Esurance sends a message about decommodification...

Esurance sends a message about decommodification. Does it matter who you really are when buying insurance or can you be reduced to a bunch of numbers that convey some message about your value as a customer?

TYPOLOGY OF COMMODIFICATION AND DECOMMODIFICATION

* Derived from Robison, Oliver & Frank 2015 and review of:

Achtenberg, E. P., & Marcuse, P. (1986). Toward the decommodification of housing. Critical perspectives on housing, 474-483.

Bambra, C. (2005). Cash versus services:‘worlds of welfare’and the decommodification of cash benefits and health care services. Journal of social policy, 34(02), 195-213.

Bambra, C. (2006). Research Note: Decommodification and the worlds of welfare revisited. Journal of European Social Policy, 16(1), 73-80.

Batton, C., & Jensen, G. (2002). Decommodification and homicide rates in the 20th-century United States. Homicide Studies, 6(1), 6-38.

Bond, P. (2002). An answer to marketization: decommodification and the assertion of rights to essential services. Multinational Monitor, 23(7/8), 14-17.

Bond, P. (2004). Water commodification and decommodification narratives: Pricing and policy debates from Johannesburg to Kyoto to Cancun and back.Capitalism Nature Socialism, 15(1), 7-25.

Bond, P. (2005). Globalisation/commodification or deglobalisation/decommodification in urban South Africa. Policy Studies, 26(3-4), 337-358.

Clasen, J., & Siegel, N. A. (Eds.). (2007). Investigating welfare state change: the'dependent variable problem'in comparative analysis. Edward Elgar Publishing.

Cook, D. T. (2004). The commodification of childhood: The children’s clothing industry and the rise of the child consumer. Duke University Press.

Dale, G. (2010). Social democracy, embeddedness and decommodification: on the conceptual innovations and intellectual affiliations of Karl Polanyi. New political economy, 15(3), 369-393.

Dickens, P. (1985). Housing, states, and localities. Taylor & Francis.

Esping-Andersen, G. (1987). Citizenship and socialism: decommodification and solidarity in the welfare state. Stagnation and Renewal in Social Policy: The Rise and Fall of Policy Regimes, London: Sharpe.

Esping-Andersen, G. (1988). Decommodification and work absence in the welfare state.

Gal, J. (2004). Decommodification and beyond: a comparative analysis of work-injury programmes. Journal of European Social Policy, 14(1), 55-69.

Gaukroger, S. (1986). Romanticism and decommodification: Marx's conception of socialism. Economy and Society, 15(3), 287-333.

Gran, B. (1997). Three worlds of old-age decommodification?: A comparative analysis of old-age support using the Luxembourg income study. Journal of Aging Studies, 11(1), 63-79.

Halewood, C., & Hannam, K. (2001). Viking heritage tourism: authenticity and commodification. Annals of tourism research, 28(3), 565-580.

Heller, M. (2003). Globalization, the new economy, and the commodification of language and identity. Journal of sociolinguistics, 7(4), 473-492.

Henderson, G. (2004). 'Free' food, the local production of worth, and the circuit of decommodification: a value theory of the surplus. Environment and Planning D, 22(4), 485-512.

Holden, C. (2003). Decommodification and the workfare state. Political Studies Review, 1(3), 303-316.

Huo, J., Nelson, M., & Stephens, J. D. (2008). Decommodification and activation in social democratic policy: resolving the paradox. Journal of European Social Policy, 18(1), 5-20.

Hyman, R. (2007). Labour, markets and the future of" decommodification". Hans-Böckler-Stiftung.

Kaiser, C. P. (1998). Dimensions of culture, distributive principles, and decommodification: Implications for employee absence behavior. The Journal of Socio-Economics, 27(5), 551-564.

La Grange, A., & Pretorius, F. (2005). Shifts along the decommodification-commodification continuum: Housing delivery and state accumulation in Hong Kong. Urban Studies, 42(13), 2471-2488.

Lewis, J. (1992). Gender and the development of welfare regimes. Journal of European social policy, 2(3), 159-173.

Murie, A. (2005). The dynamics of social exclusion and neighborhood decline: welfare regimes, decommodification, housing, and urban inequality. Cities of Europe: Changing Contexts, Local Arrangements, and the Challenge to Urban Cohesion, 151-169.

