a d v a n t a g e subjects as d i f f e r e n t as a n i n d i v i d -
ual, a family, a g r o u p of friends, an ethnic g r o u p , an institution, or a
p o l i t i c a l p a r t y . A l s o the resources e x c h a n g e d c a n be v a r i o u s : the g a i n can
be a d i r e c t o r a n i n d i r e c t one, i t can i n v o l v e m o n e y b u t also o t h e r u t i l i t i e s
or services, the exchange o f c o m m o d i t i e s m a y be s i m u l t a n e o u s o r d e l a y e d ,
18 The Market for Corrupt Exchange

the v a l u e o f the g o o d s m a y differ. A s f o r the s t r u c t u r e o f the c o r r u p t

exchange, i t changes a c c o r d i n g t o the degree o f c o n t i n u i t y a n d s t a b i l i t y o f
the r e l a t i o n s h i p s , the n u m b e r o f actors i n v o l v e d , the r o l e o f p r o t e c t i v e
agencies, a n d the presence o r absence o f e x t o r t i o n . T h e basis o f l o y a l t y t h a t
a l l o w s f o r the d e v e l o p m e n t o f a c o r r u p t exchange v a r i e s f r o m p e r s o n a l
f r i e n d s h i p t o p a r t y m e m b e r s h i p . T h e degree o f d e v i a t i o n f r o m the n o r m s
can be m o r e or less serious, a c c o r d i n g to s t a n d a r d s set b o t h b y the l a w
a n d / o r b y p u b l i c o p i n i o n . I n w h a t f o l l o w s , w e w i l l a n a l y z e the d i f f e r e n t
2 2

t y p e s o f c o r r u p t transactions, f r o m s i m p l e r ones t o m o r e c o m p l e x net-

w o r k s o f exchange i n a "systemic c o r r u p t i o n , " w h e n " t h e i l l i c i t becomes
the n o r m a n d . . . c o r r u p t i o n so c o m m o n a n d i n s t i t u t i o n a l i z e d t h a t those
b e h a v i n g i l l e g a l l y are r e w a r d e d a n d those c o n t i n u i n g t o accept the o l d e r
n o r m s p e n a l i z e d " ( C a i d e n a n d C a i d e n 1977:306).

2.2. Theoretical Perspectives on

Political Corruption
Since c o r r u p t i o n is a d e v i a t i o n f r o m n o r m s t h a t i n v o l v e s a h i d d e n
exchange b e t w e e n a p u b l i c a g e n t a n d a t h i r d p a r t y , a m a i n q u e s t i o n t o be
a s k e d is, W h a t causes, or a l l o w s for, differences i n the d i f f u s i o n o f s u c h
d e v i a t i o n ? W h y d o the degrees o f c o r r u p t i o n change i n t i m e a n d space?
E x p l a n a t i o n s address d i f f e r e n t a n a l y t i c a l levels. Together w i t h the a l r e a d y
m e n t i o n e d functionalist approach, three m a i n explanations for political
c o r r u p t i o n have recently developed:

1. T h e first a p p r o a c h , s o c i o l o g i c a l i n n a t u r e , l o o k s at differences i n c u l -
t u r a l t r a d i t i o n s a n d v a l u e s . T h e c e n t r a l focus is o n the so-called m o r a l cost,
w h i c h reflects i n t e r n a l i z e d beliefs, s u c h as esprit de corps, the " p u b l i c s p i r i t -
edness" o f p u b l i c officials, p o l i t i c a l c u l t u r e , a n d the p u b l i c a t t i t u d e t o w a r d
i l l e g a l i t y . W e can define m o r a l cost as the u t i l i t y l o s t because o f the i l l e g a l -
i t y o f a n a c t i o n ; i t therefore increases w i t h the presence o f a v a l u e s y s t e m
t h a t s u p p o r t s a respect for l a w . F o r a n i n d i v i d u a l "the m o r a l cost is l o w e r
2 3

the m o r e e p h e m e r a l a p p e a r t o h i m those circles o f m o r a l r e c o g n i t i o n t h a t

p r o v i d e d h i m w i t h p o s i t i v e c r i t e r i a f o r respect f o r the l a w " ( P i z z o r n o
1992:46). A n i n d i v i d u a l is g o i n g t o suffer a h i g h e r cost w h e n b o t h i n h i s
o w n p e r s p e c t i v e a n d those o f h i s peers c o r r u p t b e h a v i o r i n v o l v e s a v i o l a -
t i o n o f v a l u e s — s u c h as " p u b l i c " — t h a t are d e e p l y i n t e r n a l i z e d . F r o m a n
i n t e r a c t i o n i s t p e r s p e c t i v e , m o t i v a t i o n s are a social c o n s t r u c t i o n , deter-
m i n e d b y the expectations o f s i g n i f i c a n t others a n d g e n e r a l i z e d expecta-
t i o n s o f society as a w h o l e ( C o l e m a n 1987). V a r i a t i o n s i n m o r a l costs c a n
therefore e x p l a i n the d i f f e r e n t responses o f i n d i v i d u a l s t o s i m i l a r occa-
sions f o r c o r r u p t i o n : " [ P ] e o p l e i n a g i v e n society face the same i n s t i t u t i o n s
b u t m a y h a v e d i f f e r e n t v a l u e s " (Elster 1989a:39). I n t h i s p e r s p e c t i v e ,
Pareto n o t i c e d , "the differences [ b e t w e e n c o u n t r i e s ] are t o be f o u n d i n t h e
A Theoretical Model 19

substance, t h a t is i n t h e s e n t i m e n t o f the p e o p l e ; w h e r e t h e y are m o r e (or

less) honest, there w e f i n d a m o r e (or less) honest g o v e r n m e n t " (Pareto
1916:625). I t is therefore possible t h a t , g i v e n s i m i l a r i n s t i t u t i o n a l c o n d i -
24

t i o n s , t h e levels o f p o l i t i c a l c o r r u p t i o n w i l l v a r y w i t h the average m o r a l

