by Anca Pop
Despite the current, multifaceted backlashes against neoliberal globalization, liberal ideas on the global economic system are still the orthodoxy of the day. Whether it be in IMF and World Bank frameworks, EU membership conditionality, or TPP negotiations, the international economic consensus is still upheld by the belief that policies of trade liberalization, deregulation, and privatization are likely to reduce corruption. Inversely, corruption is said to have a negative impact on trade, investment, and growth.
A history of ideas approach to the study of early liberal theories sheds some light on what lies behind this professed “incompatibility” between liberal (and neoliberal) economic principles and corruption—an especially important question since this argument has been used to promote neoliberal practices worldwide.
Across much of the seventeenth and eighteenth centuries, the authority underlying administrative and judicial acts in Great Britain was not entirely under the sway of state power; it was rather “split” between the the state and individuals occupying official positions—a situation often qualified by historians as informal, privately held power.
Upon his admittance of guilt in relation to the twenty-three charges of bribery brought against him in 1621, Lord Chancellor Francis Bacon, the Head of the Judiciary of the time, boldly declared that he was “the justest chancellor that haths been in the five changes since Sir Nicholas Bacon’s time,” as he hadn’t allowed the donations received while administering justice to influence the judgments he imparted. During his prosecution by the Parliament over the widespread practice of commerce with state offices, in 1725, another Lord Chancellor—Macclesfield—stated in his defense that “taking a Present, or taking Money from Persons upon their Recommendations or Nominations into Offices, though they do concern the Administration or Execution of Justice, is not a crime in its own Nature; it is no Act of Immorality, it is no Act of Injustice to any Man.”
A series of political and economic phenomena converged during the eighteenth century to ascribe an increasingly regulated and accountable status to public functionaries, and to occasion the advent of new forms of denunciation of corruption. First, contemporary attempts to reform the expanding military-fiscal Leviathan were often accompanied by vehement criticism of state parasitism, tax exorbitance, and economic elitism. Part of this process meant that a growing number of officials were being brought to court for acts of misconduct. Second, early liberal hues of an interest-based language added a different set of justifications to the case against corruption. In this view, corruption’s ingrained oppressiveness and immorality were far less dangerous than its adverse effects on individual and public interests.
In a recent report on corruption in early modern Britain, Mark Knights makes reference to the first common law criminalization of misbehavior in public office. In 1783, in its case against the accountant Charles Bembridge—a state employee accused of concealing public money—the prosecution claimed that “if this is a public office, it appears to me to be a principle that it has public duties belonging to it.” The judge agreed, declaring that “the object [Bembridge’s] could only have been to defraud the public … a man accepting an office of trust, concerning the public, especially if attended with profit, is answerable criminally to the King for misbehavior in his office.”
It can be argued that with the bureaucratization of government during this period in British history—and, indeed, across Europe—corruption, while becoming increasingly regulated, also emerged as a defining feature of the very workings of the state itself. The British case has been portrayed as unique among European states in the way corruption—or, as it was dubbed at the time, “Old Corruption”—and the criticism thereof were at the heart of eighteenth-century state reforms. Through a combination of parliamentary reform acts, government policies and public pressure, reforms were initiated to target encumbering tax regimes, reduce the number of offices, and encourage a salaried and more efficient allocation of state positions. These measures were designed to keep in check military expenditure and public debt—on the rise during the American War of Independence—and, more generally, to implement a system of control over budgetary, financial, and economic matters.
Several authors have pointed out the link between this period of trial and error, of intense disputation and civil strife over the means to advance change in matters of state competence, and the emergence in the nineteenth century of a liberal form of government—one centered on a model of minimal state intervention in the economy and a speedier and reduced administration. According to this analysis, it was precisely because of this “point of inflexion” from within the state system—”Old Corruption” and its devastating effects during a century of encroaching authority by a heavily enriched financial military elite—that reform entailed minimizing the state. Other opinions have drawn attention to the fact that these early modern mechanisms of fighting corruption through the means of a diminished state were simultaneously inhabited by tensions: “A paradox of corruption is thus that the expansion of the state both increases the opportunities for corruption and ultimately creates a set of institutions, mentalities and practices that can be brought to bear on corruption.” I would argue that, in itself, weighing up state involvement as both a source of and an obstacle to corruption was one of the first instantiations of what Foucault called the endless crises of liberal governmentality. Deciding how much—and in what specific ways—the government needed to expand its powers in order to limit an abuse of power—likely to be enhanced by that very expansion—would remain an unresolvable task for generations of liberal politicians. Indeed, it still is a defining challenge for today’s anti-corruption programs.