Ray, R., Gornick, J. C., & Schmitt, J. (2010). Who cares? Assessing generosity and gender equality in parental leave policy designs in 21 countries. Journal of European Social Policy, 20(3), 196-216.

Robison, L., Oliver, J., & Frank, K. (2015). Commodity and Relational Good Exchanges: Commodification and Decommodification. In 2015 Allied Social Science Association (ASSA) Annual Meeting, January 3-5, 2015, Boston, Massachusetts (No. 189690). Agricultural and Applied Economics Association.

Room, G. (2000). Commodification and decommodification: a developmental critique. Policy & Politics, 28(3), 331-351.

Salzman, J., & Ruhl, J. B. (2000). Currencies and the commodification of environmental law. Stanford Law Review, 607-694.

Scruggs, L., & Allan, J. (2003, August). Trends in welfare state decommodification in eighteen advanced industrial democracies, 1972-2000. In Annual Meeting of the American Political Science Association.

Scruggs, L., & Allan, J. (2004). Welfare state decommodification and poverty in advanced industrial democracies. In Trabalho apresentado na 14a International Conference of Europeanists, Palmer House Hilton, Chicago, IL (pp. 11-13).

Scruggs, L., & Allan, J. (2006). Welfare-state decommodification in 18 OECD countries: a replication and revision. Journal of European Social Policy, 16(1), 55-72.

Sesia, P. (2003). Repeasantization and decommodification of indigenous agriculture: Coffee, corn, and food security in Oaxaca. The social relations of Mexican commodities: Power, production, and place, 81-126.

Sharp, L. A. (2000). The commodification of the body and its parts. Annual Review of Anthropology, 287-328.

Soron, D., & Laxer, G. (2006). Thematic Introduction Decommodification, Democracy and the Battle for the Commons. Not For Sale Decommodifying Public Life, 1, 15-35.

Suddaby, R., & Greenwood, R. (2001). Colonizing knowledge: Commodification as a dynamic of jurisdictional expansion in professional service firms. Human relations, 54(7), 933-953.

Thrift, N. (2006). Re-inventing invention: new tendencies in capitalist commodification. Economy and Society, 35(02), 279-306.

Timothy Burke. (1996). Lifebuoy Men, Lux Women: commodification, consumption, and cleanliness in modern Zimbabwe. Duke University Press.

Ungerson, Clare (1997) Social politics and the commodification of care. Social Politics, 4, (3), 362-381.

Vail, J. (2010). Decommodification and egalitarian political economy. Politics & Society, 38(3), 310-346.

Walby, S. (2001). From gendered welfare state to gender regimes: national differences, convergence, or restructuring?. Gender and Society Group, Stockholm University, 17.

Western, B. (1989). Decommodification and the Transformation of Capitalism: welfare state development in seventeen OECD countries. Journal of Sociology, 25(2), 200-221.

Willmott, H. (1995). Managing the Academics: Commodification and Control in the Development of University Education in the UK. Human Relations, 48(9), 993-1027.

Zaman, H. (2006). Breaking the iron wall: Decommodification and immigrant women's labor in Canada. Lexington Books.

Globalization, globalism and decommodification

By Jeff Oliver

What is the connection between globalization, globalism and decommodification? In 2006, Zaman captured the essentials of these connections quite well. The book is worth reading for anyone that is interested in the intersection between social rights and globalism, social rights and immigration or globalism and immigration. I am interested in all such intersections. For several months I have been seeing the treatment of migrants as a product of commodification and neoliberalism. 

Commodification as an emphasis on markets/market value

Zaman ties these things all together quite nicely. It is hard to do justice to the entire book in a few sentences, but if I were to make that attempt, I would first borrow a sentence from Zaman: "globalism can be described as neo-liberal globalism" (Zaman 2006, 4 see also Otero & Jugenitz 2006). In other words, globalism is about increasingly enlarging the place of markets and market value in a society which has the (unintended?) side-effect of decreasing the intrinsic or non-market value of things in society. There is a vast discussion debating and developing this idea (Room 2000, Holden 2003, Bond 2004, 2005, Scruggs & Allan 2006, Vail 2010).