a t t i t u d e s a m o n g the citizens a n d the p u b l i c a d m i n i s t r a t o r s .
2. F r o m a n e c o n o m i c p e r s p e c t i v e , i n s t e a d , a n i n d i v i d u a l rationally
o p t s for c o r r u p t i o n w h e n the i n s t i t u t i o n a l s y s t e m o f i n c e n t i v e s a n d o p p o r -
tunities makes this activity subjectively satisfying: " A person c o m m i t s an
offense i f the expected u t i l i t y t o h i m exceeds the u t i l i t y he c o u l d get b y
u s i n g h i s t i m e a n d o t h e r resources at o t h e r a c t i v i t i e s . Some persons
b e c o m e ' c r i m i n a l s / therefore, n o t because t h e i r basic m o t i v a t i o n differs
f r o m t h a t o f o t h e r persons, b u t because t h e i r benefits a n d costs d i f f e r "
(Becker 1968:172). A s w i t h o t h e r b e h a v i o r s i n v o l v i n g d e v i a t i o n f r o m l a w s
a n d / o r n o r m s , i n d i v i d u a l decisions t o p a r t i c i p a t e i n c o r r u p t exchanges
d e p e n d u p o n the p r o b a b i l i t y o f b e i n g d i s c o v e r e d a n d p u n i s h e d , the sever-
i t y o f the p o t e n t i a l p u n i s h m e n t , a n d the expected r e w a r d s c o m p a r e d w i t h
the a v a i l a b l e alternatives. P o l i t i c a l e c o n o m i s t s h a v e s i n g l e d o u t some fac-
tors t h a t i n f l u e n c e the i n d i v i d u a l calculus to p a r t i c i p a t e i n p o l i t i c a l cor-
r u p t i o n (Rose A c k e r m a n 1978). There are t h e o p p o r t u n i t i e s a n d i n c e n t i v e s
for c o r r u p t i o n : those i n s t i t u t i o n a l forces d e t e r m i n i n g the costs o f p o l i t i c a l
m e d i a t i o n ; the ease w i t h w h i c h n e w actors o r g r o u p s can enter the s y s t e m
a n d the p r o b a b i l i t y o f electoral defeat; the o v e r a l l l e v e l o f state i n t e r v e n -
t i o n i n the e c o n o m i c a n d social fields; the degree o f d i s c r e t i o n i n v o l v e d i n
p u b l i c acts; the r e l a t i v e efficiency o f the v a r i o u s a d m i n i s t r a t i v e a n d p o l i t i -
cal c o n t r o l s ; the f o r m s o f p o l i t i c a l c o m p e t i t i o n ; the t y p e s o f m a r k e t w h e r e
c o r r u p t exchanges d e v e l o p . A t the i n d i v i d u a l l e v e l , the m o r e a p o l i t i c i a n
needs m o n e y i n o r d e r t o o b t a i n p o l i t i c a l p o w e r a n d the m o r e a n entrepre-
n e u r needs p o l i t i c a l p r o t e c t i o n , the h i g h e r w i l l be the m a r g i n a l v a l u e
e x p e c t e d f r o m c o r r u p t i o n . F u r t h e r m o r e , the l o w e r the p r o b a b i l i t y o f b e i n g
d e n o u n c e d o r b u y i n g a " l e m o n " f r o m the partner, o f b e i n g d i s c o v e r e d a n d
s a n c t i o n e d b y t h e j u d i c i a r y p o w e r , a n d the l o w e r the penalties for c o r r u p -
t i o n , the less w i l l be t h e expected costs o f g e t t i n g i n v o l v e d i n i l l e g a l
exchanges. 25

3. T h e t h i r d a p p r o a c h is s t i l l b a s e d o n r a t i o n a l choice, b u t i n a g a m e
t h e o r e t i c a l f r a m e w o r k . F r o m t h i s p e r s p e c t i v e , the choice b e t w e e n c o r r u p -
t i o n a n d n o n c o r r u p t i o n d e p e n d s u p o n n o t o n l y i n d i v i d u a l preferences
a n d the i n s t i t u t i o n a l context, b u t also o n the strategic i n t e r a c t i o n w i t h t h e
choices o f o t h e r i n d i v i d u a l s . I n fact, the m o r e w i d e s p r e a d is c o r r u p t i o n ,
the l o w e r the r i s k s o f b e i n g d e n o u n c e d for those w h o decide t o engage i n
i l l e g a l practices, a n d t h e h i g h e r the p r i c e t o be p a i d b y those w h o t r y t o
r e m a i n h o n e s t a n d t h e r e b y get m a r g i n a l i z e d . T h e v e r y d i f f u s i o n o f cor-
r u p t i o n reduces its m o r a l costs: " [ W ] e l l , i f e v e r y b o d y seems c o r r u p t , w h y
s h o u l d n ' t I be c o r r u p t ? " ( M y r d a l 1968:409). T h e s k i l l s a n d i n f o r m a t i o n
26
20 The Market for Corrupt Exchange

c o n c e r n i n g the m o s t effective m e t h o d s f o r c r e a t i n g r e l a t i o n s o f c o r r u p t i o n
a c c u m u l a t e w i t h t i m e , w h i l e the s i m p l e e x p e c t a t i o n t h a t c o r r u p t i o n is
w i d e l y practiced induces a g r o w i n g n u m b e r of i n d i v i d u a l s to e m p l o y it.
Vice versa, w h e n c o r r u p t i o n is m a r g i n a l , the search f o r a r e l i a b l e p a r t n e r is
a difficult o n e . R e l y i n g o n s i m i l a r assumptions, game theorists indicate
27

the p o s s i b i l i t y o f m u l t i p l e e q u i l i b r i a — w i t h h i g h a n d l o w densities o f cor-

r u p t i o n — i n the c o r r u p t m a r k e t 2 8
Therefore, " p e o p l e m a y h a v e s i m i l a r
v a l u e s , w i t h i n a n d across societies, a n d s i m i l a r i n s t i t u t i o n a l s t r u c t u r e s a n d
yet, f o r a c c i d e n t a l reasons, e n d u p i n d i f f e r e n t e q u i l i b r i a " (Elster 1989a:40).
We c a n a d d t h a t e v e n differences i n v a l u e s a m o n g s i m i l a r c o u n t r i e s m a y
be e x p l a i n e d b y the e v o l u t i o n o f d i f f e r e n t social n o r m s i n e q u i l i b r i a , as v i r -
tuous or malicious parties t e n d to reinforce reciprocal (mis)trust, coopera-
t i o n (or d e f e c t i o n ) , ( u n ) c i v i c - m i n d e d n e s s , r e c i p r o c i t y , i.e., v a l u e s y s t e m s
t h a t are m o r e o r less f a v o r a b l e t o c o r r u p t p r a c t i c e s . 29

