The corporation as an institution in our society is all pervasive, and in our capitalist society put in high regard. It is effectively today’s most dominant institution in the likeness of yesterday’s church and religious dominance. We must now then, ask a question, are companies and CEO’s held responsible the same way average citizens are in today’s democracy? This diary is going to introduce how white collar crime is perceived within our society, put forward perspectives on why this type of crime occurs, how white collar criminals are held accountable, and the effects on society that white collar crime has.
Perception of Crime
One of the main dilemma’s of the corporate crime issue is how our society perceives it. It is paramount that at this interjection we define occupants of three structural positions of society: (1) workers, (2) employers and managers, and (3) professionals and public officials (Benson, 1989, p.468). The worker’s crime and the employer’s crime are held in two different regards in our society. In terms of the legal and cultural viewpoints of white collar crime there are many that ascribe to the position that our society tends to "skew our perceptions in such a manner that we are much more likely to recognize and criminalize the harmful acts of the poor, powerless, and marginal groups of society" (Poveda, 1994, p.19). Intuitively this makes sense; white collar crime rarely is covered by the media in much detail because the presses, especially daily news papers are geared to a twenty-four hour cycle in reporting (Conklin, 1977, p.116). Several business offenses take place over a long period of time and does not have the high drama of such conventional crimes as murder, robbery, etc (Conklin, 1977, p.116).
Begining with Tony Poveda giving us the dualistic fallacy of corporate crime he states, that there are two widely shared myths provided to support conventional thinking about the crime problem (Poveda, 1994, p.3). First is the myth of the criminal type he asserts:
"The belief that the world is sharply divided between criminals and non-criminals or delinquents and nondelinqeunts has a long history. It is a belief that not only is deeply embedded in popular thinking about crime and criminals, but also permeates much criminological thought. This false dichotomy often takes expression in the characterization of criminals as belonging to some criminal type... the modern myth of the criminal type portrays the criminal as a particular social type: poor, young, male, lower class, minority."(Poveda, 1994, p.4). This first myth is a very stereotypical representation of a criminal, not your business suit wearing professional, but rather a young male, usually poor, and possibly a minority. This, usually working class citizen recipient of a largely fallacious presupposition that it is the working class poor who commit the greatest scale of crimes. It is in fact the opposite according to Michael Benson, who claims that both employers and managers commit offenses of a greater scale than working class offenders (Benson, 1989, p.472). There is of course, a second myth of the crime problem which Poveda states is the myth of the Law Abiding Citizen. This myth supports the "...notion that the vast majority of citizens are law-abiding" (Poveda, 1994, p.7). However: "unless they fit into the prevailing cultural stereotype of the criminal, they will not be regarded as "real" criminals" (Poveda, 1994, p.7). Intuitively one can recognize how a CEO of a company, will not be regarded as a "real" criminal by our societies standards. Stereotypically speaking white collar crime has to do with most business persons who are relatively well off to begin with. This notion of affluence already discerns the business person, from the "street criminal". It is a distinction which is crucial to how we perceive the crime problem. This opinion of what constitutes a "real" criminal is reinforced within the courts as the business person does not appear to be criminal, but rather "a fellow country club member who in a moment of weakness strayed from the path and now knows it"(Conklin, 1977, p.113).The perception of white collar crime is again one held by the legal institution and its players within it. This notion of the "fellow country club" member supports a class viewpoint of how law should work for one economic class, and no other. In this respect, a white collar criminal is not held in the same regard as an average citizen. How white collar crime is perceived in our society may also have a lot to do with why it occurs within our society.
