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It’s not.What is potentially undemocratic are the reasons for calling one.I've gone on record, many times stating that the referendum was a bad idea. We don't ask for a show of hands when it comes to matters of medical expediency so I don't see why we should need one for single issue political questions. Especially ones that require advanced degrees in economics and politics to answer.The fact of the matter remains that Brexit was masterminded by a select elite of very rich, very white businessmen and politicians who quite correctly saw the EU as a barrier to their greed. Being in the EU has no effect on Jacob Reece Mogg or Rupert Murdoch, none; they don't have to live next door to the immigrants they pretend to despise, they don't have to deal with issues of sovereignty for the most part because most of their money is held overseas. The only two things the EU represents to such a person is that it is in the first place, a barrier to them making even greater profits than they already enjoy and in the second, the only thing preventing them the treading on human rights, the remission of which is an integral part of keeping the oligarchy in closer now that we are reaching a point of Ancien régime levels of inequality.Things that negatively affect poor people, such as the drop in the value of the pound have the opposite effect for arch Brexiteers such as Rupert Murdoch who may snap up Sky for a fraction of the pre-referendum cost. De -shackling the UK from EU regulations allows business moguls to gradually erode worker rights, dilute environmental regulation and engage in other vampiric activities that help feather their nests.Good for them!Not so good for anyone else really. As is so often the case, it is impossible to sell the public on matters of the distant elite and their tax haven loving greed. So instead for years, the press -- owned by the very people who refuse to pay any taxes in this country -- painted a picture of the EU as a nasty dystopian super state that was impugning our sovereignty."Bureaucrats," we were told, "are making British laws!"“Are any of these laws any good?" Precisely nobody asked."Oh yes," came the not actually printed reply, "Maternity leave, paternity leave, working hour restrictions, support for higher wages, civil liberties, anti-competition laws, sustainable fisheries, LGBTQ rights, food standards, drug standards, anti-terrorism coordination -- loads of stuff you'd really miss if we got rid of it.""What about the bendy Bananas?" Screamed the Express newspaper."Yes OK, there is that," some of us replied."Bloody foreigners; protecting our rights and dictating the shape of fruit,” we grumbled.The media told us that the EU was undemocratic despite that fact that member states had vetoes on pretty much everything. We were told we'd take back control of our own laws but nobody seemed to want to leave the IMF, the U.N, the World Bank or indeed the World Trade Organisation. All of these groups have rules that you have to abide by if you want membership. Indeed, many Brexiteers looked forward to the implementation of the Trans-Pacific Partnership, an organization that had SECRET courts that could sue governments in the event that corporations profits were not as robust as expected. This, very real attack on sovereignty was fine and dandy despite the fact that it had far fewer democratic credentials than anything the EU ever tried to do. Mogg, Farage, Davis and their buddies in the media seemed OK with it all . It was, after all going to make them richer so...The public was lied to and not just during the campaign. No organization is perfect -- and the EU is no exception -- but that it has been slandered and misrepresented since its inception is beyond question. The attacks have been sustained and deliberate. Indeed, if I wanted to create an oligarchic state I would begin by convincing feckless, ill informed people that the problems they faced were down to regulations, immigration, and political elites whose expert opinion 'defy' common sense.And having read that, you probably think I'm going to suggest that we have a second referendum.Well, I'm not.Don't get me wrong, I think Brexit was the greatest self-inflicted nut-shot that the world has ever seen since China's Hongwu Emperor -- Zhu Yuanzhang -- banned maritime shipping back in 1371. I do however have reasons for believing that a second referendum could have lasting and damaging consequences that are basically impossible to predict with any degree of accuracy. That is to say that I think the consequence would be bad but how bad, and what form they might take is beyond me.What I'm not prepared to say is no second referendum under any circumstances. I'll elaborate.The case for a second referendumDemocracy's great strength lies in its stability, not in its powers of decision-making.Anyone annoyed with the current status quo, anyone who has a beef with this government or that government has to wait only a few short years to voice their displeasure via the ballot box. Nobody has to ride off and chop the king's chin off, we don't need to storm the Bastille, recruit Minutemen militia or make long-winded speeches about glory, duty, and honor on hills in the north of England.Which is good!Of course, we can't have a direct democracy in part because it's impractical but mostly because it leads to disastrous decisions like Brexit.Asking a master baker which party he is voting for is one thing, but asking for a nuanced response on the intricacies of the EU/Canada Free Trade deal is a little outside his area of expertise. For those of you who are wondering, his field of expertise is cakes and cakes --unlike macroeconomics -- prescribe to predictable rules of inflation, deflation, and all-around tastiness.None of this is controversial in any way shape or form and indeed, we've known about the limitations of democracy since the time of Plato and about the tastiness of cakes for even longer than that.It's one of the reasons why the idea of democracy was rejected for the vast majority of human history whilst cakes have been enjoying an almost 100 percent approval rating since their inception.I think I need to stop talking about cakes now or I'm going to have to eat one.The ancients knew that asking the plebs -- which is where we get the word plebiscite from in the first place --- their opinion was probably a bad idea but Plato did -- somewhat reluctantly -- suggest there might be a way around the whole business of asking a group of bakers how best to make choux pastry.I mean navigate the ship of state. Sorry, cakes...He suggested that we elect officials whose job is to sit through meetings, eat little cakes and read briefings on matters far too dull for the rest of us. We, after all, have our own work to get on with and despite the obvious cake envy that select committee meetings engender in all of us, it's a case of rather them than me. Select committees are unimaginably tedious affairs.It's why the cakes on offer are always so sweet and tasty.So we are fine with the political elite getting on with the tedious business of government as long as they don't make the mistake of reaching a cross-party consensus. When they do -- and they often do because a good idea is, after all, a good idea -- those people who disagree with the decision for whatever reason are left 'single issue disenfranchised.' For the most part, these issues are on the fringes but occasionally they gain broad support among the public, especially if a bunch of media moguls abuses the power at their disposal and riles the masses with a heady mix of lies, sophistry, buy one cake and get two free voucher schemes, and misinformation.Broadly speaking most elected representatives agree that Brexit is a dumb move. So, those people who chose to swallow the lies and sophistry of Nigel Farage could quite legitimately complain that they were not being listened to.Being ignored by the political class though is nothing new.The Campaign for Nuclear Disarmament is a great example of people not being listened to. If during the cold war you wanted to vote for a British party that was prepared to offer unilateral nuclear disarmament then you could go whistle. Few serious politicians thought it was a good idea and most advocates of disarmament abandoned the idea soon after getting into office. Presumably, they were allowed to take a look at the now declassified death toll estimates that would be incurred in the event of a surprise Soviet strike. Things are not much different today. If you want to get rid of Trident it's hard to know which way to vote really. Tweedle Dumb or Tweedle Dumber I suppose.Plato recognized that this might be a problem and warned against it too."Beware the Sophists," he told us, "Lest the used car salesmen sell you a lemon."(I'm paraphrasing somewhat, in case you were wondering.)A weak argument can defeat a strong argument if the person espousing knows what buttons to press in order to rile up the audience. The buttons leave pressed are well-known to us all. Bureaucrats (because who likes them?) Brussels (because who or what exactly is Belgium?) Media elites (because they are so fucking smug and never mind that Farage had a column in the Express or that his director of communications, Patrick O Flynn was an Express journalist or that his other spin doctor was an ex-BBC producer nicknamed 'Gobby.') Immigrants (because they depreciate wages even though Germany has more immigration than the UK and yet has consistently shown higher wage growth.)And so on.Which leads us to this point. Ignoring democratic decisions is not a good idea.Peaceful transitions of power are an absolute must.Without them, you get all the disadvantages of democracy -- sophistry, deliberations, yin and yang parties undoing and redoing policies, civil apathy and a disengagement with the issues of the day--without its central advantage. (Stability.)We've been through this, keep up.You cannot simply hold referendums until you get the result you want. My analysis of what the Brexit vote was all about is the correct one but no Brexiteer is ever going to accept that. Most will simply refuse to accept that there is such a thing as political expertise in the first place and start yelling the very keywords I just highlighted. We cannot point to their susceptibility to sophistry as justification for a second vote.Indeed, there are only two real justifications to holding one. Firstly, that a substantial period of time has passed and secondly that a 'substantive' change in circumstances has taken place.Substantive ChangeLet's imagine that the Brexiteers really did care about sovereignty and it wasn't simply a convenient lie to get working class people to vote against their own rights and prosperity. I know, that's pretty hard to swallow -- I spat a mouthful of cake all over my monitor just writing it --but bear with me.Having done away with the EU these proud patriots then turn their attention elsewhere."Nato