While globalism and commodification certainly are not synonymous (I fear that some are beginning to make this mistake...), globalism, especially as defined by those like Zaman, tends to bring commodification with it wherever it goes. With neoliberalism as the prime political-economic agenda of globalism, the market (and as an extension market-value) come to occupy a larger place in globalized societies. If we define commodification as an increase in the centrality of markets and market value in society (Holden 2003, Bond 2004, 2005, Vail 2010) then commodification would seem to naturally follow globalism almost like its shadow. This is because of the difficulty in increasing the emphasis on markets without becoming commodified (at least by the definition that commodification is an increasing emphasis on the market and market value!). 

Other definitions of commodification

There are other definitions of commodification, however. Although these will not be discussed in depth at this time (see the post in this blog on "Straightening out definitions of commodification and decommodification), I would argue that all of these definitions stem out of the broader idea (and more inclusive definition of the term "commodification"): any process that increases the commodity component of an object (be it a society, a person, an exchange or a material or immaterial object). Consequently, Zaman's (2006) assertion seems to be supported--globalism brings with it an increased focus on things that have worth in a market (commodities). We must therefore only make the tiny leap from that idea to the idea that the esteem of non-commodities is simultaneously reduced in society (it is theoretically possible for the value of both to increase, although one might question how often that actually occurs in practice...). 

Intersections of commodification and migration

If commodification and globalism are so tightly joined, then it becomes easy to see how these might intersect with migration. Migrants generally feel low status in society and generally struggle to find a place and a space in their new countries (Gold 2010). In the wake of globalism, migrants are often expected (whether it is done consciously or unconsciously) to justify their presence in a new country based on their market value. In this way, migrants are commodified. Some countries (without doing extensive research New Zealand comes to mind...) have a system down that "quantifies" the market worth of a potential migrant down to every last detail and this is the system used to determine admission to the country. Likewise, we hear stories even in the US of the "high worth" migrants that get moved to the front of the line because of "who they are" meaning how wealthy they are or how valuable their services will be (STEM educated PhDs for example...). 

Finally, there is a great paradox in this commodification of migrants as migrants often seem to fall on a "double edged sword of commodification"--be lazy and unproductive if they do not succeed economically and a threat to native born jobs if they do succeed economically (see Gold 2010). 

Summary observations

In the wake of globalism, migrants are asked to navigate their new country vis-à-vis their market value. However, this often exacerbates their low status as they are seen either as a threat if they succeed economically or as lazy and a drain on society if they do not succeed economically. Additionally, other definitions of commodification (described in the blog post, "Straightening out definitions of commodification and decommodification") imply that migrants become objectified, dehumanized or alienated from their intrinsic worth as a person. Zaman (2006) has partially undertaken a study of what it means for migrants to become decommodified in a world of neoliberal globalism. This book is a great read for those interested in the intersections of migration, globalism and commodification. Additionally, there is room to expand, think through and further push on Zaman's ideas. 

Specifically, definitions of commodification and decommodification are still largely under-developed and often applied almost exclusively to the idea of state intervention and welfare. While decommodification can be linked to the state's actions in reducing the emphasis on the market, there are many applications to discuss decommodification and migrants outside of that context. For example, the way migrants are admitted to a country can either commodify or decommodify them, the way they are treated by the native born segment, or the way they are portrayed in the media can all "objectify" migrants or emphasize the value they have based on their intrinsic human worth. 

Works cited

Bond, P. (2004). Water commodification and decommodification narratives: Pricing and policy debates from Johannesburg to Kyoto to Cancun and back.Capitalism Nature Socialism, 15(1), 7-25.

Bond, P. (2005). Globalisation/commodification or deglobalisation/decommodification in urban South Africa. Policy Studies, 26(3-4), 337-358.

Gold, S. J. (2010). The store in the hood: A century of ethnic business and conflict. Rowman & Littlefield Publishers.

Holden, C. (2003). Decommodification and the workfare state. Political Studies Review, 1(3), 303-316.

