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The Concept of Systematic Corruption in American Political and Economic History

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  • John Joseph Wallis
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    Abstract

    The critical role of governance in the promotion of economic development has created intense interest in the manner in which the United States eliminated corruption. This paper examines the concept of corruption in American history; tracing the term corruption to its roots in British political philosophy of the 17th and 18th century, and from there back to Machiavelli, Polybius and Artistole. Corruption was defined prior to 1850 in a way that was significantly different from how it was defined in the Progressive Era. "Systematic corruption" embodied the idea that political actors manipulated the economic system to create economic rents that politicians could use to secure control of the government. In other words, politics corrupts economics. The classic cure for systematic corruption was balanced government. Americans fought for independence because they believed that the British government was corrupt. The structure of American constitutions was shaped by the need to implement balanced government. Conflict and debate over the implementation of balanced government dominated the political agenda until the 1840s, when states began moving regulatory policy firmly towards open entry and free competition. By the 1890s, systematic corruption had essentially appeared from political discourse. By then corruption had come to take on its modern meaning: the idea that economic interests corrupt the political process. What modern developing countries with corrupt governments need to learn is how the United States eliminated systematic corruption.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10952.

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    Date of creation: Dec 2004
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    Publication status: published as John Joseph Wallis, 2006. "The Concept of Systematic Corruption in American History," NBER Chapters, in: Corruption and Reform: Lessons from America's Economic History, pages 23-62 National Bureau of Economic Research, Inc.
    Handle: RePEc:nbr:nberwo:10952

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    1. Peter L. Rousseau, 2000. "Jacksonian Monetary Policy, Specie Flows, and the Panic of 1837," Vanderbilt University Department of Economics Working Papers 0004, Vanderbilt University Department of Economics, revised Jun 2001.
    2. Bodenhorn,Howard, 2000. "A History of Banking in Antebellum America," Cambridge Books, Cambridge University Press, number 9780521669993, April.
    3. John Joseph Wallis, 2004. "Constitutions, Corporations, and Corruption: American States and Constitutional Change," NBER Working Papers 10451, National Bureau of Economic Research, Inc.
    4. Price V. Fishback & Shawn Everett Kantor, 2000. "A Prelude to the Welfare State: The Origins of Workers' Compensation," NBER Books, National Bureau of Economic Research, Inc, number fish00-1, June.
    5. Bodenhorn, Howard, 2002. "State Banking in Early America: A New Economic History," OUP Catalogue, Oxford University Press, number 9780195147766, September.
    6. Naomi R. Lamoreaux & Jean-Laurent Rosenthal, 2004. "Legal Regime and Business's Organizational Choice: A Comparison of France and the United States," NBER Working Papers 10288, National Bureau of Economic Research, Inc.
    7. Goodrich, Carter, 1950. "The Revulsion Against Internal Improvements," The Journal of Economic History, Cambridge University Press, vol. 10(02), pages 145-169, November.
    8. John Joseph Wallis, 2000. "American Government Finance in the Long Run: 1790 to 1990," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 61-82, Winter.
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    Cited by:
    1. Zenathan Hasannudin, 2012. "The structure of bank supervision and corruption in lending: a study for transition economies," Post-Print dumas-00802139, HAL.

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