D i f f e r e n t h y p o t h e s e s c o u l d be d e v e l o p e d o n the r e l a t i v e i m p o r t a n c e o f
i n s t i t u t i o n a l assets a n d c u l t u r a l v a l u e s o n t h e a c t u a l d e n s i t y o f c o r r u p t i o n
( P i z z o r n o 1992:42^13). Suffice i t t o say t h a t t h e l e v e l o f p o l i t i c a l c o r r u p t i o n
i n a g i v e n c o u n t r y w i l l be d e t e r m i n e d n o t o n l y b y the e x p e c t e d e c o n o m i c
costs a n d benefits, b u t also b y t h e d i s t r i b u t i o n o f m o r a l costs i n society, a n d
t h a t d i f f e r e n t p o s s i b l e e q u i l i b r i a m a y be d e t e r m i n e d b y i n d i v i d u a l i n t e r -
r e l a t e d choices. I n o r d e r t o u n d e r s t a n d c o r r u p t exchanges, w e therefore
h a v e t o l o o k at the i n s t i t u t i o n a l a n d c u l t u r a l c o n s t r a i n t s o n v i o l a t i o n o f t h e
c o n t r a c t b e t w e e n the p u b l i c a d m i n i s t r a t o r (the agent) a n d t h e state (the
p r i n c i p a l ) . A s w e s h a l l see i n t h i s v o l u m e , h o w e v e r , w e h a v e t o l o o k also
at t h e p r o d u c t i o n a n d r e p r o d u c t i o n o f s o m e a d d i t i o n a l resources t h a t are
necessary f o r the d e v e l o p m e n t o f c o r r u p t exchanges, a m o n g t h e m t r u s t ,
i l l e g a l s k i l l s , p o l i t i c a l p r o t e c t i o n , i n f o r m a l n o r m s , a n d consensus. These
resources b r i n g d o w n t h e cost o f i l l e g a l exchanges, b y r e d u c i n g t h e i r m a t e -
r i a l r i s k s as w e l l as t h e i r m o r a l costs. I n o u r analysis, w e s h a l l t r y t o i n t e -
grate s o c i o l o g i c a l a n d e c o n o m i c m o d e l s . A l t h o u g h t h i s is n o t a n easy task,
w e b e l i e v e t h a t o n l y b y c o n s i d e r i n g these d i v e r s e sets o f v a r i a b l e s w i l l w e
be able t o i m p r o v e o u r u n d e r s t a n d i n g o f the c o m p l e x f u n c t i o n i n g o f the
corruption market

2.3. The Structure of Corrupt Exchanges

I n o u r a p p r o a c h , c o r r u p t i o n is the r e s u l t o f a n e t w o r k o f i l l e g a l exchanges.
S o m e t i m e s c o r r u p t i o n i n v o l v e s a s i m p l e exchange b e t w e e n t w o actors, a
c o r r u p t e r a n d a c o r r u p t a g e n t (or " t h e c o r r u p t e d " ) , w h o d e r i v e s s o m e d i s -
cretional p o w e r f r o m his (implicit or explicit) contractual agreement w i t h
a p r i n c i p a l (see F i g u r e 1.5).
A Theoretical Model 21

PRINCIPAL (THE STATE)

contractual money,
performance, delegation
political of power INSTITUTIONAL EXCHANGE
representation

PUBLIC AGENT

private
resources, political CORRUPT EXCHANGE
money rents

BRIBER (THIRD PART)

Figure 1.5. Network of illegal exchanges.

A s w e are g o i n g t o see, t h e r e l a t i o n s h i p b e t w e e n the c o r r u p t e d a n d t h e

c o r r u p t e r m a y s o m e t i m e s be m a d e easier b y the i n t e r v e n t i o n o f a m i d d l e -
m a n , w h i l e its r e p e t i t i o n o v e r t i m e f a v o r s the f o r m a t i o n o f t r u s t b e t w e e n
parties. W h e r e c o r r u p t i o n is w i d e s p r e a d i t o f t e n i n v o l v e s g r o u p s o f
a d m i n i s t r a t o r s a n d b u s i n e s s m e n , w h o b e t w e e n themselves n e g o t i a t e t h e
size o f the b r i b e a n d t h e p u b l i c r e s o l u t i o n s t o be t a k e n . O n the one side,
associations o f p u b l i c actors i n c l u d e v a r i o u s figures w i t h d i f f e r e n t roles,
w h o s e c o o r d i n a t i o n i n r e a c h i n g a d m i n i s t r a t i v e decisions t h a t can be
e x c h a n g e d f o r b r i b e s is i n d i s p e n s a b l e : p a r t i c u l a r l y , w e f i n d p u b l i c a d m i n -
i s t r a t o r s ( b o t h those i n elected p o s i t i o n s a n d those w i t h p a r t y a p p o i n t -
m e n t s ) , career a d m i n i s t r a t o r s a n d p a r t y f u n c t i o n a r i e s . O n the o t h e r side,
cartels o f b u s i n e s s m e n reach agreements o n a series o f p u b l i c . d e c i s i o n s ,
w h i c h t h e y m u s t d e m a n d f r o m the p o l i t i c i a n s : t h e y collect m o n e y a n d
h a n d i t o v e r t o p o l i t i c a l cartels, w h o i n t u r n offer t h e m p r i v i l e g e d access t o
t h e decisions a n d d i s t r i b u t e t h e m o n e y b e t w e e n p o l i t i c i a n s . O f t e n m i d d l e -
m e n i n t e r v e n e t o establish contacts b e t w e e n t h e t w o parties, t o c o n d u c t
the n e g o t i a t i o n s , a n d t o transfer t h e b r i b e m o n e y . I n t h i s m o r e c o m p l e x
22 The Market for Corrupt Exchange

w e b o f exchanges, b o n d s o f t r u s t are established t h a t a l l o w t h e c o r r u p t

exchange t o be b r o u g h t t o a c o n c l u s i o n . T h i s s t r u c t u r e o f exchanges is
s h o w n i n F i g u r e 1.6.
C o r r u p t exchanges d o n o t i n v o l v e , h o w e v e r , o n l y t h e p u b l i c a d m i n i s -
t r a t o r s a n d p r i v a t e e n t r e p r e n e u r s w h o d i r e c t l y p a r t i c i p a t e i n t h e m , b u t also
o t h e r actors, w h o a l t h o u g h n o t d i r e c t l y t a k i n g p a r t i n the s h a r i n g o u t o f t h e
p o l i t i c a l rent, nevertheless o b t a i n o t h e r f a v o r s i n exchange f o r resources
t h e y c o n t r o l . I f w e l o o k at F i g u r e 1.6, f o r instance, w e c a n n o t i c e t h a t t h e cor-
r u p t p o l i t i c i a n s , i n o r d e r t o a c q u i r e d e c i s i o n a l p o w e r , n e e d t h e consensus o f
t h e v o t e r s , a consensus t h a t t h e y can o b t a i n v i a c l i e n t e l i s t i c exchange.
M o r e o v e r , t h e actors i n t h e c o r r u p t exchange n e e d " c o v e r - u p s " ; i n o t h e r
w o r d s , they m u s t m i n i m i z e the l i k e l i h o o d of b e i n g reported a n d investi-
g a t e d . W i t h either threats or f a v o r s , t h e c o r r u p t p o l i t i c i a n s m u s t erect a w a l l
o f silence a r o u n d t h e i r i l l i c i t d e a l i n g s . T h e y therefore exchange f a v o r s w i t h
a series o f actors—the b u r e a u c r a c y a m o n g t h e m — w h o m i g h t o t h e r w i s e
j e o p a r d i z e t h e i r i l l i c i t a c t i v i t i e s . Since t r u s t is n o t a l w a y s sufficient t o
enforce i l l e g a l agreement, a n d t o a v o i d i n d i v i d u a l s e x i t i n g f r o m t h e c o v e r t
exchanges, coercion m a y be n e e d e d as a n a d d i t i o n a l resource. O r g a n i z e d
c r i m e is therefore o f t e n a n actor f r o m w h o m c o r r u p t p o l i t i c i a n s b u y t h e
resources o f p h y s i c a l v i o l e n c e t h e y n e e d t o p u n i s h " l e m o n s , " free-riders, o r
those w h o t h r e a t e n t o d e n o u n c e t h e c o r r u p t s y s t e m (see F i g u r e 1.7).
I n o u r s t u d y , w e w i l l a i m first o f a l l at a " t h i c k d e s c r i p t i o n " o f c o r r u p t
exchanges, o f the n e t w o r k s o f actors i n v o l v e d i n t h e m , a n d o f t h e
resources t h e y use. O u r a s s u m p t i o n is i n fact t h a t , i n o r d e r t o u n d e r s t a n d
the causes a n d consequences o f c o r r u p t i o n , w e n e e d a clear p i c t u r e o f t h e