Otero, G. and H. Jugenitz (2006). "Forging New Democracies: Indigenous Struggles for Autonomy" in Laxer, G. and D. Soron (eds.) Not for Sale: Decommodifying Public Life, University of Toronto Press, Higher Education Division.
Room, G. (2000). Commodification and decommodification: a developmental critique. Policy & Politics, 28(3), 331-351.

Vail, J. (2010). Decommodification and egalitarian political economy. Politics & Society, 38(3), 310-346.

Zaman, H. (2006). Breaking the iron wall: Decommodification and immigrant women's labor in Canada. Lexington Books.

Commodification, decommodification and social rights

Should we be free to enjoy our life in a way that we do not depend on market forces? In the seminal work The Three Worlds of Welfare Capitalism, Espling-Anderson (1990) provided a definition of “decommodification” that is very popular in academia to the present (Bambra 2005, 2006; Scruggs & Allan 2006; Huo, Nelson & Stephens 2008). Because this definition focuses on the way market forces can impede social rights, it may be tempting to say that commodification (the opposite of decommodification) should be seen as a sort of “enemy” to social rights, and should consequently be minimized, but to what extent?

Decommodification –freedom to enjoy social rights without bowing to the market

At its heart, Espling-Anderson’s argument is that social rights and social stratification “are shaped by nexus of state and market in the distribution system" (Esping-Anderson 1990, 4). The reason this can be called “decommodification” is because social rights diminish a person’s status as a “commodity”—and the state and the market are the two major forces that can impact that status.

Hou, Nelson & Stephens (2008) paraphrase Espling-Anderson by saying that decommodification means "exit from the labour market with little or no loss of income" (2008). This may seem incomplete or contradictory, but it is right on target with the point Espling-Anderson (1990) seems to be making: that “outstanding criterion for social rights must be the degree to which they permit people to make their living standard independent of market forces”. Perhaps it is Espling-Anderson’s point, or maybe it is an extension of it to say that the fundamental consideration in balancing the market and the state is the degree to which human beings are able to enjoy some basic standard of living without having to bow to powerful market forces.

At first, this conjures to mind ideas about the “neoliberal project” –a sort of “market über alles” political economy. As Espling-Anderson (1990) points out, contemporary neoliberalism is little more than the political economic project of favoring and enacting neoclassical economic principles in a country. Many have written about neoliberalism as a project of conquest—a sort of neo-colonialism—that ends up benefitting wealthy elites in the name of “trickle-down economics” (Szirmai 2005, Harvey 2007, Duménil & Levy 2011). While this cannot be undertaken in full in this article, those familiar with this literature may see a connection between Espling-Anderso’s (1990) notion of decommodification and the way that state deregulation of the market can decrease social rights—specifically for the poor or underprivileged.

In short, “commodifying” people—allowing the market to become so important in society that people are only “worth” what they can produce or exchange in the market—has the potential to almost destroy social rights for non-elites in society. Therefore, are we to conclude that commodification is dehumanizing and should be extinguished?

The paradox of commodification as “undesirable”

While it may seem easy to argue against commodification as it is an enemy to social rights, I am reminded of a statement I once heard from Dr. Lawrence Bush (University Distinguished Professor of Sociology at Michigan State University) referring to bureaucracy that seems to apply equally well to commodification.  We all like it! Commodification moves exchanges into regulated, efficient and predictable markets. We like that we can have our labor “monetized” based on certain standards, precedents or conventions. It is easy and predictable to know and compare prices and use money—the monetized “version” or “substitute” of our labor—to buy products. We like that we can see real estate listings with prices when buying a home. Markets can be very efficient and it seems unlikely that any of us would sign up to have markets completely banned. So as much as we do not want markets to get “out of control” or take over our lives, we must not forget that we all look to them for their redeeming qualities of transparency and efficiency.

Conclusion—what should the balance be?

Do not misunderstand that I am arguing in favor of markets. Rather, I am making the point that what most of us are really looking for is a balance between state power and market power. Espling-Anderson (1990) provided the theoretical foundation for conversations that center around finding that balance. Favoring the market in a society can lead to the undesirable outcome of commodification of human beings. My own research on the neoliberal project in Colombia in the 1990s supports the idea that favoring the market can commodify people.

