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Friends with Benefits? Join the debate on policy capture at the OECD Integrity Forum!

Posted by Ben Wheatland at Mar 21, 2016 05:11 PM |
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A guest blog from Michael Johnston and Frédéric Boehm. Michael is the Charles A. Dana Professor of political science at Colgate University, USA. Frédéric is a Policy Analyst at the OECD.

 “Institutions are not necessarily or even usually created to be socially efficient; rather they, or at least the formal rules, are created to serve the interests of those with the bargaining power to create new rules.”

Douglas C. North (1994: 360)

Using and abusing the power of the government to obtain or concede narrow benefits is not a new phenomenon. In the Middle Ages, kings used to reciprocate loyalty by granting trade or manufacturing monopolies, protecting their supporters from competition. Still today, influencing economic regulations might be a more cost-effective way for a company to obtain benefits than traditional business strategies such as product differentiation or innovation.[1] Who is able to influence polices? How can vested interests manipulate decision-making? What can be done to prevent it?

Democracies are experiencing widening income gaps between rich and poor. Many citizens are convinced that only the richest are heard and that leaders don't care about their interests. The alarmingly low levels of trust in government, the poor turnout at the ballot box, and some of the political apathy or radicalisation observed in many OECD countries could well be related to policy-making that is increasingly perceived as exclusive and serving vested interests. 

Nowadays, bribing legislators or policy-makers in order to ensure that a law, a regulation or a policy is tailored to one’s own narrow interests is usually clearly illegal. At least since the UN Convention against Corruption, the vast majority of countries around the globe have committed themselves to prohibiting such straightforward corrupt practices.

However, incentives and temptations to influence decisions remain, and humans throughout history have generally proved to be quite ingenious in doing so. What many might regard as questionable influence can be achieved through perfectly legal and even legitimate, or at least widely accepted, institutions and connections. Lobbying and political finance are two examples of grey areas where networks can be put up for rent, and big money can grant you illegitimate power.

But let’s remember that these activities are legal and work within established institutions. So can they still be called corrupt? At just what point, in a liberal market-based democracy, does acceptable advocacy of self-interest shade over into policy capture? Why can capture be understood as Influence Market Corruption[2], even though it may not be achieved through legally defined corrupt practices?

Transparency International defines corruption as an abuse of entrusted power for private gain. Policy capture abuses the trust and the power citizens have placed in their democratic governments. In an age in which many once-public functions have been privatized, and in which public-private boundaries seem to be less clear-cut than in the past, dealings undermining public trust can also extend beyond government to include science, the professions, academe, business and labour organizations, and others. They erode the social contract on which democracies are built, and along with it the credibility and legitimacy of the system as a whole. History shows that countries develop by becoming more inclusive, levelling the playing field, and allowing more and more individuals to participate in the political processes and in the economy -- not by fostering exclusive policy-making in the interests of a few.[3]

While capture is therefore not necessarily illegal, it is always illegitimate, and specifically against shared core democratic values. Tackling it requires broader approaches that acknowledge the importance of values and political openness in addition to formal rules. The OECD, which directly addresses the institutional frameworks, development, and relationships among the market democracies where Influence Market corruption is of most pressing concern,  promotes the idea of safeguarding integrity in policy-making based on such a balanced approach through its Recommendation on Improving Ethical Conduct in the Public Service, the Guidelines for Managing Conflict of Interest in the Public Service, the Principles for Transparency and Integrity in Lobbying, as well as through its recently launched Report on Financing Democracy.

The OECD is currently developing a new Recommendation on Public Integrity that will be finalised at the 2016 Integrity Forum. The comprehensive integrity system it proposes provides guidance beyond controlling narrowly-defined corrupt practice and also helps in preventing a broader set of integrity violations, including capture. Furthermore, the presentation and discussion of the book Corruption, Contention, and Reform at the 2016 OECD Integrity Forumwill, amongst others, provide a forum to discuss the threats of capture, its potentially far-reaching and disastrous consequences for our democracies, and avenues to prevent it. 

[1] Stigler, G.J. (1971), The Theory of Economic Regulation. Bell Journal of Economics and Management Science 2(1), 3-21

[2] Johnston, M. (2014), Corruption, Contention, and Reform. The Power of Deep Democratization. Cambridge: Cambridge University Press

[3] Acemoglu, D. & Robinson, J.A. (2012), Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Crown Business

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