is an attack on our sovereignty," they wheeze. "We might have to go to war in defense of France even if we don't want to! Let's take back control of our military!"A vote is cast and 52% of the population vote to leave NATO against the express advice of professors of military history, international relations, experts WWII veterans and a whole troop of master bakers. A letter written by three admirals, two generals, four former defense secretaries politely asking the British public if they had lost their fucking minds is widely ridiculed by the right-wing press who quickly come up with an amusing nickname for those who want to stay in NATO.Snato Quoists or something... I don't really know, I'm not a tabloid journalist.Much flag waving occurs and the government dutifully sets about performing the task of implementing the 'will' of the British people.One year later, Putin is overthrown by a military coup and Russian tanks enter Poland with orders to keep pushing west until they hit the coast of Greenland.Who's for rejoining NATO now?I'm guessing the majority.Oh, there would be some ‘Nay -Taoists’ ( I’m getting the hang of this,’ who would swear they knew what they were doing;"British forces should live in harmony with the source, pattern, and substance of all military regimes, not just once with whom we are ideologically aligned." they would opine, right up to the point at which a Soviet-era tank ran over their chins at a speed of 45 miles per hour and an estimated pressure of 106179,3 Pa or 15.4 pounds per square inch if you prefer.There are always zealots though. Some would point out, as they took a machine gun burst to both testicles, that having an integrated defense strategy would have only slowed the Russian advance down, as was the case with the Nazi Blitzkrieg 1941 France.A few others might note that the U.K survived that war.No matter, I'm hoping that these people would be a minority and that opinion polls suggesting that 86% of Brits wanted back in would make the notion of a second referendum somewhat less than controversial.Substantive changes in the geopolitical environment are grounds for a second referendum.Deal with it.Still, the example given is a little on the heavy side of the term 'substantive.' I mean who the hell would vote for a Brexit that potentially raised the price of cakes?Oh, wait, 52 percent of the population.Christ, guys…Still, the question is where to draw the line? I can think of loads of reasons for reversing Brexit ranging from zombie invasions to Yellowstone Park blowing its lid, to a news bulletin saying that in post-Brexit Britain every local shop that is neither a hairdresser or a Spa is ‘guaranteed’ to close.I'm willing to bet that even the most hardened Brexiteers would agree with at least some of them.But again, those are extreme examples.'We were lied to,' and 'we didn't vote on what kind of exit,' are both commonly cited reasons to return to the question itself. But are they substantive? I don't think so.I think that any attempt to ignore the referendum on those grounds would be seen by some -- potentially by many-- as an affront to democracy.Scottish First Minister Nicola Sturgeon has been stung by this very concept. That the UK is going to leave the EU was cited as a substantive enough a change that a second referendum was needed. The electorate disagreed and the plans have been put on hold.For now.An economic crisis on the scale of 2007 would be a good enough reason to call another referendum too, but that's based on a hard reading of the economic challenges and that just won't do. You might have noticed that Bexiteers aren't interested in such analysis.They would label it as doom-mongering and as they stood in line for the soup kitchen to open circ 2025 they would swear that Brexit would have been a great success if only it had been done 'hard and fast'."Like your mom," some wag would quip and the whole thing would descend into the kind of apathetic scuffle one only gets with an austerity driven calorie controlled diet.Substantive then does not mean 'having a firm basis in reality,’ important, meaningful, or considerable.' That's the dictionary definition and dictionaries are written by etymologists -- experts in the meaning and origin of words -- and if there's one thing we have learned through the whole sorry Brexit omnishambles it's that British people are sick and tired of expert opinions.That and that they probably don’t know what an etymologist is.No, 'substantive' has no connection to rational, logical decision-making processes at all.Substantive means 'big enough to convince a large enough number of informed, militant nationalists that things are now so different that putting the ship of state into a hard reverse is now acceptable.' Substantive means that the tilt of the Titanic is now somewhat noticeable and those gentlemen who voted to retreat to the parlor for brandy and cigars have come back on deck and want to get in the lifeboats after all.So, where does that leave those of us who know in our hearts that Brexit is a bad idea?There are three scenarios I can thinkLet's call the whole thing offFor my part, I cannot support a second referendum as things stand at the moment. The election that followed would make about of projectile diarrhea in a one-man tent look like a pleasant stroll through a scented meadow. It would be a -- if you'll excuse my French -- Tempête de merde to end all shit storms and the fallout could do more harm than Brexit could ever do. A resurgence of UKIP might be the least of our worries; widespread civil disobedience, the rise of a populist figure such as Le Penn, Mosely or Trump. Who knows?Who honestly knows?Again don't get me wrong, a second referendum on the deal itself is absolutely the sensible way forward but it would create more problems than it solved. Brexiteers would never accept the second referendum as the new 'will of the people' regardless of how many people voted to remain after all.There's also no guarantee that 'remain' would win the second time round and wouldn't that just be hilarious?Delay of the landThe golden rule of journalism is that one should never construct a subtitle that requires the reader to realize it is to be read in an Irish accent in order for it to make sense. Well, I just broke that rule so I guess all bets are off.Here's the thing about trade agreements. They are really, really difficult, complicated and fickle things. Pains in the arse to be honest.It takes years to hammer out a half-decent one.The two years the UK has been given to renegotiate with the EU is wholly inadequate and is, in fact, indicative of the EU's belief that nobody in their right mind would ever want to leave the union in the first place.Seven or eight years to work things out would be much, much better and not just for us ‘liberal elite bubble remain scum’ either. Brexiteers might be living in a fantasy world when it comes to arguments on trade and the value of the pound, but they have to live in the real world too. As such, they should want to see the exit done properly."Do you want it good or do you want it Tuesday? " Or so the saying goes because you can never have it both ways. A good trade deal is better than a bad one. I want to buy an Xbox one X when they come out and I'd rather it cost £449 pounds than a WTO non-most favored nation tariff-added version at £600.So would you, don't lie.So taking our time is a good thing, and everyone who claims to have the UK's best interests at heart should agree.The delay would take us to around 2026 and at least one general election would have occurred with another one imminent.At such a point, the idea that enough time has passed might apply, if barely might be more palatable. By 2025 we could ask for a referendum on the two options available; the deal we have meted out and the deal we already have (which is, of course, the EU.) We might even be surprised! I genuinely would like to see the alternative deal and if it was good -- really good-- I might even concede that even though Brexit is a bad idea in terms of erosion of worker and human rights it might not be the economic nut shot I at first thought it to beI have been known to change my mind in the face of new evidence and that fact that I’m wearing Boxer shorts and not jockeys tight now pretty much proves it.Brexiteers would bitch and moan about the whole thing still, but that's OK; they were quite vocal in their demands for a second referendum if the vote didn't go their way and we can always throw that back in their faces. 'At least,' we could say, we gave people time to think it over. A decisive vote -- 60+ one way or the other -- would settle the matter for a generation.By which point the sweet relief of an atheist's death will have taken me beyond such earthly matters and I can get on with the job of self-composting which -- if you'll excuse the hubris -- I've always thought I'd be rather good at.We don't have to leave in a hurry based on one vote and indeed we should not. No matter how anti-Europe you are you must still want to see a good deal for the UK and I'm sorry, but negotiations need more time.Assuming Europe will give it to us.One Point FiveThe last option is to give voters a deal on the kind of Brexit we go for. We leave the EU but in around two years time we are given two or more scenarios to choose from. A hard Brexit that involves a fiscal cliff or something soft and Nordic like my first girlfriend. Again, there are issues to be faced with such a vote.It's two fingers of fudge, no question.To begin with, Norway is floating on oil yet has a tiny population so they are rich. So rich that If you ever get the chance to marry a Norwegian you should probably do so, get your citizenship and go live there. Norway is ace. They don't need the EU. We do.Secondly, the Brexiteer masterminds mostly wanted to erode environmental protections and human and workers rights and a soft Brexit won't do that. So the papers will insist that the whole thing was a con and that the British people had been robbed and would continue to do so even if 92 percent voted for a softer exit.So the issue would come back, though maybe not with as much severity as if we'd simply ignored the referendum entirely.And that's that I guess.For general musings or indeed if you want to contact me / yell at me, or ask for my phone number, you can reach me via Twitter.