Many indigenous people in Colombia have had their “inalienable” lands sold off to transnational corporations. For many of these individuals, land is not a commodity, but a part of who they are—a part of their identity. Even putting a price tag on land is a commodifying process in the eyes of many of these indigenous people. The question then remains, what is the role of government—or what should it be—in regulating the reach and influence of markets. In 1984, the United States government made it illegal to sell your own organs (National Organ Transplant Act). This is an expression of the way governments can override market forces in favor of the “decommodification” of people. In other words, governments can and have stepped in to situations that will make people lose their “humanity” and become more like a commodity. One might argue that prostitution laws have the same desired outcome—the keep people from selling themselves like a commodity. Where and how this line must be drawn is largely a matter of perception and culture that must be decided by stake holders in any given context.

Works Cited

Esping-Andersen, Gosta. 1990. The Three Worlds of Welfare Capitalism. Princeton University Press.

Scruggs, L., & Allan, J. (2006). Welfare-state decommodification in 18 OECD countries: a replication and revision. Journal of European Social Policy, 16(1), 55-72.

Bambra, C. (2006). Research Note: Decommodification and the worlds of welfare revisited. Journal of European Social Policy, 16(1), 73-80.

Bambra, C. (2005). Cash versus services:‘worlds of welfare’and the decommodification of cash benefits and health care services. Journal of social policy, 34(02), 195-213.

Huo, J., Nelson, M., & Stephens, J. D. (2008). Decommodification and activation in social democratic policy: resolving the paradox. Journal of European Social Policy, 18(1), 5-20.

Szirmai, A. (2005).The Dynamics of Socio-Economic Development: An Introduction. Cambridge University Press.

Harvey, D. (2007). Neoliberalism as creative destruction. American Academy of Political and Social Science, 610. 22-44.

Duménil, G. and Levy, D. (2011). The crisis of neoliberalism. Harvard University Press. Cambridge, Mass

 

Straightening out definitions of commodification and decommodification

Introduction

Commodification and decommodification have been observed to be terms whose definitions are “frequently contested but not contradictory” (Zaman 2006, 8). Yet, can there be little argument that in practice commodification and decommodification are used in many different ways. (Even Zaman (2006, ix) notes that commodification needs further exploration and that decommodification is an "under-developed" concept). For example, does commodification mean that something has been standardized, objectified vs. regarded primarily in terms of its intrinsic worth as suggested by scholars such as Suddaby & Greenwood (2001) and Heller (2003)? Or is commodification a cultural increase in the place commodities have in a given society (Burke 1996, Cook 2004, Thrift 2006)? Does commodification mean that something is exchanged in a market (vs. non-market) setting (Willmott 1995, Halewood & Hannam 2001)? Or does commodification mean payment for informal services (Ungerson 1997, Williams & Windebank 2003)?

If the diversity of those definitions is problematic, discussions of decommodification become even more problematic as they are often not the opposite of commodification (as logic would argue they should be). For example, decommodification is often seen as exchanges taking place in informal settings or as state regulation. In the case of the latter, there is an abundance of literature on decommodification and the welfare state ( Orloff 1993, Savolainen 2000, Scruggs & Allan 2006). Ironically, unless one defines commodification as “state deregulation,” this definition (decommodification as state regulation) becomes somewhat illogical—or at least somewhat logically inconsistent.

What should the definition of decommodification be?

This is difficult to posit without first having a well-established definition of commodification (of which decommodification should logically be the opposite). First, however, it should be noted that many scholars writing about decommodification and the welfare state are careful to use wording that does not conflate state regulation with decommodification. For example, Huber, Ragin and Stephens (1993) describe the “decommodifying effect of (the) welfare state…” (emphasis added). Brady, Beckfield & Seeleib-Kaiser (2005) denote decommodification as one of three measures of the welfare state (rather than asserting that decommodification is synonymous with the welfare state or state regulation).