money money
MIDDLEMAN

information .... information

A-"""
N E T W O R K OF trust trust HIDDEN CARTEL
PUBLIC AGENTS OF BUSINESSMEN

trust

Figure 1.6. Complex web of exchanges involving middlemen.

 3

o
discretionary power,
consensus, political support favors, political protection
— — * BUREAUCRATS
VOTERS — " * CORRUPT
< POLITICIAN
clientelistic favors silence
protection
favors resources of
intimidation

ORGANIZED CRIME

Figure 1.7. Role of organized crime in illegal exchanges involving corrupt politicians.
24 The Market for Corrupt Exchange

characteristics o f t h e p h e n o m e n o n — i n o t h e r w o r d s , before w e c a n i n v e s -
tigate the " w h y " of c o r r u p t i o n , w e m u s t k n o w , i n detail, the " h o w . "

3. HOW TO STUDY POLITICAL CORRUPTION

3.1. Empirical Research on Political Corruption

I n o u r research w e a i m at a n a l y z i n g i n greater d e t a i l t h e s t r u c t u r e o f cor-
r u p t exchange, b y e x a m i n i n g b o t h t h e characteristics o f t h e actors w h o
d i r e c t l y engage i n i t a n d t h e resources t h e y exchange. B u t h o w d o w e
s t u d y c o r r u p t exchanges? W h a t are t h e p o t e n t i a l sources o f e m p i r i c a l
research o n c o r r u p t i o n ? T h e c o n s t r u c t i o n o f causal e x p l a n a t i o n a b o u t
p o l i t i c a l c o r r u p t i o n is h a m p e r e d b y t h e d i f f i c u l t y o f m e a s u r i n g t h e fre-
q u e n c y o f c o r r u p t exchanges. A s i n a n y f o r m o f c r i m e , t h e o f f i c i a l statis-
tics—based o n p o l i c e o r j u d i c i a l s o u r c e s — i n c l u d e o n l y t h e v i s i b l e p a r t o f
t h e p h e n o m e n o n . N o t o n l y therefore d o t h e y u n d e r e s t i m a t e t h e a m o u n t o f
c o r r u p t i o n , b u t there is n o reason t o b e l i e v e t h a t t h e v i s i b l e p a r t o f t h e ice-
b e r g is r e p r e s e n t a t i v e o f t h e s u b m e r g e d p a r t . O n t h e c o n t r a r y , i t w o u l d be
safe t o h y p o t h e s i z e t h a t t h e d i s t r i b u t i o n o f t h e " d i s c o v e r e d " c o r r u p t
events a n d t h e i r characteristics are i n f l u e n c e d b o t h b y t h e i n v e s t i g a t i v e
s t r a t e g y o f t h e state's repressive apparatuses, as w e l l as b y t h e degree o f
t o l e r a n c e f o r i l l e g a l a c t i v i t i e s a m o n g c e r t a i n social g r o u p s , o r w i t h i n p u b -
lic o p i n i o n at large. These p r o b l e m s are e v e n m o r e serious f o r a c r i m e t h a t ,
l i k e c o r r u p t i o n , o f t e n has n o v i s i b l e v i c t i m s , w h i l e t h e p o t e n t i a l r i s k f o r
those w h o d e n o u n c e a c o r r u p t a c t i o n m a y b e c o m e , as w e w i l l see, q u i t e
h i g h . Recent e x p e r i m e n t s w i t h i n d e x e s o f c o r r u p t i o n b a s e d o n e x p e r t s '
p e r c e p t i o n o f t h e p h e n o m e n o n face serious c r i t i c i s m i n t e r m s o f t h e i r r e l i -
a b i l i t y . T h i s m e a n s t h a t a n y a t t e m p t at b u i l d i n g e x p l a n a t o r y m o d e l s o f
political c o r r u p t i o n w o u l d confront the difficulty of accurately m e a s u r i n g
the dependent variable.
If, h o w e v e r , w e shift o u r c o n c e r n f r o m t h e causes t o t h e m e c h a n i s m s o f
p o l i t i c a l c o r r u p t i o n , j u d i c i a l m a t e r i a l s represent a v e r y r i c h source. I n
o r d e r t o describe t h e d y n a m i c s o f c o r r u p t exchange, w e m a d e i n fact a b u n -
d a n t use o f t h e t r i a l records, i n c l u d i n g i n t e r r o g a t i o n s a n d d o c u m e n t s , o f
a b o u t one h u n d r e d cases o f p o l i t i c a l c o r r u p t i o n , w h i c h o c c u r r e d i n I t a l y i n
t h e eighties a n d t h e n i n e t i e s . I n s a m p l i n g these cases w e f o l l o w e d t w o c r i -
teria: (1) w e i n c l u d e d a l l t h e m o s t i m p o r t a n t cases o f p o l i t i c a l c o r r u p t i o n
for w h i c h t h e p r e l i m i n a r y sentence h a d a l r e a d y b e e n passed; (2) w e t r i e d
to use e x a m p l e s o f c o r r u p t i o n i n d i f f e r e n t g e o g r a p h i c a l as w e l l as a d m i n -
i s t r a t i v e areas. O u r cases are therefore a s i g n i f i c a n t , a l t h o u g h n o t r e p r e -
sentative s a m p l e o f p o l i t i c a l c o r r u p t i o n i n Italy. To these j u d i c i a l m a t e r i a l s
w e a d d e d those r e f e r r i n g t o f o u r h u n d r e d requests f o r j u d i c i a l a c t i o n
How to Study Political Corruption 25

