The Contested Transnational Field of Corporate Citizenship: Implications for Sovereignty, Development, Democracy and the Rule of Law

(Abstract from paper) Sociological theorizing and research on the relationship between inequality and corruption is surprisingly rare given the discipline’s long-standing focus on the correlations of inequality with democracy and development, as well as research that demonstrates the associations between corruption, democracy and development.  We propose that greater income inequality increases corruption and find that its explanatory power is significant relative to conventionally accepted correlates of corruption such as low levels of economic development and democracy.  We argue that the rich will employ corruption as one means to preserve and advance their own status, privileges and interests while the poor will be vulnerable to extortion at higher levels of inequality.

While countries with authoritarian regimes are likely to have greater levels of corruption on average, higher levels of inequality increase the likelihood of corruption in countries with democratic regimes because the wealthy cannot employ oppression to advance their interests in these political systems.  Contrary to conventional wisdom, smaller and not larger government is associated with higher levels of corruption because higher inequality through corruption is associated with both lower tax rates as well as lower government transfers and subsidies. We also corroborate the finding that the negative effect of inequality on economic growth can be explained at least in part by its impact on corruption.