Deciding how much—and in what specific ways—the government needed to expand its powers in order to limit an abuse of power—likely to be enhanced by that very expansion—would remain an unresolvable task for generations of liberal politicians.
At the same time as these reckonings with “Old Corruption,” a distinct line of interrogation of the link between state authority and corruption emerged from outside the political establishment. Early liberal economic ideas in Britain also railed against the corrupt mercantilist policies of the time. These were seen as wealth-acquisitive vehicles of a sycophantic merchant aristocracy, and as encouraging wasteful colonial war-mongering and monopoly-seeking zero-sum competition among European states.
In his case against corrupt monopolist practices, Adam Smith repurposed naturalist ideas advanced by certain strands of republican and Enlightenment thought by lodging them within his theory of a market-centered societal model. Smith’s embrace of “natural rights and liberties” was not especially informed by natural law theories widespread at the time, such as Locke’s famous proposition of the three natural rights (life, liberty and estate), which the government would be obliged to protect. For Smith, it was much more about the right to act according to one’s own interests. This was bound up not with the necessities of any fundamental human nature, but with the “naturalness” of free market mechanisms. From this point of view, corruption needed to be held in check mainly because of its perversion of the nature of the market—its disturbance of the market’s natural growth instinct—rather than due to moral or legal justifications.
Furthermore, Smith applied an economistic lens to the existing anti-corruption rebuke of the state’s arbitrary management and misappropriation of resources. His reprimand placed the separation of the economy from the government at the heart of modern civilization, and conceived of corruption as a consequence of the infringement of this separation. For Smith, collective social interest was intrinsically determined by the natural dynamic of individual interests, from which it followed that a state concerned with the collective good of its people should do nothing more than allow the unhindered manifestation of individual interests. As Foucault elucidated in his analysis of early liberal ideas, Smith’s radicalism consisted in implying that what necessitated the separation of the two spheres was the premise of their “heterogenous and incompatible” natures, which rendered the prospect of an “economic sovereign” fraught with error and abuse.
The end of the eighteenth century was also rich in denunciations of the malfunctions festering at the core of Britain’s corrupt colonial operations.
The end of the eighteenth century was also rich in denunciations of the malfunctions festering at the core of Britain’s corrupt colonial operations. Among them, the East India Company (EIC)—the infamous monopoly holder of large parts of the commerce with Britain’s Indian colonies—elicited numerous, acerbic public condemnations. In 1773 Thomas Pownall, a well-known colonial official, bemoaned: “If the public inquires after the cause to which this wretched state is owing, they are told of the want of wisdom and power in the company at home; of mischievous errors in the directors; of factions in general courts; of ungovernable disobedience in their servants abroad; of peculation of public treasure; of frauds in expenditures; of falsehoods in accounts; of plundering, pillaging, and rapine, both public and private; of rapacious extortions in trade, which have ruined the commerce and manufactures of the country; of tyranny, in every exertion of the cruel spirit, which had absolutely destroyed the country itself.” Espousing a common view in those times, Pownall explained this dismal state of affairs through the fact that the EIC was operating as a de facto sovereign administrative power in India, for which “the company, by its direction within the realm is not adequate to, and with which its servants … should not be trusted.”
A staunch critic of the EIC, Smith equally expressed his doubts about the ability and suitability of merchant enterprises to fashion themselves into public good endeavors. In so doing, though, he prioritized once again an economic interpretation over a legal-political understanding of the facts. According to him, private actors were no more fitting than the state to establish goals and devise policies with an all-encompassing economic scope. This wasn’t because of any infringement of sovereignty, but because doing so would tamper with the invisible self-adjusting dynamic of the economic game. Foucault remarked on Smith’s suggestion that the “invisible hand” would only be able to operate under conditions of lack of knowledge or clarity on the part of economic actors (including the sovereign) as to how a common good design should look. In the case of the EIC, merchants-turned-sovereigns would be seen from a Smithian perspective as hijacking this secretive powerful mechanism. To the liberal mind, corruption was looming even more dangerously, as it was feeding itself on the very power of non-transparency postulated by Smith as the defining attribute of the market economy.