Explanations for white collar crime
There has been a multitude of theorists attempting to explain white collar crime, and it would be wise to address some prevalent theorists. One such theorist, Paddy Rawlinson puts forward a suggestion to begin looking at the nature of corporate crime and why it happens: "The capitalist ethos broadens the possibilities not just for organized crime but, in an increasingly ruthless market, encourages legal business to adopt expedient and dubious alliances and contentious behaviours in the preservation of its status and the maintenance of profit."(Rawlinson, 2002, p.304). Rawlinson in this discussion is paralleling the corporate crime with organized crime in Eastern Europe and Russia, revealing its similarities in ruthlessness and greed. Under our current capitalist structure, the maintenance of profit and acquisition of profit are some of the leading factors for why corporate crime occurs. Steven Box put forward the notion that corporate crime was a product of certain uncertainties within the market such as competitors, the government, employees, consumers the public and the achievement of certain goals, particularly profits(Poveda 1994, p.98). Box asserts that corporate crime is based on strain, that the achievement of corporate goals and reducing the strain may be resolved by illegally reducing or eliminating the environmental uncertainty through price fixing, bribing public officials, and fraudulent advertising, all of which are crimes based on affluence (Poveda, 1994, p. 98). He affirmed that ultimately its individuals who act and think; therefore it is these individuals in high level positions who are willing to act illegally (Poveda, 1994, p.98). The strain for increased profit margins is a product of the capitalist system itself, and should be perceived as the willful actions of the affluent classes maintaining a power structure which serves them. The next theorist who put forward an explanation is Coleman and his "culture of competition" (Poveda, 1994, p. 100). This culture of competition is distinguished by an intense craving for wealth and success along with a principal fear of failure (Poveda, 1994, p. 100). Even though this cultural pattern is played out in social-psychological motivations, its origins are structural in the political economy of industrial societies, where enormous surplus of wealth has been created (Poveda, 1994, p.100). He continues by saying that this "culture of competition is nevertheless more ingrained in some industrial countries then others. Western capitalist nations, and especially the United States with its frontier tradition and strong ethic of individualism are most imbued with it competitive drive" (Poveda, 1994, p.100).
What Coleman is describing essentially is the results of capitalism and competition upon people and society and how this can lead to crime. The very nature of capitalism creates this competition which pins one person against another, disenfranchises one and leaves one affluent. The capitalist system itself can be seen as unethical when left to its own devices, it needs to be held accountable, the same way an average citizen is, one could theorize the reason why it is not, is the fact that its an organization and not an individual such as Schrager and Short’s suggestion. Schrager and Short asserted the idea of "organizational deviance" perspective which is worth noting. The emphasis here is that organizations and not just individuals can be deviant (Poveda, 1994, p. 94). In order to differentiate organizationally deviance from individual deviance there must be two conditions that must be met. There must be norm violations, as judged by an outside authority, and the action must also be supported by the international norms of the organization (Poveda, 1994, p. 94). Schrager and Short state that: "This internal support takes two forms: peer support, and elite support. Peer support occurs when ones colleague or fellow workers also participate in or tolerate the deviance in question. Elite support occurs when the top level of management or administration of the organization supports the activity." (Poveda, 1994, p. 94). Peer and Elite support can both individually lead a person to commit a white collar crime, but can also do the opposite. This can be likening to peer pressure, the individual is not following what is right, but what benefits themselves, or the company, or both. Schrager and Short articulated the difference between occupational and organizational crime. In their opinion, in occupational crime, individuals commit crimes for themselves, whereas organizational crime individuals are committing crimes through their occupation for their company (Poveda, 1994, p. 94). It is the organization that benefits in the ladder, although Schrager and Short stated that some personal gain can be acquired (Poveda, 1994, p. 94). One could conjecture that if there was peer and elite support to follow guidelines and restrictions on illegal actions that organizational deviance may decline. However this would infer self-regulation, a system we already use, which does not work. Since corporate crime is facilitated by competition, strain, organizational acquiescing, it stands to reason then, that since corporate crime is different to "street" crime, that it should be handled appropriately, in that, the punishment should fit the crime. Subsequently, looking at how corporate offenders and non-corporate offenders receive justice and punishment.
