On Corruption

At irregular intervals the U.S. is shaken by high-profile cases of political and financial corruption. Every time the media indignantly denounces the miscreants as if to reaffirm that except for them America remains unspotted and innocent. There is barely a mention of the corrupt practices and conventions inherent in contemporary finance capitalism.

Rod Blagojevich, governor of Illinois and would-be grifter, and Bernard Madoff, worldly moneyman, momentarily capture the headlines. With his alleged offer to auction off a U.S. Senate seat to the highest bidder, Blagojevich followed in the steps of Plunkett of Tamany Hall and is a piker compared to Madoff, whose alleged $50 billion Ponzi scheme is apparently history’s largest private financial fraud. Ex-chairman of the Nasdaq Stock Market and one of its major players, for decades Madoff lubricated his venture by making strategic political contributions and mixed business with philanthropy, in the process raising his social status and soothing his conscience.  The explosion of Wall Street’s government-condoned financial bubble exposed Madoff’s pyramid scheme, which can only be understood in the context of the larger praxis and culture of corruption that makes it so difficult for President Barack Obama to separate the wheat from the chaff as he forms his cabinet, White House staff, and inner circle of advisers.

Corruption is a highly polemical word-concept, its rhetorical use adapted to political warfare. Its charges—including bribery, extortion, nepotism—are leveled to mobilize popular and partisan support against incumbents or rivals. A phenomenon of group psychology and action, the meanings attached to the word corruption have changed from one civilization to another, from one century to another, and from one country to another.  To think critically about corruption is to think about venality not only in politics but also in economics, finance, religion, sports, the arts, education, and social intercourse. Even so, private individuals who tender bribes are judged and penalized much less severely than politicians, government officials, and bureaucrats who solicit and pocket them, presumably because they betray a public trust. The imbalance is greater in societies where the richest of the rich, both individual and corporate, are in a position to corrupt public servants of modest means.

If man is innately venal it is hardly surprising that elected politicians and state functionaries are corruptible. Political society is not ruled by angels mindful of prayer books. By the nature and logic of things, and in the words of Lord Acton, “power tends to corrupt, and absolute power corrupts absolutely.”

Since corruption is chronic in political and civil society (and at certain moments, as Bertolt Brecht observed, “to find an official who accepts a bribe is to find humanity”), the issue is not corruption as such, but its scale and virulence and pervasiveness. So-called primitive societies may well have been the least open to corruption, since there was little if any separation between the private and public sphere, which is a precondition for bribery to subvert non-venal gift-giving. But there was bribery, especially of judges, among the ancient Egyptians, Babylonians, and Hebrews. In Greece, by the fourth century B.C.E., bribery developed along with the growth of city, economy, and government, as well as with the need to pack public assemblies. Ancient Rome was never free of venality, though it only began to suffuse civil and political society during the late republic and with imperial expansion: sale of public offices, contracts, and concessions, capped by clientage and the buying off of the plebs with “bread and circuses.” Even the office of Emperor occasionally went to the highest bidder.

Whereas ecclesiastic simony was probably the most common graft of the Middle Ages, the purchase or sale of public places, especially judicial and tax offices, became not uncommon in France and England in early modern Europe, as a complement to hereditary offices. Europe’s overseas colonization provided new avenues for corruption in the metropole as well as in distant imperial provinces. Corruption has always been part of and necessary to imperialism, involving the purchase and sale of fat charters, concessions, and contracts for the economic and fiscal exploitation of colonies, particularly for the extraction of nonrenewable resources and commodities.

Corruption, then, is not equally prevalent always and everywhere.  In moments of radical economic transition and social change, when governmental and legal structures are inchoate and social conventions are in flux—in the United States from 1865 to 1890; in the new states of post-colonial Middle East, Africa, and Southeast Asia; in the lands of the ex-Soviet Union and its former satellites since 1989—corruption becomes rampant and glaring by virtue of unhoped-for opportunities for tempter and tempted alike. Grand corruption overtakes petty graft.

With its moving frontier, particularly from the time of the Civil War to beyond the fin-de-siècle, America excelled in corruption. The legendary robber barons and captains of industry, retrospectively celebrated as the founders of modern American capitalism, built their business empires with calculated recourse to the massive corruption of government—local, state, federal—for private gain.  In a climate of relative and widely condoned moral laxity, fraud and graft ran wild, particularly in the frenetic race for rights of way for railroads; for land grants from the public domain for the exploitation of timber, minerals, and oil; and for favorable tariffs, taxes, and business regulations. To achieve their ends, Cooke and Gould, Vanderbilt and Rockefeller, Huntington and Stanford, Frick and Carnegie spent vast sums to “fix” things. They competed in bribing senators and representatives of both parties, in suborning elections, in buying newspapers, and in seducing public intellectuals.

A few magnates, hoping to cut the cost of fixing things, themselves stood for public office, using their wealth to secure political power. The giants of certain industries, rather than fight each other in the face of relatively toothless government controls, colluded to form lobbies and, eventually, to merge their firms. As of the late 1870s, because of his fraudulent and illegal practices in building up Standard Oil, John D. Rockefeller became a notorious fugitive from justice. To elude process servers he kept crossing state borders until, fearful of being arrested and extradited, he holed up in his estate in Pocantico, New York, surrounded by security guards, to fend off servers of subpoenas. With time, eager to improve his image and status, the oil mogul began to funnel some of his tainted wealth into philanthropic works, prompting Mark Twain’s assessment that through “all the ages three fourths of the support of the great charities has been conscience-money.”

