I would like to say something about the relationship between rationality and corruption highlighted by a previous comment. Corruption is a multifaceted phenomenon and I am interested in its links to political culture. I think corruption is a rational behavior. I would summarize by saying that it maximizes the benefits of an actor who has a defined set of goals, values and norms, in a social context that --sharing the same set of cultural traits-- approves or consents the use of means that would be rejected and punished in other social and cultural contexts. That is, widespread corruption is the result of rational behavior when the social / cultural context approves or consents it.

There is no doubt that collectively the outcome is less efficient than the outcome that would be obtained if the honest behaviors were widespread, but, because what is widespread is corruption, the individual acting honestly is the "loser", at least in the eyes of those who do not share her/his value system (who, in the context we have assumed,, are the majority).

In the specific situation in which the actors decide, the most efficient long-term collective outcome would be at best purely theoretical. A majority of actors would have to agree to act honestly at the same time and thus achieve collectively --but not individually in all cases- the best outcome. 

So, this type of agreement even implies individual sacrifice (for example, a politician or businessman would have to renounce to get rich through corruption, when he/she could do so with impunity).This can be done sometimes !! One example are the famous Moncloa Pacts in Spain, agreed by the main political actors, which were followed by agreements between employers and trade unionists. But in most cases, we have the classic prisoner's dilemma:: the rational behavior of individuals leads to an inefficient outcome collectively.

Those who study political culture stresses --among other things-- features such as interpersonal trust. Generalized trust helps solve this kind of dilemmas of collective action, because --for example--some actors can postpone their own benefits for the sake of collective interest, by being confident that other actors will act in the same way in the future. Other political culture elements involve specific values which, when widespread among ordinary citizens and / or elite members, make them more sensitive and prone to act against corrupt behaviors 

Dear @Yimin, I have found 50 publications available here at ResearchGate database. Follow the link attached. 

I have attached also a case study of collusive corruption from India!

https://www.researchgate.net/publicliterature.PublicLiterature.search.html?type=keyword&search-keyword=collusive+corruption

http://www.dailymail.co.uk/indiahome/indianews/article-2118406/Transparency-International-lifts-lid-public-private-sector-collusive-corruption-graft-mining-oil-power.html

I am working on a special edition now of Journal of Developing Societies that will try to examine this question.  Hopefully it will be out by early next year.  One thing I note is that corruption is something everyone laments, but no one really knows how to solve.  It might be the biggest obstacle to improving living standards in the developing world.  In my opinion, the root of the problem here is related to a very narrow view of human behaviour promoted by economics, namely that humans decide on the basis of rationality.  Even if we add in steep discount rates, the levels of corruption in the developing world and the dysfunction they bring to the economies is a greater cost to everyone than any short-term gain.

Fjeldstad, Odd-Helge has worked in an interesting analisis and survey about corruption, wich is analised from it's most particular acte, an illegal particular payment to a sistemic problem wich affects the political and economical system. I agree with Anil Hira, that corrption is a problem that all political and economical actors, and including civil society declaims as the cause of main social problems, but no body realy want's to solve.  If I think about Argentina, the corruption is tipicaly sistemic, and it grows in every private or public space you can imagine. It is also part of the clientelistic/cohersive system wich organizes most of the (public) labour market and the public social assistance. And the private and public colllusion is important in the Public work building programs, ehwre the over cost may be over 30%  more than the usual cost!  One of the problems, is that the citizen don't relate this actes to the lake of wellbeing they endure every day -bad scholls, bad health system, bad transportation infrastructure and so on. And most of all, this countries usually have very high taxes to finance that collusive corruption.

I would like to say something about the relationship between rationality and corruption highlighted by a previous comment. Corruption is a multifaceted phenomenon and I am interested in its links to political culture. I think corruption is a rational behavior. I would summarize by saying that it maximizes the benefits of an actor who has a defined set of goals, values and norms, in a social context that --sharing the same set of cultural traits-- approves or consents the use of means that would be rejected and punished in other social and cultural contexts. That is, widespread corruption is the result of rational behavior when the social / cultural context approves or consents it.

There is no doubt that collectively the outcome is less efficient than the outcome that would be obtained if the honest behaviors were widespread, but, because what is widespread is corruption, the individual acting honestly is the "loser", at least in the eyes of those who do not share her/his value system (who, in the context we have assumed,, are the majority).

In the specific situation in which the actors decide, the most efficient long-term collective outcome would be at best purely theoretical. A majority of actors would have to agree to act honestly at the same time and thus achieve collectively --but not individually in all cases- the best outcome. 

So, this type of agreement even implies individual sacrifice (for example, a politician or businessman would have to renounce to get rich through corruption, when he/she could do so with impunity).This can be done sometimes !! One example are the famous Moncloa Pacts in Spain, agreed by the main political actors, which were followed by agreements between employers and trade unionists. But in most cases, we have the classic prisoner's dilemma:: the rational behavior of individuals leads to an inefficient outcome collectively.