With the rise of agriculture big property owners became aristocrats and teamed up to make the rules. According to Hannah Arendt (1906-75), power was never the property of an individual. “It belongs to a group and remains in existence only so long as the group keeps together.”Aristotle (384–322 BCE) wrote that it was natural for people to join together to make what is called the "state” (an organized political community under one government). He wrote that "Man is by nature a political animal…a gregarious animal." Aristotle believed that rule by aristocrats should be – could be – just. He believed in a balance between the powers of the state and the rights of individuals, something between regimentation and anarchy. He claimed that the state should not be so powerful or all-encompassing that it fails to offer a good amount of liberty to its individual citizens. He rejected the totalitarianism advocated by his mentor, Plato. But, as a man of his time, Aristotle believed in slavery. He was Greek and thought it natural and just that Greeks held non-Greeks as slaves.A couple of millennia later, in the 1600s, Thomas Hobbes, the English philosopher, rejected the Aristotelian tradition of the scholastics. He was interested in modern science, but regarding politics he supported the authority of those aristocrats called monarchs. He believed that without that authority people would feel free to plunder, rape and murder. Hobbes thought a monarch should be like a good father to his people. He ignored the argument that a monarch’s authority was derived from God and instead described a monarch’s relationship with his subjects as contractual, as an agreement about duties: the monarch protecting his subjects and his subjects free to do whatever his laws did not explicitly forbid.A couple of generations after Hobbes came the English philosopher and Enlightenment thinker John Locke, to be known as the “Father of Liberalism.” He stayed with government by social contract, but he had a more optimistic view of humanity than had Hobbes. He favored electing representatives to a legislative body (parliament) and wanted a monarch's powers limited by constitutional law – a constitutional monarchy. He favored a judicial branch of government independent of the powers of the monarch and legislators, an independent judiciary that made decisions based on the nation's constitution. Locke believed that with representative government and a constitution people could live together peacefully. The bigotries and brutalities that had contributed to Europe's recent religious wars had annoyed him. He believed that churches should be voluntary associations rather than appendages of higher authority associated with the state (as was the Anglican Church). He held that for a modern society to function well it had to be unified not by a single religion but by allowing religious diversity. And a part of Locke's optimism was his belief in education, in people improving themselves and their circumstances. He died in 1704, and his ideas would be adopted by those who made the American revolution.In 1712 in Switzerland, Jean-Jacques Rousseau was born. He grew up as a social outsider and at times a vagrant. He developed a contempt for the educated elite and spoke of humanity having been corrupted by the arts and sciences. Physics, he said, had risen from vain curiosity. In place of science he was a romantic and spiritualist, believing in the instincts and emotions of the unlearned more than in reason. He wrote that liberty was not to be found in the institutions and laws created by the elite but in the hearts of free men. Rousseau believed in a politics by General Will, a populism with ultimate political authority resting with the masses that could be subverted by demagogues. A few would be inspired by Rousseau and many would falsely associate it with populist authoritarians. It would be rejected by those who believed in science and put their political philosophy in a historical context.Into the 19th and 20th centuries some separated themselves enough from materialistic science to view freedom as something individualistic and spiritual, that a person chained in a dungeon is free if he has faith and imagines that he is free. Others described freedom as societal, as a triumph over material circumstances, that a society can offer protections and well-being denied to those living abandoned or in political isolation somewhere. There was also the idea that freedom was enhanced by factual knowledge, also societal, a historical and collective phenomenon rather than mere imagination.There was also the materialist connection to the idea of freedom that came with Karl Marx. Marx’s ideas gained notoriety when the Marist revolutionary, Vladimir Lenin, and his political party, the Bolsheviks, took power in Russia in late 1917. No liberal, Lenin saw societies as divided according to one’s association with the means of production – according to economic classes. Lenin intended to replace domination by those motivated by profits (the bourgeoisie which had risen in power with the industrial revolution) with the working-class (also risen with the industrial revolution). The so-called working class were to be the new owners of industry and the Bolsheviks were to exercise state power representing working class interests as bourgeois machinations and thinking were overcome and socialist mores developed. And, theoretically, workers would be gaining freedom as they acquired more control over their destiny.Lenin and the Bolsheviks crushed free enterprise, and they were not friendly toward religion, which had been tied to monarchical rule and that Marx had considered an opiate. Lenin’s coup in late 1917 had been almost bloodless, but traditionalists fought back, and civil war arose that continued into 1922 that killed 8 million people, including i(according to Wikipedia) about one million “soldiers” fighting for the Bolshevik’s Red Army.In 1951, Hannah Arendt’s The Origins of Totalitarianism was published. It was about Stalin’s Soviet Union and Adolf Hitler’s Nazi Germany. Autocracies, she complained, sought absolute political power while totalitarian regimes sought to dominate every aspect of everyone’s life. In her book On Revolution (published in 1963) she wrote that the French Revolution became a disaster after its leaders abandoned their goal of freedom (liberty) to focus on compassion for the masses. Leaders of the American Revolution, she wrote never abandoned the goal of institutionalized liberty. Arendt favored the pluralist democracy that is identified with the United States. She favored the right of a people to continually question and this as a way of moving society forward. She believed that if we hold to ideas dogmatically we are forgetting the process of examination and questioning by which we came to accept it. She wrote that during times of conformity and crisis, not questioning leads to wrongdoing. She wrote of a “banality of evil,” created by conformists rather than by “monsters.” And in On Violence (1969) she wrote that it was “a sad reflection on the present state of political science that our terminology does not distinguish among such keywords as power, strength, force, authority, and, finally, violence.” Violence, she wrote, "can destroy power; it is utterly incapable of creating it.” She described power as requiring approval, support and cooperation (hearts and minds) and that dictators resorting to violence (state terrorism) were signaling weakness: a lack of support.In the United States books and films had been censored, street-corner speeches and marches by labor were prohibited. And in early 1918 the US Congress outlawed any speech deemed “disloyal” or “scurrilous” as well as any speech intended to encourage resistance to the war. In 1951, during the Cold War, the US Supreme Court upheld the conviction of Eugene Dennis for organizing the US Communist Party. Dennis served five years in prison, alongside other US Communist leaders. Communists in the US were driven from their professions and they were spied upon, but some of America’s liberal tradition remained and most Communists were allowed to live normal lives, to assemble, and the US Communist Party was allowed to distribute its newspapers. Communists ran for public office and demonstrated that they were hardly a threat.People from right to left in the US believed in the rough and tumble politics of multiple parties. Verbal distortions and lying were allowed as free speech. People and corporations were allowed to use their vast wealth to influence elections (some of it for liberal candidates and causes), and in 2010 the US Supreme Court would decide that “money is free speech.” There was political stability, with people on the losing side of elections accepting their loss. People were confident that their properties would not be made communal, and a majority believed their basic rights would be maintained. The non-violent civil rights movement led by Martin Luther King Jr would benefit from a hearts-and-mind majority opinion. Order was served by the recognition that violence was a monopoly of government agencies (law enforcement). Those thinking otherwise, Timothy McVeigh and similarly agitated Americans, were too few to seriously threaten the established order. The chaos of revolution came elsewhere.That elsewhere was China – in 1949. Chiang Kai-shek’s “nationalist” anti-communist government was supported by instruments of violence (artillery, tanks, trucks and cargo plane logistics supplied by the US, but Chiang’s force lacked the unity and organized public support necessary to defeat the Communist revolution’s army. Chiang and his government and troops fled to Taiwan, his failure and the Communist revolution’s success – so far.China’s communist revolutionaries gave verbal adherence to Marxism-Leninism. Circumstances were not identical to the Bolshevik experience, but they saw their revolution as historically legitimate and believed it was their turn at social engineering for the sake of those they believed should be free of domination by a ruling class. China’s Communist Party wanted as smooth of a transition as possible, but there were peasants who sought retribution from the landlords and zealous Communist cadres who joined them and committed excesses. Estimates are that more than a million died. In early 1950, those believed to have been overly zealous in leading communities in land reform were removed from the Party. Party policies were social experiments at achieving a new social order.With Mao Zedong’s leadership the Party collectivized agriculture. It tried a “Great Leap Forward,” but planning was not accompanied by reliable information and coordination. There was failure. The figure commonly agreed upon is that by the end of 1961 as many as 20 million had died from malnutrition. China's Communist Party blamed the weather and its conflict with the Soviet Union, which had withdrawn all of its technicians and advisors from China, taking their blueprints with them.A kind of revolution-purity that destroyed the French Revolution was employed. It was called a “cultural revolution”. Mao’s wife, Jiang Qing, called for a revolution against anti-socialist poisonous weeds.” Listening to Western classical music (Beethoven) became a crime. Zealous young people, Red Guards, chanted and waved a little red book of "Quotations from Chairman Mao.” With support from Mao and the Red Army they traveled through China attacking those they deemed insufficiently revolutionary. And within the Communist party there were purges.By September 1967 the chaos had become too much for Mao. The Red Army was called upon to end the chaos. Mao’s lost influence within the Party. Some who had been purged were rehabilitated. A high ranking party official who favored economic and political reforms, Hu Yaobang, attracted favor from university students. He had a heart attack and died in in April 1989 (age 73). Reform-minded students joined his wife in blaming stressful inner-party feuding for his death. Demonstrations arose in Beijing’s Tiananmen Square. Party members friendly toward the students urged patience and modesty. The demonstrations appeared to be losing momentum and a youthful intensity intervened. Students resorted to sensational hunger strikes, and they erected a paper mâché statue called the Goddess of Democracy. Demonstration leaders reached for a form of purity, announcing: Chinese people, arise! Long live the people! Long live Freedom! Long live democracy!’ Anti-communists in the US and anti-party elements in China were encouraged. Soldiers were attacked. The army was called in to restore order and the new attempt at revolution – or counter-revolution as it would be called – was easily crushed in what was called a “night of bloodshed.”Deng Xiaoping was one of the Party’s leaders who called in the army. He had been victimized by the Cultural Revolution and was not a fan of youthful immoderation. He was a pragmatist and very much a reformer, supporting change that worked as experience at local levels rather than the top-down reforms of his contemporary Mikhail Gorbachev’s perestroika in the Soviet Union. Deng was impressed by Singapore's economic development and sent tens of thousands of Chinese to Singapore and other countries to learn from their experiences. Deng held that a market economy and socialism were not incompatible. He lifted employment barriers against those associated with the former landlord class, and he allowed those favoring a restoration of private markets to enter the Communist Party.Deng died in 1997 (age 93). The Party in 2012 chose Xi Jinping to be its General Secretary. (He was also the head of state, literally “state chairman.” Singapore’s founding father, Lee Kuan Yew, when asked about Xi, described him as "a thoughtful man who has gone through many trials and tribulations … a person with enormous emotional stability who does not allow his personal misfortunes or sufferings to affect his judgment. In other words, he is impressive". In the US, the Republican Newt Gingrich would describe Xi as a “dictator” who threatened “the survival of our free and sovereign nation” (Trump vs. China, p4).The Republican Party platform in 2016 focused on governance that protected individual rights and concerns. It separated citizenry from the government, claiming that “the people” were the best stewards of the nation’s God-given natural resources. On the other hand there were those who viewed this individualist orientation as similar to Aristotle’s description of the Spartans. The Spartans, Aristotle wrote, “are very bad at paying taxes… they do not inquire too closely into each other’s contribution.. [the] state has no money, but is full of individuals eager to make money for themselves.”China’s Communist Party platform in 2017 was “Xi Thought” (a work ghostwritten by a Party political theorist and Politburo member, Wang Huning). Xi Thought focused on benefits that accrued to the whole of society – a kind of socialism disparaged by the Republicans. Xi described the Communist Party as consisting of citizens working for the all of the nation’s citizenry. Xi’s platform stayed with Party’s claimed association with science. Xi called for governance based on empiricism and innovation for the sake of “open and shared development.” He prioritized long-term investing and short-term goals as possibly like a drug addict wasting himself on the pleasure of a hit. Like Deng, Xi was drawing on the experience of others. He was keeping China on a course of rapid economic growth with what is described as a Keynesian, Rooseveltian, or Shimomuran no-debt investment credit policy that doesn’t stifle innovation (a policy employed by Japan during its postwar rapid growth and then successfully by South Korea).In the United States, Gingrich has described China as totalitarian (Trump vs. China) and “wants to be the world’s superpower,” that “Xi Jinping and the Chinese Communist Party are constructing a different kind of world that threatens the survival of our free and sovereign nation.” In the United States, hostility toward Communism or one-party rule is a tradition.Kishore Mahbubani, Dean and Professor in the Practice of Public Policy at the National University of Singapore, argues that China has changed since Mao’s time, that 120 million Chinese leave China as tourists every year and return freely.On Quora a Chinese man living in Minnesota who occasionally visited his parents in China, Raphael Hukai, writes that one can publicly shout dislike for the Party or a certain leader “as long as she or he is “not organizing others to do something.” He writes that more personal freedom isn’t near the top of their concern list. And others on Quora have suggested that China’s citizenry in general have some confidence in their government and appreciate the improvements derived from their country’s economic progress.The Communist Party in China fears that hostility might disrupt the nation’s progress in international and economic affairs. Xi speaks against governments interfering in the internal affairs of other countries and the US trying to govern as the world’s policeman. He has US actions regarding Tibet to point to. China has been in Tibet since the Qing Dynasty and the 1700s. After the revolution in 1949 and until President Nixon’s rapprochement with China in the early 1970s, the US had agents in Tibet trying to foment anti-China sentiments and Tibetan independence.China has accused the US of encouraging the demonstrations in Hong Kong, and rightwing conservatives in the US are accused of supporting the demonstrations in Hong Kong as a front line against China and communism. Some in the US expect that Xi will eventually send his troops to a bloody crackdown against the Hong Kong demonstrations, but so far Xi has left efforts at law and order in Hong Kong to the Hong Kong police. Perhaps he wants to avoid giving more propaganda points to hostile anti-Communists. Instead, he has sent its troops from their barracks armed with brooms and such on a mission of cleaning up the mess made by the demonstrators.And hostile discourse exists regarding China’s governance in Xinjiang Province. There, in 2009, Muslim rioting targeted Han Chinese. Education centers were created that critics describe as concentration camps where Uighur religion and Islamic identity are being crushed. (A young Uighur says his relative watched only one terrorist video or participated in only one illegal sermon and asks when his relative can return home.)Meanwhile, China continues to gain on the US technologically, moving past copying and an “age of discovery to the age of implementation, and from the age of expertise to the age of data.” (AI Super-Powers, by Kai-fu Lee.) What do those who fear China think that the US can do to save the world? China’s technological advances, its huge population, growing military might and ability to defend itself makes launching a war against China unlikely.The US is left with the option of competing with China economically, with Republicans counting on President Trump making America Great Again and employing traditional Republican mechanisms of revenue collection and investment distribution, an economic strategy that so far has failed to maintain US leadership in economic development.

Corruption is a constant in the society and occurs in all civilizations; however, it has only been in the past 20 years that this phenomenon has begun being seriously explored. It has many different shapes as well as many various effects, both on the economy and the society at large. Among the most common causes of corruption are the political and economic environment, professional ethics and morality and, of course, habits, customs, tradition and demography. Its effects on the economy (and also on the wider society) are well researched, yet still not completely. Corruption thus inhibits economic growth and affects business operations, employment and investments. It also reduces tax revenue and the effectiveness of various financial assistance programs. The wider society is influenced by a high degree of corruption in terms of lowering of trust in the law and the rule of law, education and consequently the quality of life (access to infrastructure, health care). There also does not exist an unambiguous answer as to how to deal with corruption. Something that works in one country or in one region will not necessarily be successful in another. This chapter tries to answer at least a few questions about corruption and the causes for it, its consequences and how to deal with it successfully.Keywordscorruptioninfluenceeconomyeconomic growthrule of lawchapter and author infoShow +1. IntroductionThe word corruption is derived from the Latin word “corruptus,” which means “corrupted” and, in legal terms, the abuse of a trusted position in one of the branches of power (executive, legislative and judicial) or in political or other organizations with the intention of obtaining material benefit which is not legally justified for itself or for others.Corruption was referred to as a great sin already in the Bible: “Do not accept a bribe, for a bribe blinds those who see and twist the words of the innocent.” However, the history of corruption is in fact related to the beginning of the creation of law and the state and was already in the antiquity considered an evil, which negatively affects the public administration and the functioning of the political system. The earliest records of corruption date back to the thirteenth century BC, to the time of the Assyrian civilization. From the found plates, written in cuneiform, the archeologists managed to discern how and who accepted bribes. Under the Roman law, the criminal offense of corruption was defined as giving, receiving or claiming benefits in order to influence an official in connection with his work. Due to the prevalence of corruption in the country, this law was supplemented by a new law, which predicted compensation for damage in double value of the damage, and the loss of political rights for the perpetrator of the corruptive act. However, this did not help alleviate corruption, especially due to the fact that corruption was most practiced by the members of the Senate and senior state officials, both in Rome itself and in the remote Roman provinces. The early Christian faith condemned corruption, yet corruption later also developed greatly in ecclesiastical structures, and achieved its peak with the selling of indulgences in the Middle Ages, all until the condemnation of the latter (as well as of other