Medieval Spontaneous Order, Associate Government, Predatory Government and Corruption

Abstract

In this paper, we present a corruption analytical framework to explain certain aspects of the recorded human history. The suggested analytical framework connects both the agency theory and the rent-seeking theory together. We argue that while the agency theory lacks a satisfactory explanation of the institutional environment where the problem of corruption occurs, the rent-seeking theory lacks en exact definition of rules which determine how the problem of corruption should be eliminated. Thus, our analytical framework stresses the importance of a system for creation of legislation and its enforcement in corruption elimination. We use this corruption analytical framework to describe several historical examples. Corruption is introduced through the example of bribery.

Using the first historical example, we describe how spontaneous orders have solved the corruption problem. Spontaneous orders represent systems of customs and formal duties created by European medieval merchants. Given the second example, we describe how associate governments have solved the corruption problem. Associate governments are formal organizations of European medieval city states. Using the comparison of spontaneous orders and associate governments we show that corruption is a problem of the government rather than the spontaneous order. On the third example, we describe how predatory governments of medieval England and medieval France invoked corruption. On the comparison of the historical example of medieval England and France we show that the systems for creation of legislation and its enforcement are crucial for offering solutions to the problem of corruption in every constitutional democracy. More precisely, we argue that when the system for creation of legal rules is subordinated to public control and the independent judicial system is subject to competition, the problem of corruption is subdued compared to non-democratic states. Moreover, we argue that less corrupt formal organizations encourage productive entrepreneurial activities.

Keywords: Corruption, Law Enforcement, Historical Example

JEL Classification: D73, N30, N40