Recently a retired Indian civil servant wrote to me: “if you analyse the DNA of a child born here you will find the bribe gene”. This genetic disposition presumably explains India’s chronic corruption.

But if this were true then how were Indians honest in the past? And are we not all part of the same human species – same as the people in honest societies of the West?

History tells us that before Chandragupta Maurya’s reign corruption was starting to gain ground in India due to tyrannical rule and the absence of an effective justice system. But after Chandragupta Maurya, things dramatically improved. Megasthenes, the Greek ambassador to India in c.300 BC, reported in his book, Indika, that the people of India had high regard for truth and virtue. Honesty was the supreme virtue of the people. They even left their houses and property unguarded.

Fa Hien from China reported in c.410 AD that there were few quarrels or disputes in India. The people rarely felt the need to approach the judiciary. Public highways were secure and free from the menace of thieves and dacoits. In c.630 AD, Hueng Tsang reported that the people of India are faithful to their oaths and promises, with very few cases of law-breaking. In c.1536, Fernao Nunes of Portugal likewise reported that the people of the Vijayanagara empire were very honest.

Today, almost all government ministers in India are thoroughly corrupt (I speak from personal experience) but in the past things were different. In 1916 Pramathanath Banerjea conducted a comprehensive study of public administration in ancient India and concluded that ministers in ancient India led very simple lives and were renowned for their honesty, integrity and nobility of character. The administration of justice was very efficient as a result of the uprightness of the judges and efficiency of the police. Such high-quality administration was the real reason why Indians were the most honest people in the world.

But even otherwise, it simply can’t be true that Indians today are born more corrupt than children of other societies. We are all part of the same species. Economists start with the assumption that all humans are opportunists, each capable of deception in his self-interest.

Dan Ariely is the world’s leading expert on dishonesty. His experiments covering nearly 50,000 people across the world have confirmed that “the amount of cheating seems to be equal in every country”. This includes comparisons across countries like the USA, China, Italy, Turkey, Canada, and England. Ariely has found that the vast majority of people will cheat a little when they think it will help them get ahead. Only a very few people, however, are extreme cheaters.

Despite this innate tendency for opportunism, the levels of corruption in the West are dramatically lower than in India. I’ve directly experienced this in the 25 years I’ve lived in the West. Most are habitually honest, but some do cheat when an opportunity presents itself, or if the governance system fails. Supermarket chains spend a lot of effort to prevent shoplifting from both shoppers and staff. Cheating is particularly rampant in some sectors of the Western economy, like the building and construction industry. Regulatory solutions like occupational licensing don’t work in such cases – in fact, make things worse. Regulating to fully control cheating requires extremely high levels of competence, that most Western policy thinkers lack.

If Indians were more genetically dishonest than other humans, I would have long ago given up on India. But our situation is entirely retrievable: we can once again become the world’s most honest society if we pay attention to the details of our governance system. We must not write off India as a basket case with defective genes. Instead, our educated people need to start understanding the causes of corruption.

Dishonesty is not a trivial matter that any society can ignore. Unless people keep their promises and contractual obligations and government functionaries are largely honest, no society can possibly succeed. Ancient Indians was honest because we had brilliant thinkers like Kautilya who understood how corruption can be reduced. Dan Ariely has found a basic fact which was well known to Kautilya: that people cheat more where there is an opportunity and incentive to do so. When the justice system works, dishonestly drops.

Policies of governance matter far more to a society than we normally appreciate. Kautilya and Lee Kuan Yew were both grand masters of governance and we need to learn from them. Also, in the West policy thinkers constantly evaluate governance systems for robustness. Sadly, in India, no one understands the core principles of economics and public administration. This comprehensive ignorance is the real failure of our intellectuals. They can’t wiggle out of this personal failure of diligent study by blaming our people’s genes.

The case of prohibition imposed by the 18th amendment in the USA is educative. The entire American society degenerated rapidly as a result of this single policy change from a largely honest to a completely corrupt society. Only after prohibition was repealed did things limp back to normalcy.

In post-independence India, we adopted socialism that created massive opportunities and incentives for corruption. The government meddles in every part of our life, creating opportunities for corruption. And government employees are paid lowly so they develop strong incentives to be corrupt. Our lowly paid justice system (which is itself therefore badly corrupt) takes bribes from corrupt government employees and lets them escape any punishment. And then we wonder why there is corruption! In fact, no honest IAS officer can survive: he is shunted aside. I had no choice in the end but to leave the IAS: no one wanted an honest IAS officer anywhere near them. Our governance system is therefore perfectly designed for corruption, as I show in my 2008 book, Breaking Free of Nehru. We have entirely forgotten Kautilya.

All socialist societies are necessarily corrupt. The USSR was a prime example, but this is true of every country that has adopted socialism, whether in Asia, Africa or South America. There is a direct link between rankings by Transparency International of corruption and the levels of freedom in these societies. The more free (ie less socialist) a society, the lower its corruption levels.

We know that India was well governed in the past and that’s why our people were honest. Our lazy and incompetent intellectuals blame our people’s “genes” but it is they who are fully responsible for this shambles. Indians must start learning how to design a good governance system.