immoral acts of the clergy, with the Pope at the head) by Martin Luther. Apart from the condemnation of corruption, the Reformation also led to a break with until then dominant Catholic culture and the emergence of Protestant ethics.As a child (he was a hostage at the Ravenna court), Attila1 noticed a high level of corruption among the state officials of the Western Roman Empire and how they appropriated the state money (as a consequence, there was less money in the Treasury and therefore the taxes increased). He thus decided that if he would ever to rule, he would do so fairly and by oppressing the corruption in his own country. The early feudalism was familiar with various laws that punished the bribing of courts also with death. Later, when the developed feudalism again turned to the Roman law, a number of laws (Dušan’s Code, Mirror of the Swabians) discussed the abuse of position. Then, in late Feudalism, countries became virtually helpless in the fight against corruption, as illustrated by the case of France, which in 1716 established a special court in which should rule in cases of abuse of royal finances; however, these abuses (embezzlement, extortion, bribery, scams, etc.) were so extensive that the court was abolished and a general amnesty introduced in 1717 made some forms of corruption quite a tradition. The corruption was also widespread during the time of the Spanish Inquisition, where the victim of the accusation could make amends with money, which made the corruption, especially among the inquisitors, extensive.Throughout the history, many intellectuals dealt with corruption or theorized about it one way or another. Machiavelli2 had a low opinion on republics, considering them even more corrupt than other regimes, and according to him, corruption leads to moral degradation, bad education and bad faith. On the other hand, however, the great philosopher, diplomat and lawyer Sir Francis Bacon3 was known both for receiving bribes and taking them. When he reached the highest judicial position in England, he was caught in as many as 28 cases of accepting a bribe and defended himself before the parliament by saying that he usually accepted a bribe from both parties involved and that the dirty money therefore did not affect his decisions. The parliament did not accept these arguments and sent him to the jail where he spent only a few days as he was able to bribe the judge.Thus, although the corruption has been occurring in society ever since, it has only been given more attention in the recent period—the researches on the phenomenon and its negative impacts have become more common after 1995, when countries and international institutions began to be aware of this problem. The attitude of the public toward corruption was, until then, neutral. In 1998, Kaufmann and Gray [1] found that:Bribery is widespread, especially in the developing and transition countries; there are, however, significant differences between and within regions.Bribery increases transaction costs and creates insecurity in the economy.Bribery usually leads to ineffective economic results, in the long term impedes foreign and domestic investments, reallocates talents due to income and distorts sectorial priorities and technology choices (for example, it creates incentives for contracting major defense projects or unnecessary infrastructure projects, but does not encourage investments in rural specialist health clinics or in preventive health care). This pushes companies into the “underground” (outside the formal sector), weakens the state’s ability to increase revenue and leads to ever-increasing tax rates (as too little tax is taken), which is levied on less and less taxpayers, consequently diminishing the state’s ability to provide enough public goods, including the rule of law.Bribery is unfair, as it imposes a regressive tax, which heavily burdens in particular commercial and service activities performed by small businesses.Corruption destroys the legitimacy of the state.Many other researchers and institutions (the World Bank Institute—WBI, the European Commission, the United Nations, the EBRD) have investigated corruption and its impact on macroeconomic and microeconomic indicators through various forms of corruption, as well as its connection with local customs and habits, and how it affects the everyday lives of people. Most studies are therefore mainly the analyses of the effects of corruption on various economic indicators, such as GDP growth, investments, employment, tax revenues and foreign investments [2, 3, 4, 5], or the study of various forms of corruption in relation to politics and the economic environment [6], the research of its social condition and various manifestations [7, 8]. Dobovšek [9] agrees with the negative effects, i.e. high economic, political and social costs, and adds that corruption is not a weakness of people but of institutions (supervisory and other), as they should be the ones to obstruct the greed and temptation of individuals within them.2. Causes of corruptionAlthough corruption differs from country to country, it is possible to identify some of the key common driving forces that generate it. What is common to all countries, which are among the most corrupt, has been identified by Svensson [10]; all of them are developing countries or countries in transition,with rare exceptions, low-income countries,most countries have a closed economy,the influence of religion is visible (Protestant countries have far the lowest level of corruption),low media freedom anda relatively low level of education.Regardless of the above, corruption cannot be assessed unambiguously, since there is never only one phenomenon that is responsible for the occurrence and the development of it; corruption always arises from an array of several, interrelated factors, which can differ considerably from one another. Among the most commonly mentioned factors that influence the development of corruption are: political and economic environment, professional ethics and legislation, as well as purely ethnological factors, such as customs, habits and traditions.2.1. Political and economic environmentThe phenomenon of corruption is strongly influenced by the political and economic environment. The more is the economic activity in the country regulated and limited, the higher the authority and the power of officials in decision making and the greater the possibility of corruption, since individuals are willing to pay or offer payment in order to avoid restrictions. A great potential for corruption is especially there where the officials are under the regulation given the opportunity to decide on the basis of discretion.The level of corruption is also affected by the monetary policy. Goel and Nelson [11] in their research found a strong link between monetary policy and corruptive activity in the States. The States that have a well-regulated financial sector, not a lot of informal economy or black market are also less corrupt than those where the opposite is true. They also find that there is less corruption in the countries with higher economic and political freedom.Dimant [12] puts it well in his claim that the level of efficiency of public administration determines the extent to which corruption can find fertile soil and sprout. Such efficiency is determined by the quality of the regulations and permits, since ineffective and unclear regulations help to increase the level of corruption in at least two different ways:The artificially created monopoly of power that enables civil servants to obtain bribes is based on their superior position and embedded in the system.On the other hand, however, ineffective and unclear regulations cause inhibition and therefore encourage natural persons to pay bribes in order to speed up the bureaucratic procedure.Corruption is also strongly influenced by the low salaries of public administration employees (state officials), who are therefore trying to improve their financial position by receiving bribes, and consequently, the socio-economic situation of the government officials also affects the phenomenon of corruption. This is demonstrated also by Allen et al. [13] in their study where they find that corruption arises because agencies, institutions and the government can no longer control corruption effectively due to underpaid officials, which is a problem especially in the developing countries, where they do not have the sufficient tax revenue to properly reward the local officials. However, low wages are not the only cause of corruption; the poor state of the public administration, which is a consequence of political “overcrowding”4 of officials, due to which loyalty usually prevails over professional standards, also strongly affects the corruption. As an important factor influencing corruption, some authors also indicate satisfaction with the work done by officials—the more they are dissatisfied with their work or place of work, the higher the degree of corruption, which is confirmed by Sardžoska and Tang [14] in their studies. The mentioned authors find that the private sector has higher ethical values, in particular those that affect satisfaction with work, than the public sector and is therefore less unethical (especially regarding thefts and corruption). Indirectly, Svenson [10] also affirms this and states that in principle, the salary level of civil servants affects the receipt of a bribe (the higher it is, the smaller the chance that the person will act corruptly). However, he continues on that a higher salary also strengthens the negotiating power of the official, which leads to higher bribes and he also states that, on the basis of existing research, it is very difficult to determine whether a higher salary causes less corruption, which means that the level of salary is not a decisive factor, but merely one of many.The economy is unfortunately largely dependent on politics and often reflects the rule of law; various options for eliminating competition are exploited, and bribery is just one of the possible weapons in the struggle to gain a job. At the same time is the mentality of the economy sometimes: “The cost of a bribe is only a substantial business cost, an integral part of the contract,” or “Even if we stop the bribery, our rivals will not, so we must bribe in order to remain competitive, “or” bribery and misleading behaviour are not really crimes, they are just part of the old business practice. They are part of the game and everyone does it.” On the other hand is the point sometimes simply the “lubricating” of the bureaucratic wheel by the private sector to do certain things faster or easier.The political influence of corruption is also manifested through the proverb: examples are attractive! If the top of the politics (government, parties and leading politicians) is corrupt, then corruption shows at all levels, and this evil at the same time spreads among the ordinary population, as nobody trusts the institutions or