From Institutional Consequences to Systemic Transformation.

The first article in this series addressed macroeconomic corruption, whose documented scale exceeds public debt in the four largest economies of the European Union, although this dimension has not been incorporated into economic, political or anti-corruption analysis.

This second article addresses the systemic dimension of corruption, continuing to rely primarily on texts produced by intergovernmental organisations. The question is no longer merely how much corruption costs, but what happens when its consequences simultaneously reach society as a whole, adversely affecting the lives of the majority.

In the 1980s, the expression crony capitalism began to gain currency in the United States and the United Kingdom to refer to an economy in which connections with political and institutional power condition opportunities to do business.

Transparency International was established in Germany in 1993. Its founders included two former senior World Bank officials and a former member of US military intelligence. Two years later, it published its first Corruption Perceptions Index (CPI), which made it possible to compare perceptions of corruption across countries.

Systemic consequences were present from the earliest rules

The first international anti-corruption instrument was adopted in 1996 by the Organization of American States (OAS) under the name Inter-American Convention against Corruption. Its preamble states:

“CONVINCED that corruption undermines the legitimacy of public institutions and strikes at society, moral order and justice, as well as at the comprehensive development of peoples.”

From the very first international convention, therefore, the consequences attributed to corruption extended beyond the individual conduct that could be subject to criminal prosecution. They affected institutions, society, justice and development.

Something similar occurred in Europe.

In 1990, the Council of Europe had established the European Commission for Democracy through Law, known as the Venice Commission, to develop standards relating to the three major institutional pillars of the West: democracy, human rights and the rule of law.

In its 2018 Opinion CDL-AD(2018)028, concerning the separation of powers and judicial independence, the Venice Commission warned:

“The even higher cost is the one of ruined lives, the erosion of the rule of law and decay of democracy.”

The relationship between corruption, the political system and the economic system appears even more clearly in the two conventions on corruption adopted by the Council of Europe in 1999.

The Preamble to the Civil Law Convention on Corruption states:

“Emphasising that corruption represents a major threat to the rule of law, democracy and human rights, fairness and social justice, hinders economic development and endangers the proper and fair functioning of market economies;

Recognising the adverse financial consequences of corruption to individuals, companies and States, as well as international institutions.”

That same year, the Criminal Law Convention on Corruption stated:

“Emphasising that corruption threatens the rule of law, democracy and human rights, undermines good governance, fairness and social justice, distorts competition, hinders economic development and endangers the stability of democratic institutions and the moral foundations of society.”

By the end of the twentieth century, therefore, international documentation was already explicitly linking corruption to the deterioration of the rule of law, democracy, human rights, social justice, competition, economic development and the market economy.

The United Nations further expands the consequences

The first legally binding global anti-corruption instrument is the United Nations Convention against Corruption (UNCAC), adopted in 2003 and in force since December 2005.

In its preamble, the States declare:

“Corruption is an insidious plague that has a wide range of corrosive effects on societies. It undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life and allows organized crime, terrorism and other threats to human security to flourish.

This evil phenomenon is found in all countries — big and small, rich and poor.”

Corruption therefore appears once again not simply as the sum of individual criminal acts, but as a phenomenon capable of affecting the stability and security of societies, democratic institutions, justice, sustainable development and the rule of law, as well as being associated with organised and economic crime.

Following the adoption of the 2030 Agenda (SDGs) in 2015, Target 16.5 subsequently maintained a deliberately broad formulation:

“Substantially reduce corruption and bribery in all their forms.”

A social, political and economic phenomenon

En la documentación de Naciones Unidas de 2003 relacionada con la firma de la Convención se afirmaba:

“Corruption is a complex social, political and economic phenomenon that impacts on every aspect of society.”

This characterisation is particularly important because it simultaneously recognises the social, political and economic dimensions of corruption, characteristics inherent in a systemic phenomenon.

The recent Directive (EU) 2026/1021 on combating corruption maintains and broadens this perspective:

“Corruption is a transnational phenomenon that affects all societies and economies.”

This statement also dispels a common misconception: that corruption is fundamentally a problem of poor or institutionally less developed countries. The European Union itself expressly recognises that corruption affects all societies and economies, including those of its own Member States, thereby reiterating the idea previously expressed by the United Nations.

The Directive also states:

“Corruption remains a significant problem at Union level, threatening the stability and security of societies, including by enabling organised and other serious crime. Corruption undermines democratic institutions and universal values on which the Union is founded, particularly the rule of law, democracy, equality and the protection of fundamental rights. It jeopardises development, prosperity and the sustainability and inclusiveness of our economies.”

Thirty years after the first international convention, therefore, institutions continue to attribute to corruption consequences affecting essentially the same fundamental pillars, while progressively incorporating new dimensions.

