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The Routledge International
Handbook of the Crimes
of the Powerful
Across the world, most people are well aware of ordinary criminal harms to person and property. Often committed by the powerless and poor, these individualized crimes are catalogued in
the statistics collected annually by the FBI and by similar agencies in other developed nations.
In contrast, the more harmful and systemic forms of injury to person and property committed
by powerful and wealthy individuals, groups, and national states are neither calculated by governmental agencies nor annually reported by the mass media. As a result, most citizens of the
world are unaware of the routinized “crimes of the powerful,” even though they are more likely
to experience harms and injuries from these types of organized offenses than they are from the
atomized offenses of the powerless.
Research on the crimes of the powerful brings together several areas of criminological focus,
involving organizational and institutional networks of powerful people that commit crimes
against workers, marketplaces, taxpayers, and political systems, as well as acts of torture, terrorism,
and genocide. This international handbook offers a comprehensive, authoritative, and structural
synthesis of these interrelated topics of criminological concern. It also explains why the crimes
of the powerful are so difficult to control.
Edited by internationally acclaimed criminologist Gregg Barak, this book reflects the state of
the art of scholarly research, covering all the key areas including corporate, global, environmental,
and state crimes. The handbook is a perfect resource for students and researchers engaged with
explaining and controlling the crimes of the powerful, domestically and internationally.
Gregg Barak is Professor of Criminology and Criminal Justice at Eastern Michigan University
and the former Visiting Distinguished Professor in the College of Justice & Safety at Eastern
Kentucky University. In 2003 he became the 27th Fellow of the Academy of Criminal Justice
Sciences and in 2007 he received the Lifetime Achievement Award from the Critical Division of
the American Society of Criminology. Barak is the author and/or editor of 20 books, including
the award-winning titles Gimme Shelter: A Social History of Homelessness in Contemporary America
(1991) and Theft of a Nation: Wall Street Looting and Federal Regulatory Colluding (2012). His most
recent book is the 4th edition of Class, Race, Gender, and Crime: The Social Realities of Justice in
America (2015) with Paul Leighton and Allison Cotton.
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The Routledge
International Handbook of
the Crimes of the Powerful
Edited by Gregg Barak
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First published 2015
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2015 selection and editorial material, Gregg Barak; individual chapters,
the contributors
The right of Gregg Barak to be identified as author of the editorial material,
and of the individual authors as authors of their contributions, has been asserted
by them in accordance with sections 77 and 78 of the Copyright, Designs and
Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
utilized in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in writing from the
publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
A catalog record has been requested for this book
ISBN13: 978-0-415-74126-2 (hbk)
ISBN13: 978-1-315-81535-0 (ebk)
Typeset in Bembo
by Apex CoVantage, LLC
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Contents
List of illustrations
List of contributors
Preface
Acknowledgements
Introduction: on the invisibility and neutralization of the
crimes of the powerful and their victims
Gregg Barak
xii
xiii
xix
xx
1
PART I
Culture, ideology and the crimes of the powerful
37
1 Crimes of the powerful and the definition of crime
David O. Friedrichs
39
2 Operationalizing organizational violence
Gary S. Green and Huisheng Shou
50
3 Justifying the crimes of the powerful
Vincenzo Ruggiero
62
4Corporate criminals constructing white-collar crime: or why
there is no corporate crime on the USA Network’s White Collar series
Carrie L. Buist and Paul Leighton
73
PART II
Crimes of globalization
5Capital and catharsis in the Nigerian petroleum extraction
industry: lessons on the crimes of globalization
Ifeanyi Ezeonu
87
89
vii
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Contents
6State and corporate drivers of global dysnomie:
horrendous crimes and the law
Anamika Twyman-Ghoshal and Nikos Passas
105
7Truth, justice and the Walmart way: consequences
of a retailing behemoth
Lloyd Klein and Steve Lang
121
8Human trafficking: examining global responses
Marie Segrave and Sanja Milivojevic
132
9Globalization, sovereignty and crime: a philosophical processing
Kingsley Ejiogu
144
PART III
Corporate crimes
155
10Corporate crimes and the problems of enforcement
Ronald Burns
157
11Corporate-financial crime scandals: a comparative analysis
of the collapses of Insull and Enron
Brandon A. Sullivan
12Corporate social responsibility, corporate surveillance
and neutralizing corporate resistance: on the commodification
of risk-based policing
Hans Krause Hansen and Julie Uldam
13Walmart’s sustainability initiative: greening capitalism
as a form of corporate irresponsibility
Steve Lang and Lloyd Klein
172
186
197
PART IV
Environmental crimes
209
14Climate change, ecocide and the crimes of the powerful
Rob White
211
15Privatization, pollution and power: a green criminological
analysis of present and future global water crises
Bill McClanahan, Avi Brisman and Nigel South
223
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Contents
16Unfettered fracking: a critical examination of hydraulic
fracturing in the United States
Jacquelynn Doyon and Elizabeth A. Bradshaw
235
17The international impact of electronic waste:
a case study of Western Africa
Jacquelynn Doyon
247
PART V
Financial crimes
263
18Bad banks: recurrent criminogenic conditions in the US
commercial banking industry
Robert Tillman
265
19Financial misrepresentation and fraudulent manipulation:
SEC settlements with Wall Street firms in the wake
of the economic meltdown
David Shichor
20A comprehensive framework for conceptualizing financial
frauds and victimization
Mary Dodge and Skylar Steele
278
289
PART VI
State crimes
303
21Transnational institutional torturers: state crime, ideology and the
role of France’s savoir-faire in Argentina’s Dirty War, 1976 to 1983
Melanie Collard
305
22Para-state crime and plural legalities in Colombia
Thomas MacManus and Tony Ward
320
23Australian border policing and the production of state harm
Mike Grewcock
331
24Gendered forms of state crime: the case of state
perpetrated violence against women
Victoria E. Collins
348
ix
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Contents
PART VII
State-corporate crimes
361
25Blacking out the Gulf: state-corporate environmental
crime and the response to the BP oil spill
Elizabeth A. Bradshaw
363
26Collaborate state and corporate crime: fraud, unions
and elite power in Mexico
Maya Barak
373
27Mining as state-corporate crime: the case of AngloGold
Ashanti in Colombia
Damián Zaitch and Laura Gutiérrez-Gómez
386
PART VIII
State-routinized crimes
399
28Organized crime in a transitional economy: the
resurgence of the criminal underworld in contemporary China
Peng Wang
401
29Institutionalized abuse of police power: how public policing
condones and legitimizes police corruption in North America
Marilyn Corsianos
412
30The appearances and realities of corruption in Greece:
the cases of MAYO and Siemens AG
Effi Lambropoulou
427
PART IX
Failing to control the crimes of the powerful
441
31Postconviction and powerful offenders: the white-collar
offender as professional-ex
Ben Hunter and Stephen Farrall
443
32Business ethics as a means of controlling abusive corporate behavior
Jay P. Kennedy
33Ag-gag laws and farming crimes against animals
Doris Lin
455
466
x
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Contents
34 G
enocide and controlling the crimes of the powerful
Augustine Brannigan
479
35 C
ontrolling state crime and alternative reactions
Jeffrey Ian Ross
492
36 H
acking the state: hackers, technology, control,
resistance, and the state
Kevin F. Steinmetz and Jurg Gerber
503
37 (Liberal) democracy means surveillance: on security,
control and the surveillance techno-fetish
Dawn L. Rothe and Travis Linnemann
515
38 L
imiting financial capital and regulatory control as non-penal
alternatives to Wall Street looting and high-risk securities frauds
Gregg Barak
525
Index
537
xi
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Illustrations
Figures
6.1
18.1
20.1
20.2
23.1
23.2
23.3
23.4
23.5
27.1
Analytical framework
Bank failures and median loss, by year of failure, 1980 to 2011
Social construction framework
The cyclic nature of the SCF groups
Immigration detention population from 1990 to 31 July 2014
Average days in immigration detention centres in
Australia from 2012 to 31 July 2014
Children in immigration detention in Australia
from 2012 to 31 July 2014
Drawing by child in detention on Christmas Island
Nauru protest, 29 September 2014
Number of granted mining titles (TMOs) in Colombia, 2000 to 2010
107
269
296
298
335
336
337
339
343
392
Tables
4.1
14.1
18.1
20.1
Perpetrator, crime and victim in each episode of the first
two seasons of White Collar
Commodification of nature
Characteristics of failed/sued banks and comparison group banks
Financial fraud and sentencing
76
215
272
291
xii
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Contributors
Maya Barak is a doctoral candidate in the Department of Justice, Law, and Criminology at
American University with a dual concentration in the sociology of law and criminology, and
overall emphasis on qualitative methods. Her research brings together the topics of law, deviance,
immigration, and power utilizing interdisciplinary approaches that span the fields of Criminology and Criminal Justice, Law and Society, Sociology and Anthropology.
Elizabeth A. Bradshaw is an Assistant Professor of Sociology at Central Michigan University and
specializes in the area of state and corporate criminality. She received her PhD in Sociology from
Western Michigan University in 2012. Her dissertation examined the causes of the Deepwater
Horizon explosion and the ensuing response to the 2010 Gulf of Mexico oil spill as a form of
state-corporate environmental crime.
Augustine Brannigan received his doctoral training in Sociology at the University of Toronto,
and graduated in 1978. He taught for two years at the University of Western Ontario before joining the faculty of sociology at the University of Calgary in 1979 where he taught criminology,
criminal justice, social psychology and social theory until his retirement in 2012. He has appeared
as an expert witness in criminal trials cases involving obscenity, law and prostitution.
Avi Brisman is an Assistant Professor in the School of Justice Studies at Eastern Kentucky Uni-
versity in Richmond, KY (USA). He has published articles in Contemporary Justice Review, Crime,
Law and Social Change, Crime Media Culture, Journal of Contemporary Criminal Justice, Race and
Justice, Theoretical Criminology, and Western Criminology Review, among other journals.
Carrie L. Buist is an Assistant Professor of Criminology at the University of North Carolina
Wilmington. She received her Ph.D. from Western Michigan University in Sociology with concentrations in Criminology and Gender and Feminism. Her primary areas of research are women
police officers, LGBT issues, gender, feminist theory, and feminist criminology. Her most recent
articles have been published in the Journal of Culture, Health & Sexuality (with Emily Lenning),
and in the Journal of Crime and Justice
Ronald G. Burns is a Professor in the Department of Criminal Justice at Texas Christian University. His recent books include Policing: A Modular Approach; Critical Issues in Criminal Justice;
Multiculturalism in the Criminal Justice System (with R.H. McNamara), and; Environmental Law,
Crime and Justice: An Introduction (with M.J. Lynch and P.B. Stretesky). His publications focus on
policing issues, corporate deviance, and environmental crimes.
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Contributors
Melanie Collard is a researcher at the International State Crime Initiative (ISCI) and also teaches
Criminology at the London School of Economics and Birkbeck. She completed her Law Degree
at the Université de Liège, Belgium. She also holds an LLM in Public International Law from
Queen Mary University of London and an MA in Criminology and Criminal Justice as well as
a PhD in Law & Criminology from King’s College London.
Victoria Ellen Collins is an Assistant Professor in the School of Justice Studies at Eastern Ken-
tucky University. She recently completed her dissertation where she examined the processes
involved in creating, implementing, and enforcing policy on maritime piracy. Some of her recent
publications have appeared in journals such as International Criminal Law Review, Critical Criminology, Contemporary Justice Review, and The Australian and New Zealand Journal of Criminology.
Marilyn Corsianos is Professor of Criminology and Sociology at Eastern Michigan University. She is the author of The Complexities of Police Corruption: Gender, Identity and Misconduct
(Rowman & Littlefield, 2012), the CHOICE Outstanding Academic Title Policing and Gendered Justice (University of Toronto Press, 2009), co-author (with Walter S. DeKeseredy) of
Pornography and Violence Against Women (Elsevier, forthcoming), and co-editor of Interrogating
Social Justice (Canadian Scholars’ Press, 2000).
Mary Dodge is a full Professor at the University of Colorado Denver in the School of Public
Affairs. She earned her PhD in 1997 in Criminology, Law and Society from the School of Social
Ecology at the University of California, Irvine. Her articles have appeared in the American Journal
of Criminal Justice, Women & Criminal Justice, Contemporary Issues in Criminology, International Journal of the Sociology of Law, and The Prison Journal, among others.Her book, Women and White-collar
Crime, was published in 2009.
Jacquelynn A. Doyon is an Assistant Professor in the School of Criminal Justice at Grand Valley
State University. Her most current research projects include such topics as the illegal trafficking of
electronic waste, international policies and procedures on global warming, and the controversial
practice of hydraulic fracturing (“fracking”).
Kingsley Ejiogu is an Assistant Professor of Criminal Justice at the University of Maryland
Eastern Shore. He received his PhD in 2012 from Texas Southern University. His teaching and
research interests are in comparative criminal justice policy and governance of criminological
space, geospatial intelligence systems, and terrorism.
Ifeanyi Ezeonu is an Associate Professor of Sociology and Criminology at Brock University,
Ontario, Canada. He is a graduate of the Universities of Cambridge, Leeds, and Toronto. His current research interests include critical gang studies, critical security studies, international political
economy, and contemporary African Diaspora.
Stephen Farrall is Professor of Criminology at Sheffield University, UK. His research has focused
on the fear of crime (especially how best to measure it), why people stop offending, middle-class
crimes, and crime histories.
David O. Friedrichs is Distinguished Professor of Sociology and Criminal Justice at the University of Scranton (Pennsylvania, USA). He is author of Trusted Criminals: White Collar Crime
xiv
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Contributors
in Contemporary Society 4e (Cengage 2010) and Law in Our Lives: An Introduction 3 edn (Oxford
University Press 2012) and editor of State Crime (Ashgate 1998).
Jurg Gerber is a Professor in the Department of Criminal Justice and Criminology at Sam
Houston State University, Texas.
Laura Gutiérrez-Gómez is a criminology PhD student at the University of Cambridge (UK).
After studying an LLB in European Law and an MA in Criminology (cum laude) in the Netherlands, she wrote an MA dissertation (Utrecht University) on state-corporate harm in the case of
AngloGold Ashanti in Colombia.
Gary S. Green retired in 2014 as Professor of Government at Christopher Newport University.
He has written on a wide variety of topics in criminology, especially in the area of wrongdoing
associated with non-criminal purpose occupations. He lives in the Midwest enjoying his family
and the outdoors.
Michael Grewcock teaches criminal law and criminology in the Faculty of Law at the University
of New South Wales, Sydney. He is the author of Border Crimes: Australia’s War on Illicit Migrants
(2009) and a number of articles and book chapters on contemporary border policing. He is a
member of the Editorial Board of the State Crime journal.
Hans Krause Hansen is Professor of Governance and Culture Studies at Copenhagen Business
School. Originally trained in political science and Latin American studies, his current research
revolves around the role of private actors in global governance, anti-corruption practices in
international business, the surveillance infrastructures and practices of transparency regimes.
He has published extensively in international peer-reviewed journals.He is a member of the
PRME Working Group on Anti-Corruption and serves as reviewer for several international
journals.
Ben Hunter is Senior Lecturer in Criminology at the University of Greenwich, UK. His research
interests focus on desistance from crime, white-collar crime and the contributions of existential
philosophy to understandings of offenders’ lives.
Jay P. Kennedy is currently a doctoral candidate in the School of Criminal Justice at the Uni-
versity of Cincinnati, where he is a Graduate School Dean’s Distinguished Fellowship recipient,
and a Yates Scholar. His research focuses on issues of deviance within for-profit organizations,
including the study of employee theft, multi-level antecedents of corporate crime, and ethical
business decision making.
Lloyd Klein is an Adjunct Associate Professor at York College, CUNY. His research interests
generally focus on criminal justice policy issues. Prior publications include work on community
corrections, the impact of sex offender legislation, white-collar crime, and political surveillance.