against m e m b e r s o f p a r l i a m e n t ( w h i c h a r r i v e d at the c h a m b e r b e t w e e n
M a y 1992 a n d J u l y 1993) for c r i m e s s u c h as c o r r u p t i o n , c o r r u p t i o n w i t h
e x t o r t i o n o n the p a r t o f the p u b l i c actor, v i o l a t i o n o f the l a w o n p a r t y
f i n a n c i n g , a n d c r i m i n a l a n d M a f i a association. T h e j u d i c i a l m a t e r i a l w a s
c a t a l o g u e d a c c o r d i n g t o a c o d i n g scheme t h a t i n c l u d e d a b o u t n i n e t y cate-
gories. T h e i n - d e p t h analysis o f j u d i c i a l m a t e r i a l s w a s s u p p l e m e n t e d b y
t h e i n f o r m a t i o n r e t r i e v e d f r o m a ten-year press a r c h i v e , f o r m e d o f m o r e
t h a n 2,500 articles f r o m dailies a n d w e e k l i e s .
W i t h t h e a i m o f c o n t r o l l i n g the " g e n e r a l i z a b i l i t y " o f o u r cases w e also
a n a l y z e d the y e a r l y r e p o r t s f r o m 1987 t o 1992 o f the Corte dei conti (the
A u d i t C o u r t ) t o t h e p a r l i a m e n t ; the acts o f the three p a r l i a m e n t a r y c o m -
m i t t e e s o n the m a s o n i c l o d g e P2, t h e M a f i a , a n d r e c o n s t r u c t i o n efforts after
the e a r t h q u a k e i n I r p i n i a ; t h e acts o f the F l o r e n t i n e c i t y c o u n c i l c o m m i t t e e s
f o r m e d t o i n v e s t i g a t e m i s a d m i n i s t r a t i o n i n 1983; a n d the a n n u a l r e p o r t s o f
the o m b u d s m a n f o r the Tuscany R e g i o n f r o m 1991 t o 1993. T h e i n t r o d u c -
t i o n o f these a d d i t i o n a l sources n o t o n l y gave us the p o s s i b i l i t y o f collect-
i n g n e w i n f o r m a t i o n , b u t i t also a l l o w e d us to c o m p a r e the f u n c t i o n i n g o f
different institutions for oversight of p u b l i c administration.
C o n s c i o u s o f the l i m i t a t i o n s o f a l l these sources, w e s u p p l e m e n t e d t h e m
w i t h a b o u t s i x t y s e m i s t r u c t u r e d i n t e r v i e w s w i t h experts f r o m b o t h the
p u b l i c a n d the p r i v a t e sector. P o l i t i c i a n s , bureaucrats, entrepreneurs, t r a d e
u n i o n i s t s , a n d j u d g e s w e r e a m o n g o u r i n f o r m e r s o n the d y n a m i c s a n d
characteristics o f c o r r u p t exchange. M o s t o f these i n t e r v i e w s referred to i n -
d e p t h case studies o n the d e v e l o p m e n t o f p o l i t i c a l c o r r u p t i o n i n three
cities, chosen i n o r d e r t o be representative o f d i f f e r e n t g e o g r a p h i c a l a n d
p o l i t i c a l contexts: Savona i n n o r t h e r n Italy, Florence i n the center, a n d
C a t a n i a i n the s o u t h . 3 0

P r i o r t o p r o c e e d i n g t o o u r analysis, a m e t h o d o l o g i c a l n o t e is i n order.
Since s o m e o f the j u d i c i a l p r o c e e d i n g s h a v e n o t y e t c o n c l u d e d , o u r s t u d y
relies u p o n v e r y r i c h , b u t y e t n o t c o m p l e t e d o c u m e n t a t i o n . M o r e o v e r , o u r
f i r s t h a n d d e s c r i p t i o n s o f c o r r u p t exchanges are o f t e n b i a s e d b y i n d i v i d u a l
defense strategies: t h u s , the e n t r e p r e n e u r s t e n d t o present a n i m a g e o f cor-
r u p t i o n as the r e s u l t o f g r e e d y p o l i t i c i a n s , w h i l e the latter accuse the for-
mer of d i s t r i b u t i n g bribes i n order to a v o i d market competition. A s m e n -
t i o n e d , w e t r i e d t o reduce the s h o r t c o m i n g s t y p i c a l o f o u r sources b y
t r i a n g u l a t i n g the d e s c r i p t i o n o f t h e d i f f e r e n t actors, a n d a d d i n g i n f o r m a -
t i o n c o m i n g f r o m actors e x t e r n a l t o the c o r r u p t exchanges. H o w e v e r ,
w h e n r e a d i n g the excerpts f r o m o u r d o c u m e n t s o r i n t e r v i e w s , keep i n
m i n d t h a t t h e y d o n o t n e a t l y m i r r o r the reality, b u t represent its d i s t o r t e d
i m a g e . A last o b s e r v a t i o n : i n r e p o r t i n g i n f o r m a t i o n f r o m d i f f e r e n t sources
w e are n o t interested, o f course, i n i n d i v i d u a l s ' p e n a l r e s p o n s i b i l i t y ; the
statements r e f e r r i n g to i n d i v i d u a l s i n v o l v e d i n i l l e g a l a c t i o n are therefore
26 The Market for Corrupt Exchange

to be c o n s i d e r e d n o t so m u c h as a j u d i c i a l l y b a s e d t r u t h , b u t m o r e as w i d e -
spread images about the d y n a m i c s of c o r r u p t i o n .