From institutional connections to productivity losses

The systemic dimension does not appear only in institutional declarations.

The previous article on macroeconomic corruption drew on, without mentioning its title, the study Growing Like Spain: 1995–2007, published within the Eurosystem framework.

The study examines the extraordinary loss of productivity in the Spanish economy during a period of strong economic growth. Total factor productivity declined by approximately 0.7% per year when, in the absence of the deterioration in resource allocation, it would have increased by around 0.8% annually.

The difference is approximately 1.5 percentage points each year.

However, the study contains a finding that is particularly relevant to understanding systemic corruption: resource misallocation was greater in sectors in which connections with public officials were more important for business success.

The mechanism directly connects with the earlier concept of crony capitalism: firms devote resources to establishing political and institutional connections, resource allocation becomes progressively more distorted and, ultimately, aggregate productivity declines.

Corruption thus ceases to be merely a transfer between the person who pays and the person who receives. It changes the allocation of resources within the economy and reduces its productivity.

When corruption reaches those who are supposed to control it

One of the sources used by Transparency International to compile its Corruption Perceptions Index is the World Justice Project.

The WJP Rule of Law Index examines different forms of corruption within the executive branch, the judiciary, the police and military, and the legislature. These include bribery, improper influence and misappropriation of public funds.

This is essential to understanding the systemic dimension.

Corruption does not necessarily remain outside the institutions responsible for combating it. It can also reach the powers and institutions whose function is precisely to enforce the rules, protect rights and constrain abuses of power.

When corruption reaches the mechanisms responsible for preventing, investigating, adjudicating or sanctioning it, the problem is no longer merely the existence of corrupt individuals within the system. The possibility arises that the operation of the system itself protects or reproduces the conditions that enable corruption.

Extractive minorities

Directive (EU) 2026/1021 also includes economic fairness among the values harmed by corruption.

This reference allows the scope of the analysis to be broadened.

The growing concentration of income and, especially, wealth in a minority of the Western population is a phenomenon extensively documented by the United Nations, the OECD and European institutions. The relevant question for the analysis of corruption is not whether this concentration exists, but what proportion of it results from the normal functioning of the market economy and what proportion derives from mechanisms of extraction facilitated by political, regulatory, financial or institutional power.

Institutions can extract resources, but extraction does not necessarily end with them. Individuals, organisations and public and private networks can use institutions, rules and their relationships with power to obtain resources, opportunities, privileges or protection.

This leads to a broader concept, more characteristic of wealthy countries and more systemic than that of extractive institutions: extractive minorities.

The object of analysis therefore ceases to be exclusively the public official who accepts a bribe or the institution that functions poorly. It also encompasses actors who continuously benefit from the deviation of institutions from the purposes for which they were created.

This distinction becomes increasingly important in societies characterised by a high concentration of economic, political, financial, technological and informational power.

Corruption as a mechanism of systemic transformation

The documents discussed above were produced by different organisations, at different times and for different purposes. Yet there is remarkable continuity in the consequences they attribute to corruption.

The OAS refers to institutions, society, justice and development.

The Council of Europe adds democracy, human rights, social justice, competition, economic development and the functioning of the market economy.

The United Nations adds the stability and security of societies, sustainable development, the rule of law, and organised and economic crime.

Transparency International defines corruption as a social, political and economic phenomenon.

And in 2026, the European Union once again relates it to democracy, equality, fundamental rights, the rule of law, development, prosperity and the sustainability of economies.

Added to this is econometric evidence that institutional connections can alter resource allocation and generate aggregate productivity losses.

Systemic corruption, therefore, is not simply another type of corruption alongside political, judicial, administrative or economic corruption.

When corruption simultaneously affects the market economy, productivity, the distribution of resources and opportunities, democratic institutions, the rule of law and fundamental rights, it ceases to be merely a pathology within the system and becomes a mechanism for transforming the system itself.

This distinction also makes it possible to reconsider some conventional explanations of Western decline. Economic, political and social phenomena that are commonly studied as independent causes may, at least in part, be mechanisms through which the consequences of systemic corruption are transmitted.

If by Western decline we mean the simultaneous deterioration of the market economy, the rule of law, democracy, fundamental rights and the economic conditions of a growing share of the population, it becomes difficult to separate that decline from corruption: international organisations themselves have for decades identified precisely these forms of deterioration among its consequences.

Systemic corruption thus emerges as a structural cause of Western decline, including its economic decline.

The next question is unavoidable.

After thirty years of international conventions, legislation, specialised bodies, strategies, indices and anti-corruption policies, what have been the results of the fight against corruption?

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DOI: 5281/zenodo.21994617

Javier Marzal

Independent Researcher

ORCID: 0009-0009-4373-8068