He is also the author of a book on consumer credit and the impact of legislation regulating the
credit card industry.
Effi Lambropoulou is a Professor of Criminology in the Department of Sociology at Panteion
University of Social and Political Science, Athens, Greece.
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Contributors
Steven Lang received his PhD in Sociology from the CUNY Graduate Center and is an Associ-
ate Professor at LaGuardia Community College. He has done research and written on the political ecology of global urban waterfronts. Currently, he is doing research on urban regeneration
strategies in global cities.
Paul Leighton is a Professor in the Department of Sociology, Anthropology and Criminology at
Eastern Michigan University. He received his PhD from the American University in Sociology/
Justice. He is a past President of the Board of SafeHouse, the local shelter and advocacy center
for victims of domestic violence and sexual assault.
Doris Lin is an animal rights attorney, Director of Legal Affairs for the Animal Protection League
of New Jersey, and a former chair of the New Jersey State Bar Association's Animal Law Committee. She holds a BS in Applied Biological Sciences from the Massachusetts Institute of Technology and a JD from the University of Southern California Law Center.
Travis Linnemann is Assistant Professor of the School of Criminal Justice at Eastern Ken-
tucky University. His research concerns the cultural politics of drug control and the reciprocities
between the “war on drugs” and “war on terror.” His work has appeared in the academic journals
Critical Criminology, Theoretical Criminology, Crime Media Culture, and British Journal of Criminology
among others.
Thomas MacManus is a Postdoctural Research Fellow at the International State Crime Initiative
(ISCI, statecrime.org) and is based at King’s College London’s Dickson Poon School of Law. He
was admitted to the New York State Bar in 2004 and the Role of Solicitors of Ireland in 2008. His
current research focuses on civil society, especially in Burma and Colombia. He is Joint Editor
of Amicus Journal and is on the Editorial Board of the journal State Crime.
Bill McClanahan is a graduate student in the School of Justice Studies at Eastern Kentucky Uni-
versity. His research interests include green criminology, cultural criminology, and peacemaking
criminology.
Sanja Milivojevic is a Lecturer in Criminology at University of New South Wales, School of
Social Sciences. Her research interests are trafficking in people and transnational crime, borders and
mobility, security technologies, surveillance and crime, sexting, gender and victimisation and international criminal justice and human rights. Her latest book ‘Sex Trafficking: International Context and
Response (co-written with Marie Segrave and Sharon Pickering) has been published by Willan.
Nikos Passas is Professor of Criminology and Criminal Justice at Northeastern University,
and co-Director of the Institute for Security and Public Policy. He is also Law Professor at Case
Western Reserve University, Programme Consortium Member and Faculty at the International
Anti-Corruption Academy, Vienna, Anti-Corruption Course Director at the Ethics and Compliance Officer Association (ECOA), and INSPIRE Fellow at Tufts University.
Jeffrey Ian Ross is a Professor in the School of Criminal Justice, College of Public Affairs, and
a Research Fellow of the Center for International and Comparative Law at the University of
Baltimore. His work has appeared in many academic journals and books, as well as popular media.
He is the author, co-author, editor, or co-editor of several books, including most recently The
Encyclopedia of Street Crime in America (Sage, 2013).
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Contributors
Dawn L. Rothe is an Associate Professor of Criminology at Old Dominion University. She
is the author or co-author of seven books, over 70 peer-reviewed articles and book chapters
dealing with crimes of globalization, state-corporate crime, state crime, and the international
criminal justice system. Her articles appear in such journals as International Criminal Law Review,
Contemporary Justice and Criminology.
Vincenzo Ruggiero is Professor and Chair of Sociology and Director of the Crime and Con-
flict Research Centre at Middlesex University. His most recent book isThe Crimes of the Economy
(2013). Some of his work is translated into several languages, including Spanish, French, German,
Italian, Lithuanian, Turkish, Portuguese, Greek and Chinese.
Marie Segrave is a Senior Lecturer in Criminology at Monash University. She has undertaken
significant research in the area of human trafficking and migrant labour exploitation in Australia
and South East Asia. She is the co-author of Sex trafficking: International Context and Response (with
Milivojevic and Pickering) and the editor of Human Trafficking, part of the five-volume Ashgate
series on Transnational Crime.
David Shichor received his PhD in Sociology from the University of Southern California and
is Professor Emeritus of Criminal Justice, California State University San Bernardino. He has
edited and co-edited ten books and authored and co-authored over 100 articles and book chapters in the areas of white-collar crime, penology, victimology, privatization, and criminal justice.
Huisheng Shou is an Assistant Professor of Government Department, Christopher Newport
University. His research focuses on comparative and international political economy, globalization, and public policies, and his area of concentration is on China, East Asia, and developing
countries. His current research projects focus on China’s welfare reform, corporate regulation
and compliance, and environmental governance. His work has appeared in the Journal of Chinese
Political Science and edited volumes. He was the recipient of the Best Paper Award at the 2010
annual conference of the Association of Chinese Political Science for his study on China’s welfare
reform.
Nigel South is a Professor in the Department of Sociology, a member of the Centre for Criminology and the Human Rights Centre at the University of Essex, and an Adjunct Professor,
School of Justice, Queensland University of Technology. He has published on green criminology;
drug use, health and crime; social inequalities; and theoretical and comparative criminology, and
serves on the editorial boards of Critical Criminology and Deviant Behavior.
Skylar Steele is a Master of Criminal Justice student at the University of Colorado Denver in the
School of Public Affairs, currently working on his thesis on police ethics compared to gender and
geographic influences. His research and writing interests include gender and crime, white-collar
crime, policing, jurisdictional crime, and the history of criminal justice.
Kevin F. Steinmetz is an Assistant Professor in the Department of Sociology, Anthropology, and
Social Work at Kansas State University.
Brandon A. Sullivan is a Doctoral Candidate in the School of Criminal Justice at Michigan State
University and research associate with the National White Collar Crime Research Consortium,
the Center for Anti-Counterfeiting and Product Protection (A-CAPP), the Extremist Crime
xvii
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Contributors
Research Consortium, and the National Consortium for the Study of Terrorism and Responses
to Terrorism (START).
Robert H. Tillman is Professor of Sociology at St. John’s University in New York City. He
received his PhD in sociology from the University of California, Davis. He is the author and
co-author of several books on white-collar crime, including Profit Without Honor: White-collar
Crime and the Looting of America (Prentice-Hall, 2013, 6th edn).
Anamika Twyman-Ghoshal is an Assistant Professor of Sociology and Criminology at Stonehill
College in Easton, MA. Her main research interests include governance, globalization and how
these affect transnational crime, white-collar crime, corruption, terrorism and maritime piracy.
Julie Uldam is Assistant Professor at Copenhagen Business School, conducting her postdoctoral
research in collaboration with Free University of Brussels (VUB) and London School of Economics (LSE). Her work has been published in peer reviewed journals, including International
Journal of Communication, Policy and Internet, Sociology Compass and International Journal of Electronic
Governance.
Peng Wang is Assistant Professor of Criminology at the University of Hong Kong. His research
interests include organized crime, mafias, police corruption, and the crime–terror nexus. He is
currently working on a book focusing on the Chinese mafia.
Tony Ward is both a lawyer and criminologist with a special interest in state crime. He is a Reader
in Law at the University of Hull and has been teaching at the University of Hull Law School since
2004. He is Co-Director of the International State Crime Initiative (ISCI, statecrime.org), one of
the Editors of the journal State Crime, a member of the Editorial Board of the British Journal of
Criminology, and is a member of the Steering Committee of the Crime Studies Network.
Rob White is Professor of Criminology in the School of Social Sciences at the University of
Tasmania, Australia. He has published extensively in the areas of youth studies and criminology.
Among his recent books are Environmental Harm: An Eco-Justice Perspective (Policy Press, 2013)
and Climate Change from a Criminological Perspective (Springer, 2012).
Damián Zaitch is Senior Lecturer at the Willem Pompe Institute for Criminal Law and Crimi-
nology, Utrecht University. He has researched and published on social control and terrorism,
police cooperation in Europe, critical criminology, and for the past 15 years on organized crime,
drug trafficking and drug policies in the Netherlands and Latin America. He is involved as senior
researcher in the LAR project, financed by the Dutch Scientific Council (NWO) on land use
change, socio-environmental harm, and human rights violations in Brazil and Colombia.
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Preface
Beginning at the turn of the fourteenth century with the dawn of capitalism and the early formations of primitive capital and up through the contemporary epoch of advanced capitalism with
its formations of global financial capital, the world’s expanding inequality and the appropriation,
privatization, and circulation of accumulated capital has continuously serviced an economy based
on the legal rights of private property and material wealth, on the one hand, and on alienation
and dispossession of social labor from commodity production and exchange for the individual
and the masses, on the other hand. As for the crimes of the powerful, dependent as they are
on both extra-legal activities and legally sanctioned market trading to accomplish exponential
capital growth, these illegal pursuits are typically committed by corporate and state entities and
the arrangements and agreements between them. As a consequence, the crimes of the powerful
remain primarily beyond incrimination.
The Routledge International Handbook of the Crimes of the Powerful brings together an investigation into the following:
•
•
•
•
•
•
•
Crimes of globalization
Corporate crimes
Environmental crimes
Financial crimes
State crimes
State-corporate crimes
State-routinized crimes.
While there are a number of books, anthologies, and/or handbooks devoted to these substantive areas, this volume represents a major project aimed at tackling and reframing the separate
and yet interrelated worlds of these crimes of the political economy, social control, and analytical
inquiry into the crimes of the powerful. In providing a diverse collection of original essays on the
full range of the crimes of the powerful, this handbook not only accounts for and examines the
similarities and differences in the perpetration and victimization of, and reaction to, these harmful and injurious actions or omissions, but it also establishes a basis for evaluating various means
of addressing the adverse or unfavorable environmental and social conditions brought about by
the crimes of the powerful.
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Acknowledgements
I would like to thank the other 49 contributors for participating in this international project on
the crimes of the powerful that has yielded befittingly a very powerful handbook. I would also
like to thank Eastern Michigan University for release time from teaching in the fall of 2014 so
that I could devote my undivided attention to the editing and writing duties required by this
endeavor. In the context of this release time, there was one particular 75-minute discussion that
I had with three colleagues from the Department of Sociology, Anthropology, and Criminology
at EMU on the meaning of or what exactly constitutes the “crimes of the powerful.” So I would
like to thank Kevin Karpiak, Anders Linde-Laursen, and Robert Orrange for that conversation
in the fall of 2013, which stayed with me throughout this project and helped me to shape the
delineation of the crimes of the powerful as part of my introduction and overview for this international handbook. Finally, I would like to thank Heidi Lee, Editorial Assistant in Criminology
at Routledge Books, for her shepherding of this project from start to end.
Gregg Barak
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Introduction
On the invisibility and neutralization of the
crimes of the powerful and their victims
Gregg Barak
In the developed political economies of the world, most people are well aware of ordinary
criminal harms to person and property. Often committed by the powerless and/or poor, these
individualized crimes are not only catalogued in the statistics collected annually by the FBI in the
United States and by similar agencies in other developed political economies, but the data as well
as visual images of these crimes are also dispersed to the public through the news media. In addition, there are television dramas and full-length motion pictures engrossed with “street” crimes.
By contrast, the more harmful and serious forms of injury to person and property committed
by powerful and/or wealthy groups or organizations and by governments or states are neither
counted officially by any managerial agencies nor regularly reported on by the news media.
And while the public has access to a handful of motion pictures and fewer made for television
dramatic series focusing on “suite” crimes, the offenses are restricted to organized crime and the
offenders to professional criminals.
As a result, though most citizens of the world and their properties are more likely to experience victimization from the organizational and institutional offenses of the powerful than from the
erratic and atomized offenses of the powerless, most people are still concerned about the latter and
are in the dark about the former. On the other hand, most critical criminologists are aware of the
routinization of the crimes of the powerful and they are mindful that people are increasingly at
greater risk for harm or injury from these criminals. And yet, our lack of knowledge of the crimes
of the powerful compared to our knowledge of the crimes of the powerless persists. In part, as many
chapters in this handbook document, the crimes and victims of the powerful remain relatively invisible thanks to the concerted efforts of lawyers, governments, and corporations to censor or suppress
these disreputable pursuits from going viral when they succeed. This absence of knowledge also
continues, in part, because the discipline of criminology spends only 5 percent of its time researching, teaching, and writing about “white-collar” crime while devoting 95 percent of its time to
“blue-collar” crime (McGurrin et al. 2013). Even this 5 percent may be inflated because much of
what passes for researching and teaching about “white-collar” crime (i.e., embezzlement, identity
theft, insurance fraud) not only has little in common with the crimes of the powerful, but also are
actually crimes against the powerful. In these cases, chronically asymmetrical relations of popular
knowledge and scholarly inquiry are deeply embedded in the cultural, economic, and political
institutions that both influence and transcend academic studies of criminology.
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Historically, the crimes of the powerful have managed to avoid or escape criminalization
and stigmatization. Time and again, these powerful criminal activities have been conventionalized or neutralized by way of alliances, negotiations, and justifications that undermine the
moralizations of these offenses (Carson 1979; Prins 2014; Ruggiero 2013). Concurrently, the
legal reactions to as well as the ideological rationalizations of elite offenses by capitalist state
actors and other defenders of the status quo contribute to this demoralization of the crimes of
the powerful and to the denial of victimhood and liability for those harmed or injured. This
tendency of state-criminal enforcement to concede to the needs of the organizationally powerful and to capital accumulation is nothing new. Two illustrations, some 150 years apart, are
the habitual crimes of large manufacturers in nineteenth-century England and the epidemic
of securities frauds by major financial institutions in the United States and elsewhere early in
the twenty-first century.
In each set of circumstances, there were criminal laws in place to impose negative sanctions
upon these habitual or reoccurring offenses. In the case of the daily victimization of manufacturing workers, there were laws to avert their wretched working conditions. Nevertheless,
impoverished factory workers, adults and children alike, in locations such as Manchester, Leeds,
and Birmingham were subject to flogging, starvation, and 18-hour workdays. In response, the
biggest manufacturers regularly received immunity for their routine violations of laws prohibiting mistreatment of their employees (Harvey 2014). At the turn of this century, the recent wave
of institutionalized crimes by the financial services industry in the US and elsewhere, which precipitated the Wall Street implosion of 2008, were committed with the assistance from the federal
deregulation of certain securities transactions that were previously criminalized. However, there
were other laws in place to protect consumers or investors and to criminally punish the world’s
largest financial firms for failing to engage in due diligences or for trafficking in toxic securities
masquerading as triple AAA certified investments. As most informed people are now aware, these
and other systemic criminal violations throughout the financial services industry created a housing bubble and crash and a subsequent global recession, which resulted in the loss of trillions of
dollars in capital and the victimization of hundreds of millions of people worldwide. And yet, not
one of those financial entities or the principal agents responsible for these high-stakes securities
frauds was ever subject to criminal liability or penalty (Barak 2012).
In each of these business-as-usual crime scenarios, the lack of criminal prosecution of the
routinized illegal behaviors have been justified or rationalized away because of the necessity of
capitalizing accumulation, enhancing the interests of the capitalist state, and elevating the national
well-being of all citizens. These social relations of criminal non-enforcement are reflective of a
legal order where the capitalist state not only possesses the monopoly over the legitimate use of
force and violence, but also the sovereignty over the currency and the law. In addition, the capitalist state possesses the power to tax and to redistribute incomes and assets as well as the regulatory
authority over other institutions, such as education, health care, and criminal justice. Most importantly, the capitalist state has ultimate power or eminent domain over private and public property,
as these are most often deferential to the needs of capital accumulation and reproduction. Meanwhile, the interests of the capitalist state are not one and the same as the interests of capital, and
yet capitalist state apparatus play key supportive roles in the management of capital vis-à-vis the
collaboration of their departments of treasury and their central banks constituting what David
Harvey labels as the “state[e]finance” nexus. Stated somewhat differently, the capitalist state is not
an instrument of capital that automatically or mechanistically absolves the crimes of the powerful.