3.2. The Structure of This Book

T h e b o o k is o r g a n i z e d a r o u n d t h e analysis o f t h e resources t h a t are
e x c h a n g e d a n d o f t h e d i f f e r e n t actors w h o take p a r t i n p o l i t i c a l c o r r u p t i o n .
Business p o l i t i c i a n s , i l l e g a l b r o k e r s , p r o t e c t e d e n t r e p r e n e u r s , a n d
p a r t y - a p p o i n t e d b u r e a u c r a t s exchange resources o n t h e i l l e g a l m a r k e t ,
a l t e r i n g t h e i n s t i t u t i o n a l s y s t e m o f i n t e r a c t i o n s b e t w e e n t h e state a n d t h e
m a r k e t . A s w e are g o i n g t o see i n C h a p t e r 2, b y m a n i p u l a t i n g o r v i o l a t i n g
the r u l e s e s t a b l i s h e d t o oversee t h e b e h a v i o r o f p u b l i c agents, t h e y are able
to p r o d u c e p o l i t i c a l rents, i n c r e a s i n g t h e a m o u n t o f m o n e y t h e state p a y s
for a service, o r r e d u c i n g w h a t t h e " p r o t e c t e d " e n t r e p r e n e u r s h a v e t o p a y
to t h e state f o r a p u b l i c service. T h e c o n t r o l o f p r o p e r t y r i g h t s o n rents is
t h u s e x c h a n g e d w i t h c o r r u p t e r s , t h r o u g h t h e exercise o f p o w e r , r e s e r v e d
i n f o r m a t i o n , or political protection.
C h a p t e r 3 describes t h e characteristics o f a n a c t o r — t h e "business p o l i t i -
c i a n " — w h o s e presence spreads w i t h c o r r u p t i o n . C o r r u p t i o n , i n fact, o p e r -
ates o n t h e m o t i v a t i o n s f o r c h o o s i n g a p o l i t i c a l career, t h e " e m e r g e n c e " o f
political skills, a n d the aggregations a m o n g politicians. U s i n g the a d d i -
t i o n a l resources t h e y a c c u m u l a t e d u r i n g c o r r u p t exchanges, b u s i n e s s
p o l i t i c i a n s take o v e r t h e c o n t r o l o f p o l i t i c a l p a r t i e s .
A s w e w i l l a r g u e i n C h a p t e r 4, t h e d i f f u s i o n o f p o l i t i c a l c o r r u p t i o n is
r e l a t e d t o t h e characteristics o f t h e p r i n c i p a l c o l l e c t i v e actor o f a p o l i t i c a l
system: the party. I n particular, c o r r u p t i o n transforms the structure of the
parties b y creating a n d strengthening a " h i d d e n " structure, organized
a r o u n d illegal activities, w h i c h tends to become m o r e p o w e r f u l t h a n the
v i s i b l e p a r t y s t r u c t u r e a n d b u r e a u c r a c y . I n t h i s h i d d e n side o f p o l i t i c s , t h e
p a r t i e s assume a n i m p o r t a n t f u n c t i o n : t h e y enforce c o r r u p t exchanges b y
s o c i a l i z i n g t h e i n d i v i d u a l t o i l l e g a l a c t i o n , selecting t h e p u b l i c d e c i s i o n s i n
w h i c h i l l i c i t rents are easier t o p r o d u c e , a n d a c t i n g as w a r r a n t o r f o r t h e
i l l e g a l transactions.
C o r r u p t agents i n t e r v e n e i n t h e s y s t e m o f c o n t r o l o f p o l i t i c a l c o r r u p -
t i o n . Since i n c e n t i v e s t o c o r r u p t i o n g r o w w i t h t h e less p r o b a b i l i t y t h a t t h e y
w i l l be d i s c o v e r e d a n d p u n i s h e d , s y s t e m a t i c c o r r u p t i o n t e n d s t o d e s t r o y —
as w e w i l l a r g u e i n C h a p t e r 5—the f u n c t i o n i n g o f t h e m e c h a n i s m s o f c o n -
t r o l i n t e r n a l t o t h e state a p p a r a t u s e s ( s u c h as a d m i n i s t r a t i v e b o d i e s o r t h e
magistracy). I n particular, the c o r r u p t politicians, to a v o i d a d m i n i s t r a t i v e
c o n t r o l s , w i l l t r y t o i n v o l v e p u b l i c b u r e a u c r a t s as w e l l as m a g i s t r a t e s i n
i l l e g a l exchange, p a y i n g f o r t h e i r c o n n i v a n c e w i t h p o l i t i c a l p r o t e c t i o n i n
t h e i r careers as w e l l as a share o f t h e b r i b e s .
Together w i t h t h e business p o l i t i c i a n s a n d p o l i t i c a l p a r t i e s , o t h e r actors
take p a r t i n c o r r u p t exchanges, m e d i a t i n g b e t w e e n t h e c o r r u p t e r s a n d t h e
Notes 27

c o r r u p t e d . A s w e w i l l see i n C h a p t e r 6, since c o r r u p t i o n is a c r i m e a n d cor-

r u p t t r a n s a c t i o n s m u s t therefore r e m a i n secret, at least t o the p u b l i c a n d
the p o l i c e , those a c t i n g as m e d i a t o r s h a v e t o possess p a r t i c u l a r s k i l l s i n
i l l e g a l i t y . B r o k e r s i n the c o r r u p t m a r k e t t r a d e p r i v i l e g e d i n f o r m a t i o n w h e n
occasions f o r i l l e g a l exchanges arise a n d w h e n p e o p l e are a v a i l a b l e t o p a r -
t i c i p a t e i n t h e m . T h i s p r i v i l e g e d i n f o r m a t i o n is o f t e n e x c h a n g e d i n s i d e
h i d d e n n e t w o r k s — f o r instance, d e v i a n t m a s o n i c l o d g e s — w h i c h foster the
d e v e l o p m e n t o f b o n d s o f l o y a l t y b e t w e e n the v a r i o u s actors t a k i n g p a r t i n
political corruption.
C o r r u p t exchanges, o f course, also i n v o l v e p r i v a t e actors, m a i n l y entre-
p r e n e u r s , since t h e y o f t e n h a v e stronger interest i n p u b l i c decisions a n d
m o r e resources t o i n f l u e n c e t h e m . W h i l e e n t r e p r e n e u r s u s u a l l y p r e s e n t
t h e m s e l v e s as v i c t i m s o f p o l i t i c i a n s , i n m o s t o f the cases—as w e w i l l state
i n C h a p t e r 7—they also d e r i v e a d v a n t a g e s f r o m i l l e g a l activities. W i t h d i f -
ferent strategies, e n t r e p r e n e u r s w h o w o r k i n the p u b l i c sector t r y t o ensure
p o l i t i c a l p r o t e c t i o n — w h i c h t h e y can either b u y each t i m e t h e y c o m e i n
contact w i t h a p u b l i c a d m i n i s t r a t o r , or t r y t o g a i n o n a m o r e c o n t i n u o u s
basis. I n b o t h cases, p o l i t i c a l p r o t e c t i o n p r o d u c e s i n fact p o l i t i c a l rents,
f r o m w h i c h the b r i b e s are t a k e n .
M o r e o v e r , b e i n g i l l e g a l , c o r r u p t a n d c o l l u s i v e exchanges f i n d f a v o r a b l e
c o n d i t i o n s w h e r e the use o f force is n o t u n d e r the m o n o p o l i s t i c c o n t r o l o f
the state. W h e r e o r g a n i z e d c r i m e is s t r o n g a n d d e e p r o o t e d , i t p r o v i d e s
c o r r u p t p o l i t i c i a n s w i t h resources o f v i o l e n c e t h a t can be u s e d t o enforce
the i l l e g a l pacts. A s w i l l e m e r g e i n C h a p t e r 8, o r g a n i z e d c r i m e a n d c o r r u p t
p o l i t i c i a n s are l i n k e d t o each others b y a p a c t o f r e c i p r o c a l p r o t e c t i o n :
w h i l e the m a f i o s i offer (the threat of) v i o l e n c e a n d electoral s u p p o r t , the
p o l i t i c i a n s r e w a r d t h e m w i t h p u b l i c resources (such as p u b l i c contracts)
a n d p r o t e c t i o n against the i n v e s t i g a t i v e state apparatuses.
A s w e are g o i n g t o discuss i n the c o n c l u d i n g chapter, there is a v i c i o u s
circle i n the i n t e r a c t i o n b e t w e e n c o r r u p t i o n a n d o t h e r p o l i t i c a l p a t h o l o g i e s
(such as inefficiency, c l i e n t e l i s m , a n d the p o l i t i c a l p r o t e c t i o n o f o r g a n i z e
c r i m e ) , i n w h i c h each o f t h e m facilitates the d e v e l o p m e n t o f the other. T h e
r e s u l t is a p r o g r e s s i v e e r o s i o n o f b o t h m a t e r i a l p u b l i c resources a n d s y m -
b o l i c p o l i t i c a l resources, ( l e g i t i m i z a t i o n ) w h i c h m a y e n d u p — a s h a p p e n e d
i n the I t a l i a n case—in the b r e a k d o w n o f the r e g i m e .

