Question about corruption?
Is corruption more likely to exist under a capitalist or a socialist society? I know that they inevitably exist in both, but which society would traditionally have a higher level of corruption?
Please give an explanation with your answer, and I only want serious answers to this question please.
- 1 decade agoFavorite Answer
The planet's answer is the most sensible of those posted so far. You can't say whether corruption is more likely to exist in one or the other unless you can demonstrate some kind of institutional relationship.
That market pressures are stronger in socialism as someone else said is ludicrous. If you were to have an institutional change as China has been having in recent years, then yes you can expect that market pressures will guide the economy to a more productive, not necessarily preferable, equilibrium which would be accompanied by a faster rate of growth.
Think of the solow model with endogenous saving and the situation where your productivity to labor and capital increase, this demonstrates, the idea that in capitalism you marginal product = marginal cost given that there is sufficient competition whereas an socialism these decisions are made by a state which may not be able to determine the most productive allocations as the market pricing mechanism would. But this would require an institutional change, so the market pressures could only take full influence in absence of a socialist organization of production and distribution.
So to answer your question. You need to look for models that analyze the difference between allocations in these two economies, unfortunately these models would have a real tough time modeling the decisions of the leaders of a socialist country. You also have to think about what you consider to be socialist.
Even in Cuba the market has some reign, in both black market operations (saying that this is corruption is kind of a misnomer), and in legal enterprises which the government sometimes grants permits for.
When you say corruption you need to define this term. If you think of corruption as a kind of rent-seeking activity. Then you would realize that rent-seeking can occur in both capitalist and socialist societies. In a socialist society there are many rents to be had because what the market would in part resolve by the pricing mechanism (cheapest bidder for a contract gets the job) . So someone could argue that because of this there would be more corruption there. But check out the Nordic countries who have very low corruption perception (check out the first link in source, Sweden has the lowest perceived corruption along with a few other countries) and they have tax burdens between 40% and 55% of their GDP (data in wikipedia for finland, sweden, norway).
So heres my suggestion, check out that link below. Then look at that list and see how countries rank on perceived corruption. Try doing this in excel then in the column next to it try and find out what kind of institutional framework describes the way they organize production and distribution. Then see how they all rank, that will give you an empirical observation. After that its a matter of trying to find a model which describes what aspects of these institutional frameworks would lead to the empirical observation. It might be that certain characteristics or relationships arise between the countries that have the greatest amount of corruption. But I am sure you can find many more important explanatory variables (you could set up a regression with the left hand side equal to the corruption index and the right hand side equal to the variables you want to check out and include a dummy variable that is 1 for a predominantly market based economy and 0 for when the state organizes a large portion of the production and distribution process.
I say production and distribution process since we are including a socialist system, I would normally use the word market order (catalaxy as defined by Hayek).
- Iqbal ELv 41 decade ago
Although an argument can be made that corruption exist in both societies, when expose, the punishment is more severe in a capitalist society. For example, the market will punish Corporations that are tainted by scandal and corporate chiefs are sent to prison. Enron, Worldcom and Adelphia Corporations, with billion of dollars in market capitalization, went out of business and their bosses were sent to hefty jail sentences. In a capitalist society there are more scrutiny by
shareholders, independent Corporate Boards, rating agencies etc. Socialist societies are more prone not to expose or embarrass the State and there are not checks and balances that are prevalent in a capitalist society.
- icemanLv 71 decade ago
The Root-Cause of the corruption is greed, which a is promoted more in a capitalist society than a socialist one.
- 1 decade ago
There is far more corruption in socialism. The obvious explanation I think would be that a command economy is farther from an ideal market than a capitalist one, and that, as a result, market pressures are stronger. This makes black market activities and corruption more valuable and increases the chance that people will accept the cost of circumventing the law.
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- Anonymous1 decade ago
Neither capitalism or socialism has the corner market on corruption. It has more to do with the moral and ethical values instilled on people as they grow up. The coming generations will bring more corruption into government because younger people don't value the truth or honesty as much as past generations. They cheat more on tests in school and don't care if they hurt their friends. Violence is up in the schools as well. Heaven help us with the generation in high school today take over the government.
I also totally agree with iceman above.Source(s): .
- Mike WLv 71 decade ago
I'd have to say that a socialist society would have more corruption. They tend to put more restrictions on what people can and cannot have. That would create an environment in which a black market is more likely to thrive. Bribery would be the rule rather than the exception, for those who wish to get ahead, and those being bribed would, because of low pay, be more amenable to being bribed than their capitalist counterparts.
- 1 decade ago
I personally think the Socialist Society.
Because everyone is more or less put on the same level in a Socialist Society, The more power a person might have, the more he/she could grant "special" favors if the price was right.
- Anonymous1 decade ago
They are both equal opportunity corruption societies. Where there is government their is corruption.Source(s): politics
- 1 decade ago
Corruption is done by individuals! Dah! Even when they band together they are still individuals doing their part.