Rather, the capitalist state apparatus represents a complex network of bureaucracies and vested
interests that are loosely affiliated and whose discretionary power is executed in a bunch of legally
contradictory ways that are increasingly subordinate to but not dictated by capital.
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Let us take an example involving the relationship between illegal tax evasion, wealth inequality, and the policies of austerity that invisibly hurt average people globally in the name of
national indebtedness. As Gabriel Zucman, a London School of Economics assistant professor
and protégé of Thomas Piketty as well as the 2013 author of the bestselling The Missing Wealth
of Nations argues, the idea of the richest nations’ indebtedness is an illusion caused by tax havens
that he estimates hide US$7.6 trillion, or 8 percent of the world’s personal financial wealth.
Based on his calculations, “If all of this illegally hidden money were properly recorded and taxed,
global tax revenues would grow by more than $200 billion a year” (Leslie 2014). And these
numbers do not include the larger corporate tax avoidance schemes where Zucman calculates
that 20 percent of all corporate profits in the United States are shifted offshore, depriving the
government of one-third of corporate tax revenues, effectively dropping the corporate tax rate
to only 15 percent.
Zucman argues further that if these offshore assets were properly measured, “Europe would be
a net creditor, and American indebtedness would fall from 18 percent of gross domestic product
to 9 percent” (Leslie 2014). Keep in mind that since the less wealthy continue to pay their taxes,
the prevailing tax-evasive practices deepen wealth inequality as well as weaken consumer buying
power. These tax-avoiding schemes also skew economic statistics, hamper the private and public
sectors from managing the economy or making social policy, erode respect for the law, discourage
job creation, foster corruption, and accumulate private capital by rewarding indiviudals and corporations for sheltering money overseas rather than reinvesting it domestically in infrastructure
and economic development.
Hence, victims of the financial crimes of the powerful (i.e., “mortgage foreclosures,” “control
frauds,” “bankruptcies”) often remain hidden, unrecognized, and out of sight not only due to a
lack of criminal enforcement, but also because various tax accounting schemes that during much
of the twentieth century were offenses in the US are now commonly practiced by multinational
corporations. These formerly prohibited tax-avoiding or -dodging schemes were decriminalized
during the Clinton and Bush II administrations. Under Mr. Obama, these and other unspecified Wall Street practices have been rhetorically railed against by the President but left essentially
untouched by the law. For example, there are damages or loss of revenues incurred today from
other state-facilitated forms of legalized corporate tax abuse, such as the practices of “synthetic
cash repatriation” and “corporate inversions” that allow untaxed foreign profits to be used to
pay the costs of domestic operations or to be reinvested in both stocks and US treasury bonds
(McKinnon and Paletta 2014).
A unifying framework for studying the crimes of the powerful
As part of the institutional crises and the changing social and political landscapes of the 1960s and
1970s, the study of the “crimes of the powerful” or what had previously been known as those
illegalities committed by “white-collar” criminals shifted to illegalities committed by private
business organizations or corporations and state institutions. As Alan Block and William Chambliss (1981: 2) wrote in Organizing Crime about the changing discipline at the time: “criminology
underwent a ‘paradigm revolution’” with the “emergence of ‘the new criminology’” (Taylor et
al. 1973) and “the study of the ‘crimes of the powerful’” (Pearce 1976), which included those
“crimes of nation states, through the illegal and immoral acts of large corporations, to misuses of
police and political office by local, state, and national power holders.” As part of a newly radical or
critical paradigm, investigators were free to examine the crimes of power and privilege (Krisberg
1975) as well as the institutional abuses of racism, sexism, imperialism, neocolonialism, and capitalism (Schwendinger and Schwendinger 1970). This paradigmatic shift allowed for entertaining
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the idea that these institutional arrangements were criminogenic. Similarly, Block and Chambliss
(1981: 10) were writing about why:
criminal law and criminal behavior are best understood not in terms of customs, norms,
or value-conflict and interest-group activity, but as directly linked to efforts by the state to
create laws as a resolution to dilemmas created by conflicts that develop out of the basic
contradictions in the political economy.
Some 25 years later Crimes of the Powerful: A Reader appeared with a compilation of 45 extracts
from previously published material referring to crimes committed by state institutions and private
business organizations and corporations with such substantive section headings as “State, violence, crime: States of exception”; “Partners in crime: The protection racket state”; “Capitalism
and the crimes of the powerful: The slow sacrifice of humanity”; and “Law and the corporation:
Structures of irresponsibility.” As its editor David Whyte (2008) underscored, the study of the
crimes of the powerful is “not merely about crime; it is really about power” and the institutionally powerful who have become “the central agents of power in contemporary societies” (p. 3).
In everyday terms, the crimes of the not so powerful and the very powerful are inclusive of
a panoply of criminal and civil offenses that range from the more mundane thievery, swindling,
corruption, usury, predation, violence, and coercion, to the more arcane practices of monopolization, manipulation, market cornering, price-fixing, and Ponzi schemes, to the more exceptional
war crimes or crimes against humanity, to the more common crimes against the environment.
More abstractly, the contemporary crimes of the very very powerful are where the personal and
the collective intersect and upon which all species may just depend for their common survival.
Finally, the seven overlapping and semi-autonomous faces of the crimes of the powerful identified
below often coincide with each other, or with one or more of the other faces.
In the case of environmental crimes, for example, that are harmful to the air we breathe, the
water we drink, and the food we eat, these may overlap with other crimes of the powerful such
as global, corporate, financial, state, state-corporate, and state-routinized. Similarly, the crimes of
globalization that are responsible for much of the world’s environmental pollution and ecosystem
destruction are also associated with those transnational corporations that have often abandoned
traditional employment models as they rid themselves of union contracts, healthy workplaces,
direct liability, and employment taxes. In their place, these multinationals substitute governmentsubsidized business models that pay excessively low wages, engage in wage theft and retaliation,
and use contingent workers.
In this handbook, the unifying framework for examining the crimes of the powerful is found
in the dialectical expansion or contraction of harms informed, on the one hand, by the reciprocal
relations of accumulating licit and illicit capital and, on the other hand, by the reciprocal relations
of capitalist reproduction interloping with the systems of bourgeois legality and the apparatus of
the capitalist state (see also Balbus 1974). In light of these political and economic arrangements as
well as the emerging and traditional areas of criminological inquiry, this international examination of the crimes of the powerful is classified into seven clustered or overlapping sets of activities:
(1) crimes of globalization, (2) corporate crimes, (3) environmental crimes, (4) financial crimes,
(5) state crimes, (6) state-corporate crimes, and (7) state-routinized crimes. All of these powerful and offending categories of criminality share in common varying gradations of leverage on,
opposition to, and protection from the capitalist state apparatus of crime control.
To recapitulate, the crimes of the powerful are typically committed by well-established private
and/or public organizations in violation of the rights of workers, women, children, taxpayers,
consumers, marketplaces, political and eco-systems, and/or against the interests of equity and
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religiosity, ethnicity and race, and gender and sexuality. These crimes of the powerful also refer
to less commonly practiced forms of injury such as those involving torture or various kinds of
genocide. These human rights violations are typically known as the internationally sanctioned
crimes of war and/or crimes against humanity and the peace. In a nutshell, the crimes of the powerful concern a wide range of activities that are performed illegally as well as a narrower range of
illegal avoidances or omissions that frustrate or do not sustain morally bound obligations, and a
plethora of harmful activities that are legally beyond incrimination or civil action.
Presently, this and other up-and-coming investigations into the crimes of the powerful are
propelled both by the converging material needs of geopolitical securitization and global capital,
on the one hand, and by the academic studies in international, transnational, and global criminology, on the other hand (Larsen and Smandych 2008; Sheptycki and Wardak 2005; Smeulers and
Haveman 2008). Accordingly, this international handbook brings together several distinctive and
yet overlapping areas of criminological study that focus on those harms and injuries whose commonalities may include organizational and institutional networks of powerful people – locally,
nationally, and transnationally – and whose fields of criminal endeavor and victimization are
diversified and wide-ranging. Indeed, studies of the crimes of the powerful straddle a variety of
disciplines and areas of academic interest.
A truly multi-disciplinary field of investigation, the study of the crimes of the powerful involves
the cross-fertilization of areas of knowledge and inquiry from readings in criminology, human rights,
criminal justice, law, security studies, development studies, and peace and conflict studies. Hence,
this collaborative project aims to articulate a way of thinking about these crimes of the powerful
that extends our existing theoretical and methodological frameworks for developing a localized and
globalized understanding of the complex relations of law, power, and justice both interpersonally
and institutionally. Finally, this transnational examination provides a rationale for mounting a nontraditional global movement in resistance to the crimes of the powerful and for social justice not
unlike the emerging global movement in resistance to ecocide and for climate justice.
Part I Culture, ideology and the crimes of the powerful
This inquiry into the crimes of the powerful begins by focusing attention on the socially constructed realities of crime through the lenses of cultural, ideological, and lawful co-production.
As Augustine Brannigan writes in Beyond the Banality of Evil (2013), “crime is the use of force
and fraud in the pursuit of self-interest. Sometimes this is illegal, sometimes immoral, and sometimes imprudent” (p. 23). Importantly, much of criminality and particularly those crimes of the
powerful are often treated as though they were “non-criminal” matters. Armed with this kind
of understanding of “crime and crime control,” Part I establishes what constitutes the crimes of
the powerful and conveys the economic, philosophical, political, and social interpretations that
revolve around defining, excusing, and ignoring the materially harmful activities of the powerful.
One take away from this conceptual overview is that in addition to the state apparatus, the
people at large mostly through ignorance, also adjudicates or legitimates the acceptable costs
of capitalist criminality, in the courts of public opinion. Together, the crimes of the capitalist
economy, for example, become bearable because their overheads allow for and facilitate the progress, development, and survival of an economic and political system whose very legitimation and
structure depends on the very same asymmetrical relations of privilege, domination, inequality,
consumption, and profit (see also Ruggiero 2013). These self-interested crimes of the powerful,
however, are not primarily about individualistic gains, avarice, or greed. For example, the crimes
of corporate domination or state repression are mainly about trying to secure organizational and
institutional goals of advancement, survival, and/or expansion (Quinney 1977; Coleman 2002).
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In the opening chapter of Part I, “Crimes of the powerful and the definition of crime,” David
Friedrichs locates the origins of the historical bias of the field of criminology within the pioneering work of Italian criminologist Cesare Lombroso and the publication of his English translated
version of Criminal Anthropology in 1897, which treated the crimes of the powerless as central
to his focus. Friedrichs tries to imagine how criminology might have developed differently –
perhaps with the crimes of the powerful as its central focal concern – had the 1898 publication
of Political Crime by French jurist Louis Proal, with his emphasis on those crimes committed by
the politically powerful, including tyranny, war, and corruption, not fallen into criminological
obscurity, or had it acquired a large following of its own similar to or in place of Lombroso’s.
Next, he provides a depiction of the evolution of the definition of crime in general and of whitecollar crime and the crimes of the powerful in particular. Friedrichs also addresses the limitations
of mainstream conceptions of crime, examines the meanings of the crimes of the powerful, and
who or what constitutes “the powerful,” distinguishing between the very powerful and the petit
(or petty) powerful. Accordingly, crimes of the powerful may range from the monstrous (e.g.,
genocide) to the mundane (e.g., harassing peddlers). Friedrichs finishes his overview by discussing
emerging conceptions of the crimes of the powerful, such as the crimes of globalization, arguing
that increasingly, the application of the term “crime” to the activities of the powerful is a core
attribute of an evolving criminological enterprise.
In Chapter 2, “Operationalizing ‘organizational violence’,” Gary S. Green and Huisheng
Shou provide a heuristic interrogation of the meaning of organizational violence. They argue
that because those who study the wrongdoing of organizations have yet to agree on the concept’s constituent structure, there is a tendency to both under- and over-ascribe violent behavior
to organizational agents. Accordingly, they strive both to concretize the abstract conditions of
organizational violence to give the concept meaning and to deconstruct the concept in order
to determine which behaviors and individuals within an organizational entity should be held
accountable, liable, and/or culpable for the crimes of organizational violence. Grounded in the
context of organizational decisions and previous definitions of violence, Green and Shou discuss
the pros and cons for the inclusion of specific elements in operationalizing organizational violence. After raising and responding to a series of nine questions, Green and Shou proffer their
own working definition of organizational violence, as an invitation to others to come forth with
precise meanings of organizational violence.
In Chapter 3, “Justifying the crimes of the powerful,” Vincenzo Ruggiero concentrates his
theoretical investigation on the ways in which the crimes of the powerful are justified through
philosophical and political arguments. He begins his analysis by departing from Sykes and Matza’s
1957 “techniques of neutralization” because these justifications or ex-post rationalizations are
“precisely situated and mobilised within contexts in which notions of morality and legality
are negotiated.” Ruggiero’s adopted idea of justification implies “recourse to general principles
and philosophies that are presented as non-negotiable, in that they are thought of as belonging
to a collective patrimony of values.” By specifically using such conceptual variables as equality, inclinations, needs, toleration, liberty, and authority, Ruggiero reveals how non-negotiable
justification represents “a strategy that may or may not incorporate deceit, but mainly aims to
present conducts as being beyond good and evil, to allow them to escape any sort of judgment.”
Finally, Ruggiero contends that these illegalities in the name of experimentation, innovation, and
the pursuit of private gains and in the wake of their devastation have always had the capacity to
restructure legal, political, and ethical relationships on behalf of capital accumulation.
In Chapter 4, “Corporate criminals constructing white-collar crime – or why there is no
corporate crime on USA Network’s White Collar series,” Carrie L. Buist and Paul Leighton
employ a content analysis of the first two seasons of the televised series White Collar. They found
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no programs on corporate or state crime or on respectable citizens engaging in criminal fraud of
any kind. Instead, the programming revolved around high-end professional criminals, organized
criminals, and elevated incidences of interpersonal crimes like murder rather than coverage of
activities that more indirectly cause extensive suffering and victimization. Buist and Leighton
conclude that the absence of corporate and state crime in the televised series White Collar parallels the real world where a public consciousness of the crimes of the powerful is disappearing at
the very same time as corporate and state abuses of power are becoming more corrupt, harmful,
and unabashed.
Whether based on actual or fictional narratives, there are two award-winning and critically
acclaimed fictional dramas that are also devoid of respectable citizens engaging in organizational
fraud: AMC’s popular series Breaking Bad (2008–2013) that entered the Guinness World Records in
2014 as the highest rated show of all time, and Netflix’s streaming internet season House of Cards
with two seasons under its belt and a third in production. These highly rated mass-mediated
programs are worth talking about because they too allegedly reproduce the behavior and crimes
of powerful people. Like White Collar, both Breaking Bad and House of Cards are also wanting of
any crime stories delving into the world of corporate, financial, state, or global crime. Instead,
their interpersonally misleading representations of powerful criminals focus attention on the
personalities and pathos of a few characters that, in dealing with life’s adversities, resort to predatory crimes of drug dealing, extortion, and murder. These stirring images of the individualistic
crimes of the powerfully mundane or psychopathic, not unlike the reified images of white-collar
crime in White Collar, are not reflecting on the victimization of consumers or workers by powerful business organizations or of the violations of personal privacy by governmental agents or of
voting rights by political gerrymandering.
On the contrary, these criminal portrayals of the powerful are about evil people doing
unequivocally bad things. No gray areas of wrongdoing, only shades of black and white. In the
case of Breaking Bad, the story’s protagonist, a struggling high school chemistry teacher who has
been diagnosed with lung cancer, turns to a life of crime to make a lot of illegal money for his
family to tide them over when he is gone. He takes his expertise and uses it to cook some of the
purest methamphetamine to be smoked in parts of Mexico, the USA, and Europe. Our outlaw
starring character also distributes his product by way of criminal organized networks and drugdealing cartels. He also kills a few individuals up close and personal and has potential witnesses
against him “rubbed out” by a network of criminal thugs behind prison walls.