Certainly state regulation is a highly related topic to decommodification. However, to say that state regulation is decommodification misses the underlap that occurs between state deregulation and decommodification. For example, think of the way commodification has been described as objectification of something. An object can become regarded primarily vis-à-vis its measurable worth vs. its intrinsic value (some scholars would say that commodification is when something’s use value is displaced by its market value [Willmott 1995]). This objectification can exist in a way that is completely independent of state regulation or deregulation. This is not to say that state regulation cannot impact conceptions of commodification or decommodification, but commodification and decommodification are largely social (Sharp 2000). Markets are socially constructed, and commodities are only deemed so to be based on social perceptions. Consequently, commodification is a social construct, and whether or not something is seen as a commodity may be influenced by a host of factors, of which state intervention is only one aspect.

In partial support of Zaman’s point, the many definitions of commodification, as described in the first paragraph, are not completely contradictory. However, they are often imprecise, creating confusion in their usage. Consider defining commodification in a way that is consistent with the term “commodity” (Robison, Oliver & Frank 2015). In fact, even Karl Marx, the "father" of commodification declared that because the commodity is the most basic unit in capitalist societies, "Our investigation must...begin with the analysis of a commodity" (Marx 1967). If a commodity is something that is generally mass produced, exchanged in a market, and valued largely for its form, quality and function rather than the specific individuals that produce or consume it, then what is commodification? Simply put, it is any process that converts something into an object that is exchanged in a market and primarily valued for its form, quality and function rather than the specific individuals involved in the production or consumption of that object.

Consequently, it becomes apparent that the definitions given in the introduction are not all inaccurate, but often imprecise or not all inclusive. For example, the definition of commodification as “objectification” is not incorrect, but only takes in part of the definition (converting something into an object with measurable values rather than intrinsic worth). The definition of commodification as a cultural increase in the preoccupation with commodities in a society certainly is useful as it employs commodities in the definition. In this case the “thing” that is commodified is societal preoccupations. In general, things in society are given more worth or are more highly esteemed if they are seen as commodities. Additionally, saying that commodification is a conversion to market (vs. non-market) exchange is at least partially correct as commodities are exchanged in markets.  However, it has been noted that certain special cases of decommodification can take place in market settings as well—a point that will not be thoroughly undertaken in this piece but can has been taken up in Robison, Oliver & Frank (2015).

The last definition of commodification implies that payment for informal services can be seen as commodification. While this can be true, it is certainly not necessarily the case. The exchange of money corresponds highly to the purchase of commodities, but money can be exchanged for non-commodities. If one purchases friendship or sexual intimacy it is said to “commodify” those objects. In other words, buying something with money tends to commodify things that were not previously commodities. However, consider the caring friend or family member that buys your freedom with money. This has the opposite effect of restoring your value as a human being rather than an object that could be owned like a commodity (personal conversation with Lindon Robison December 2014).

Additionally, definitions of decommodification (or commodification) will have different a different focus based on the unit of analysis. For example, "commodifying" a person might mean to treat them like a commodity, while commodification of culture or society might focus on the way commodity exchange is emphasized or valued in a society (as well as possible discussions of reasons why they are valued). 

Conclusion

While it can be argued that the current definitions of commodification are “frequently contested but not contradictory” (Zaman 2006, 8), it should be noted that the current definitions are often incomplete. This is very academically precarious as notions of commodification appear to be conflated with other things such as dehumanization and state deregulation. While these are related terms, it is very risky to confuse them with the basic definition of commodification as any process that increase the position of commodities in human exchanges or perceptions. Additionally, the many varying definitions of commodification appear to be spilling over into the logical opposite of commodification—decommodification. If the definition of commodification is being contested, how can we agree on the definition of its opposite? Returning to the basic definition of a commodity in finding a definition for commodification (as suggested in Robison, Oliver & Frank [2015]) is recommended in order to have inclusive definitions of commodification that will not create further confusion in academic studies.

Works cited

Brady, D., Beckfield, J., & Seeleib-Kaiser, M. (2005). Economic globalization and the welfare state in affluent democracies, 1975–2001. American Sociological Review, 70(6), 921-948.

Huber, E., Ragin, C., & Stephens, J. D. (1993). Social democracy, Christian democracy, constitutional structure, and the welfare state. American journal of Sociology, 711-749.

Marx, 1967 Capital, Volume 1 New York: International Publishers

Orloff, A. S. (1993). Gender and the social rights of citizenship: The comparative analysis of gender relations and welfare states. American sociological review, 303-328.