In the twentieth century, America’s emergence as an imperial power could not help but bring about an efflorescence of corruption. Compared to the directly ruled Roman and overseas European empires, the indirectly linked U.S. empire gave rise to a military-industrial complex which became cause and effect of constantly rising public expenditures for enormous military contracts which, historically, have been exceptionally conducive to jobbing. The growth of this mighty “defense” establishment, with military bases and subaltern allies the world over, goes hand in hand with imperial America’s global reach for critical and invaluable commodities entailing enormously lucrative but also highly corruptible contracts. This grab is facilitated by the American lead in aeronautics, telecommunications, pharmaceuticals, and computer technology, all of which call for licensing, fraught with influence-peddling.

In this era of universal finance capitalism, yesterday’s pork-barrel and log-rolling politics has been overtaken by hyper-corruption, both straightforward and circuitous, legal and unlawful. With the sweeping deindustrialization of America, there is no longer a senator to represent the state of Boeing nor a corporate CEO—and future defense secretary (GM chief Charles Wilson)—to proclaim that “what is good for General Motors is good for America.” The objectives have become altogether less insular: bribes, in the form of campaign contributions and gifts, are designed to influence, if not buy, legislative and administrative decisions to benefit giant interests, many of them transnational. Indeed, with the globalization of economy and finance, corruption has become global as well. Suitors and supplicants resort to it in the quest for business contracts and political leverage.

With corruption systemic in the U. S., not just mega-corporations and financial companies practice it but so do rating agencies and accounting firms. And it festers in the Old World where the Vivendi, Parmalat, and Afinsa/Escala scandals are analogous to the Enron and WorldCom scandals in the New World.

Obviously not all the culprits are big-time corporate executives. There remain super-wealthy individuals who fix things as a matter of course. Bill Gates and Sergey Brin, Warren Buffet and George Soros do so aboveboard; the likes of Marc Rich and Boris Berezovsky act surreptitiously.  The latter know no national loyalty: Rich renounced his American citizenship to acquire Spanish, Swiss, and Israeli passports to facilitate staying ahead of the law; Berezovsky fled to the United Kingdom to escape Russian courts. Confirming Mark Twain’s maxim, all make large bequests to philanthropic causes.

Overall, however, most of the great tempters are faceless CEOs who seek to advance corporate fortunes along with their own. Together with well-funded lobbies and pressure groups it is they who do most of the giving to both political parties, leaving organized labor and civic groups far behind. Increasingly, business-friendly Republicans and Democrats, their elections and advancements heavily financed—hence swayed—by big corporations and trade associations, are hegemonic in the legislative, executive, and administrative branches of government at the federal, state, and local levels. The symbiosis between corporate business and corporate government is made possible by the revolving door between the private and public sector. Without severing their links to the Beltway the insiders become outsiders promoting interests pending an eventual return to power. To bolster their pedigrees many seek and secure affiliations with elite universities or think tanks.

While out of power the highest-level and most visible politicos and functionaries monetize their experience and connections in government, corporate business, and high society at home and abroad. Jimmy Carter apart, ex-presidents today seek and command huge fees for oily corporate speeches. Former cabinet members and top advisors set up, join, or counsel high-powered consulting firms that engage in transnational influence-peddling and lobbying on behalf of domestic and foreign corporate clients, charging fees in keeping with their vaunted access to the inner corridors of political and corporate power: on the Republican side, James Baker III, Henry Kissinger, Thomas McLarty, Peter Peterson, and John W. Snow; Democrats include Madeleine Albright, Sandy Berger, William Cohen, Carla Hills, and Richard Holbrook.

James Baker’s Carlyle Group, with ex-President George H. W. Bush as its senior advisor, is prototypical of these corruption tanks, which, in collaboration with major law, investment, accounting, and public relations firms, constitute a formidable nexus of influence and power.  Retired senior officers of the armed forces similarly cash in on their credentials and access by advising defense contractors and performing as military analysts in the media.

The 21st century is witnessing the birth of a new concert of nations to be dominated by several great powers, not just one. Although their political systems differ radically, they are all anchored in and driven by a new form of state capitalism. The rivalries among the major state actors will be intensified by sharpened competition for access to or control of increasingly scarce resources—energy, food, and water. In addition population growth will continue to be centered in chronically unstable countries racked by poverty and malnutrition. Not a few of these wretched states are endowed with valuable natural resources controlled by narrow and venal inveterate elites.

The reversion to a multinational world system dominated by several great powers practicing a new kind of mercantilism is a boon to corruption. The corruption-mongers of state finance capitalism are working hand-in-glove with the creatively destructive robber barons and fixers of emerging and failing states. The former decry the latter for their crude and blatant corruption and nepotism all the while they wheel and deal with them. As for the likes of Blagojevich and Madoff, they will continue to figure as colorful supernumeraries while serving to deflect attention from the feast of vultures.

Arno J Mayer is emeritus professor of history at Princeton University. He is the author of The Furies: Violence and Terror in the French and Russian Revolutions.

Arno Mayer is the Dayton-Stockton Professor of History, Emeritus, at Princeton. He can be reached at mayer@princeton.edu.