In the case of House of Cards, when the story’s villainous democratic House majority whip
learns that he is being passed over for a Secretary of State appointment, he schemes with his
equally conniving political wife to exact revenge on his congressional adversaries. On his way
to positioning himself to replace a dying Vice President of the United States, he personally kills
not only a fellow US representative, but also a female investigative journalist with whom he has
been colluding and having sex. By the final episode of the second season, the recently appointed
Vice President Frank Underwood has set his boss up to have engaged in unethical and conflict
of interest financial dealings while in the oval office. Rather than face messy impeachment hearings the President resigns – and as the closing credits for the second season roll across the screen,
audiences witness Underwood being sworn in as the next President of the United States.
Part II Crimes of globalization
Whether one is discussing the logics of exclusivity and the social bulimia of late modernity
(Young 1999) or the logics of expulsion and the elementary brutalities of advanced political
economies (Sassen 2014), each of these analyses of a post-Keynesian multinational world order
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captures the new realities of advanced global capitalism. These social realities include neoliberal
policies of austerity and privatization, the diminution of the welfare state, the immiseration and
exclusion of not only the indigenous or migrant classes but also the former working and middle
classes of developed societies, as well as the diminishing role of mass consumption for profits in
a number of economic sectors, especially those intertwined with an increasingly driven financial
globalism marked by the systemic extraction and destruction of the social, the economic, and
the biosphere (Klein 2007; Harvey 2014). These crimes of scale and technology push people
out or away as they contract the spaces of traditional economies and expand those of the newer
corporate and transnational sectors.
Crimes of globalization refer to “those demonstrably harmful policies and practices of institutions and entities that . . . by their very nature occur within a global context” (Rothe and
Friedrichs 2015: 26). These crimes of globalization are powered, in part, by the policies of
neoliberalism and the actions of international financial institutions such as the World Bank and
the International Monetary Fund and, in part, by the competitive needs of global markets and
capital accumulation. As these four sets of powerful interests interact in the commercial affairs
of nations and multinational corporations, they often negatively affect the well-being of human
and animal populations as well as ecosystems and natural environments. In Part II, the “global
crimes” represented include violations of domestic, international, and humanitarian law and are
not limited to these myriad abuses and harms: the contamination of natural resources, health
complications, high rates of poverty, extreme inequalities, global dysnomie, predatory activities,
toxic waste dumping, violations of sovereignty, assassinations and disappearances, forced evictions,
thefts of homelands, recolonization, human trafficking, and the violations of civil rights, worker
rights, women rights, and children rights.
The five chapters incorporated here, individually and collectively, shed much light on the
etiology of the crimes of globalization and the unsuccessful attempts to control the widespread
harm and injury from these crimes. In Chapter 5, “Capital and catharsis in the Nigerian petroleum extraction industry: lessons on the crimes of globalization,” Ifeanyi Ezeonu examines the
political economy of oil extraction in the Niger Delta and the harmful activities of transnational
corporations, consistent with a growing body of literature that conceptualizes market-driven
harms as criminogenic. Ezeonu argues that without a strong regulatory framework in Nigeria
the Niger Delta region has become a perfect landscape for neoliberalism and economic activities
that have been sustained at highly negative costs to the indigenous population, to healthiness,
and to the natural environment. While manifesting high rates of poverty and extreme economic
inequality, he also underscores how these abuses by a significant number of Western transnational
corporations involved in crude oil and marketing have been aided by the various regimes of the
Nigerian government. Ezeonu concludes that while Friedrichs and Friedrichs’ 2002 conception
of the crimes of globalization aptly captures the Niger Delta region as a site of neoliberalism
and enormous wealth and plunder, “the collaborate roles of domestic capitalists, many of whom
control apparatuses of state power,” also encourages the re-contextualizing of these crimes as
domestically preventable market-generated harms.
In Chapter 6, “State and corporate drivers of global dysnomie: horrendous crimes and the
law,” Anamika Twyman-Ghoshal and Nikos Passas examine the extent to which neoliberal policies contribute to criminogenic processes. They do so by applying the analytical framework of
global anomie theory (GAT) to two different case studies, the first involving maritime piracy
off the coast of Somalia, and the second involving the forced eviction of an entire people from
the island of Diego Garcia to establish a US military base and the accompanying theft of this
nation from the Chagossians. Among their conclusions, Twyman-Ghoshal and Passas maintain
that their case studies expose not only the double standards and inexcusable abuses of power,
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but also explain how global policies of neoliberalism are conducive to mass victimization. And
finally, that global anomie theory is useful for both understanding transnational misconduct and
explaining how the processes of globalization and neoliberalism can lead to anomie, dysnomie,
and horrendous crimes.
In Chapter 7, the first of two harmonizing offerings that analyze Walmart, the retailing
giant (see also Lang and Klein, Chapter 13), Lloyd Klein and Steve Lang, in “Truth, justice and
the Walmart way: consequences of a retailing behemoth,” scrutinize the workings of Walmart
and other multinational global retailing businesses, spotlighting an international business model
that bypasses environmental standards, creates dangerous manufacturing conditions, and subverts
workers’ rights as a strategy for importing cheaply manufactured goods primarily to the United
States. After exploring the consequences of Walmart’s business model for workers and communities in several countries, including China, Mexico, and Bangladesh, they “focus their attention on
the ways in which workers and communities struggle to resist Walmart’s exploitative corporate
practices.” Comparatively, they also examine other countries like Germany that have successfully
resisted the global expansion of Walmart and its exploitation of workers and environments alike.
In Chapter 8, “Human trafficking: examining global responses,” Marie Segrave and Sanja
Milivojevic provide a critical overview of the insights and contributions of both competing and
complementary analyses of human trafficking. Theoretically, they take issue with the inability of
these analyses to adequately capture the various forms of “gendered exploitation that occur in
connection” with “the migration – labor nexus” that impacts upon those persons “least able to
negotiate lawful migration and labor options in countries of transit or destination.” Pragmatically,
Segrave and Milivojevic underscore that despite the extensive interdisciplinary analyses of human
trafficking, there is limited empirical data to support many of the claims made and conclusions
reached. The purpose of their critique is ultimately to stress the importance of attending to how
we frame what is and what is not considered human trafficking in order that we take stock of
both the counter-trafficking strategies available and the limitations of conceptualizing human
trafficking as a crime.
The final selection in Part II, “Globalization, sovereignty and crime: a philosophical processing” by Kingsley Ejiogu, nicely rounds out the readings on the crimes of globalization. From the
vantage points of virtual communities and the commodification of cyberspace, Ejiogu explores
the philosophical creation of innovative models of transnational crime. Underpinned by theories
of egalitarian global governance, reform interchangeability, and social change with the perceived
gains of global interdependence, Ejiogu observes the emergence of the metaphysical pathways to
globalized crime and the criminal, evaluates the dilemma of crime as a progressive attachment
to the value system of human development, and questions the use of heuristic international
philosophical synergies for globalized crime governance. More specifically, Ejiogu grounds his
examination of the evolving values of globalization in relation to the transnational crimes of terrorism and human rights abuses at the meeting point of sovereign boundaries. He argues that the
transnational development or global pathways of these crimes follow the new borderless world of
the internet. Finally, Ejiogu calls for the development of new disciplinary paradigms both at the
integrity and intersection of sovereign borders.
Part III Corporate crimes
What exactly is a corporation? The modern version of a corporation is a nineteenth-century
invention of capitalism that created a separate entity, a “legal person,” which is not the same as
an individual/s or shareholder/s who own/s the company. This corporate legal person, like a real
person, can enter into contracts, borrow money, and sue for damages. However, a corporation,
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unlike a real person, has limited rather than full liability. That is, a corporation may be sued without exposing its owners or shareholders to personal liability because by definition they are not
the corporation; nor are any of the directors, executives, or employees. Thus, the corporation is a
legal invention or “fiction” that allows individuals to personally profit from their kosher activities without having to be fully liable for their un-kosher activities, especially when people are
harmed as a result of those activities. Hence, the U.S. Supreme Court did not declare in Hobby
Lobby in 2014 that a corporation has religious rights because it was confused about whether
or not a corporation could pray, but rather because the Court decided five to four not only to
allow business owners to retain the powerful protection of limited liability, but also to expand
this benefit or right by exempting corporations from one of their basic financial obligations of
the Affordable Care Act. Naturally, there could be no corporate crimes without corporations or
the right to incorporate.
Corporate crimes are those illegal acts committed by either a business entity (e.g., a corporation) or by individuals on behalf of a business entity. Functionally, corporate crimes may also
overlap with state-corporate crime (see Part VII) in particular and with state omissions or nonregulatory behaviors (see Parts II–VII) in general because the opportunity to pull these crimes off
with minimal liability, criminal or otherwise, depends on the selective practices used by the apparatus of the capitalist state. For example, on September 14, 2014 The New York Times published
an extensive investigation into the record of the National Highway Traffic Safety Administration
that goes well beyond its publicly acknowledged failure to detect an ignition switch defect in
several models of GM cars now linked to at least 21 deaths. The investigation also included the
handling of major safety defects since 2004 and found that NHTSA had “been slow to identify
problems, tentative to act and reluctant to employ its full legal power against companies” (Stout
2014; Stout et al. 2014).
After analyzing agency correspondence, regulatory documents, and public databases as well
as interviewing congressional and executive branch investigators, former agency employees, and
auto safety experts, The New York Times learned that in many of the major vehicle safety issues
during this ten-year period – including “unintended acceleration in Toyotas, fires in Jeep fuel
tanks and air bag ruptures in Hondas, as well as the GM ignition defect – the agency did not take
a leading role until well after the problems had reached a crisis level, safety advocates had sounded
alarms and motorists were injured or died” (Stout et al. 2014). Two thousand and fourteen was
a particularly disturbing year in automobile safety, which included the deadly ignition “scandal”
at GM, the billion-dollar Toyota criminal settlement, and the ever-expanding number of air bag
recalls. In fact, in 2014 automakers “recalled more than 48 million vehicles in the United States,
surpassing the previous record of about 30 million in 2004” (Stout et al. 2014). The GM ignition recall “compensation program” managed by Kenneth Feinberg is alleged to have paid out
US$70 million to the families of 15 killed auto victims (Stout 2014). Naturally, consumer safety
advocates and safety experts continue to push for a more transparent approach from NHTSA,
which had declined to be interviewed for The New York Times story.
In Chapter 10, “Corporate crimes and the problems of enforcement,” Ronald Burns provides
a general overview of the history and contemporary state of corporate crime as well as of the
affairs, quandaries, and inefficacies of enforcing the laws against corporate crime. He also provides a theoretical overview of corporate crime and of the research and methodological issues
pertaining to the enforcement of corporate crime. Burns argues that though corporations may
not necessarily intend to harm or injure, “pressures to perform” result in corporate violations
that do, in fact, harm and injure. At the same time, these corporate crimes have traditionally gone
unnoticed by the general public and they have been under-enforced by the state, resulting in
punishments as merely the costs of doing business as usual.
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In Chapter 11, “Corporate-financial crime scandals: a comparative analysis of the collapses of
Insull and Enron,” Brandon Sullivan analyzes the historical demises of two of the largest energy
companies in the United States: Insull in the early 1930s and Enron in the early 2000s. Sullivan
argues that both Insull’s and Enron’s crimes exemplify what William Black has termed “control
fraud,” where corporate leaders use their businesses to defraud others while at the same time
manipulating external and internal controls to carry out the crimes and to prevent their detection. These types of corporate control frauds were facilitated by criminogenic environments that
lacked effective regulation and enforcement, and by political campaign contributions and highprice lobbying for enhanced deregulation. Finally, despite the persistence of major corporatefinancial scandals like these, including those of Tyco, Adelphia, and Global Crossings to name a
few, no serious attempt has ever been made to link the root causes of corporate abuse to the lax
policies of regulation.
In Chapter 12, “Corporate social responsibility, corporate surveillance and neutralizing corporate resistance: on the commodification of risk-based policing,” Hans Krause Hansen and Julie
Uldam are concerned about the lack of attention paid to the role played by corporate surveillance
and intelligence practices in tending to the interests of big business, and in neutralizing those critics and activists who are keen to reveal corporate fraud or environmentally damaging practices.
They are also concerned about how these practices are used in their social responsibility and
public relations campaigning. In the context of critically reviewing the literature on corporate
surveillance and intelligence practices, and linking these to theoretical debates on corporate social
responsibility, corporate self-regulation, and private policing, Hansen and Uldam empirically analyze the different surveillance and intelligence tactics deployed by oil companies BP and Shell to
silence their radical critics. They conclude the chapter by arguing for the further need to theorize
corporate power and surveillance in relation to debates on privatized self-regulation and policing.
In the final contribution to Part III, “Walmart’s sustainability initiative: greening capitalism as
a form of corporate irresponsibility,” Steve Lang and Lloyd Klein examine how the retail giant
conducts a kind of international diplomacy and a legislation of American social and industrial
policy. More specifically, they reveal how Walmart’s mission to make consumption smarter and
more sustainable is having a far-reaching and troubling influence on environmental policies and
practices around the globe. They also expose the Walmart sustainability paradox that “embraces
sustainability outside of its organizational supply chain but not inside its stores with respect to its
workforce and their communities.” Finally, Lang and Klein demonstrate how Walmart’s “greening of capitalism” reinforces neoliberalism and corporate irresponsibility as it appropriates environmental problems and turns them into marketable and profitable business ventures.
Part IV Environmental crimes
Much of the time, environmental crimes fit into multiple areas of harm and victimization, as
in the case of greenhouse gas emissions or the crimes of hydraulic fracking carried out by the
multinational oil and natural gas industries. Depending on the associated context and whether
these “fracking crimes” are committed beneath the farms of Midland, Texas, near the rivers and
streams that empty into the Great Lakes of the northern United States, or at the southern edge of
the Sahara Desert in Timbuktu, Mali, they may be identified primarily as environmental, corporate, state-corporate, and/or globalization crimes. However we label these environmental crimes,
a growing number of criminologists, including the former President of the American Society
of Criminology Robert Agnew (2012), argue that the “crimes of climate change” are globally
positioning the human species for serious risks of extinction. Hyperbolic or not, the potential
harm and victimization from environmental crimes to the Earth’s ecosystems may ultimately
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dwarf the combined harm and victimization from all the other crimes of the powerful. What
we know for sure, as the four contributions in this part testify, is that the harmful costs from all
of the environmental crimes represent a convergence of powerful interests “not to know” about
the real dangers and potential threats to our collective security.
In Chapter 14, “Climate change, ecocide and crimes of the powerful,” Rob White discusses the
systemic and organizational crimes of the powerful in relation to climate change. In doing so, he
provides an integrated analysis of: ecocide and its social relations to and interactions with transnational corporations; global crimes and state-corporate crimes; the commodification and consumption of nature; and the struggle against neoliberalism, self-interest, and the fortress mentality of late
capitalism. White concludes by arguing that exposing injustice and advocating for eco-justice for
humans, non-humans, and eco-systems is not enough. In an age of globalization, White also calls
for strategic interventions, identifies an alternative vision to Fortress Earth, and outlines the types of
ideals and values to pursue in the course of reassessing our systems of production and consumption.