Accountability in Corporate Crime
Putting forward the presupposition that business offenders are not held accountable in court for their misgivings would be wrong. However only wrong insofar as they are not held as accountable as other citizens for the type of crime and the punishment which corresponds to harm done to society. In actuality: "When business offenders are convicted in criminal court, the most common sanction is either a suspended sentence with probation or a fine. Fines are often trivial in amount for corporations. In fact, "usually the corporation has gained more financially from its crime than it pays in a fine if convicted" (Conklin, 1977, p.103). Accountability in affluent crimes (embezzlement, securities fraud, income tax evasion) is much lower than in crimes usually caused by issues concerning poverty. For example, in 1977 in the United States, those convicted with auto theft was seventy-one percent, with the number of months in jail in the mean of thirty six months, contrast this with securities fraud at the same time; sixteen percent convicted got a jail sentence with a mean of under twelve months in jail(Conklin, 1977, p.101).
This presents a large discrepancy in not only jail sentences but the length of these jail sentences and crime. These convictions and reprimands against the corporations and white collar criminals seem trivial at best. The industry and policies of our governments has been to deal with corporate regulation in a "laissez faire" approach. This serves the capitalist’s interest best, and not the public interest. Paradoxically, this does not seem to be in step with some of the industries executives. It has been held by a large amount of corporate citizens that corporations cannot be simply allowed to regulate themselves. In an industry poll, sixty three executives were asked: "What do you see as an alternative to government regulations: can industry police itself?" the response to this was 57.3 % of those polled said the government is needed and that industry cannot police itself (Clinard, 1983, p.107). One reason why the industry does not police itself is that society does not perceive corporate crime as "criminal". Marshall Clinard puts forward the opinion that due to the relative infrequency of criminal prosecutions for corporate violations, the public has developed the view that much of corporate violations are of a "non-criminal" type, and thus not serious in nature (Clinard, 1990, p.14). So not only are CEO’s not seen as "real criminals" but the crimes they commit in the public eye don’t seem to be of a "criminal nature" either. The type of crimes they commit often are given a reprimand of some sort of sanction or administrative penalty (Clinard, 1990, p.15).Once again Marshall Clinard asserts that even where the criminal penalty is available, it is infrequently invoked because of the greater amount of investigative and prosecutorial effort and time it entails(Clinard, 1990, p.15). Therefore the seriousness of corporate violations is not necessarily related to the type of penalty invoked, for example:
"...a large-scale study of sanctions imposed for corporate law violations found that administrative penalties were employed in two-thirds of serious corporate law violations, and that slightly more then two-fifths of the sanctions imposed for serious or moderately serious violations consisted simply of a waning to the corporation not to commit the offence again" (Clinard, 1990, p.15).
This study provides an outlook not only to self regulation, but also to the type of penalty these corporations are subject to, in respect to the seriousness of the crime. This large discrepancy in penalties for white collar criminals reinforces the notion that the bourgeois class in the legal system will take care of its own. It is for these reasons that Marshall Clinard, and many others suggest there must be a more realistic definition of corporate crime (Clinard, 1990, p.15). It must include any violation punished under administrative, civil or criminal law (Clinard, 1990, p.15). This, it is suggested by many as the only way to bring the law violations of corporations into the same perspective as those of ordinary criminal offenders (Clinard, 1990, p.15).
Some feel however that criminal law in itself does not assure compliance to the law, for example Richard Quinney states: "Criminal law alone does not assure compliance as long as those corporations that are controlled exercise political control and influence over regulatory agencies and courts. What is needed is greater political control by the public over the corporations and their power and influence in the political economy. And only with basic changes in the culture and structure of American society will there be a solution to corporate crime."(Kramer, Michalowski, and Kauzlarich, 2002, p.264). Since top corporate officials are members of an elite part of our society, one could put forward the notion that it is in their best interests not to be held accountable. As William Chambliss and Robert T. Seidman aptly state "The more economically stratified a society becomes....the more it becomes necessary for the dominant groups in the society to enforce through coercion the norms of conduct which guarantee their supremacy"(Schmalleger, Volk, 2005,p.282).
The norm conduct of many of today’s corporate crimes continually go unnoticed and the public seems complacent to not act on these illegal actions further cementing the notion of this elite supremacy. These crimes have a very real effect on our society and in societies abroad.