the rule of law. Johnston [15] thus points out useful thinking in terms of two types of equilibrium—the balance between the openness and the autonomy of the institutions and elites it leads and the balance between political and economic power and opportunities for cooperation. Ideally, the institutions should be open to influences and feedback from different sources, yet at the same time sufficiently independent to effectively carry out their work. Where the openness and independence of the institutions are in balance, the officials are accessible, but not excessively exposed to private influences; if they can make authoritative decisions, while not using their power to arbitrate, the corruption is relatively low. But where the official power is poorly institutionalized, too exposed to private influence, and the officials’ independence is reflected in excessive exploitation of their power—they can do as they please—the possibility for extreme corruption is again high.2.2. Professional ethics and legislationLack of professional ethics and deficient laws regulating corruption as a criminal offense, and the prosecution and sanctioning of it are also an important cause for the emergence and spread of corruption. A great influence comes also from the ineffective sanctioning of corruption, which only increases the possibility of continuing the corruptive actions of those involved, creating at the same time a strong likelihood that others will join in the corruption due to this inefficient sanctioning.The sole lack of professional ethics is a particular issue, as the administration requires different amounts of time to develop or change its ethics and professional standards, which is well known in transition countries (in some, ethics and professional standards changed overnight and approached the equivalents in the developed democracies, and in some, they remained the same as in socialism). It is precisely in the transition countries that the “softer” acts of corruption are often considered to be acceptable and justifiable. Therefore, due to lack of professional ethics in some countries that otherwise manage illegal corruption well, there is nevertheless a widespread form of legal corruption.Corruption also generates a lack of transparency and a lack of control by supervisory institutions. Therefore, where there is insufficient legal basis or sufficient political will to control, which enables a non-transparent functioning of both politics and the economy, corruption flourishes. Corruption is also affected by the extensive, non-transparent or incomplete legislation, where laws can be interpreted in different ways (for the benefit of the one who pays).2.3. Habits, customs, tradition and demographyDifferent countries have different attitudes to corruption. In Europe alone, we can find two extremes; from completely corruption intolerant North to the warm South, where corruption is an almost normal, socially acceptable phenomenon. Or the difference between countries with a democratic past, which traditionally prosecute corruption, and former socialist countries, where the corruption in the state apparatus was a part of folklore tradition. Then, there are also different customs; in some cases, a “thank you” in the form of a gift for a service (for which this person has already been paid with a salary) is an expression of courtesy, and elsewhere it is considered corruption. Everything is only a matter of ethics and morality; however, they can be very different in different areas and different countries.Some forms of corruption also relate to an informal form of social security, where the family or the immediate community takes care of its members. Such forms of informal social security prevail in less developed countries, where there is no legal regulation of formal social security and in the countries of Southern Europe where the influence of the broader family (patriarchate5) is still very strong, like for example in Italy, Greece, Albania, Bosnia, etc. These countries are known for nepotism, cronyism and patronage, since the family as well as the wider community provide social security. The family or community takes care of their members, who, in return, must be loyal and in a way also repay the benefits they receive from it. The same is true of faith. While the southern, predominantly Catholic, very hierarchically organized part of Europe, encourages the cult of the family (also joint and several community) and several liability, the northern, mainly Protestant part, emphasizes individualism and individual responsibility (which means less forms of corruption). The corruption also prospers better in countries where Islam and Orthodoxy are the main religion. The influence of the dominant religion in the country is thus important.The influence of majority Protestantism has been tested several times and has proven to be an important factor for the low level of corruption in a country. However, the relationship between Protestantism and good governance is probably rooted more in history than in today’s practice. Today, there are many nominally Protestant countries that are de facto secular, while also many non-Protestant countries fight effectively against corruption. Thus, the influence of Protestantism appears to emerge from its egalitarian ethos, which could indirectly function as a support to the general orientation toward ethical universalism, literacy and the promotion of individualism. Its role is therefore important, as it at certain stages of the development explains why the first countries that were well managed were predominantly Protestant. This does not mean that other religious traditions are incompatible with good governance, but only that they have not succeeded in compiling this particular array of factors at the right moment [16].Similarly, the research by North et al. [17] showed that, according to the authors, the least corrupt countries or those countries where the rule of law is the strongest were predominantly Protestant in 1900 and those who are most corrupt were predominantly Orthodox in the same year. The results of their research have shown that there is a link between religion and corruption on one hand, and respect for the rule of law on the other, but not that the link is causative. The questions therefore arise: Why do some religions respect the rule of law more than others and control corruption? Do the characteristics of a particular religion themselves lead to the results? Are there any differences in religious doctrines, practices or cultures that lead to such results? Are there other links that are not rooted in the religious culture, but are related to religious affiliation?A study titled Perception of corruption by authors Melgar et al. [18] tried to find out which groups of people are more likely to pay for corruption. They found that those who think that there is a lot of corruption also perceive it so and are consequently more willing to pay for it (as they think or expect the society to function that way). By using a wide and very heterogeneous set of data and econometrics, it has been shown that the social status and personal characteristics also play an important role in the shaping of corruption perception at the micro level. While divorced women, unemployed persons, persons working in the private sector or the self-employed are considered to be in positive correlation with the perception of corruption (corruption is perceived more and they are more willing to pay bribes), the opposite applies to married persons, full-time employees, people who frequently attend religious ceremonies and people with at least secondary education (they perceive less corruption and are also unwilling to pay). According to the classification of countries, they find that it can be proved that all African and Asian countries are in the upper half of the table, and the same applies to the former socialist countries and most of the East Asian countries. People living in these countries perceive more corruption than others. On the contrary, most European countries and some of the former English colonies show lower perceptions than the average (there are also exceptions) and rank in the lower half, the same as half of the richest countries. They also added that the geographical classification of countries has been strongly correlated with the corruption perception index (CPI), which shows that individual characteristics and social conditions are specific factors that influence the perception of corruption. However, they have also found that better economic results reduce the perception of corruption, while the macroeconomic instability and income inequalities have precisely the opposite effect. With Mahič [19], we also found a similar influence on the perception of corruption; in the economic crisis (high unemployment and low purchasing power), the perception of corruption is rising.A very important factor that affects corruption is also demographics. A number of studies have shown that patriarchal society is more prone to corruption. This is confirmed by several researches that actually explore to what extent are men women corrupt. Several earlier, especially econometric contributions to the debate on who is more corrupt, men or women, argued that there is a link between a higher representation of women in government and lower levels of corruption. An influential study of 150 countries in Europe, Africa and Asia by the World Bank [20] confirmed this and concluded that women are more reliable and less prone to corruption. The subsequent findings were later reinforced by further research. Rivas [21] also affirms this in his research and notes that, according to the results of the survey, the conclusion could be that women are less corrupt than men and that the increase in the number of women on the labor market and in politics would help fight corruption. Lee and Guven [22] in the survey: Engaging in corruption—the influence of cultural values and the contagion effects at the micro-level also raised the question of whether men are more corrupt than women. The findings of the research support the thesis that women are less susceptible to corruption than men, especially in cultures that require men to be ambitious, competitive and materially successful, as these factors significantly contribute to unethical behavior. This was surprisingly well shown also in practice [23] when, due to gender equality, the Peruvian government a decade ago decided to involve more women in the police units. When the 2,500 female police officers were joined as traffic police officers, something unexpected happened; bribery was drastically reduced, and people welcomed the female police officers on the streets.3. The impact of corruption on the economyIn 1997, Tanzi and Davoodi [2] conducted a systematic study of the impact of corruption on public finances. Several important findings came to light:Corruption increases the volume of public investments (at the