In Chapter 15, “Privatization, pollution and power: a green criminological analysis of present
and future global water crises,” Bill McClanahan, Avi Brisman and Nigel South take on the popularly conceptualized viewpoints that water pollution and access to clear water are problems with
different socioeconomics and geopolitics. They attempt to recast the issues of water and harm
by exploring the ways in which the global spread of the privatizing and commoditizing logics of
neoliberalism has led to restricted and unequal access to clean water, to a regulatory atmosphere
favorable to corporate polluters, and to a reconceptualization of water as a saleable commodity
rather than an element of the commons. Utilizing a critical theoretical framework informed by
green criminology, McClanahan, Brisman, and South seek to contextualize access-restricting
water privatization, corporate polluting of oceans, rivers, streams, and estuaries, municipal water
regulation schemes that criminalize or hinder water reuse, and corporate schemes to profit from
the bottling and selling of water as events and movements detrimental to ecological health and
sustainability, yet beneficial to powerful corporate, economic, and political actors and institutions.
In Chapter 16, “Unfettered fracking: a critical examination of hydraulic fracturing in the United
States,” Jacquelynn Doyon and Elizabeth Bradshaw attempt to get a handle on both the regulatory
practices of the industry and on the environmental and human health effects of fracking. This is
not easy because the United States has no federal framework in place for regulating the hydraulic
fracking industry and has yet to perform a comprehensive examination of fracking on water contamination, seismic activity, and workplace safety. Similarly, calls for transparency of the chemicals
used in fracking fluids are shielded by “trade secrets” where some 84 percent of the registered wells
in the US claim exemptions from full disclosure. As for federal regulations, the Energy Policy Act
of 2005 exempts oil and gas companies from several environmental protection laws, including the
Clean Water Act and the Safe Drinking Water Act. As a result, states have much latitude in implementing environmental protections, and a hotchpotch of policies now currently exists within and
between states. While local grassroots efforts to regulate or ban fracking have met with some successes, the interests of big oil and gas companies have stymied other attempts. Doyon and Bradshaw’s
not surprising take is that without uniform legislation based on independent scientific research the
“economic logic” and the harmful effects of industrial fracking will continue unfettered.
The final chapter in Part IV, “The international impact of electronic waste: a case study of
Western Africa,” also by Jacquelynn Doyon, examines the profitable markets that are not in
production or consumption, but are in the business of electronic waste disposal. After decades
of shipping hazardous and toxic waste from the industrialized nations of the West to nations in
the Asian Pacific such as China and India, more recently that waste (and now heavily electronic
waste) has been re-routed to the western coast of Africa in response to increasing regulations and
restrictions in Asia. The lack of international regulation of global waste today coupled with lax
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enforcement of what domestic laws do exist permits the transboundary shipment of often illegal
“e-waste” to the ports of Lagos, Nigeria and Accra, Ghana, which places a heavy burden of the
physical and environmental harms associated with the improper disposal of electronic waste on
already marginalized populations. Her analysis underscores the fact that advanced political economies have a vested interest in exporting e-waste and that developing political economies have
a vested interest in importing e-waste. Finally, Doyon discusses the implications of the ongoing
relations of life cycle electronics in terms of exploiting disadvantaged nations and of the prospects
for future environmental and human harms.
In the not too distant future, succumbing to or overcoming the environmental harms and
crimes of the powerful – from ecocide to global shortages of water to fracking to electronic waste
disposal to moving beyond fossil fuels to the unsustainable expansion of consumption – may very
well come to a showdown between a climatic crisis of uneven civilized landscapes versus barbarized landscapes, on the one hand, and a reconstructed public capitalism versus an unencumbered
private capitalism, on the other hand. Between then and now, as Naomi Klein argues in her latest book, This Changes Everything: Capitalism vs. the Climate, the task is “to articulate not just an
alternative set of policy proposals, but an alternative worldview to rival the one at the heart of
the ecological crisis – embedded in interdependence rather than hyperindividualism, reciprocity
rather than dominance, and cooperation rather than hierarchy” (Klein 2014: 20). In very concrete
terms this means resisting neoliberalism and privatization. It means struggling to disperse power
into the hands of the many rather than consolidating it into the hands of a few. It means struggling to expand rather than contract the public commons.
Finally, it means transforming the climate movement into a “people’s movement” as was the
case on Sunday, September 21, 2014 when hundreds of thousands of diverse people filled the
streets of New York City calling for climate justice, including many thousands of union members, representatives from indigenous peoples’ organizations, business types behind an Investors
for Climate Solutions banner, and students, anti-poverty, family and faith groups. As organizers
of the People’s Climate March pointed out, there were 2646 demonstrations held that day in
156 countries, representing “the largest mass protest to date against government and corporate
inaction on the overheating of our planet” (The Nation Editorial 2014: 3). This type of people
power had more than a symbolic effect. The very next day institutional investors representing
US$50 billion in assets, including the offspring of the biggest name in petroleum history, John
D. Rockefeller, announced that they were divesting all of their money from fossil fuels.
Part V Financial crimes
At least since the post-mortem of the 1929 Wall Street stock market crash tensions have persisted
between those people favoring and those people disfavoring regulation or deregulation. After
the Wall Street implosion and the subsequent bailouts in 2009, issues and questions about “reregulation” have added further to the strains over financial market intervention. In the words of
Thomas Hoenig (quoted in Barak 2012: 133), President of the Federal Reserve Bank of Kansas
City: “It is ironic that in the name of preserving free market capitalism in this country, we have
undermined it so deeply.” His point being that for the past 75 years, whether during heightened
periods of regulation or deregulation, the economic reality of financial markets has always relied
upon and consisted of “banking on the state,” as the Bank of England’s Andrew Haldane has
termed the relationship. For example, during the recent financial meltdown,
public safety nets and assistance were stretched far beyond anything that we had done in
past crises. Deposit insurance coverage was substantially expanded and public authorities
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went well beyond this with guarantees of bank debt instruments, asset guarantees at selected
institutions, and many other forms of market support. Discount window lending sharply
departed from previous practices in terms of nonbanks and special lending programs. Substantial public capital injections were further provided through TARP to the largest financial
organizations in the United States and to several hundred other banks on a scale not seen
since the Reconstruction Finance Corporation in the 1930s. These steps were similar to
those that many other major countries took.
(Quoted in Barak 2012: 133–134)
Hoenig argues that over an extended period of time “we have experienced a ratcheting process
in which public authorities are pressured to widen and deepen their state safety nets after every
financial crisis brought on by excessive bank risk taking. This expansion in safety nets then
sets the stage for the next crisis by providing even greater incentives for risk taking and further
expanding moral hazard” (Quoted in Barak 2012: 134). As a consequence, Hoenig further contends:
We have become trapped in a repeating game in which participants continue to seek ever
higher and more risky returns while “banking” on the State to fund any losses in a crisis.
Large organizations, moreover, are the key players in this process as States become more
immersed in the perception during a crisis that they protect any bank regarded as systemically important. We must stop this game if we are to create a more stable financial system
and not condemn us to an escalating series of crises with rapidly rising costs.
(Quoted in Barak 2012: 134)
One of the questions I asked about re-regulation in my examination of The Wall Street Financial
Reform and Consumer Protection Act of 2010 (Dodd-Frank) in Theft of a Nation (2012) was
whether or not these financial reforms would alter the economic relations of banking on the
state. Another question I posed had to do with what impact or relief would Public Law 111-21
or the Fraud Enforcement and Recovery Act of 2009, signed by President Obama on May 20, for
the purposes of improving the enforcement of fraud, securities and commodities fraud, financial
institution fraud, and other frauds related to Federal assistance and relief programs, have on the
weakest victims of the epidemic in mortgage and securities frauds that occurred throughout the
financial services industry during the run-up to the near economic abyss.
Concerning FERA, this public law has had at best a negligible impact upon the recovery for
the vast majority of Americans victimized directly or indirectly by high-stakes securities fraud.
As for Dodd-Frank altering the practices of Wall Street banking on the state, these relations look
secure well into the immediate future. In other words, we still have a private banking oligarchy
dependent on the US Federal Reserve System (or central bank) and a capitalist state and political
economy dependent for its well-being on financial capital. These contradictory relationships are
hardly conducive for re-regulation or for regulatory control. Moreover, the biggest global banks
of Wall Street have more concentrated wealth now than before the implosion in 2008/2009 and
by way of revolving doors, financial lobbying, and campaign contributions the powerfulness of
the Wall Street – Regulatory interlock seems impenetrable.
As most white-collar criminologists in the US know, The Fed (or US Federal Reserve) and in
particular the Federal Reserve Bank of New York, are responsible for supervising and monitoring what the big banks on Wall Street do. The Fed in short is supposed to make sure that these
banking institutions do not break the rules or take risks that could bring down the financial
system. Not exactly “the cop on the beat,” these Fed examiners are embedded in offices of their
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own within those financial institutions they are assigned to oversee. In early 2009 shortly after
the financial meltdown, a team of Fed managers under the charge of David Beim, a former Wall
Street banker and current Colombia University finance professor, was asked by the NY Fed president at the time, David Dudley, to investigate and submit a confidential report on the behavior of
the Fed running up to the Wall Street meltdown. The report subsequently released to the public
by a governmental commission found Fed deference to the banks, an unwillingness to take action,
extreme passivity, and regulatory capture. One of the recommendations for how the New York
Fed could be more effective was to hire a new kind of employee: “outspoken, unafraid, somebody
who would not get captured” (Chicago Public Media and Ira Glass 2014: 2).
In the wake of the crisis, Congress had concurrently given the Fed new responsibilities and
resources that could potentially help implement this Beim recommendation. Hence, the NY
Fed went on a hiring spree of new bank examiners and financial experts. One of those hired
was a former Fed employee and “whistleblowing” attorney Carmen Segarra, who had secretly
recorded conversations of Fed meetings during her employment. Her many revelations in conversation with Jake Bernstein, a futures analyst, international trader, and investigative journalist,
and with Mike Silva, the Fed’s top official inside of Goldman Sachs, on the 60-minute program
This American Life, produced in collaboration with ProPublica that aired on September 26, 2014,
substantiates the findings of the Beim Report. I encourage readers to go online and listen to the
show for themselves, but to get a sense of the program allow me to share from Ira Glass’ remarks
at the beginning of the program and to paraphrase from Bernstein’s remarks before the commercial break half-way through:
It’s This American Life, I’m Ira Glass. Today on our show we’re hearing never-before-heard
recordings made secretly by a bank examiner named Carmen Segarra at the New York Fed.
They give an unprecedented look inside this very secretive, very powerful, very important
financial regulator.
(Chicago Public Media and Ira Glass, 2014: 1)1
As for Jake Bernstein, he explains that the New York Fed declined to be interviewed for the show,
how the Fed officials came to This American Life’s office to listen to the tapes of Carmen Segarra,
how the program sent the Fed 13 pages of questions and received back a two-page statement.
Bernstein also pointed out that unlike the Beim Report, the Fed failed to acknowledge the central
problem or to identify any recommendations addressing the Fed culture, the fear of speaking up,
the deference to the banks, or the regulatory capture.
A sampling of the crimes committed by the world’s mega-financial firms, banks, and institutions includes violating securities laws by imposing illegal extra fees and costs on customers, laundering money from illegal enterprises, and improperly pushing toxic financial deals on
unsuspecting and budget-stressed cities from Stockton, California to Detroit, Michigan. These
same financial players were also fraudulently active in the Libor interest rate manipulation. In
that particular financial scam, the Federal Deposit Insurance Corporation filed a lawsuit in the
U.S. Federal District Court in Manhattan on March 14, 2014, sueing 16 banking giants, including Bank of America, Citigroup, and JP Morgan in the United States for fraud and conspiring
to keep the global interest rate (or the interbank offered rate that banks charge each other) low
to enrich themselves. Among the other banks sued were Britain’s Barclays and Royal Bank of
Scotland, Switzerland’s biggest bank UBS, and Rabobank of the Netherlands (The Associated
Press 2014).
For a sustained period of more than five years (2009–2014), the mass media and the public
were more exposed to the workings of the “state – finance” nexus or to the ongoing alliance
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between the state apparatus and capital (Harvey 2014) and the world of securities frauds than they
ever were before or, for that matter, to any of the other crimes of the powerful. Because of the
TARP bailouts and other FED perks like interest-free loans that followed the financial implosion
of 2008/2009, the collective loss of some US$14 trillion in wealth, and the subsequent worldwide recessions and worse that ensued, there have been literally hundreds of books and many
more articles, journalistic and scholarly, written about the securities industry, the regulation/
deregulation/re-regulation of banking practices, and to a much lesser extent, the risk and recurrent criminogenic conditions that surround these types of securities trades. In addition, several
film documentaries were made such as Inside Job (2010) or The Untouchables (2013), which provide substantial exposés into these financial crimes of Wall Street. Finally, there was the 650-page
US Senate investigative report, Wall Street and the Financial Crisis: Anatomy of a Financial Collapse,
published in the spring of 2011.
The fundamental lessons or combined messages from these mediums are not all that complicated. Two of the more critical insights demonstrated over and over in the numerous analyses
from myriad diverse perspectives and fields of inquiry, inclusive of whistleblowers, investigative
journalists, and regulators, are as follows. First, the capitalist-financial system has always been a
rigged structure of profit accumulation, unfairly tilted in favor of one set of economic interests
over or against or in conflict with other sets of economic interests, whether or not the law and
political economy were subject to periods of increasing or decreasing regulation (Prins 2014).
However, concerning inequality, per capita incomes, or financial crime, this need not be the case.
As Nobel Laureate in economics Joseph Stiglitz (2014: 7), a former chairman of the Council
of Economic Advisers and chief economist for the World Bank, has explained on numerous
occasions:
•
•
•
The dynamics of imperial capitalism of the nineteenth century needn’t apply in the democracies of the twenty-first century.
Our current brand of capitalism is a counterfeit capitalism.
Inexorable laws of economics aren’t tearing us apart. Our policies are.
Second, the looting, the shorting, and the control frauding by the wealthiest bankers/banking
institutions and their financial organizations (e.g., trading companies, holding companies, insurance companies, securities firms, private equity firms) on and off Wall Street, buttressed by insider
political and legal colluding, have always been beyond incrimination and generally subject to
some form of bailout and/or state subsidy when their untrustworthy actions have resulted in
downturns in the economy and in the simultaneous harming of millions of people. In contrast,
less powerful financial fraudsters (e.g., think thrifts and savings and loans in the late 1980s), as
well as the very powerful corporate (e.g., Enron, WorldCom), state (e.g., Abu Ghraib, Gitmo),
and corporate-state (e.g., Blackwater, DynCorp, Halliburton) offenders and their organizations
have at least from time to time been held culpable and subject to criminal sanctions (Barak 2012;
Black 2005; Prins 2014; Ruggiero 2013; Warren 2014; Will et al. 2013). Unlike the Wall Street
offenders and their crimes of capital control, the corporate, environmental, and corporate-state
offenders are not immune to penal sanctions from advanced, if not developing, political economies and their respective capitalist states.
As far back as thirteenth- and fourteenth-century capitalism, a handful of the biggest bankers and/or traders were always in a position to negotiate, if not dictate, the terms of financial
exchanges. In today’s age of globalizing capital, the six biggest banking institutions in the United
States post the financial crash of 2008, with their agents situated strategically in the executive,
legislative, judicial, and regulatory corridors of Washington, DC, have only further consolidated
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their wealth, privilege, and capacity to resist criminal sanctions. Moreover, the exposure in the fall
of 2014 of the SEC “cover-up” for the systemic thefts by the private equity industry of its investors suggests that not much has changed on the criminal enforcement front since the cover-up
policies of “too big to fail banks” began in 2009. In the case of the missing private equity scandal,
apparently there were millions of dollars of income across the equity industry, adding up to a
couple of billion dollars, for non-existent monitoring services charged to investors (Smith 2014).
