Corruption as Social Exchange

Abstract

This chapter applies social exchange theory to corruption. If two parties exhibit corrupt behaviors, secrecy becomes a new joint good, making the two parties more dependent on each other (an increase in total power). Since no external enforcement mechanisms are available in illicit exchanges, the initial reciprocal exchange pattern shifts toward negotiated or productive forms of exchange. Such forms of exchange, however, tend to leave traces, either because the amount of traded resources increases or the contingencies between the behaviors become more visible to the outside. Using the larger network structure, in which corrupt exchanges are embedded, to deal with the problem of detection also is Janus-faced. Adding more ties to the exchange increases either the competition between several potential exchanges partners (exclusively connected network) or the risk of nonreciprocity and whistle blowing (positively connected network). By showing that illicit relations are inherently unstable, we specify some of the scope conditions of social exchange theory.