NOTES

1. As these statistics signal, the number of people involved in political cor-

ruption grew more than proportionally to the number of cases, revealing the exis-
tence of more complex networks of corrupt exchanges. By December 1993, four
hundred judges (i.e., about 5% of the Italian judges) had participated in the inves-
tigations on political corruption (Nelken 1996b:111).
28 The Market for Corrupt Exchange

2. As Scott notes, if "the study of corruption teaches us anything at all, it

teaches us not to take the political system or a particular regime at its face
v a l u e . . . . Here coalitions that could not survive the light of day, government deci-
sions that would set off a public outcry, elite behavior that would destroy many a
political career are located.... For most nations at some point in their history, and
for many nations today, however, the surreptitious politics of this arena is so deci-
sive that an analysis which ignored it would be not simply inaccurate but com-
pletely misleading" (1972:2).
3. O n corruption in L D C s (less developed countries) see, among others, Bay-
ley (1966), Waterbury (1973,1976), Somjee (1974), LeVine (1975), Beenstock (1979),
Epko (1979), Gould (1980), Medard (1982), Wade (1982,1985), Gould and Amaro-
Reyes (1983), Ward (1989), and Wilson (1991).
4. There are a number of theoretical works dealing with corruption in social-
ist systems. See, for example, Kramer (1977), Schwartz (1979), Simis (1982), Mon-
tias and Rose Ackerman (1980), Liu (1989), and Harris (1989). Sands (1990) offers a
pessimistic perspective on the short-run effects of economic reforms on bureau-
cratic corruption in China.
5. This is the case with the concept of "amoral familism," which Banfield
used to describe certain characteristics of the value system dominant in Italy, and
the South in particular: "In a society of amoral familists, the claim of a person or
institution to be inspired by zeal for the public rather than private advantage will
be regarded as a fraud" (Banfield 1958:95).
6. Suggested by Huntington (1968), Merton (1957,1972), Leff (1964), and Nye
(1967), among others, and in a number of recent economic analyses, e.g., Beck and
Maher (1986) and Lien (1986). For critical reviews, see Ben-Dor (1974) and, more
recently, Cartier-Bresson (1997b, in particular 52-55).
7. A survey of seven democratic countries can be found in della Porta and
Many (1997a). See also Little and Posada-Carbò (1996), Ridley and Doig (1995),
Levi and Nelken (1996), and Bakker and Shulte Nordholt (1996). A study of the
evolution of corruption in Israel indicates that illegal practices have adapted to
economic and political modernization (Werner 1989). Political scandals have also
taken place in countries traditionally considered as having low levels of corrup-
tion. To give only one example, in Great Britain two government ministers have
been forced to resign in the past ten years after accusations of using their parlia-
mentary office for private gain.
8. This attempt to produce a global comparative measure of corruption is
based on ten different surveys that collected information from businessmen, risk
analysts, journalists, and the general public. It is not immune to criticism, however,
being based on data far from homogeneous in nature and relating mainly to inter-
national commerce. A discussion of the general issues involved in the measure-
ment of corruption can be found in Malee and Gardiner (1987).
9. A n increasingly common form of corruption is described by Thompson
(1993) as mediated corruption, mediated, that is, by the democratic political
process. It differs from conventional corruption because (a) the gain the politician
receives is political, not personal and illegitimate in itself; (b) the way in which the
benefit is provided by the public official (not the benefit in itself) is improper; (c)
Notes 29

the democratic process is damaged by the connection between the gain of the
politician and the benefit of the private actor.
10. As Heidenheimer notes, "the deep-rootedness of corruption in the Italian
political system is a by-product of the lack of trust among its citizens and between
citizens and the state" (1996:339).
11. In this context, however, countries may themselves face a "prisoner's
dilemma." Even if everybody prefers a situation with no international corruption
to one of generalized corruption, the situation is more favorable for a country that,
as opposed to the others, does not prohibit foreign corrupt practices, thus provid-
ing its enterprises with a competitive advantage. A n d even if all governments
adopt restrictive laws, a similar prisoner's dilemma may apply to the implemen-
tation of the norms. For this reason, international supervising agencies may be
indispensable for the fight against international corruption.
12. Concentrating our attention on democratic countries, we will be able to
keep a series of variables related with the political system and the level of mod-
ernization constant (Lijphart 1975; Sartori 1979). O n the problems of comparative
analysis of political corruption, see Scott (1972).
13. Eugenio Cefis, who succeeded ENI's first president, Enrico Mattei (killed
in a suspicious air accident in 1962), recalls that the latter "said more than once that
before giving money to the parties, they should ask three times for it, and then only
25-35 percent of the sum demanded should be paid. In Mattei's philosophy, more-
over, the payoff had to be proportional to the benefits derived by E N I " (L'Espresso,
6 June 1993, p. 68).
14. A competition developed between the different parties to gain control of
that money. As the former secretary of the Socialist party, Giacomo Mancini,
recalls: "I realized that the bosses of the publicly controlled firms mistreated us in
comparison with the D C . I quarreled with the president and the general director of
I R I . . . which had offered a ridiculous amount of money, and eventually I suc-
ceeded in obtaining a total of 300-400 million lira" (La Repubblica, 20-21 August
1992, p. 7).
15. In 1991 the public company ENI—for 4,200 billion lira—bought back
shares of the chemical company Enimont, which had been previously created by
the merger of the two leading public and private chemical companies. The decision
to nationalize the Italian chemical industry was taken on very favorable terms for
the private partner Montedison, guided by its manager Raul Gardini: E N I paid
1,650 lira per share, although the average market value was 1,374 lira. By way of
compensation, Gardini (who committed suicide in 1994, as the scandal emerged)
paid bribes totaling 150 billion lira to all the principal political leaders and parties
in the ruling coalition.
16. This strategy bore its fruits: ENI's financial director, Florio Fiorini, has
admitted paying 10 billion dollars per month to the four principal government
parties between 1970 and 1980, for a total of 1,500 billion lira (La Repubblica, 17 Feb-
ruary 1993, p. 2).
17. Different insights about the "corruption of the body politic" in Thucy-
dides, Plato, Aristotle, Machiavelli, and Rousseau are presented in a unified frame-
work in Dobel (1978).
30 The Market for Corrupt Exchange

