When we think about corruption in the corporate and political arenas, what often comes to mind are high-profile scandals involving bribery, kickbacks, or blatant misconduct. But in my paper Systematic Corruption (forthcoming in the Columbia Law Review), I argue that the deeper threat is structural: corruption not as isolated wrongdoing, but as an ongoing system of dependence built through state-conferred economic privilege.

At its core, systematic corruption is about how politicians use economic privileges—such as corporate charters, regulatory approvals, government contracts, and enforcement discretion—to build and sustain political coalitions. Unlike opportunistic corruption, which involves discrete quid pro quo exchanges for private gain, systematic corruption is rooted in the institutional design of political and economic power. By repeatedly rewarding political loyalty with economic benefits, governing coalitions can entrench themselves and ultimately suppress both political and economic competition. Systematic corruption is bad politics and bad economics.

A contemporary illustration comes from merger review. When antitrust enforcement becomes entangled with political loyalty—when firms perceive that favorable treatment may depend less on competition law and more on their alignment with the administration in power—merger review ceases to be a programmatic regulatory screen and instead becomes a partisan tool. Even absent explicit threats, the mere possibility that enforcement decisions hinge on political considerations can induce anticipatory compliance. Firms adjust their behavior, rhetoric, and affiliations to curry favor, helping to cement the dominant party’s hold on power. The danger is not simply uneven enforcement; it is the gradual transformation of a rule-bound process into a system of conditional privilege.

Lessons from Corporate Chartering History

Before the advent of general incorporation laws, businesses needed special legislative charters to obtain privileges like legal personhood. In the early republic, the authority to grant charters was held by legislatures with broad discretion. This discretion often made chartering a tool of political reward and exclusion, with the dominant coalition steering charters to allies and rewarding supporters with stock in the new corporations.

Reforms in the mid-1800s abolished special charters in favor of general incorporation statutes that allowed firms to incorporate under uniform rules with minimal political discretion. Similar institutional changes in public employment (civil service protections), contracting (competitive bidding rules and professionalized procurement), and public debt (fiscal reforms and voter-approval requirements) helped reduce systematic corruption in those contexts. I argue that these reforms shared a focus on three structural design principles:

1. Limiting discretionary power that can be used for political advantage.
2. Insulating key decisions from partisan control.
3. Establishing countervailing power (e.g., competitive markets, empowered rival groups or citizens) in which ambition counteracts ambition.

These principles didn’t eliminate politics from economic life. But they shifted the terms of competition from loyalty and favoritism toward the merits of policies, products, and services.

Why Systematic Corruption Matters Today

Fast forward to the present, and we face different institutional configurations but similar risks. Today’s economy is dominated by large firms that depend on favorable treatment by the government for their success. Government regulation is essential for a healthy economy, but it may also give public officials discretionary levers that, if left unchecked, can be wielded to reward political allies or punish dissenters.

For example, enforcement agencies have broad discretion to decline to bring enforcement actions even if they have merit. Licensing and permitting processes often grant or deny valuable rights on a case-by-case basis. The core concern isn’t that officials are malevolent actors seeking to line their own pockets—though that can also happen—but that the institutional setup allows economic privilege to be tied to the political support of recipients.

Implications for Corporate Governance Reform

What does all this mean for corporate governance? One risk I highlight is that proposed reforms sometimes expand discretionary government control over corporate status without sufficient structural safeguards. For instance, calls to condition incorporation or continued corporate privileges on vaguely defined “public purposes,” as in Elizabeth Warren’s Accountable Capitalism Act, can inadvertently recreate the same discretionary levers that nineteenth-century reformers intentionally moved away from.

But that does not mean that corporate law must remain inert. One potentially promising strategy is to build countervailing power within the firm rather than expanding discretionary power in the state. Reforms that enhance worker voice, diminish the influence of controlling stockholders, or otherwise redistribute authority inside corporations could potentially make firms less vulnerable to political extortion. If control rights are given to actors who are more likely to resist political pressure—either because they are more dispersed or have different preferences—corporations may be better positioned to avoid becoming partisan tools. Crucially, however, any such reforms should be structural rather than enforced on the political whim of some federal agency subject to presidential control.

Beyond Corporate Law: Antitrust, Administrative Law, and Law of the Political Process

The implications extend beyond corporate governance to antitrust, administrative law, and the law of the political process. In antitrust, there is reason for optimism. Economic concentration can make it cheaper for politicians to manufacture loyalty—if only a handful of firms dominate a sector, securing their alignment may be enough to shape an entire market. Structural antitrust enforcement that reduces concentration can therefore serve as a bulwark against systematic corruption by increasing the number of independent economic actors and diffusing political leverage. But there is also a cautionary note. Proposals to broaden antitrust beyond consumer welfare to encompass a wide range of social and political values could require enforcers to balance competing considerations. If that balancing is highly discretionary, antitrust itself risks becoming a patronage tool, with different standards applied to allies and adversaries. The challenge is to pursue political antitrust through relatively rule-bound or structural mechanisms that constrain discretion rather than expand it.

Administrative law presents perhaps the most direct application of the historical lessons. Because much of today’s economic privilege flows through the executive branch, recent actions limiting administrative discretion can potentially be helpful, though there are obvious tradeoffs. By contrast, recent efforts to concentrate removal authority or weaken civil-service protections risk recreating the conditions that allowed earlier patronage systems to flourish. Meanwhile, establishing countervailing power, whether through participatory governance or private rights of action, could help to check attempts to weaponize administrative discretion.

Finally, the law of the political process offers complementary tools. Given existing constitutional constraints, the most promising reforms are not direct limits on political spending, but measures that illuminate and counterbalance it. Stronger transparency rules can expose attempts to tie economic benefits to political support, while public funding of elections can reduce incumbents’ dependence on private actors who receive state-conferred privileges. Neither approach is a panacea, but both can help disrupt the feedback loop between economic and political power.

A Structural Approach to Corruption

American governance is not irredeemably corrupt. Rather, the central insight of Systematic Corruption is that we should treat corruption as a design problem, not a moral deficiency. By understanding how institutional arrangements channel and constrain political and economic incentives, we stand a better chance of building governance systems that break the feedback loop between economic and political power, thereby promoting robust political and economic competition on the merits.