For decades, economists have offered potential solutions to the problem of corruption. From opening up a country’s economy to trade to reducing the size of government, some of these ideas are often cited as anti-corruption remedies to this day. The main argument behind most economists’ anti-corruption recommendations draw on the idea that increasing competition and allowing the market to operate freely with as little government intervention as possible, will help eradicate corruption. Over the past two decades, however, this notion has been heavily contested on the basis that markets are imperfect and that market failures call for the intervention of governments.
At the same time, research on the causes, consequences and remedies for corruption has multiplied in the field of political science and sociology. Authors have moved beyond narrow definitions of corruption, which in the economic literature is often understood only as rent-seeking or bribery, to broader concepts that capture better the many potential manifestations of the problem. Moreover, the most recent literature on the issue characterizes corruption as just a symptom of a broader problem associated with the type of governance regime a society operates under. This implies that corruption is the result of a system in which decisions of all kinds are made on the basis of connections rather than on impersonal (universal) criteria.
This paper seeks to revise the relevance of the traditional anti-corruption tools often recommended by economists in the light of this new understanding of corruption. The paper will apply the notions of particularism and universalism to the market itself and present evidence that market mechanism can only help fight corruption when they operate under the premises of meritocracy and free and fair competition.