Those who study political culture stresses --among other things-- features such as interpersonal trust. Generalized trust helps solve this kind of dilemmas of collective action, because --for example--some actors can postpone their own benefits for the sake of collective interest, by being confident that other actors will act in the same way in the future. Other political culture elements involve specific values which, when widespread among ordinary citizens and / or elite members, make them more sensitive and prone to act against corrupt behaviors 

thank you for your discussion. and  i hope there are more people joining us to deepen reseach on this issue.

collusive corruption, as a group behavior, has some unique conditions for its realization. collusion has been reseached by many scholars, especially economists,such as Tirole. though collusion can not be seen as equal to collusive corruption, and economic analysis has its own limits,  this kind of research can still give us some good views.

can someone give some suggestions of collusive corruption based on the economic analysis of collusion?

Уважаемый коллега! Поставленный Вами вопроса касается не только экономической выгоды от коррупционного взаимодействия. В качестве причин такого поведения могут выступать психологические факторы - потребности человека, вызванные поведением окружающих.

Dear Yimin,

you have set an interesting question about corruption as a collective phenomenon. I will just share some ideas about this issue.

In economics, we have models of criminal behavior. It happens when expected payoff is higher than expected cost. This means that either the laws punishing corruption are too weak (I guess this is not the case of China) or the probability to be caught is low (or even when not low, there is a chance to escape punishment again by corruptive behavior, via bribe).

Collective phenomenon is a network effect where optimization is not purely individual but is influenced by neighbors. Such an influence breaks traditional concept of rational individuals because social influence can perturb rationality. But there is another effect - the probability to be caught and finally punished can  become lower in such a network.

thank your for your translation.

yes, i also study the collective corruption from the social psychology. and  many scholars have done some good researches.

i hope someone can give me some ideas from the economic perspective.

Dear Yimin,

I gave you already my ideas fro economic perspective. If I would do economic model of corruption, I will proceed the way I have described, that is a mix of economic approach and social networks. From economics I would take individual choice, optimization based on some utility function.

But agents are not isolated here, they are linked into a network. I know a good book edited by Durlauf and Young about social networks: https://mitpress.mit.edu/books/social-dynamics

Mathematical theory of networks is developed more by physicists and computer scientists. You may look at works of Duncan Watts who has introduced the concept of "small world" (perhaps it is good approximation for corrupted group): https://en.wikipedia.org/wiki/Duncan_J._Watts

I was also writing about "Structural economics" (see on my RG page), but it is just a survey of extension of economic assumptions to describe interactions and emerging structures.

In developing countries many times - endless examples - many political parties/ groups collude together to gain personal monetary advantage at a very large economic cost to the exchequer. At times people of these parties cutting across party lines come together to fleece the public/economy. 

In India we have had a number of scams pointing towards the collusion of politicians/bureaucrats and the like.

Another question is of rationality - whose rationality. The colluding rationality of the corrupt, society's rationality, individual rationality.   

Уважаемая коллега верно заметила. Большинство политических деятелей после прихода к власти разменивают властные ресурсы на экономические. Их годовой доход кратно увеличивается если они становятся высшими должностными лицами государства. Пример, Президент Украины Петр Порошенко, у которого после прихода к власти размер состояния увеличился в 7 раз, а уровень жизни населения уменьшился на 20-25%.

Reasons of collusion corruption are several but in nutshell, it is the complete breakdown  of responsibility, lose of virtues of ethics for the common good and the over pronouncement  of the self unnecessarily. A similar thread on this issue is attached below:

https://www.researchgate.net/post/Do_you_think_corruption_in_all_its_variants_a_threat_to_contemporary_world

Hi Yimin

Here you make two questions in one:

(1) What is the origin of corruption.

Krishnamurti has a fantastic explanation of what is the cause of corruption.

https://youtu.be/oSqzkGyxpmc

(2) Is colusion always corruption?

There are governments that like to fix prices.... looks a lot like collusion... is this corruption?

Hope that this helps.... Jorge López-Cifre

I think it is a very basic point of civilization based on Yimin Mao's point of 'Collusive Corruption'. If we study the development of human civilization from cave-living age, we will see that opportunism cause this initiation of civilization or development. Individual benefit boost always to a person to gain as well as lucrative living process. To be a leader is also the basic instinct of human. Capitalism is it's one major terminology and Scientific-Socialism may be the best terminology against this 'Corruption.

Criticism is most wanted in this regard.