For some perspective on the kind of money these individuals can make – when the 1971
founder Bill Gross of Pimco, otherwise known as the Pacific Investment Management Company
of Newport Beach, CA resigned on September 26, 2014 and announced that he was off to
run a tiny bond fund, Janus Capital Group Inc., a four months old “start-up,” he was earning
US$200,000,000 a year (Grind 2014). As the saying goes, “that’s not exactly chopped liver”;
then again, there are hedge fund managers like Ray Dalio of Bridgewater Associates, Westport,
CT, and James Simons of Renaissance Technologies, East Setauket, NY, who earned US$3 billion
and US$2.1 billion respectively in 2011 (The 40 Highest-Earning Hedge Fund managers, http://
www.forbes.com/pictures/mdg45ghlg/ray-dalio-2/).
Speaking of hedge funds, otherwise known as illiquid partnerships, these were traditionally
limited to a small number of wealthy investors employing sophisticated investment strategies,
such as taking leveraged, long, short, and derivative positions in both domestic and international
markets. Currently, hedge funds as well as private equity funds are vehicles used to pool investment capital with little oversight or regulation as part of the shadow banking industry. In addition
to wealthy clients’ money, these funds today include the management of ordinary people’s money
by way of their pension fund investments, often to the detriment of these investors (Appelbaum
and Batt 2014). For a bit more perspective on hedge fund wealth, Gross announced his resignation from Pimco in the early morning hours on a Friday. By the end of the trading day, roughly
US$10 billion of withdrawals from Pimco had occurred. Some experts speculate that Pimco
could lose at least US$100 billion or more in total asset withdrawals before things cool out. Pimco
CEO Douglas Hodge said in a statement that the firm “manages nearly $2 trillion in assets, and
we are confident that the vast majority of our clients will continue to stand with us” (Quoted in
Grind et al. 2014: A1).
Hedge funds may also involve debt-restructuring instruments such as those concerning a
2014 UN Human Rights Council resolution in Geneva that condemned investors, led by US
hedge funds NML and Aurelius Capital management, who had successfully sued Argentina in
US courts, demanding payments worth more than US$1.3 billion. The resolution was approved
by 33 votes to five, with nine countries abstaining. The United States, Britain, Germany, Japan,
and the Czech Republic voted against it. “The resolution ‘condemns the activities of vulture
funds’ and says it regrets the effect the debt payment to such funds could have ‘on the capacity of
governments to fulfill their human rights obligations’” (BBC News 2014).
Two out of three contributions in Part V concentrate on the enforcement behaviors of the
state in addressing financial institutions for their securities violations. The first involves local
community banks and the second involves the banks of Wall Street, allowing for some comparisons of the differential responses to these financial frauds, such as the former but not the latter
violators being subject to criminal prosecution. The third contribution provides a broad conceptual examination of the relations between financial fraud and its victimization.
In Chapter 18, “Bad banks: recurrent criminogenic conditions in the US commercial banking
industry,” Robert Tillman examines the causes behind the wave of bank failures in the period
2008 to 2011 that left 355 banks – most of them small community banks – shuttered, with losses
exceeding US$57 billion. He also describes the criminogenic environment that surrounded the
banking industry in the 1980s that was recreated in the 2000s when lawmakers and regulators
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ignored the lessons of the recent past and implemented policies that loosened restrictions on
commercial banks and other lending institutions. Tillman argues that corrupt bankers took
advantage of this relaxed regulatory environment and regional economic booms to engage in a
variety of reckless and fraudulent practices, leading their banks to insolvency. Theoretically, he
argues for combining economic theories of financial instability and looting with the sociological/
criminological concept of criminogenic markets. Finally, Tillman presents quantitative data on
the conditions at failed banks where allegations of misconduct were leveled at bank insiders to
support his argument.
In Chapter 19, “Finnacial misrepresentation and fraudulent manipulation: SEC settlements
with Wall Street firms in the wake of the economic meltdown,” David Shichor examines the
settlements between the SEC and Wall Street for its disclosure and misrepresention of violations
in the context of the deregulation of the securities market that began in earnest in the 1980s with
the Reasgan administration. First, he connects the recent economic meltdown to the now familiar narrative of fraudulent mortgage originations, securitization of risky mortgages, and esoteric
financial products. He then critiques and discusses the preferred SEC settlements with financial
firms in which they would “neither admit nor deny” their wrongdoing. Bemoaning the lack
of criminal sanctions and recognizing that it is much easier to settle with corporations than to
criminally punish executives, Shichor still favors imposing some kind of personal liability upon
those individuals reponsible for these fraudulent offenses as a potential deterrent and because
justice deserves as much.
In Chapter 20, “A comprehensive framework for conceptualizing financial frauds and victimization,” Mary Dodge and Sklar Steele offer an in-depth perspective on a variety of factors
associated with the different types of financial frauds, the fiscal and emotional impacts of these
frauds, and the difficulties of establishing standing as a victim. In the process, Dodge and Steele
present an overview of the development and standing of victims of financial fraud as well as a
synthesis of empirical research and case studies to advance an inclusive framework for estabishing increased understanding of the dynamics of victmization. They argue that there is still much
research to conduct on financial victimization and that the use of a social constructionist framework represents a starting point for the necesssary studies related to regulation, prosecution, and
sentencing. Dodge and Steele further contend that by ferretting out the nuances of financial
fraud and victimization, this will facilitate a fuller appreciation of the need for victim recognition,
prevention, and resitution as well as for taking the necessary policy steps toward fullfiling these
needs, both locally and globally.
Part VI State crimes
State crimes, originally coined as “state-organized crimes” by William Chambliss (1990: 184) in
his 1989 American Society of Criminology presidential address, referred to those “acts defined
by law as criminal and committed by state officials in pursuit of their jobs as representatives of
the state.” Chambliss identified an array of state-organized crimes, including but not limited to
supporting terrorists, spying on citizens, diverting funds illegally, selling arms to blacklisted countries, engaging in criminal conspiracies, carrying out assassinations, and smuggling contraband.
A classic state crime from this historical period was the Iran-Contra Affair where senior officials
of the Reagan administration during his second term, in violation of an arms embargo, secretly
facilitated the sale of arms to Iran as a means of trying to secure the release of US hostages held
in Iran, on the one hand, and as a means of funding the Nicaraguan Contras in violation of the
U.S. Borland Amendment prohibiting the government from funding the Contras in their efforts
to overturn the democratically elected Sandinista Nicaraguan government, on the other hand.
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As a member of Chambliss’ Program Committee, I was responsible for arranging the topical sessions on “Crimes By and Against the State.” More than 25 papers on crimes by the state
were presented. Ten of those ended up in the first book devoted solely to state crime, the edited
anthology Crimes By the Capitalist State: An Introduction to State Criminality, published in 1991 as
a volume in the SUNY Series in Radical Social and Political Theory. The chapters in this reader
were organized around three themes: the classical forms of state crime, the dialectical nature of
state crimes, and the crimes of state omission. An extract from the prologue states,
the study of state criminality is a political enterprise consisting of, among other things,
the study of power, ideology, law, and public and foreign policy. As such, the study of state
criminality is part and parcel of the emotionally charged landscape of a changing political
economy.
(Barak 1991: 5)
Over the past quarter of a century, the conceptualizing of crimes of state has continued to evolve
in both theory and practice. For example, in 2004 Penny Green and Tony Ward produced a
book-length treatment of state crime, utilizing case studies and drawing upon the disciplines
of law, criminology, human rights, international relations, political science, and social deviance
to craft their analysis in State Crime: Governments, Violence and Corruption. Five year later, in what
has become a seminal contribution to the area, State Criminality: The Crime of All Crimes (2009:
6), Rothe provided an integrated theory and practical typology for understanding state crime.
Therein, she defines state crime as: “Any action that violates international public law, and/or a
state’s own domestic law when these actions are committed by individual actors acting on behalf
of, or in the name of the state, even when such acts are motivated by their personal economical,
political and ideological interests.” Consistent with these conceptualizations of state criminality,
there are also those activities that may not involve state actors directly, but rather are committed by non-state proxies aided by some kinds of external resources, facilitation, planning, and/
or logistics.
Accordingly, the crimes of and by the state examined in Part VI include torture, organized
violence, forced immobility, and gendered violence. These crimes are more inclusive than actions
arranged or committed by the state or by its agents or proxies. They also refer to those state
crimes of omission and to state crimes of collusion with the crimes of globalization, of corporations, of the environment, and of finance capital already described in great detail. In addition,
the capitalist state and its agents are integral to the commission of state-corporate crimes and
state-routinized crimes that will be examined in the next two parts of the handbook. Functionally then, the capitalist state has a stake of one kind or another in virtually all of the crimes of the
powerful as well as its own.
Not unlike powerful corporations and financial institutions that are supposed to self-regulate,
the capitalist state is also presumed to oversee itself. However, as a dynamic and adaptable institution the state capitalist apparatus has always been situated within the contradictions of forbidding
versus forgiving the powerful for the numerous laws that they routinely violate. As a consequence, when it comes to the crimes of the powerful, inquiring minds are often left clueless
because much of the time these offenses are not materially processed through the formal legal
systems and as a result these behaviors remain state secrets that are not available for public enquiry.
In Chapter 21, “Transnational institutional torturers: State crime, ideology and the role of
France’s savior-faire in Argentina’s Dirty War, 1976 to 1983,” Melanie Collard provides a case
study in the exportation of torture techniques as a way of probing the transnational institutionalization of torture. Collard analyzes the deadly cooperation between France and Argentina that
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transformed Argentine war professionals into official state torturers. Using a transnational state
crime framework as well as an international structural context, Collard asks why and how France
became Argentina’s trainers in torture. Specifically, she examines the “transnational institutional”
perpetrator and the linkages connecting France with institutionalized torture in both the Algerian War in the 1950s and in Argentina between 1976 and 1983 vis-à-vis the French military
training of Argentine officers in the late 1950s and early 1960s. Her conclusions are that the
French military had established the theoretical, methodological, and semantic basis for torture
that informed the repressive actions of the Argentine army. Therefore, she argues that to use the
label of “transnational institutional torturers” is appropriate.
In Chapter 22, “Para-state crime and plural legalities in Colombia,” Thomas MacManus
and Tony Ward offer a fascinating case study in what they label “para-state” crime. They argue
that although the Republic of Colombia is a state, it does not have a complete monopoly over
the legitimate use of organized force within its territorial borders. In parts of Colombia, for
example, guerrilla groups FARC and ELN rule what amount or have amounted to “de facto”
states. Complicating matters further is that Colombia has informally delegated some of its
legitimate use of violence to paramilitary organizations outside of its legal framework, known as
the “paraestado.” MacManus and Ward use the example of Colombia to illustrate the complex
and fluid relations of the state and civil society, and how these may be expressed in organized
violence. They conclude that in Colombia there is an unclear dividing line between civil society
and “uncivil society” that relies on coercion rather than moral or political argument to pursue
demands.
In Chapter 23, “Australian border policing and the production of state harm,” Michael Grewcock examines the systemic abuses inflicted upon irregular migrants by contemporary Western
border controls. Using Australia’s “border protection” policies targeting unauthorized refugees as
a case study, Grewcock analyzes a continuum of internal and external policing practices including
visa restrictions, anti-smuggling operations, mandatory detention, and forced removal to Australian funded detention centers in Nauru and Papua New Guinea, that are designed arguably
to disrupt unauthorized movement and ultimately prevent access to Australia’s refugee determination process. He provides extensive evidence, including testimony on the normalization of
abuse and the offshore processing and criminalization of people smuggling. Grewcock contends
that not only are practices such as indefinite detention inherently and profoundly abusive, but
furthermore, by immobilizing refugees in precarious transit zones, subjecting them to indefinite
warehousing regimes, denying them access to formal travel and refusing settlement, Australia’s
border policing measures expose refugees to much higher levels of risk and push them into more
dangerous forms of confinement and travel. Grewcock concludes that rather than protecting
refugees from smugglers, Australia’s border policing regime generates multiple harms that may
be identified as state crime.
In the final chapter of Part VI, “Gendered forms of state crime: The case of state perpetrated
violence against women,” Victoria Collins seeks to extend the discussion of women and gender
to include state perpetrated violence. After reviewing the established literature on state perpetrated violence against women, Collins specifically addresses the systematic state victimization of
women both in times of conflict/war and peace. Using examples from the violent targeting of
women and girls during the 1992 to1994 conflict that occurred in the former Yugoslavia to the
violent targeting of girls and women by both Sunni and Shite militia during the US occupation
of Iraq to the sexual assaults of women soldiers by US military men in peacetime, Collins reveals
the ways in which the state directly and indirectly perpetrates gendered violence. She concludes
that her case studies demonstrate that the larger historical, social, and political constructions of
gender interactions are a product of institutional relations that are reinforced by the state.
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Part VII State-corporate crimes
The idea of state-corporate crime traces its roots to an ASC paper presented by Kramer and
Ray Michalowski (1990: 3) in which they defined state-corporate crimes as “illegal or socially
injurious actions that occur when one or more institutions of political governance pursue a goal
in direct cooperation with one or more institutions of economic production and distribution,”
as well as a book chapter by Judy Aulette and Michalowski (1993) about the Imperial Foods
chicken-processing plant fire in Hamlet, North Carolina on September 3, 1991 when 25 workers
were killed and 55 injured because the fire doors were locked preventing these employees from
exiting the burning fire. State-corporate crime typically involves political and economic elites or
their agents acting together in violation of local, national, and international laws. Their “wrongdoing at the intersection of business and government” has been well documented by numerous
case studies, such as the space shuttle Challenger explosion, the Ford Explorer rollovers, and the
ValuJet flight 592 crash, which have revealed numerous cover-ups, frauds, collusions, and more
(Michalowski and Kramer 2006).
Traditionally, the idea of state-corporate crimes has signified those illegalities that are products
of both state activities and/or policies and corporate activities and/or practices, usually in some
form of collaboration for mutual gains or respective interests. More recently, there has been the
recognition that these state-corporate or public – private partnerships or symbiotic crimes may
also include other organized groups that are not representatives of either business or government.
As the chapters in Part VII disclose, these hybrid state-corporate crimes can be more complex,
involving other significant participants or interests such as unions, political parties, and paramilitary units. These newer formulations are also increasingly taking both the local and global conditions of capital production into their accounts. Currently, the applications and conceptualizations
of state-corporate crime are expanding to include vested interests from civil society as well, as
exemplified by the state-corporate-organized crime found in Colombia.
In Chapter 25, “Blacking out the Gulf: state-corporate environmental crime and the response
to the BP oil spill,” Elizabeth Bradshaw provides a case study in an attempted state-corporate
“cover-up” to suppress the criminality and environmental impact caused by the explosion of the
Deepwater Horizon rig owned by Transocean and leased by British Petroleum. Bradshaw carefully reveals how both state and corporate actors worked in coordination to conceal the extent of
the damages through a variety of means. Employees and clean-up workers were censored, toxic
chemical dispersants were used, a media blackout was implemented in the Gulf, and a deliberate
manipulation of official images and information about the spill were circulated. Bradshaw argues
that the coordinated efforts by BP and the federal government were able to keep the devastating effects of the oil spill from public view, thereby limiting, if not preventing, the social control
effects of their crimes.
Full disclosure: as of fall 2014, BP had paid out US$43 billion in clean-up costs and fines,
in compensation claims from injured businesses, and in relation to pleading guilty to criminal
manslaughter charges for the 11 men who died in the explosion. Then, on September 4, 2014,
Louisiana district judge Carl Barbier concluded that “profit-driven decisions” and “willful misconduct” led to the rig explosion, and so he found BP liable for “gross negligence” under the
Clean Water Act, which imposes penalties of US$4300 per barrel of oil spilled compared to only
US$1100 per barrel for simple “negligence.” This could add up to an additional US$18 billion
with some of the fines to be picked up by rig owner Transocean and US contractor Halliburton
(Banerjee and Khouri 2014). Of course the “gang of three” are appealing the Barbier civil ruling.
In Chapter 26, “Collaborative state and corporate crime: fraud, unions and elite power in
Mexico,” Maya Barak examines the case of the National Mine, Metal and Steel Workers Union
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of Mexico and the numerous civil, criminal, and extra-legal harms committed in tandem by
one of the world’s largest mining companies and the Mexico government beginning in 2006.