expense of private investments), as there are many options that allow for public expenditure manipulation and are carried out by high-level officials so as to get bribes (which means that more general government expenditures or a large budget offer more opportunities for corruption).Corruption redirects the composition of public expenditure from the expenditure necessary for basic functioning and maintenance to expenditure on new equipment.Corruption tends to pull away the composition of public expenditure from the necessary fixed assets for health and education, as there is less chance of getting commissions than from other, perhaps unnecessary projects.Corruption reduces the effectiveness of public investments and the infrastructure of a country.Corruption can reduce tax revenues by compromising the ability of the state administration to collect taxes and fees, although the net effect depends on how the nominal tax and other regulatory burdens were selected by the officials, exposed to corruption.The influence of corruption on the economy was studied by the same authors [3] through several factors:Through the impact of corruption on businesses: The impact of corruption on a business is largely depend on the size of the company. Large companies are better protected in an environment that is prone to corruption, they avoid taxes more easily and their size protects them from petty corruption, while they are often also politically protected, which is why the survival of small (especially start-up companies) and middle-sized companies, regardless of their importance for the growth of the economy and the development, is much more difficult than the survival of large companies.Through the impact of corruption on investments: Corruption affects (a) total investments, (b) the size and form of investments by foreign direct investors, (c) the size of public investments and (d) the quality of investment decisions and investment projects.Through the influence of corruption on the allocation of talents: Indirectly, corruption has a negative impact on economic growth through the allocation of talents, since gifted and prospective students are driven, due to the influence of the environment and the situation in the country, for example, to study law rather than engineering, which would add value to the country.Through the impact of corruption on public spending: Corruption has a negative impact on public spending and has an especially strong impact on education and health. There are also indications of the correlation between corruption and military expenditure, which means that high level of corruption reduces economic growth due to high military expenditure.Through the impact of corruption on taxes: Because of corruption, less taxes are levied than would otherwise be, as some of the taxes end up in the pockets of corrupt tax officials. There are also frequent tax relieves in the corrupt countries, selective taxes and various progressive taxes; in short, there is much less money than the country could have, and so corruption, through the country’s financial deficit, also affects the economic growth; and conclude the findings on the negative impact (both indirect and direct) of corruption on economic growth.Smarzynska and Wei [5] came to similar conclusions regarding the effects of corruption on the size and composition of investments. Corrupt countries are less attractive for investors, and if they do opt for an investment, due to non-transparent bureaucracy, they often enter the market with a joint venture, as they usually understand or control matters of the home country better. The local partner can also help foreign companies with the acquisition of local licenses and permits or can otherwise negotiate with the bureaucratic labyrinths at lower costs. Generally inclined (as investors) to the joint venture in the corrupt countries are especially the US investors; however, even investors from those European countries, which are among the highest ranked on the CPI, quickly adapt to local conditions.Corruption for various reasons also affects the following:Employment, because the job does not go to the most suitable or qualified person, but the one who is ready to pay for it or in any other way return the favor.Also affects total investments [24].The size and composition of foreign investments and the size of public investments.The effectiveness of investment decisions and projects. In the presence of corruption, the investments are smaller, as entrepreneurs are aware that they will have to bribe the officials or even give them a profit share for a successful implementation of a business. Due to these increased costs, the entrepreneurs are not interested in investing.Wei [25] even made a projection which predicted that in the case of reduction in corruption in Bangladesh to the level of corruption in Singapore, the growth rate of GDP per capita would increase by 1.8% per year between 1960 and 1985 (assuming that the actual average annual growth rate was 4% per year), and the average per capita income could have been more than 50% higher, whereas the Philippines could, if its level of corruption was reduced to that of Singapore (if everything remained unchanged), have raised their investments in relation to GDP by as much as 6.6%, which means a significant increase in the investments. At the same time, he notes that in order to reduce the corruption to the level of Singapore in the countries that he compared (India, Kenya, Sri Lanka, Turkey, Colombia, Mexico and Ghana), the State should raise the salaries of officials by 400—900%. He therefore asks himself whether this would even be possible. However, he notes that in the event of a large increase in salaries, a new form of corruption would likely arise when everyone would be prepared to pay a bribe for a well-paid official job.Corruption often reduces the effectiveness of various financial assistance programs (both state and international), as money is “lost somewhere along the way” and does not reach those that need it or for whom it is intended, as the financial benefits, deriving from corruption, are not taxable because they are hidden. The state is thus also losing part of the income from the taxes due to corruption, while the public spending, resulting from corruption (or narrow private interests) leads to negative effects on the budget.The European Commission in its report found that corruption is costing the European economy about 120 billion a year, and according to the European Commissioner for Home Affairs, Cecilia Malstotröm, the corruption in Europe is most present in public procurement, financing of political parties and health care [26].The United Nations estimate that the cost of corruption in Afghanistan amounted to about $ 3.9 billion in 2012. According to Transparency International, the former leader of Indonesia, Suharto, embezzled between $ 15 and $ 35 billion, whereas the embezzlements of Mobutu in Zaire, Ferdinand Marcos in the Philippines and Abacha in Nigeria are estimated to amount to $ 5 billion [27]. However, the World Bank survey shows that $ 1 billion in bribes, both in rich and developing countries, is paid annually [28], which means that even the developed countries are not immune to corruption (but in a different form) and that the political corruption is especially present in large infrastructure projects. Bađun [29] on the example of Croatia gives conclusions, which are valid for all post-communist countries.Impact on enterprises: A survey conducted by the EBRD and the World Bank shows that bribes paid in smaller companies account for 5% of their annual profits and in medium-sized companies 4% of their annual profits. However, both are, compared to large companies, where bribes comprise less than 3%, in a much worse position, which shows how bribes are causing problems or are putting these smaller companies into a subordinate position compared to the large ones, which in turn leads to the collapse of these.Also interesting is the study of the Shadow Economy in Highly Developed OECD Countries where Schneider and Buehn [30] also find the link between the low quality of institutions that are the holders of the rule of law (or degree of corruption) and the shadow economy, and therefore, the weaker the “law” is, the higher the degree of corruption and of shadow economy. In the study Corruption and the Shadow Economy [31], the same authors explore the relationship between the degree of corruption and the emergence of the shadow economy, and their findings are that the high level of shadow economy and the high degree of corruption are strongly linked to one another. One of the hypotheses in this survey (which has been confirmed) is also: the higher the degree of corruption, the lower the economic development measured by GDP per capita. The authors detected a positive correlation; corruption thus affects the economic development.However, the extended practice of finding annuity outside the logic of the market and competition can therefore lead to a (neo) liberal conclusion that the root of the existence of corruption is in the very existence of the state—especially in excessive, selective and deforming state interventions and subsidies that create fertile soil for the development of corruption. The truth is that the devastating combination consists of widespread state intervention and subsidies in the simultaneous absence of a strong institutional framework and detailed rules of the game, including the control of public finances and effective anti-trust legislation and legal practices. On the other hand, however, there is no clear evidence that private monopolies are more effective and less corrupt than the public ones and that privatization, especially long-lasting, gradual and non-transparent one (so-called gradualism), reduces positive developmental and social effects, including the reduction of corruption [32]. Yet market deregulation, legal and judicial reform and transparent management of public procurement would significantly reduce corruption in many developing countries (as well as in transition countries), at which point the government should play an important role in the shaping of the anti-corruption policy. There should be a strong strengthening of the public procurement institution. The law is admittedly strict about the public procurement, but one of the main reasons for public procurement problems is the lack of a skilled workforce, and public procurement is thus still the breeding ground of corruption. There also exists a proverb “poverty is a curse,” which applies largely to all developing countries, as these are the countries that are most affected by poverty. Poverty destroys all ethical and moral values.One of the important aspects of the damage to the global economy is also the failure to respect copyright and intellectual property. The more corrupt countries are also inclined to lower respect for the aforementioned, and the economic damage amounts to billions