It appears that from its beginnings in the eighteenth century, liberal thought was preoccupied with the notion of corruption. This was not justified by any heightened sense of righteousness or correctitude; nor was anti-corruption primarily upheld as a proposition of modernization of the political establishment. For the early liberals—and to a large extent for subsequent generations—the fixation with corruption was due to its perceived undermining of the fundamental tenets of liberal economic thought. It was seen as a “crime” of trespassing by the sovereign power into a domain which functioned according to rules other than its own, and as thriving when private and public economic interests would extend themselves beyond a limited sphere of action. Within debates on state intervention as a means of fighting corruption, it was difficult for liberals to shed their radical naturalist interpretation of corruption as the inevitable effect of any form of overlap between the political sphere and the economic one.
To conclude, two distinct strands of criticism promoting governmental reform in eighteenth-century Britain came together in their indictment of “Old Corruption.” One grew from within the judicial-administrative practice of the state, while the other emerged from early liberal outlooks on commercial and colonial policies. The fact that liberal economic theories articulated themselves onto contemporaneous debates on reform and corruption would not be without consequence for the political forms British liberalism would inhabit starting with the nineteenth century. By indicting corruption, these theories didn’t just specify an economic viewpoint on state reform. More significantly for future interrogations of political power, they suggested that power relations, if inscribed within any one field—be it the state or a group of private actors—are by nature corrupting.
Anca Pop is a London-based researcher and editor with an academic background in history, IR, and East European studies and a track-record in European transnational activism.
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 Mary Augusta Scott, The Essays of Francis Bacon, New York: Charles Scribner’s Son, 1908, li
 Quoted in Mark Knights, Old Corruption. What British history can tell us about corruption today, Transparency International, 2016, 10, http://www.transparency.org.uk/publications/old-corruption-what-british-history-can-tell-us-about-corruption-today/#.Wu8opYgvzIU
 Mark Knights, op.cit., 12
 Quoted in Mark Knights, op.cit., 12
 See Philip Harling, The Waning of “Old Corruption. The Politics of Economical reform in Britain 1779-1846”, Oxford: Clarendon Press, 1996, 9 and Eckhart Hellmuth, Why does corruption matter? Reforms and Reform Movements in Britain and Germany in the Second Half of the Eighteenth Century, in Proceedings of the British Academy, 100, 22-23
 Eckhart Hellmuth, op.cit., 23
 Mark Knights, op.cit., 19
 John Locke, Two Treatises of Government, London, 1698, 269, https://books.google.co.uk/books?id=7kwUAAAAQAAJ&dq=editions:q2cKQ3eYrMIC&pg=PP7&redir_esc=y&hl=en#v=snippet&q=life&f=false
 See Adam Smith, Lectures in Jurisprudence, The Glasgow Edition of the Work and Correspondence of Adam Smith (1981-1987), vol V, 2004, 430, 513 www.portalconservador.com/livros/Adam-Smith-Lectures-on-Jurisprudence.pdf and Adam Smith, An Inquiry into the Nature and Causes of The Wealth of Nations, ed. S.M. Soares, MetaLibri Digital Library, 2007, 333, 488
 For more on this and for a comparison of Smith’s stance to those of his contemporaries, see Bruce Buchan, Lisa Hill, From Republicanism to Liberalism. Corruption and Empire in Enlightenment Political Thought, 2007, 16, 24-25 https://research-repository.griffith.edu.au/bitstream/handle/10072/15850/47188.pdf%3Bsequence=1
 Bruce Buchan, Lisa Hill, From Republicanism to Liberalism. Corruption and Empire in Enlightenment Political Thought, 2007, 21, https://research-repository.griffith.edu.au/bitstream/handle/10072/15850/47188.pdf%3Bsequence=1
 Adam Smith, An Inquiry into the Nature and Causes of The Wealth of Nations, op.cit., 349
 Michel Foucault, Naissance de la Biopolitique, ed. François Ewald and Alessandro Fontana, Paris: Seuil/Gallimard, 2004, 286
 Quoted in Jack P. Greene, Evaluating Empire and Confronting Colonialism in Eighteenth-Century Britain, New York: Cambridge University Press, 2013, 140
 Adam Smith, op.cit., 349-350
 Michel Foucault, op.cit, 283