Corruption, the Rule of Law, and Economic Efficiency: Virginia vs. Chicago Public Choice Theories
20 Pages Posted: 1 Feb 2014 Last revised: 7 Feb 2014
Date Written: January 29, 2011
Can corruption improve economic efficiency? Classical political economists argue that corruption undermines the rule of law (Smith 2001, chap 5). Modern Public Choice proponents argue that corruption and lobbying might influence the rule of law’s efficiency. While Chicago Public Choice scholars model how legal lobbying improves the rule of law’s efficiency’s efficiency and thus overall economic efficiency, the Virginia Public Choice models explain how corruption and lobbying reduces the rule of law’s efficiency’s efficiency and thus overall economic efficiency. In this short paper, we present a brief survey distinguishing between the arguments of the Chicago Public Choice and Virginia Public Choice schools on how corruption and legal lobbying influence economic efficiency. We argue that the Virginia Public Choice explanation is more realistic because it includes the influence of bureaucratic rent-seeking.
Keywords: Bureaucracy, corruption, economic efficiency, Chicago Public Choice, lobbying, Virginia Public Choice, rent-seeking, rule of law
JEL Classification: D74, K42, P3
Suggested Citation: Suggested Citation