Employing a social-historical analysis and framing her discussion around the roles played by
neoliberal ideology and anti-labor socio-political culture, Barak takes us through a medley of
state-corporate harms including murder, kidnapping, the death of 65 miners, the police brutality
of striking workers, threats and intimidation, harassment, bribery, forged documents, fraudulent charges, and conspiracy. Finally, calling into question traditional interpretations of statecorporate/corporate-state crime, Barak maintains that these crimes of the powerful may be more
appropriately viewed as collaborate state and corporate criminality.
In Chapter 27, “Mining as state-corporate crime: the case of AngloGold Ashanti in Colombia,” Damián Zaitch and Laura Gutiérrez-Gómez as part of a larger research project on the nature,
causes, and harmful effects of state-corporate-organized crime in Latin America since the 1990s,
focus on the South African gold-mining multinational AngloGold Ashanti (AGA) in Colombia.
Their objective is to describe and explain the interconnections between multinational and governmental bodies, actors, and policies, as they engage in, or promote, various forms of criminal,
unethical, or harmful behavior. Zaitch and Gutiérrez-Gómez also document the extent to which
mining corporations like AGA strongly resist when they are accused by courts and civil society
organizations of engaging in a slew of crimes, including fraud, corruption, theft, tax avoidance,
contamination of land and water resources, systematic infringement of all kinds of rules, serious
safety crimes, forced displacement and destruction of local communities, unlawful dispossession
of land, and collaborating with paramilitary forces. Finally, they re-examine Michalowski and
Kramer’s (2006) model of state-corporate crime in light of their empirical findings and conclude
that in “order to explain and understand the logic of corporate gold mining in Colombia, a less
prescriptive approach” is called for that takes harmful interactions and frictions into account at
the global, national, and local levels.
Part VIII State-routinized crimes
Reflexive of critical criminology and a definition of crime equating the cause of harm with
something that does not necessarily have to be an act or illegal or criminal but could be all three,
I am now introducing a variation of state-organized crime denoted here as “state-routinized
crimes” (SRCs). A concept like SRC is especially useful for examining the theory and practice of
the crimes of the powerful, especially as these revolve around different forms of institutionalized
corruption. While some of these practices may be illegal even criminal, many will be routinized through public policies, civil and administrative laws, and normative political behaviors.
Examples would include: the surveillance practices by the NSA, the passage of ag-gag laws, or the
Halliburton “loophole” exempting fracking and other modes of oil production from the Federal
Clean Air and Water Acts passed by Congress in 2006. At the time, Halliburton’s former CEO,
Dick Chaney, was occupying the office of the US Vice Presidency.
Legal or not, these state-routinized activities may cause or be responsible for all types of
real harm and injury. These activities may also provide profits and gains for those participating
individuals or networks. Most importantly, these state-routinized activities bring together politicians, lobbyists, and campaign fundraisers as well as stakeholders from all areas of business, law,
and the military. Their interactions, as part of the state – financial nexus and the fiscal military –
enforcement complex (e.g., the monetization of war-making and policing) serve as cultural and
material transmission belts enabling various crimes of the powerful.
State-routinized crimes share some commonality with expanded conceptions of organized crime. Traditionally, organized crime is commonly viewed as some kind of monolithic
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organization of criminals and is usually represented by some type of criminal enterprise or syndicate operating locally, nationally, or transnationally. More specifically, organized crime usually
refers to “illegal activities connected with the management and coordination of racketeering
(organized extortion) and the vices – particularly illegal drugs, illegal gambling, usury, and prostitution” (Block and Chambliss 1981:12). This narrowly construed definition excludes organized
corruption, organized professional theft, organized burglary rings, organized identity theft, or
any kind of unrelenting criminality organized by any other groups. In contrast to this selectively
restrictive construction of organized crime, state-routinized activities include those expressions
of “corruption,” “extortion,” and “professional theft” that are institutionalized or legally sanctioned through legislation and court decision, such as the 2010 Citizens United v. Federal Election
Commission, 558 U.S.
State-routinized crime borrows from Michael Johnston’s comparative analysis of corruption
in both advanced and developing political economies. SRC specifically incorporates Johnston’s
idea that corruption can be brought forth legally into a political system of governing, and extends
this idea to include extortion as well as professional theft in order to better understand how the
crimes of the powerful are neutralized and why their invisibility remains secure. Johnston (2005)
characterizes and distinguishes between “influence market” corruption and five other styles of
corruption practiced around the world, such as “elite,” “cartel,” “oligarch,” “clan,” or “official mogul.” He argues that the influence market-type corruption, in effect, is corruption that
has been legalized. Influence market corruption (IMC) occurs in advanced political economies
because the roles of competitive politics and lobbying are more complex than they are in those
countries where the other styles of corruption are displayed. Compared to the styles of corruption found in developing political economies that work their means and ways around the formal
systems of governing, IMC works primarily within the prevailing political-legal-economic order.
Briefly, IMC “revolves around access to, and advantages within, established institutions, rather
than deals and connections circumventing them” (Johnston 2005: 42). As Johnston explains,
“strong institutions reduce opportunities and some of the incentives, to pursue extra-system
strategies, while increasing the risks. Moreover, the very power of those institutions to deliver
major benefits and costs raises the value of influence within them” (ibid.). Just as corruption
can become legal, I am suggesting that extortion and professional theft can be legalized in the
same way, even under the guises of the first amendment of the U.S. Constitution, as in the case
of Citizens United.
Let us now loop back around to Block and Chambliss’ description of the crimes of the
powerful quoted earlier in this introduction, which in 1981 was inclusive of those “crimes of
nation states, through the illegal and immoral acts of large corporations, to misuses of police and
political office by local, state, and national power holders.” State-routinized crimes refer to those
regularized activities that may or may not be illegal and whose influence enables or facilitates
the harmful or injurious effects of the crimes of the powerful, especially those involving agencies
of the state apparatus like the police. If one then takes Alan Wolfe’s argument in The Seamy Side
of Democracy (1973), which maintained that repression was an essential aspect of class societies
that is neither irrational nor spontaneous but rather a calculated method of the state apparatus to
shape the parameters within which decisions are made and combine it with the argument that
crimes are primarily driven by the structural contradictions of capitalism from Quinney’s Class,
State, and Crime, then one is able to interpret the repressive crimes of capitalist state control as
state-routinized behavior (See also Balbus 1974).
Repressive measures of state-controlled law enforcement circulate by way of fiscal – military
states and state – finance nexuses that generate money and resources for all kinds of purposes,
including in the United States for militarizing and SWATifizing police forces throughout urban,
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suburban, and rural America, or for waging wars on oppressed barrio and ghetto communities,
or for coordinating the suppression across the nation of Occupy Wall Street encampments in the
fall of 2011. In the case of militarizing the police, federal incentives lie within the US Department
of Defense that operates the 1033 Program through the Defense Logistics Agency and the Law
Enforcement Support Office (LESO), whose motto is “from warfighter to crimefighter.” According to LESO, since 1990 the program has transferred US$4.3-billion worth of property from the
military to the police. More than 17,000 federal, state, and local law enforcement agencies have
been recipients of military equipment transferred through the program, which has increased from
US$1 million in 1990 to nearly US$450 million in 2013 (ACLU 2014).
State-routinized crimes can also be less than routinized or convoluted. They may also involve
criminals from organized enterprises, as examples from this handbook reveal and as the story
suggests behind the fall 2014 news headline, “Violence Erupts in Hong Kong as Protesters
Are Assaulted.” After one week of nonviolent student protests demanding democratic elections
for Hong Kong’s chief executive and several days of “erratic and unsuccessful attempts by the
Beijing-backed government to end the protests,” unidentified men assaulted protesters and tore
down their encampments in two of Hong Kong’s most crowded shopping districts (Buckley et al.
2014). Up until the point of those attacks, the Hong Kong authorities had:
“resorted to one contradictory tactic after another in trying to end the demonstrations:
sending in riot police officers with tear gas one day, pulling them back the next, refusing in
principle to talk to the protesters, then calling for talks with university students at the forefront of the pro-democracy campaign, disclosing a plan to wait out the protests, and then
appearing ill-prepared and tardy as the protesters were attacked.
(Ibid.).
On Friday evening one day after the Communist Party had warned that there would be “chaos
in Hong Kong if the protests did not end,” two organized gangs of attackers entered the dispute.
They “shoved and punched protesters, sometimes kicking them after they fell.” Others grabbed
the scaffolding of canopies and pulled them down. “Residents said that the police were outnumbered and slow to react, and hours passed before reinforcements arrived to protect the protesters
from a hostile crowd” of pro-Hong Kongers who sided with those who wanted access to work
as usual (Buckley et al. 2014). The skirmishing first broke out in the Mong Kok neighborhood
of Hong Kong, one of the most densely populated places in the world and home to “organized
gangs or triads that extort payments from the many small businesses there” (ibid.). Some protesters believed that the attackers were connected to the triads. In fact, on the morning after the
attacks, a police spokesman said, “19 men, including eight with links to organized crime syndicates, or triads, had been arrested in connection with the violence” (ibid.).
Meanwhile, the government denied abetting the violence, but said:
[T]he turmoil was a good reason for the entire protest movement to end its sit-ins across the
city. Benny Tai, an associate professor of law at the University of Hong Kong and a founder
of Occupy Central With Love and Peace, was quoted as saying: “I hope everybody can
persist in the spirit of peaceful resistance.” However, that “may be unlikely if a commentary
published” the morning after the Friday night clashes “on the front page of the Chinese
Communist Party’s newspaper, People’s Daily, is as prescient as the one on Thursday that
warned of chaos. The news commentary said the mayhem “could lead to deaths and injuries
and other grave consequences.”
(Buckley et al. 2014)
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As Peng Wang (2014), the author of Chapter 28 has observed, individuals and entrepreneurs
frequently employ gangsters’ services to protect property rights, facilitate transactions, enforce
debt repayment, and deal with government extortion.
In Chapter 28, “Organized crime in a transitional economy: the resurgence of the criminal
underworld in contemporary China,” Wang first identifies the causes for the re-emergence of
the criminal underworld in the People’s Republic of China. These include the widening gap
between the rich and poor, the emergence of a huge marginalized population, the failure of legal
institutions to provide sufficient and efficient protection, the prohibition of certain goods and
services, and widespread corruption in the public sector. Wang then examines and critiques the
Chinese government’s series of national “strike-hard” campaigns as failing to be effective both
against organized crime and police corruption. Not being able to defeat or effectively prevent
organized crime, he makes two recommendations to the Chinese government. Short term, Wang
calls for abandoning the “smashing black” police striking back campaigns because they drain
police power and resources away from other types of crime that may be more harmful to society.
Long term, he calls for market regulation through legislation and for the decriminalization of
some illegal markets, such as gambling and prostitution.
In Chapter 29, “Institutionalized abuse of police power: how public policing condones and
legitimizes police corruption in North America,” Marilyn Corsianos scrutinizes how law enforcement as an institution creates crime opportunities for its officers, how it often operates to justify
police abuse of powers, and how particular types of police abuse are either not recognized as such
and/or are overwhelming ignored by internal investigators. First, Corsianos evaluates the lack of
accountability mechanisms in relation to the tenants of the police culture. Next, she examines
police organizational goals and public perceptions of police deviance in relation to how the state
constructs and responds to incidents of police corruption. Corsianos also calls for a broader conception of police corruption to include forms of corruption that are not ordinarily recognized as
such, including patterns of discriminatory law enforcement. Finally, she concludes that the North
American police identities and policing systems facilitate organizational acquiescence to certain
forms of police misconduct while fostering opportunities to engage in other forms.
In Chapter 30, “The appearances and realities of corruption in Greece: the cases of MAYO
and Siemens AG,” Effi Lambropoulou reviews the functions of corruption as she attempts to
demystify Greece’s image as a nation of corrupt people. In light of two high-profile celebrated
corruption cases concerning both the public and private sectors, she reconsiders the passage of
anti-corruption legislation over the past two decades. The first study discloses what Lambropoulou refers to as an example of low accountability of political elites, involving party politics and
questionable campaign financing based on a case filed in 2002 and because of a lack of evidence
closed in 2008. The second study involves Siemens AG as an example of a classic “pay to play”
crime of globalization.
Lambropoulou concludes her analysis by acknowledging the cases of grand and petty corruption that are maintained over time in certain geopolitical landscapes in the South of Europe.
However, she rejects the presentation of Greece as exemplifying Europe’s corrupt state par excellence, because this characterization operates as a tool of scandalization and denunciation used for
the legitimation of important political and economic decisions.
Part IX Failing to control the crimes of the powerful
If there were only three thematic refrains in this international handbook, probably the most unifying of those themes would be the extent to which the enforcement apparatus of capitalist states
has failed miserably to control the crimes of the powerful. Another unifying theme would be the
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extent to which corporations, financial institutions, and state apparatus will invest in strategies to
deceive the consuming public, to distort and mystify harmful practices, to deny and dilute the
effects of widespread victimization, and to co-opt or resist those interests, policies, or laws that
contest the dominant relations of their power and abusive behavior. A third unifying theme, at
least implicitly if not explicitly, would be the extent to which the existing power arrangements
of the state–non-criminal nexus of capital unsustainable expansion needs to be fundamentally
transformed through massive social, political, and economic activism.
Certainly, one of the most prominent examples of the state – non-criminal working nexus
failing to control the crimes of the powerful in general and state criminality in particular was
when President Obama, the US Congress, and the Department of Justice in a shared “state of
denial” did not pursue criminal charges against officials of George W. Bush’s administration for
torturing and other criminal misconduct that were integral parts of their “secret” war on terror.
Not only did Mr. Obama declare that the United States should “look forward, as opposed to
looking backward,” but his administration was also unwilling to entertain an independent investigation into the torture. Even when a Senate intelligence committee finally releases its soon-to-be
(at the time of this writing) and long-awaited summary of a 6200-page “torture review” already
involving more than a year of legal review and redactions, there will not be a full accountability
from those who arranged, encouraged, and conducted torture following the terrorist attacks of
September 11, 2001. And, while the world is well aware that Khalid Shaikh Mohammed, the
alleged mastermind behind the Twin Towers destruction and killing of close to 3000 persons,
was water-boarded 183 times by the CIA in March 2003, the same cannot be stated about the
hundreds of other enemy combatants who were tortured on behalf of the US at numerous black
sites around the globe.
Under the rule of law, the state apparatus should have focused its attention on and punished those who had abetted or committed these tortures. Accordingly, the European Court of
Human Rights ordered Poland and Macedonia to pay damages to detainees for their complicity
in the CIA’s secret torture program. The USA, however, like other superpowers, continues to
buck the prevailing trends in international law and justice. Although Mr. Obama in August
of 2014 finally did publicly acknowledge that “we tortured some folks,” he continues “to
resist the consequences of that admission. His administration has even pressed federal judges to
close the door on civil suits by former detainees, citing state secrets” (Hafetz 2014). This looks,
sounds and smells strikingly familiar to the same modus operandi of denial used by the Obama
administration to clear the banksters of Wall Street for their criminal and fraudulent wrongdoings (Barak 2012).
These contradictory absences of the “rule of law” and the normalization or conventionalization of these crimes of the powerful across a liberal democratic society like the USA are also
indicative of the degree to which its economic leaders and political institutions are held accountable to and/or dependent on rules and regulations that are fairly applied. Historically, Francis
Fukuyama (2014) has shown that political order and decay fluctuates in response to the changing
modes and relations of production. For example, throughout the laissez-faire nineteenth century,
the US had a weak, decentralized, corrupt, and pre-industrial patrimonial state. During this
period, graft and other forms of bribery contributed not only to the buying of justice by those
who could afford it but also to national immorality. At the time, rackets, pull, and protection were
common antidotes for stubborn legal nuances. Prevailing values of wealth and success predominated as guiding principles of right and wrong (Barak 1980). Well into the twentieth century,
the “ability to ‘make good’ and ‘get away with it’ offsets the questionable means employed in
the business as well as the professional world. Disrespect for law and order is the accompanying
product of this scheme of success” (Cantor 1932: 145).
