Tuesday, October 30, 2012

Theory of corruption


Alhamdulillah for the weather today. It is a bright and sunny spring in Sydney. In Sydney, the temperature for spring is around 20 degrees ++. Sometimes the weather can go haywire when suddenly it drops to 16 degrees or even goes up to 34 degrees (for now). I love spring because it feels like I'm in Malaysia already. ;)

Today I want to write something about my course (again!) since I thought it will be useful to write it so that others can read it too, and I would also be able to read it in the future insya Allah. Plus, I need to polish my writing skills and my grammar. I apologize if there are grammatical errors in my writing and I do appreciate everyone who read my blog, just give me a comment or feedback or critics or anything. Insya Allah, I will try to improve it for the betterment in the future.

If the jargon used in this post is not a 'publicly known' terms, do tell me cause sometimes I may do not aware of those terms.


Many of us may have known what the corruption is, right? But I just want to write the theory of corruption and how it begins.

Ok let us begin with definition from political economists. Pure corruption is a situation where a monetary payment (a bribe) is paid to the policy maker to influence the policy outcome (1).

Pure Corruption.

Consider a case whereby the citizens have choices whether to build or not to build the bridge (or something else). If the bridge is built, everyone has to pay the head tax for the cost of building it. In the case of not built, everyone pays nothing. Those who prefer the policy (build the bridge) will benefit from the bridge while those who do not prefer it will be worse off because they just pay the head tax but not getting any benefit from it.

For policymakers, they still need to pay the head tax no matter whether they like the project or not. So, if the bribe is higher than the tax they need to pay for the cost of bridge, they will always proceed with the policy of building the bridge so that the bribe can cover the cost of paying the tax.

Corruption is inefficient here because if the majority of the people do not prefer the policy, by proceeding with such policy, the policymakers actually do not align with what the public want. The public here means the voters or taxpayers which will pay everything for the policy.

From the perspective of development economics, there are two ways that we can view the corruption. First, development can cause the corruption to arise. Second, corruption can also be a reason for slowing the growth of a country.

I just assumed that everyone knows about the second perspective. Though corruption can be efficient in certain ways from political economics' view, but it is not desirable as the high corruption index always associated with developing countries.

Transparency International's corruption perception index

Ok, theoretically how does development actually cause corruption to rise?

"Corruption opportunities arise from the need for delegation in complex societies"  (2).

We begin our story of corruption with a small district where the appointed chief in a traditional village can directly monitor the behavior of villagers. The chief collects taxes needed for public goods and can also punish the villagers if they misbehave.

As the village grows and become a city, the chief needs to delegate the monitoring of behavior to the police force and tax levy to the tax collectors. The police and tax collectors observe the true misbehavior by the villagers but they have a choice whether to report it or not.

This situation causes the intermediaries appointed by the chief make a deal with the villagers. If the police report villagers' misbehavior to the chief, the villagers may be punished. But if they do not report, the chief would not know about the misbehavior. The deal made between police/tax collectors and villagers is what do we call corruption (or 'rasuah').

The larger the penalties for those misbehavior, the more likely corruption to happen.

As a conclusion, corruption can happen anywhere regardless of where we are. It can happen among politicians, policemen, tax collectors, doctors, lawyers, and even if you're a chief in the village. The corruption/bribe can be as small as RM10 or as big as infinite value. What is more important, we have to remember that our life in this dunya is only temporary.

I end my long post with hadith:

"Allah SWT melaknat mereka yang memberi rasuah dan penerima rasuah serta orang yang memberikan jalan terhadap kedua-duanya,” (Hadis riwayat Imam Ahmad)

"Penerima dan pemberi rasuah akan ditempatkan dalam api neraka". (Hadis riwayat Imam at-Tirmidzi)"

Wallahu a'alam.

Till then,
Izzah Mohammad.


1. "Principled Agents? The political economy of good government", Timothy Besley 2006, Oxford Publication pp61.

2. Banerjee, A.V, Benabou, R., & Mookherjee, D. 2006, Understanding Poverty, Oxford Scholarship Online.

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