Mechanics of corruption revisited

THE topical issue currently is how economic self-interest protected through political power allocates a disproportionate amount of resources away from the majority of this country’s citizens.

The Brett Chulu Column

Invisible entrepreneuring, a classic grounded theory this writer developed over three years of formal research, may elucidate on the processes by which the powerful hive off public economic resources.

My study labelled an invisible entrepreneur as an entity that serves a principal but deliberately crafts strategies to cream off the principal by appropriating significant resources due to the principal. It is important to state upfront that the research that yielded invisible entrepreneuring used data from the transport industry.

Classic grounded theory converts data into concepts through constant comparison of data. The concepts so-derived apply beyond the place, people and time from which the data was gathered. The power of classic grounded theory is such that the researcher can, with accuracy, predict the reproduction of the same concepts in other settings once evidence of the same core variable is found from publicly available data.

This writer has no other data on the invisible entrepreneuring dealings than the one that is public knowledge. That publicly available data is enough to conclude that the core variable of invisible entrepreneuring is at play in the resource abuse processes under current debate.

For the purposes of this discussion, the public is the principal. In this instalment, a few invisible entrepeneuring patterns will be covered. A key pattern that is the bedrock of invisible entrepreneuring is named social structuring.

Social structuring is the informal clustering of rival invisible entrepreneurs to set rules of behaviour in order to safeguard their collective interest of maximising collective economic gain from the abuse or unlawful diversion of economic benefits from the principal’s assets.

Without social structuring, the invisible entrepreneurs cannot sustain their practices of creaming off the principal. From the now publicly available information, networks of invisible entrepreneuring seem to have been at the heart of creaming off resources meant for the benefit of the public. Rivals set aside their rivalry and agree to cooperate to outsmart the principal.

Rule-setting is key behaviour that underpins the building of the creaming network (social structuring). Informal rules are set to control the behaviour of invisible entrepreneurs to build and test loyalty to the league. An invisible entrepreneur cannot refuse to participate in the activities of this informal league as such a move would jeopardise both their self-interest and that of their rivals.

Put differently, an invisible entrepreneur must be tainted in order to fasten them to the league of iniquity. There is a logical reason for that. Another powerful sub-pattern of social structuring called asymmetring supplies the reason.

Asymmetring is the deliberate strategy of keeping damaging information within the league of invisible entrepreneurs. The principal must not have evidence landing on their lap that they are being systematically creamed off. The principal can only be allowed to suspect that their assets are being abused and that income due to them is not being surrendered.

Invisible entrepreneurs feel comfortable to let the asset owner live with suspicions as long as incriminating evidence remains guarded within the invisible entrepreneuring network.

The invisible entrepreneur knows no matter how sharp differences or even a complete fallout may arise within rivals within the invisible entrepreneuring league, the secrets of the league will be jealously protected as both friend and foe are tainted.

Even when an invisible entrepreneur exits from the league through organic means or outright ejection, the unwritten oath of secrecy is still powerful enough to censor them. Those exiting the league of invisible entrepreneuring may fiercely engage in combat with erstwhile invisible entrepreneurs but will not divulge evidence of invisible entrepreneuring. Clearly, transparency is the number one enemy of invisible entrepreneuring.

A pattern of behaviour called normalising abnormality is a vital cog in sustaining invisible entrepreneuring. Normalising abnormality is a social-psychological mechanism leased by invisible entrepreneurs. It is a sub-pattern of a broader collective behaviour called resiliencing.

Let us define resiliencing first. Resiliencing is the squeezing out of resources in the face of the constrained or dwindling capacity of the principal’s assets to yield income. Normalising abnormality still honours the invisible entrepreneurs’ social pact known as normative share defending.

Normative share defending is tempering self-interest, allowing the principal to derive a reasonable economic benefit from the asset the invisible entrepreneurs are abusing. The principal will not complain as income dwindles as they see the declining state of the asset. It is one of the fiercely defended rules of the invisible entrepreneuring league that a principal should not be creamed off beyond a certain level. Invisible entrepreneurs fiercely defend this pact.

Once renegade, invisible entrepreneurs break the normative share defending pact, they are either quickly brought into line or are exited from the invisible entrepreneuring league. If this is not done, the invisible entrepreneuring league will have pressed a self-destruct button.

The reasons an invisible entrepreneuring league may collapse has to do with a violation of the social structuring building blocks. A key building block for building an invisible entrepreneuring league is called apprenticing.

Novice invisible entrepreneurs have to be socialised into the rules and operations of invisible entrepreneuring. They have to be taught the importance of protecting information, how to temper greed and how not to eat beyond the accepted residual share of the income coming from the principal’s asset the invisible entrepreneurs’ league is abusing. Novices that are quickly allowed to practice the invisible entrepreneuring game for strange reasons are likely to make schoolboy errors that prise open the inner workings of the invisible entrepreneuring network.

When this point is reached, the invisible entrepreneuring network is under threat of collapse. Why? The principal, who all along was suspicious was being creamed off but had no evidence, now has the evidence. With the collapse of asymmetring, it is very difficult for invisible entrepreneuring to thrive.

Invisible entrepreneurs may try to save themselves in at least two ways. First, they may own up because denial is impossible and promise reparations. Second, invisible entrepreneurs may increase the share going to the principal and continue with invisible entrepreneuring within a safe margin (normative share defending margin).

Can invisible entrepreneurs correct in the face of disappearance of informational advantage?Let time decide.

Chulu is a management consultant and a classic grounded theory researcher who has published research in an academic peer-reviewed international journal. — brettchuluconsultant@gmail.com.