of dollars. Cavazos-Cepeda et al. [33] found that reforms, legal, fiscal and intellectual incentives to respect copyright and intellectual property patents encourage the society to make itself more innovative and economically more effective; however, they underline the importance of human capital and investment in people as one of the most important factors for reducing the level of corruption in the country.There are also theories that corruption can act as the lubricant of the economic wheel and at least in some cases has a positive impact on the economic growth. The empirical analysis done by Dreher and Gassebner [34] on a sample of 43 countries between 2003 and 2005 shows that corruption is even useful, but with some reservations. In particular, they investigated the short-term effects of corruption and found, for example, that in countries where corruption is widespread, more new entrepreneurs enter the market (corruption in the public sector is expected to promote private entrepreneurial activity). They are, however, not necessarily to succeed, as there is a high likelihood that they will go bankrupt due to the rigid regulations that block the activity and because of which bribes are needed. They do acknowledge, on the other hand, that most authors who have been doing research for a longer period of time admit the harmfulness of corruption both for society and the economy. Something similar show the data for some Asian countries, where, unlike their findings (short-term benefit), the high degree of corruption coincides with the long-term economic growth.Svendson [10] also notes that, in light of the theoretical literature and various research studies, notwithstanding that these show the negative impact of corruption on the economic growth, but this cannot be said for sure, since there are difficulties in measuring corruption, and at the same time, the question arises whether the econometric models that were made are good enough to capture all the important variables. He also states that corruption appears in many forms and that there is no reason to assume that all types of corruption are equally harmful to the economic growth.Recent empirical researches also attest to that; while many countries have suffered, as a characteristic consequence of corruption, the decline in economic growth, other countries have had economic growth (in some cases a very positive one) despite corruption. The latter is also to be expected, since corruption has many manifestations and it would be surprising if all types of corrupt practices had the same effect on economic performance. Analyses show that one of the reasons for this is the extent to which the perpetrators of corrupt practices—in this case the bureaucrats—coordinate their behavior. In the absence of an organized corruption network, each bureaucrat collects bribes for himself, while ignoring the negative impact of others’ demands for them. In the presence of such a network, the collective bureaucracy reduces the total value of the bribe, which results in lower bribe payments and higher innovation, and the economic growth is consequently higher in the latter case than in the former case. The interesting question is not so much why is the degree of corruption in poor countries higher than in the rich ones, but rather why the nature of corruption differs between countries. The extent to which corruption is organized is just one aspect of this, but there are other aspects. For example, it is common practice in some countries to pay ex post (as a share of profit, for example) instead of ex ante (in advance, as a bribe) to officials or politicians, so it is assumed that the effects on the economy will be different. The precise reason why corruption should take on one form and not the other is an important issue which has been largely ignored and which could have to do with cultural, social and political reasons, as well as economic circumstances [35].In the fight against corruption, a remarkable role was also played by the debt crisis. The die Welt newspaper [36] mentions the study of the Hertie School of Governance, which shows that Italy, Spain and Portugal have made great strides in the fight against bribery and corruption of their civil servants due to lack of money, which enabled a significantly more transparent and “pure” practice for the award of public procurement. The crisis is supposed to dry up monetary resources and thus reduce the chances of corruption. Also, the crisis has changed the perception of the society, and bad business practices, which were acceptable before the crisis, are acceptable no longer. However, the fight against corruption is often similar to the fight against windmills. The case of India shows how corruption is changing, getting new dimensions, not only in scope, but also in methods. Just as the population in India is growing, so is corruption, and there are always new ways how to cheat both the state and the society. The perception of corruption is increasing year after year. Despite all the anti-corruption moves and anti-corruption initiatives, people do not hesitate to offer or accept a bribe. The bribers are becoming innovative, they adapt to the situation and the innovation of companies in paying bribes and hiding them is also visible. However, just as elsewhere in the world, the negative effects of corruption are the same; it reduces foreign direct and domestic investments, increases inequality and poverty, raises the number of freeloaders (renters, free-riders) in the economy, distorts and exploits public investments and reduces public revenues.4. DiscussionCorruption is, in fact, a multidirectional process. On one hand, the provider benefits, on the other the recipient, and both are aware of the deed that remains hidden. The third link in the chain is everyone else, the victims. Although not every act of corruption is yet a criminal offense, it is, however, unethical and detrimental to the economic and political development of a society. Usually, there are persons involved with political, economic and decision-making power, and as the philosopher Karl Popper wrote in his book, The Open Society and its Enemies, that the greatest problem is not the question of who should give orders, but how to control the one who gives them. How to organize the political and social institutions in order to prevent the weak and incompetent rulers from doing too much harm? However, as there is no general and unmistakable way of preventing the tyranny or corruptions of the heavyweights, the price of freedom is eternal alertness [37]. Greediness, ambition, rapacity and immorality have been known to the human society ever since the emergence of civilization and use every tool available to them: kinship, common past, school contacts, common interests, friendship and, of course, political as well as religious ties.In a study by Šumah et al. [38], we did an analysis of countries, taking into account their ranking on the Corruption Perception Index published every year by Transparency International, and identified the main factors affecting the level of corruption in a particular group of countries, or rather, we tried to find similarities and differences between individual groups of countries in terms of what affects the level of corruption in these groups. We have established a basic model of three factors (risk, benefit and consciousness) that was created on the basis of the merger of several known, scientifically proven factors that cause or reduce corruption or affect its level in the individual country. According to this degree of corruption, we have identified five groups, classified the countries and analyzed their common characteristics. The findings were as follows:Corruption is linked to the level of GDP (the higher the GDP, the lower the rate of corruption).Corruption is related to the level of education (the higher the average level of education, the lower the level of corruption).Corruption is strongly linked to the geographical location. The highest level is in Asia (mainly in Central Asia), Africa (North and Central Africa) and South America (according to the Transparency International map).Corruption is strongly linked to the country’s prevailing religion.Corruption is linked to freedom in the country (personal freedom, freedom of speech, economic freedom, etc.), with respect to the rule of law in a country and inefficiency of public administration, which is often also locally limited or is inherently corrupt.The lower the country is ranked, the more dominant is the patriarchal society.Many researchers are still involved in corruption. The findings show that there is a link between corruption and its negative effects, but from most of the studies it is not possible to determine what the cause is and what the consequence. Whether is the level of corruption lower due to high GDP, or is it vice versa, cannot be directly identified, since the corruption depends on economic indicators, while at the same time affecting them [39]. It is also very difficult to claim that the average low level of education is due to corruption or, conversely, that corruption is a result of low education. Similarly goes for the rule of law and (in)efficiency of public administration. This interdependence will surely continue to be the subject of numerous researches in the future, for the only way to be successful in the fight against corruption is if we know the causes and begin to eliminate them.Nevertheless, there remains something that needs to be emphasized. Almost all of the studies ignore the fact that the top of the most corrupt countries consists of countries with one of the various forms of armed conflict (civil war, intertribal conflicts, inter-religious wars or some other form of aggression), which means that peace in the country is a prerequisite for a successful fight against corruption. The least corrupt countries are countries that have a lasting peace on their territory (most since the Second World War or even longer), which is confirmed by the above fact. Peace is therefore one of the prerequisites for a successful fight against corruption.The answer to the question of how to deal with corruption is not unambiguous; some countries have achieved great success in dealing with it in a relatively short time (Singapore, Estonia and Georgia) and some have been struggling for a long time (the most famous example is Italy). The first condition is in any case to ensure freedom (personal freedom, economic freedom, freedom of speech, freedom of the press, etc.) and democracy, and then education and awareness of people. However, at this point, it is not about introducing the Western type democracy, as our culture knows it, for it has often proven that, especially with the help of the army, more harm than benefit was caused. It is necessary to start using good practices of countries that are similar to each other (religion, habits, tradition, ethics and morality) and that have common history.