Longread: Corruption and Blockchain

20.12.2015

The idea that corruption is not really good comes from the very word, which derives from Latin for “spoilage”. That is how they called it in the ancient Rome, where it became comparable to the contemporary corruption in terms of scale by Caesar’s times. In order to give the phenomenon a name, the rhetoricians used the word “spoilage” meaning total decomposition of social ethics.

It is quite easy to attribute everything to depravity of people as a community. However, Machiavelli wrote that people are essentially bad, and act well only when forced to do so. Whether you agree with the great humanist or not, you hardly can say that all his words are saturated with bitterness of practical experiences.

If we take a look at the ancient Rome, we will see it was full of opportunities for abusive exercise of power. Initially it was in broad daylight, but then the city revolted, exiled its kings, and established a republic (which, by the way, derives from Latin for “common goal”). For centuries Rome saw internal troubles and external wars, however, back then corruption could not become a common practice. It became common when Italy got to be peaceful, and Romans started seeking leisure instead of solving problems.

Previously it was proactive people willing to protect the republic who stood for election: for that reason, no broad corruption was present back then. However, prolonged peace made proactive people unnecessary. Since then, it was wealthy people who were seeking (and coming to) power. The voters ceasing being cautious about their lives and property, and started actively participating in mass bribing. It all resulted in three civil wars, establishment of oligarchy, and then establishment of a highly centralized empire.

Since then corruption has always been welcome to the stage of history. Power of authority and stealing became almost inseparable. As more civilized times came by, stealing became more difficult. In autocratic societies, laws are compiled in such a way to facilitate corruption schemes.

The problem of a corrupted society is evidenced by the example of the Romans. Financial and managerial corruption is closely tied to ethical corruption. If there are no effective restrictions forcing a person to remain lawful, he or she will most likely disrespect any laws. A person who stole ten grand may go to jail just like that; a person, who stole ten million, will surely get away with that. However, now it is the time when people can minimize corruption, if not eliminate it completely.

Major corruption schemes are usually expanding within the cozy realms of accountant’s offices. Most of them involve manipulations during bidding processes, service orders, and other generally boring stuff, which, however, is mind-blowingly funded. If we speak about government entities, those funds come from the budget, which, if the rumors are right, is formed from the taxes we all have to pay. Tax-related corruption, in its turn, is also beyond any imagination. All those practices feed on a very simple feature, which is the system’s inherent non-transparency and uncontrollability.

However, if we organize the bidding and procurement on the blockchain’s basis, the whole picture will change dramatically. It will lose basic methods for maintenance of corruption, i.e. the aptly named non-transparency and uncontrollability. A distributed ledger is capable of demonstrating any process to any person. If any transaction comes through an immutable ledger, all kickbacks become crystal clear. Absence of controlling entities combined with complete availability of databases thus provide the condition making a bad person behave well, no matter how spoiled (in English or Latin meaning of the word) he or she is. Those processes may establish a solid foundation of a future society where prosperity is a mere boring routine.

By Jenny Aysgarth

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Tags: blockchain, corruption, longread