Points of View

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Myopia Creates 'Gray Areas' for the Greedy

By A. F. ROBERTSON

The billion-dollar villains of Enron Etcetera still roam free. Despite the self-righteous rumblings of the Bush administration, there have been no credible moves to rid corporate structures of corruption.

The apology usually offered is that these deeds have been perpetrated in a legal, fiscal, managerial, and moral "gray area" which, to the cynical observer, now seems to cover most aspects of business practice. The implication is that this area of obfuscation is not something that anyone has consciously created; it is a natural, even benign, phenomenon, like the marine layer which closes over our campus in the summer.

But the Corporation, that invaluable meta-body which allows individuals to join forces and dodge their personal liabilities, is not just a freak of nature, a historical accident. It was invented by European merchants in the 14th century, along with enough gray areas to allow rogues to prosper. "Did you ever expect a Corporation to have a conscience," asked an 18th-century English chancellor, "when it has no soul to be damned, and no body to be kicked?"

The complicity of scholars in these strategic inventions has made it difficult for us to perceive or understand corruption, far less offer remedies. It was the merchants who funded the first universities, and their scholarly sons who went on to build the rationales for private and public enterprise. They elaborated the ideas of rational self-interest, individual freedom, contracts, and the separation of person from office, which have been the making of the modern world.

This is the institutional fabric in which corruption occurs, and if it looks gray we should blame our own intellectual myopia rather than God or the free hand of the market.

In 1973, anthropologist Keith Hart, who studied petty criminals, coined the phrase "Informal Sector" to describe those expanding shady areas of national economies that elude conventional economic analysis. The idea was soon taken up by organizations like the World Bank, and eventually countries, such as Italy and Britain, were arguing that the volume of their "black economies" tipped the fiscal scales in favor of their joining the European monetary union.

But we are still none the wiser about how the costs and benefits of all this should be defined or measured. Ironically, the best we can say about the informal sector is that it's something we can't formally explain.

Once again, corruption is back on the academic agenda. But if we are to make any progress we'll have to extricate our minds from the institutional frameworks we ourselves have helped to create. We could start by reckoning that, like all other human artifacts, corporate structures and behavior are the outcome of human capacities and human appetites, about which we seem to know less and less as academic disciplines and subdisciplines expand and proliferate.

Until we can explain precisely how a little bit of everyday greediness grosses up into a billion dollars of corporate peculation, corruption will remain a mystery which the Andrew Fastows and Kenneth Lays of this world will readily exploit. Sure, when they go a billion dollars too far, the media will pillory them for their wicked overindulgence.

But when they parade nakedly before us as the very ordinary, greedy mortals they are, will we simply condemn them for betraying corporate ethics? What are the chances, this time, that we will be able to expose the institutional gray areas in which they have thrived?