Dear @Yimin, please do visit my thread on corruption with so many fine answers, case studies, literature, different practice... About 500 answers.

https://www.researchgate.net/post/Corruption_remains_one_of_the_biggest_challenges_for_all_societies_Do_you_have_examples_of_corruption_in_your_society

Dr. Jorge makes a good point that rationality can still be useful in understanding corruption from the point of view of reciprocity.  So, individuals will cheat if they don't expect enforcement or informal reciprocity.  Trust is the glue that makes long-term collective action work.  But this is still a far cry from the atomistic model of individual actors supported by economists.  It suggests that there could be competing rationalities, rationality at the individual and multiple collective levels, and a great deal of difficulty in calculating discount rates or expected utilities along with quite obscure information about long-term prospects for compliance.  Moreover, we can not just treat collective enterprises as individuals, in fact there is continual ambiguity b/t individual and collective rationalities, hence the paranoia of mob bosses.  To me, then, trust has to go beyond rationality and be embedded in social rituals, institutions, experience, and collective identity.  I try to make these points in my forthcoming Three Perspectives on Human Irrationality: The Book of Rules.

I feel that another reason for collusion corruption and skewed/ ambiguity in rationality in especially developing / emerging economies is what I term as 'Elected Dynasties', - a number of them at the federal and state levels. Generations of families controlling major political parties/ politics due to lack of charismatic leaders. All of them collude and may hay while in power. When out the others fill their places. 

Families and extended families collude and adopt corrupt means. it is an endless game where win is due to family affiliations rather than the achievements. The situation becomes grave when despite a number of effective leaders both the electorate and the party stalwarts bow to average scions of political families!  

Very good comment dear @Vibha. Collusion corruption is very much connected to political dynasties! Here is the example from Indonesia.

"...The court has turned a blind eye to the potential costs of political dynasties, which include rampant corruption, collusion and nepotism, the three enemies this nation pledged to eradicate at the beginning of Reformasi in 1998.

Some regional leaders who benefit from political dynasties have proved their merit and commitment to clean government, but Indonesia remains one of the world’s most corrupt nations and the Constitutional Court has wasted an opportunity to contribute to its betterment.

Sooner or later, however, the public will find their own way to put an end to political dynasties.."

http://www.thejakartapost.com/news/2015/07/10/editorial-unbreakable-dynasties.html

Thanks Ljubomir Jacic Sir

I agree with your observation. we have seen this in India. In many States the people have rejected such leaders but the irony is that at times (not always) one dynasty is replaced by the other. Not only that there are various branches of these dynasties! All demanding an office as a right after the original leader goes. 

India voted out the Government run by the Nehru-Gandhi family in a big way in 2014 General Elections. The UPA government having Congress as a major party was reduced to the minimum number of seats due to many reasons corruption being one of them. The other probably being the inability of the leaders to keep the flock together. Now the clamor is to bring the other sibling into politics to save the party! though the party has a number of political stalwarts.    

There is a pattern of preferring one party once and the other group the next time due to anti-incumbency and all this leads to collusion politics and corruption.   

Here is another story related to this thread. It is about Leyla Aliyeva, the elder daughter of Azerbaijani President Ilham Aliyev! Fine case!

https://www.occrp.org/freekhadijaismayilova/stories/azerbaijan-first-familys-opulent-russian-dacha.php

Collusive corruption is a kind of corruption, it is not insular, but just in the range of corruption.  The corrupt people frequently need help and coverture， that is collusive corruption.

ood day, dear colleague!

You can see the work of Professor Kabanov devoted to topics of interest to you (https://www.researchgate.net/profile/Pavel_Kabanov/contributions). Of course, most of them are made in Russian. But there is a little and English. I take this opportunity to invite you to take part in the international conference "Anti-corruption Dialectics" (https://www.researchgate.net/publication/281293642_?ev=prf_pub, https://www.researchgate.net/publication/281293619_Anti-corruption_Dialectics)

Conference Paper 反腐败发展过程

Conference Paper Anti-corruption Dialectics

Montenegro: OCCRP partner says coal plant project will benefit PM’s brother!

"...The plant will buy its coal from the nearby Pljevlja mine – in which the prime minister’s brother, Aco Djukanovic, is a 12 percent shareholder. The state and A2A are the other major shareholders.

MANS said there is a risk that the expanded plant will end up buying coal from the mine at inflated prices.

“The Government has left the EPCG and the Pljevlja coal mine to arrange independently the final decision on the price of the coal and margin calculations. That means that the margin calculations will depend from the private interests of the biggest shareholders, A2A and Aco Djukanovic,” MANS said..."

https://www.occrp.org/en/daily/5508-montenegro-occrp-partner-says-coal-plant-project-will-benefit-pm-s-brother

@Jose is right that corruption can be explained as a rational equilibrium in economic game. The problem is that these economic games are selfish. If there will be some element of altruism, socially efficient outcome can start to dominate. This can also be the route to eradicate corruption.

In the section 5 of this paper I consider such transformed game with an element of altruism in preferences: https://www.researchgate.net/publication/271500062_Econo-physics_A_Perspective_of_Matching_Two_Sciences

Historically there were societies with low level of corruption or without it. Sometimes corruption is perceived as a sin (religious order), sometimes laws against are strong (like in China today, but still they do not succeed completely). In other words, it is difficult to fight corruption without full renovation of ideology of the society.

Article Econo-physics: A Perspective of Matching Two Sciences