Robison, L., Oliver, J., & Frank, K. (2015). Commodity and Relational Good Exchanges: Commodification and Decommodification. In 2015 Allied Social Science Association (ASSA) Annual Meeting, January 3-5, 2015, Boston, Massachusetts (No. 189690). Agricultural and Applied Economics Association.

Scruggs, L., & Allan, J. (2006). Welfare-state decommodification in 18 OECD countries: a replication and revision. Journal of European Social Policy, 16(1), 55-72.

Zaman, H. (2006). Breaking the iron wall: Decommodification and immigrant women's labor in Canada. Lexington Books.

Corruption and social resource theory

Social resource theory (and social exchange theory in general) posits that human interaction can be seen as exchanges of tangible and intangible resources. While corruption has been discussed in great detail in academic literature, it is interesting to think about corruption through the lens of social resource theory. In doing so, one need look no further than Herbert Spencer and his work The Man vs. the State: Six Essays on Government, Society and Freedom (available online here). Spencer notes that societies choose how much of their freedom they give over to the state. His argument was (allow me to paraphrase) that people give their freedoms over to the state when a situation arises that seems too big for them to handle on their own. This becomes cyclical as the state gains power that the people have forfeited, so the next time a large problem arises, the people need the state even more and give it more power, and the cycle continues. One might say that Spencer was arguing that people entrust the state with their personal freedoms.

Entrusting individuals with rights or privileges once belonging to others lays the foundation for corruption. Taking a social resources approach, we might say that people give their rights and privileges (intangible resources) in exchange for greater efficiency (here, one might observe the irony of this observation which will be explained later), peace of mind, or more power to “get things done”. This should not be hastily dismissed. After all, would you rather coordinate military defense as a collective of individuals, or put it into the hands of the government? Therefore, although one might not think of the government as highly efficient (and perhaps it is not in many cases) there are things like military protection that would be highly inefficient if left to the people. The efficiency we are talking about here is mainly an extension of the government’s control of what Spencer would call vast resources (available here).

The idea that people give their intangible resources, including rights and privileges, to the government brings to mind a number of opportunities for corruption. 


In Franz Kafka's book The Trial, Josef K. learns that he is to stand trial for crimes he did not know he committed. A guard informs him that his personal possessions will be taken and held until after the trial. The guard then gives him the bad news: trials "these days" are taking so long that the possessions will probably eventually all be sold off. He further comments that Josef will still get the proceeds from the sale, but that they will likely be very meager. The guard then makes the astute observation that "sales aren't based on the size of the offer but on the size of the bribe".

Think of this: if I sell something on eBay, there is a certain price that that thing will sell for based on its value as a commodity plus any socio-emotional value. However, if I somehow become entrusted with your property, value can be lost through bribery. Take for example a bike worth $1000. This is its value as a commodity, plus it has socio-emotional based on its brand, or maybe it is a vintage bike that a lot of people have fond memories about, but all things considered, let us say the value is $1000. That is the amount I expect to make if I sell the bike, let’s say on eBay. Finally, let us suppose in scenario 1 I list the bike on eBay and it sells for the expected amount, $1000.

Now, if I entrust it to you, there can be a different outcome. The buyer can bribe you to sell the bike for less. It is not your bike and any amount of money you make is icing on the cake because you have nothing invested in the bike and are not the owner of it (it has no commodity or socio-emotional value for you because you do not own it). At some point, you will be willing to sell the bike for a lower price based on a certain level of bribe. Let us say that for $100, you will sell the bike for $750. The buyer only had to spend $850 (saving $150 over what they would have otherwise paid), you are up $100; the only person who loses out is me as the bike’s owner. Now, you have to explain to me why you could only sell the bike for $750 and you make up some story about how times are tough and no one was “biting” at the higher price point or whatever.

The point is that when someone is entrusted with something, they can breach that trust to get personal gain. 

Is public trust an intangible resource?

