Corruption is endemic in many parts of the world. Paying a bribe to an official, policeman, judge, or politician is seen as a normal cost of doing business, or simply necessary for living without hassle. The higher up one goes in the system of authority, the larger the payment.
This blog looks at a cautionary tale drawn from mid-19thcentury England found in the novel by Anthony Trollope, ‘The Three Clerks’ (1857). It is about corruption in the British civil service.
The narrative remains relevant today. It looks at the links between ethical standards and practice, and between social sanctioning and the law. It makes clear that there is no silver bullet such as ‘transparency’ that will eradicate corruption.
In many places in the world corruption is seen as part of normal life. It cuts across all income levels and stages of development of countries. It exists in the construction industry in New York, in local government planning processes in the UK, and in political party funding in France. Each country has their own area of weakness.
According to the World Bank’s international measure of corruption the global average of corruption comes in at a score of 2.8 on a scale where 1 represents low corruption and 6 represents high. According to measures developed by Transparency International the worst level of corruption is to be found in Sub-Saharan Africa, but even the best performing region (Western Europe) is far from clean (scoring 66 on a scale where 100 represents ‘clean’).
The cautionary tale
In his novel ‘The Three Clerks’, Trollope tells the story of three young civil servants who become linked by marriage. They are referred to below as Clerks A, B and C.
In the tale, Clerk A is the main subject of the novel. He is a newly appointed civil servant, selected on the basis of merit. He is sent to inspect a planning application for a mining venture. He is encouraged to accept a gift of shares in the venture by his future brother-in-law, Clerk B, who is a former civil servant and who has taken a financial stake in the mine.
When his fellow inspector falls ill, Clerk A finds himself in the position of writing their joint inspector’s report on the mining application. He writes the report in a way that boosts the value of the shares he has been given, as well as those of Clerk B.
Things go downhill from there. Clerk A is cajoled into further investing in speculative stocks and shares by Clerk B, and is placed by him in the position as a trustee of an inheritance. Clerk A uses this position to raid the funds in trust and to further their stock speculation.
Finally, in order to cover his losses and his depredations into the trust funds, Clerk A buys shares in a scheme to build a new bridge across the Thames put forward as a public/private partnership investment. Clerk B knows the promoter and believes he will sway the public inquiry to favour the scheme.
The chairman of the parliamentary committee holding the inquiry into the proposed river crossing is unconvinced by the mixed evidence presented on the costs and benefits of the bridge. He kicks the proposal into the long grass.
As a result of his failed speculation, Clerk A’s position becomes financially untenable and his misappropriation of the trust funds is exposed. He goes to jail and, upon release, has to emigrate in an attempt to re-establish his life. Clerk B, the instigator and associate in the speculations, is ostracised, is also forced to leave the country and goes to live in penury abroad. Clerk C, in a junior department, alone among the three, remains untainted.
The lessons from Trollope
Trollope’s tale is set at a time when the English civil service was moving from appointments based on patronage, social class and connection to one of competitive entry based on professional competence. Ideas about professional integrity, skills and probity were replacing the variable standards of who you know and want to do favours to, or call favours from.
Against this background, Trollope’s novel distinguishes between four critical features of the environment surrounding the tale of corruption.
First, standards within the administrative profession.
Secondly, standards within a wider network of associates.
Thirdly, standards within the close family.
Finally, the role of access to the law and to reliable and speedy legal remedies for enforcing private contracts.
Trollope depicted a civil service moving towards professional practices and a ‘public service’ ethic. He offers the first depiction (that I am aware of) of what is now known as cost/benefit analysis, or its analogue, impact analysis, in the regulatory field (RIA).
The cost/benefit inquiry stops the private bridge promoter in his tracks to the benefit of the public interest. Professionalism thus scores a victory. However, professionalism in the form of a public service ethic that supplants private gain does not score so well.
Clerk A knows full well that his superiors are fully committed to the public interest. He also knows full well that his private speculations in shares are in conflict with his duty to uphold the public interest.
However, Clerk B moves between the world of officialdom, business promoters and politicians and sees no conflict. In his world each can share in the gains in win-win outcomes.
What Trollope tells us is that in a world where people move interchangeably between private, public and political roles we cannot be sure that professional standards and the public interest will come out on top.
Clerk A knows that his behaviour will be disapproved of in his social circle. Clerk B moves in a different social circle akin to today’s world of policy entrepreneurs, advisors, influencers and government relations movers and shakers.
Ethical standards and relationships in Clerk B’s social circle are measured by degrees of access, influence and results. ’Success’ is all. Clerk B is only ostracised and dropped by this network when he is named and shamed in the court proceedings against Clerk A.
What Trollope tells us is that the desire for esteem and respect among our social associates can be important in promoting ethical behaviour. But measures of social esteem can themselves be flawed. They do not necessarily align with high standards of public probity.
Both Clerk A and Clerk B know that their private share speculations and conflict of interest with their public role will be greeted with disapproval and dismay in their immediate family circle. They conceal what they are up to and their malfeasance only comes to light after judicial action is launched against Clerk A.
Following his disgrace, Clerk A emigrates with his wife and children in order to restart his life afresh, and to try to remove the family taint. Clerk B is permanently cut off by his family and goes into exile as a lifelong social outcast.
Trollope thus suggests that ethical standards within the family are important, but are not a reliable preventative against wrongdoing.
The efficacy of law
The corruption involved in using public position for private gain only comes to light in Trollope’s tale because of the law relating to the obligations and duties of trustees. Clerk A is exposed and taken to court only when he cannot repay the money he has embezzled from the trust funds in his care. Although Clerk B is not a defendant, because he is not a trustee with a duty of care, the evidence brought forward in the case makes clear his full complicity.
Trollope does not paint the law in a heroic role. Clerk A’s defending barrister is an expert in confusing juries and pleading tactically with judges. Thus, he does not aim for a ‘not guilty’ verdict, but rather for a lenient sentence.
Moreover, the branch of law that proves effective is not that which pertains to corrupt practices in public life, but that relating to the execution of private contracts.
What Trollope thus points to is the wider significance for society of reliable and quickly working law relating to private contracts. Effective law promotes honesty in entering into contracts and encourages the duty of care in executing the terms of contracts.
Reducing transactions costs
Institutional economics tells us that transactions do not happen without frictions. Above all there must be honesty in contracting and dealing. Otherwise exchanges do not work at all.
We can reduce these frictions when transactions are carried out within trusted family relationships, or when we can rely on everyone observing the same professional standards. When we move outside the family, and when professional standards are in some way uncertain and compromised, or behaviour judged simply by results rather than by how the results are obtained, we need a reliable law to enforce contracts.
In situations where the law is slow, unreliable and access is difficult, the only alternative is to make side-payments in order to smooth transactions, namely, to bribe. What Trollope tells us is to look at these inter-relationships.
Corruption as symptom
At one time it was thought that corruption could be tackled simply by exposing corrupt practices to the light of day. ‘Transparency’ was the magic wand. Following exposure, corrupt officials would be fired. Corrupt politicians would be rejected by voters. The force of the law would fall on both.
Trollope’s story tells us that exposure is necessary but not sufficient. Corruption has deep social roots. It is a symptom of other things that are wrong in a society and system of government. In particular the availability of prompt, reliable and accessible law relating to the enforcement of private contracts is critical. In its absence business transactions are smoothed through other means. The incentive to offer side-payments to reduce frictions becomes irresistible.