Corruption

Corruption is any behavior that benefits a minority subgroup at the expense of a larger subgroup.

Overview

Corruption is a key concept in the social sciences, in economics, finance, business, ethics, history, sociology, and law. Corruption has multiple definitions in each of these disciplines, and in various schools within these disciplines. In the context of building technical tools for architecting general DAOs, we choose a particularly abstract definition of corruption for analyzing systems under DGF. Since DGF is not restricted to any local jurisdiction, an act will be judged for corruption without reference to any notion of legality, unlike most definitions. Whether an act has defied any explicit protocol is independent of whether the act constitutes corruption.

Negative sum result

Using this definition, corruption is an act where a minority takes at a majority's expense, including loss of common resources. Ideally, when an individual acts in the economy it benefits the majority and the individual simultaneously—a positive sum gain. But corruption is negative sum, a systemic loss, wasteful.

Friction analogy

Analogous to friction in a classical physics mechanical system, corruption is a global inefficiency. Corruption is a type of energetic waste. Compare this aspect of our technical definition of corruption with its related, older meaning as a vernacular word in English, as putrefaction or spoilage.

Corruption as defined here, is a type of friction that is inevitable in any system, because the will to profit is essential, and the complicated accounting to determine whether a minority’s profit is at the greater expense of the majority is generally not a tractable problem during a transaction. Often the majority is not aware of individual actions within their economy and so are not conscious of the loss.

Vs. oppression

Corruption and oppression are inverse negative outcomes in an economic system. Corruption is the case when a minority is advantaged at the expense of the majority. Oppression is when the majority is rewarded to the disadvantage of a minority. An example of oppression is when the majority forcibly acquires a minority’s resource, even supposing the minority was not currently using it. In this scenario, the majority power might exploit the resource's benefits more efficiently than than the minority were currently able, but that prevents the minority from using the resource in the future.

Oppression is typically more obvious, though attempts to correct the injustice may be suppressed. Whereas corruption usually requires withholding information (information asymmetry) to succeed.

Like corruption, this abstract notion of oppression is inevitable in any practical system.

Morally neutral

This technical definition of corruption is largely stripped of moral judgement, unlike its use in common speech.

Sometimes temporary corruption is necessary to move a DAO out of an energetic local minimum. For instance, to satisfy a minority of the group, a DAO may make a temporary concession that benefits the minority at the expense of the majority in order to maintain the membership of the DAO in the long run. That type of technical corruption may be necessary to correct a past grievance or to entice a new subgroup to join a DAO. Corruption, like friction, is sometime necessary in any system.

When we discuss human organizations abstractly, we ignore—temporarily—values and ethics. In that case we remove concern for right and wrong. We discipline our minds to analyze logically, bloodlessly, the pure theoretical principles and categories involved. We often try to emulate physics or mathematics in discussing abstract organizations. In that case, we don’t think of corruption or oppression as bad, but merely an inevitable aspect of the system we are studying. We wish to minimize corruption, solely to optimize efficiency or the achievement of a formal goal.

This is dangerous, since our ultimate purpose is to benefit humanity. So ignoring human value—even temporarily—threatens our entire effort.

Nevertheless by exploring ideas abstractly we can see universal aspects of the concepts that are not obvious when we are clouded by present, local concerns.

For example, viewing corruption and oppression as inverse concepts, we can see how individual freedom (as a positive opposite to group oppression) is related to corruption, and that justice (as a positive opposite of corruption) is related to oppression. Whenever we combat corruption, we create the tools of oppression. And whenever we fight oppression, by dismantling the tools of oppression, we simultaneously open the system to corruption. Seen in cardinal group terms, oppression is an aspect of group or majority action, while corruption is more closely related to individual or minority action. Seen from this higher perspective, we become conscious of the dangers of ignoring the effects of our actions when trying to eliminate corruption or oppression. Minimizing both may require some amount of toleration of both.

Rent-seeking

Rent-seeking is the act of growing one's existing wealth by manipulating the social or political environment without creating new wealth. This negative-sum effect categorizes rent-seeking as a type of corruption.

Rent-seeking happens when an actor in an economic system arbitrages the inefficiencies of communication of information (which develop, for instance, with over-regulation) in a marketplace to gain outsized profits for their property, and so prevents a more efficient matching of coincidences of wants. This is a typical effect when monopoly powers emerge.

The term rent-seeking, like corruption is a useful concept in many social sciences. Similar to corruption, this recently-coined term has generated different definitions in different academic disciplines. For our context, we again choose an abstract definition, independent of legality. Rent-seeking is one example of corruption.

The term rent-seeking has an unfortunate natural conflation with the act of renting property. If a renter provides a service that helps the economy, then that is not rent-seeking. Renting is not corruption (nor oppression) in that case. Rent-seeking is akin to a bad slumlord's behavior, not a good landlord's. A good landlord is someone who provides a useful service to meet a demand, and so is not a rent-seeker. A bad slumlord is someone who takes advantage of the inefficiencies of communication of information in a marketplace, and so prevents a more efficient matching of a coincidence of wants—similar to the degeneration we experience with unregulated advertising.