18. Similar definitions have been proposed by Key (1936), Huntington

(1968:59), Benson, Maaren, and Heslop (1978:xiii), and Nas, Price, and Weber
(1986:108). Corruption has been characterized as a behavior that deviates from the
public interest (Rogow and Lass well 1966), from legal norms (Nye 1967), or from
some other publicly sanctioned moral standards or norms (Berg, Hahn, and
Schmidhauser 1976). According to Philp (1997), any definition of corruption pre-
supposes an implicit notion of noncorrupt politics, and this implies normative
judgments about the proper scope of politics. The meaning and mechanisms of
corruption may then vary with the nature of the political system, making compar-
ative analysis more problematic. For reviews of social science literature on politi-
cal corruption, see Deysine (1980), Clarke (1983), Benson and Baden (1985), Belligni
(1987), Andvig (1991), della Porta and Many (1997b), and Cartier-Bresson (1997a).
For a wide collection of essays on this topic see Heidenheimer (1970a) and Hei-
denheimer, Johnston, and LeVine (1989).
19. More generally, we have a principal-agent relationship when there is an
asymmetric distribution of information between two (or more) contracting parties,
prior or subsequent to their agreement: "The principal (or uninformed player) is the
player who has the coarser information partition. The agent (or informed player) is
the player who has the finer information partition" (Rasmusen 1990:134).
20. Among those who have studied corruption as a violation of a contract
between an agent and a principal are Banfield (1975), Rose Ackerman (1975,1978),
Klitgaard (1988), Pizzorno (1992), Franzini (1993), and Groenendijk (1996).
21. If there is general agreement on considering corruption as an abuse of pub-
lic roles, it is much less clear where the boundaries of the concept should lie (Gar-
diner 1993). Of course, there could be uncertainty, when the principal is collective
as in democratic politics, in the definition of the principal's preferences. Could not
the public interest be better served by corrupt practices than by respect for ineffi-
cient procedures? O n the other hand, the norms that rule the behavior of public
agents—particularly those which prohibit accepting bribes—are based on the
assumption that, when the agent violates them, there is a strong risk that this will
endanger the general interest. As Markovits and Silverstein observe, "Liberal
democracies seek both to ensure the separation of the private and the public realms
and to overcome (or hide) their ambiguity over the use of political p o w e r . . . . The
liberal's inherent distrust in political power is lessened by a political process
defined by strict rules, procedures and public scrutiny.... To the liberal, the
process is the public interest" (1988:6). The liberal faith in rules as limits to power,
however, may conflict with the democratic justification of political activities that,
in order to achieve general ends of equality or social welfare, may lead to an
increase of political power, with its exclusive, secretive, and potentially corruptive
implications (Cubeddu 1994).
22. As Heidenheimer (1970b) observes, it is more difficult to suppress the phe-
nomenon when the judgments about corruption expressed in society and in the
political system do not coincide. See also Padioleau (1975).
23. Rose Ackerman (1978) considers moral cost as a kind of fixed cost that
derives from breaking the law, while Johnson (1975) and Alam (1990) employ the
similar concept of "aversion to corruption." Economists assume moral cost as given
and consider economic incentives and opportunities for corruption; we think
Notes 31

instead than it can be seen as the expression of an agent's preference for legality, and
that it may vary over time and for different groups. Qizilbash (1994) presents a
model of "moral character" using a formal definition of temptation to describe
agents that can be continent or incontinent, so influencing their corruption choices.
24. At a descriptive level, some elements of particular ("not civic") culture
have been considered as constituting a favorable background for the diffusion of
Mafia, corruption, and clientelism: "amoral familism" and emphasis on instru-
mental friendship are among them (for instance, Banfield 1958). These explana-
tions have been used in particular for Third World countries as well as Southern
European democracies. The risks of these cultural explanations are hypersimplifi-
cation and self-referentiality (Heywood 1997; Magatti 1996). In our explanation,
we will in fact try to go beyond the stereotype referring to specific cultures, trying
to analyze the social and political characteristics that interact with the develop-
ment of some value systems.
25. Goel and Rich (1989) demonstrated the importance of these "economic"
variables to explain changes in the observed levels of corruption.
26. It should be remembered that these different sets of variables—moral costs
of and economic incentives for corruption—are not independent. As illegality
becomes common practice, the codes of behavior condemning corruption may be
weakened by the adoption of a "situational morality" (Chibnall and Saunders
1977:151). Moral costs may be considered the expression of "moral conventions":
beliefs in certain general principles (such as trust in others or respect for the law)
accompanied by the expectation that they are recognized and shared by (at least
large number of) others. These conventions will be stable, forming an equilibrium
only where their social consequences—the sum of the resulting actions—are com-
patible with the expectations that shape them. Otherwise, if the actual results do
not match expectations, the adaptation of the latter may bring about a change in
the conventions themselves. If moral adversión to corruption is conditioned by the
(more or less corrupt) behavior of others, the expectation that corruption is widely
practiced becomes self-fulfilling, not simply as a result of rational calculation, but
also because the moral barriers to that activity are lowered as processes of self-
legitimation come into operation (Hirschman 1982).
27. As Andvig noted, in fact, "One of the major reasons why corruption fre-
quency stays low, when it is low, is the transaction cost involved if one attempts to
bribe in a society where bribing is rare. Think of a situation when the developer
knows that only one of hundred officials is likely to ask for a bribe. If he then offers
a bribe he would have to expect a long search to find one to bribe. Given the
expected search costs, it will not pay to offer a bribe. Looking at the other side of
the market: if only one of hundred developers is willing to bribe you, why then ask
for it? In this case only one of 10,000 meetings between officials and businessmen
is likely to give rise to a bribe" (1996:18).
28. Multiple equilibria refer to the amount of the bribes (Cadot 1987), the
number of corrupt exchanges (Lui 1986), or both (Andvig and Moene 1990). Mur-
phy, Shleifer, and Vishny (1993) single out a model of multiple equilibria in levels
of corruption and income.
29. The same applies to similar regions within the same country, such as North
and South in Italy, according to Putnam's (1993) analysis of comparative civic-
32 The Market for Corrupt Exchange

mindedness. In other words, there may be multiple equilibria in models of social

customs, which can persist even if disadvantageous to the individual—being ratio-
nally accepted—when there is a loss of reputation for disobedience: "In one of
these equilibria the custom is obeyed, and the values underlying the custom are
widely subscribed to by members of the community. In the other equilibrium the
custom has disappeared, no one believes in the values underlying it, and it is not
obeyed" (Akerlof 1980:751).
30. For more information on these interviews, see della Porta (1992:Chapter 2).
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