The words of the guard bring to mind countless incidents of corruption throughout the world. At the heart of corruption is the idea that someone has breached public trust (Jain 2001). For example, we hear of public officials taking bribes, hiring friends, funneling money into friends’ companies, embezzling funds and so on. In many of these cases, it appears that the corruption mostly has to do with getting gain in terms of tangible resources. However, there is more to it than that. One must also consider the intangible resources involved. For example, is public trust a resource? Do corrupt officials steal or at least misuse the trust that was given them as an intangible resource? 

In order to answer that question, one might simply ask if the official would have been able to extract the same benefit without having the public’s trust. Often the answer is no. The way public trust is (or is not) an intangible resource is an area that might be further investigated in connection with social resource theory. If it is not a resource, then what is it? For example, is it simply a social situation facilitating the exchange of resources in certain ways?

Economic applications of corruption and social resource theory

Additionally, one might observe other potential areas for future research. For example, how does corruption relate to Pareto optimality? For example, consider a situation that is not Pareto optimal. We do not call all such situations corruption. The Great Recession of 2007/8 brought about some discussion throughout the world about Pareto Optimality. For example, could not the situation of many people be improved a little bit without really making the wealthy worse off? (Or, some would argue it would even be fine if the wealthy were a little worse off…) This does not mean that the wealthy are corrupt. However, corrupt individuals seem to act in a way that is at the heart of a Pareto “inefficient” situation. Like the person entrusted to sell the bike, corrupt officials will take a personal gain that results in a greater loss than that gain for others. In other words, they would take a bribe of $1,000 that would cost others $20,000. This could be done through hiring friends that are not truly qualified to do complicated jobs, or through giving work to friends’ companies and paying them much more than they would otherwise make. A notable example is the Sochi 2014 Olympic Games. The $50 billion spent on the Sochi Olympics is reported to be higher than all other Olympic winter games combined with approximately a third of that sum lost to “rampant corruption, embezzlement and kickbacks” (Berman 2014). In this way, corruption makes everyone worse off than they would have been. In Sochi, the people will now be stuck with a multi-billion dollar bill that was the result of corruption.

Corruption can also be related to game theory (economics) or the theory of social situations (psychology). For example, think of a “prisoner’s dilemma” game in which the decisions of all players on a team are entrusted to a single player who gets to decide what everyone else on the team will choose to do. Now suppose that the decision maker gets an incentive for breaching the trust of the players. It may be that the decision maker earns 5 points for a decision that costs the team 10 points, but if the decision maker doesn’t breach trust, they (the decision maker) get nothing, or a lesser incentive.

Ethical considerations

All things considered, corruption often occurs when a public official acts in a way that will create an increased personal benefit, even if it is at the detriment of others. At what point is getting ahead, or amassing gains inappropriate for a public official?

There are many philosophical opportunities to discuss this question; however, morality is often defined by social consensus. In other words, we do not hear of corruption when no one is opposed to known actions that took place (a separate issue would be corrupt acts that have not been discovered yet). It may be that because corruption involves a breach of public trust, public opinion about the allegedly corrupt acts plays a big role in determining if certain actions are corrupt. In common language: who determines what is corrupt? Those who have a vested interest in a given corrupt act. Who cares if a public park could not be built because a public official took a bribe from a high-rise apartment developer? Those who paid tax dollars and voted to have the park built.

Ergo, while a full treatise on the philosophical considerations is not parsimonious at this time, it can be said that social consensus plays a large role in determining what is and is not corruption.  

Conclusion

In short, there are many potential ways to think about breaches of trust as related to social resource theory. These breaches of trust are often motivated by tangible resources. However, what are the intangible resources that are at work? Should public trust be seen as an intangible resource? Additionally, what are the economic implications of explaining corruption through social resource theory? How might game theory and Pareto optimality be related? How might they be extended given these ideas about corruption? Finally, there are many philosophical and ethical questions that accompany a discussion of corruption and social resource theory. These questions may seem peripheral; however, without addressing these ethical questions, one will not even know where to draw the boundary of corruption. In other words, corruption cannot fully be described without knowing where it starts and stops (which are essential in understanding what corruption is and is not).

OTHER WORKS CITED NOT LINKED IN TEXT

Jain, A. K. (2001). Corruption: A review. Journal of economic surveys, 15(1), 71-121.

Kafka, F. (1998) The Trial. New York: Schocken Books.