Effects of white collar crime
The effects of white collar crime are hidden well within our society for multiple reasons. However if the average Canadian knew, as according to Poonam Puri asserts, that white collar crime costs Canadians twenty billion dollars a year there may be more legislatively progressive movements toward corporate accountability (National Post, 2004). It should be noted that in Canada, some recent legislation has been attempting to curb certain types of white collar crime. Bill C-13’s recent amendments to the Criminal Code create the criminal offences of insider trading, tipping, and whistle-blowing retaliation (Library of Parliament, 2004). This new amendment also "provides additional guidance to judges on sentencing and enhances maximum sentences for corporate criminal offences" (National Post, 2004). This positive legislation is imperative to not only hold offenders accountable as regular citizens are, but raise awareness of the white collar crime issue. Corporations not only cost the average citizen money in taxes, but can also cost them their jobs as well. The "stakeholders" of a corporation are the community that it directly affects. For example: Nestle, a large food and beverage mogul, is not well known for treating its workers equitably domestically or abroad, however domestically Nestle announced in March of 2005 that it would be closing three of its candy plants in St. Louis by mid 2006(Polaris Institute, 2005,p.30). Three hundred and eighty three workers will lose their jobs, and "production at the three plants will be moved to Illinois and Mexico" (Polaris Institute, 2005,p.30). Simply put, what the company does in this race for profit margins is usually unethical as labor standards in Mexico are quite different than the United States. The layoffs in St. Louis will subjugate the workers to worsening poverty conditions in a city already much afflicted by poverty. In addition to this, in June of 2003 a California state appellate court upheld a five million dollar age discrimination verdict against Nestle for refusing to promote a manager in his forties (Polaris Institute, 2005, p.30).The court "said the company resisted promoting people over 40 and that ‘evidence showed it was company policy to eliminate so-called ‘dead wood’ and to promote young, energetic people in management positions" (Polaris Institute, 2005, p.30). The court was directly quoting from the 1990 statements by a Nestle vice president ( Polaris Institute, 2005,p.30). Abroad, Nestle is one of the worst exploiters of developing nation’s desperate poverty, their "socioeconomic impact is truly global and spans many industries"(Polaris Institute, 2005, p.23).
One such industry is the coffee industry in which Nestle, along with many other coffee companies are reaping in billions of dollars for cheap labor (Polaris Institute, 2005, p.24). Nestle and many other companies refuse to pay farmers fair trade wages, not even a living wage, and countries like Brazil and Vietnam fail to protect their citizens against this kind of corporate exploitation (Polaris Institute, 2005, p.24). One could assert that too much attention is being directed towards the stockholders contentment in profits, and not the stakeholders of communities where these corporations reside. This essay provides only one example of a specific wrongdoing company however there is a litany of companies not mentioned who do just as bad or worse, as well as those who do not commit such horrible corporate crimes.
It is unfair to generalize all companies as acting in this manner, which is why certain concessions to those responsible corporate citizens must be acknowledged. For example, Interface, the world’s largest commercial carpet manufacturer has set out to produce its products in a sustainable manner (Interface, 2005). Sustainability is a movement in the business community to achieve greater success in the three areas of financial, social, and environmental performance (IRRC, 2005). There are not many businesses which aspire to become a sustainable organization; however this idea and its proliferation are positive changes in today’s economic market. A sustainable corporation would mean better cohabitation with the raw materials that it uses to create profit while ensuring that raw material will return and, sustains the environment it has been extracted from. The effect of white collar crime and corporate criminals as reflected in both Nestle and Interface can be negative and positive. It is only through regulation by government to keep these good companies good, and these dreadful companies accountable to their actions which needs public support. The corporation’s main function is to provide wealth, the governments main function is to make decisions in the best of the public interest, it is time for both of these separate ideals to work together for a safer, more equal, society.
The pursuit of profit in our capitalist economy has many dire consequences. This economic system serves mainly capitalist interest, benefiting the capitalist class only. In this viewpoint, CEO’s and companies are not held responsible as regular citizens because their interests are seen above of the public’s interest by virtue of their wealth acquiring status. White collar crime is merely one of the many issues concerning our capitalist system, and our democratic society. How white collar crime is perceived within our society, why this type of crime occurs, white collar criminals being held accountable, and adverse effects on our society that white collar crime creates need to be further explored.