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From the turn of the twentieth century up through the 1960s in the USA, changes brought
about by a social revolution (first expressed by President Teddy Roosevelt and his Progressives and
later by his distant cousin President Franklin Roosevelt and his New Dealers) and driven by the
forces of industrialization recognized the plights and the struggles of the poor and the marginal
classes. As a response to those masses of individuals who were not benefitting from and were
posing a threat to the expanding political economy, some sectors of the ruling strata set about to
provide a Square Deal for everyday people and to “clean up” working environments as well as
the political corruption within and outside the legal systems. A strong unionization movement
of working Americans and a “radical” way of thinking eventually gained the political support
of some industrialists and other social leaders. A much stronger and centralized capitalist state
emerged in the 1930s, subject to Keynesianism and a slew of new federal regulations, realizing
a legal zenith of sorts with the “due process” revolution of the Earl Warren Supreme Court in
the 1960s.
By the 1980s and up until the present, one could argue that a decaying process or a reversal of legitimation has been occurring, in response both to the ideologies of neoconservatism
and neoliberalism and to the forces of global competitive capitalism. By the 1990s, as the “me
generation” graduates from elite colleges and universities flocked to Wall Street to make their
financial fortunes as investment brokers, arbitrage dealers, and derivative traders, unenlightened
self-interest, unregulated financial markets, and unfettered victimization had become the order of
the day. As Fukuyama (2014) argues, political and social, if not economic development in the US
has been going in reverse, spurred by deregulation, privatization, growing inequality, concentrating wealth and power, a decaying infrastructure, and a contracting welfare state. Similarly, recent
U.S. Supreme Court decisions have facilitated this reversal, exemplified by Citizens United and
Hobby Lobby, both further expanding the power and rights of “insider” corporate entities over
those of “outsider” individuals. In the process, the political institutions have become less democratic, less fair, less efficient, and more dependent on corporate classes for their policy-setting
agendas. Failing to control the crimes of the powerful is only one manifestation of the decaying
state of affairs in the United States and elsewhere.
Failing to control the violations of the powerful applies both to criminal offenders and to their
offenses. With respect to criminal desistence and/or not controlling the habitual offenders on the
street or in the suite, there has been some research, more examining the extent of the former than
the latter, to which “personal” and “social” capital among these offenders relates to their reoffending or not. Generally, personal and social capital has been conceptualized in terms of “social
bonds” at the individual-micro level (Sampson and Laub 1993; Nagin and Paternoster 1994)
and in terms of “collective efficacy” at the group-macro level (Sampson et al. 1997; Rose and
Clear 1998). Regarding white-collar offenders there are some three studies of note: one analysis
is descriptive (Weisburd and Waring 2001) and two are trajectory (Piquero and Weisburd 2009;
van Onna et al. 2014). It appears from these studies that employment as a form of social if not
economic capital is a key factor in desistence from future crime.
Unfortunately for our purposes, the available records on white-collar criminals are limited to
the Yale datasets that include both working-class and middle-class convicted offenders rather than
the upper-class offenders from the corridors of corporate or state power. Such data are missing
for a variety of reasons, not the least of which is that there are so few convicted powerful offenders
on which to collect information. In the case of any ex-Wall Street offenders from Goldman Sachs,
AIG, or Morgan Stanley, and so on there are zero convict records to study – because none of these
“criminal” violators were ever charged, let alone prosecuted or convicted for any of their criminal
wrongdoings. There are, however, some anecdotal stories about one very super-rich professional
ex-offender Michael Milken. Developer of the high-yield bond and other innovations in access
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to capital, Milken pled guilty in 1989 to reporting and securities violations, was sentenced to ten
years in prison, fined US$600 million, and barred from the securities industry for life.
As part of his plea deal, Milken’s indictments for racketeering and inside trading were dropped.
Subsequently, his sentence was reduced to two years for cooperating with prosecutors against his
former financial colleagues and for his good behavior. Upon his release from prison, he was
invited by the Anderson Graduate School of Management at UCLA to participate as a guest
lecturer in a finance course and to help the school develop a teaching video at his expense for
use by universities across the USA. Today, Milken is worth some US$2.5 billion. He is also a
survivor of prostate cancer and a founder of medical philanthropies funding research into all
types of life-threatening diseases. So, one might say that in addition to his vast economic worth,
he has a great deal of “social” capital through his philanthropic endeavors, such as the Milken
Family Foundation and the Milken Institute. Milken is also married to his second wife and has
three grown children, so one could check off the “personal” capital box, too, as contributing to
his desistence from crime.
In the opening chapter of this final section, “Postconviction and powerful offenders: the
white-collar offender as professional-ex,” Ben Hunter and Stephen Farrall explore the postconviction accounts of white-collar offenders with reference to their professional-ex statuses. In
doing so Hunter and Farrall reveal how by adopting a professional-ex status an individual draws
upon a previous, deviant identity in order to give legitimacy to a new identity. They specifically
focus in detail on the accounts of a couple of relatively powerful professional ex-offenders. The
first is Barry Minkow, convicted of accounting fraud at age 20 for single-handedly operating a
US$100 million Ponzi scheme that collapsed in 1987. Upon release from prison he became a
pastor, a fraud investigator, and ethics spokesperson who ultimately returned to prison in 2011
and again in 2014. Today, he stills owes more than US$600 million in restitution for his role in
deliberately helping to drive down the stock price of home builder Lennar Corporation, a Fortune 500 company based out of Miami, Florida. The other professional-ex reviewed by Hunter
and Farrall is Charles Colson of Watergate infamy. A former adviser to President Nixon, who
after release from prison became a famous Evangelical Leader and founder of the very successful Prison Fellowship Ministries, Colson remained crime-free up until his death in 2012 at the
age of 80.
With respect to not controlling powerful crimes, abuses, and misbehaviors there are the
internal/informal levers of power (i.e., boards of directors, investors, legal counsel, accountants)
and the external/formal levers of power (i.e., law, litigation, arbitration, punishment) circulating
through business organizations in particular. There are also the ideological or cultural inhibitors
espoused by those criminologists, policy wonks, entrepreneurs, economists, lawyers, and others
that often advocate on behalf of “social responsibility” or “financial accountability” as informal
strategies for reducing the crimes of the powerful. In the case of corporate and financial abuse and
crime, boards of directors are called upon to “do the right thing,” to act ethically and responsibly
in their roles of oversight and accountability.
These palliatives are often heard and repeated as bromides for reining in the misbehavior of
the powerful, such as when Mary Jo White, the chairwoman of the Securities and Exchange
Commission, delivered a speech at Stanford University’s Rock Center for Corporate Governance
in the early summer of 2014. White emphasized the importance of the duty of corporate directors to protect shareholders from abusive practices at companies that they oversee: “ethics and
honesty can become core corporate values when directors and senior executives embrace them”
(Quoted in Morgenson 2014: 1). Unfortunately, published research reveals that under current
governing relations where the majority of corporate boards have personal ties with their chief
executives, this is much easier said than done, even when their overlapping relations (or conflicts
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of interests) are disclosed or transparent. In fact, nearly half (46 percent) of those with personal ties
as contrasted with only 6 percent of those with no personal ties, in order to assist CEOs in getting their annual bonuses, for example, would agree to actions that would not only hurt investors
and taxpayers, but would also increase the risks for the well-being of these companies’ futures.
These contradictory relations are vital to the workings of corporate boardrooms (Morgenson
2014). Critics of social responsibility and financial accountability recognize the importance of
these findings. Unfortunately, most advocates, expert and lay alike, typically ignore these everyday,
compromising relationships.
In Chapter 32, “Business ethics as a means of controlling abusive corporate behavior,” Jay
Kennedy examines the often contradictory relations between private profits and social responsibility. He first describes and discusses the field of “business ethics,” with an emphasis on behavioral ethics and the ability of ethical business principals to control the proliferation of abusive
corporate behavior within a business environment. In the process, Kennedy highlights both the
history and philosophy underpinning business ethics and the ability of its behavioral approach
to influence business decision making through both formal and informal means. He concludes
that while business ethics are not necessarily a panacea, they do provide government regulators,
non-governmental agencies, corporations, business schools, and businesspeople with a means
“to materially affect abusive behavior within the marketplace,” especially when that behavior is
viewed as ethically ambiguous.
The next reading illustrates a “reversal in crime control.” That is a contradictory situation
where agribusiness in this instance has been able to lobby successfully for the passage of laws to
criminalize the behavior of those who would expose the farming industry’s cruelty to animals.
In Chapter 33, “Ag-gag laws and farming crimes against animals,” Doris Lin, an animal rights
attorney, examines the efforts of agribusinesses to shut down the investigations into factory farming cruelty to animals through the passage of “ag-gag laws” that criminalize the making or distribution of undercover photos or videos that document these felonious behaviors. As paradoxical
as these laws may be, Lin reveals that in the US animal cruelty laws at all levels of government
operate to protect factory farms and animal agriculture more than they protect animals.
For example, most state animal cruelty laws exempt animals raised for food as well as most of
the practices common to big agricultural facilities. But instead of the government addressing the
cruel conditions of factory farming or the inadequacy of existing laws to protect these animals,
in a number of states ag-gag bills are being introduced as one more means of suppressing the
exposure of animal cruelty, as well as a means to criminalize those individuals who would dare to
bring these abuses to public attention. Following her discussions on factory farming crimes, the
relationships between agribusiness and government regulation, and the development of ag-gag
laws, Lin also explains why “humane farming” is not a viable alternative to factory farming. She
concludes that whether or not one believes animals are sentient and have rights, ag-gag laws are
objectionable because they not only allow an industry to operate in secrecy, but they also punish
individuals who expose wrongdoing.
In Chapter 34, “Genocide and controlling the crimes of the powerful,” Augustine Brannigan
explains why genocide and related war crimes among the gravest offenses recognized in international criminal law have been so rarely successfully prosecuted. After introducing the Kantian
vision of a “cosmopolitan justice” he then outlines the evolution of the legal framework under
which genocide has been defined and applied. His narrative moves chronologically from sovereign
immunity to criminal accountability, to the rule of law at Nuremberg, to the Genocide Convention of 1948, and finally to the Rome Statue and the establishment of The International Criminal
Court in 2002. Using applicable examples as he proceeds through this history, Brannigan identifies
the numerous contemporary obstacles still in the way of the attempts to control the crimes of the
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powerful through the law of genocide, such as the costs of funding these tribunals or the biases
of focusing on developing nations in Africa that have little power to introduce their own security
measures or to resist the neo-colonial incursions by the ICC to fill these legal vacuums.
Although Brannigan acknowledges that there has been a “remarkable diminution of the
impunity with which sovereigns can evade criminal accountability in international law,” the
problem of not yet achieving cosmopolitan justice through the creation of the ICC stems primarily from the fact that “the major superpowers have absented themselves from its jurisdiction by
failing to support the convention on which it is based.” He ends his chapter with the hope that as
Nuremberg provided a check on sovereign immunity globalization may produce a reconceptualization of sovereign power as “a balance of political autonomy combined with a responsibility
to the community of nations and to the governed.” Brannigan acknowledges that if this were to
materialize, it would have to be led by the “middle powers” nations like Germany, Canada, Brazil,
Japan and so on because this is not likely to be a priority of the superpowers.
Moreover, in terms of “balanced” global power this would also have to be in opposition
to empire. As Kramer (2012: 442) argues, “One necessary, although clearly not sufficient, step
in the effort to curb state crime . . . is to challenge, resist, and change the American empire,”
which continues not only “to engage in the most state violence in the world,” but also through
its “attempted imperial domination of the globe creates or supports conditions that lead to state
crimes on the part of other nations.” With respect to external or international violators, among
the relatively powerful world nations, probably Israel, Russia, and the United States are the biggest offenders. In the case of the US, for example, post 9/11 it has tortured (e.g., Bagram Air
Force Base, Afghanistan; Abu Ghraib, Iraq; Guantanamo Bay Naval Base, Cuba) and assassinated
“enemy combatants” by drone (e.g., Yemen, Pakistan, Somalia). The US also illegally invaded and
waged war against Iraq in 2003 and occupied the country until the end of 2011. Not unlike
Stanley Cohen (2001) in States of Denial of the atrocities and suffering throughout the world,
Kramer argues that challenging the crimes of empire calls for breaking through the denial and
normalization of these crimes of the powerful, contesting their corporate and state connections,
and enhancing the power and control of international political and legal institutions.
In Chapter 35, “Controlling state crime and alternative reactions,” Jeffrey Ian Ross contextualizes the notions of controlling state crimes. He first outlines the traditional types of “internal”
(e.g., police, national security/intelligence agencies, the military, and educational institutions)
and “external” (e.g., domestic and international laws, transitional justice, and criminal tribunals)
control mechanisms. He then examines the alternative reactions (e.g., victim/activist/opposition
group resistance, state/organizational resistance, and state/organizational public relations) to the
traditional state controls and the state’s responses to those. After reviewing these traditional and
non-traditional attempts at controlling state crime, Ross concludes somewhat sardonically that
short of abolishing the state, state crimes and the non-control of these crimes will continue to
provide ample content for understanding why these processes of control fail to do so.
In Chapter 36, “Hacking the state: hackers, technology, control, resistance, and the state,”
Kevin Steinmetz and Jurg Gerber examine hackers as important players in the global struggle for
technological control and resistance. This offering seeks to incorporate alternative perspectives
into the state crime literature. Specifically examining the roles, the philosophies, and the practices
of hackers, Steinmetz and Gerber contend that while hackers such as Anonymous, a loosely associated network of activists and hacktivists, are often demonized in a process of social construction
and moral panics and sometimes pose threats to state and corporate interests, they actually have
much to teach criminologists and state actors about cyberspace and crimes by the state. Going
forward, they conclude that nations, aided by hacker communities, would be well served in reevaluating their policies and laws surrounding technology, information, and surveillance.
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Interesting “bedfellows” one might say about national cyberspace security forces teaming
up with hacker communities to prevent crime. However, that is precisely the case in Washington
Post journalist David Ignatius’ 2014 novel The Director, where the CIA hires a hacker to head
up its “counter-hacking” division to bring the agency into the twenty-first digital century as it
races to prevent the international financial system from what could be total bankruptcy. Spoiler
alert: Turns out that the hacker with all the preppy credentials that one could need, including an
advanced degree in computer engineering from Stanford University, is a double agent in league
with a cyber group of “liberal do-gooders” who want to steal the money back from New York,
London, and Hong Kong and redistribute it into the people’s bank accounts.
Turning from fiction to headlines, on October 3, 2014, “Hackers’ Attack Cracked 10 Financial
Firms in Major Assault,” including JP Morgan Chase, the world’s largest bank accessing information on 83 million households and businesses, in what has been called “one of the most serious
computer intrusions into an American corporation.” According to the New York Times article,
the hackers are thought to be operating from Russia and appear to have loose connections with
officials of the Russian government. The breadth of the cyber attacks and “the lack of clarity
about whether it was an effort to steal from accounts or to demonstrate that the hackers could
penetrate even the best-protected American financial institutions” has left “Washington intelligence officials and policy makers far more concerned than they have let on publicly” (Goldstein
ed al. 2014).
Speculation about the breaches that occurred in August 2014 include that they were meant
to send a message to Wall Street and the US that its digital networks of the world’s most powerful banking institutions were vulnerable. “It could be in retaliation for the sanctions” placed on
Russia for its military intervention into the Ukraine by the US and its allies, stated one senior
official who had been briefed on the intelligence. “But it could be mixed motives – to steal if
they can, or to sell whatever information they could glean” (Goldstein et al. 2014). Whether or
not the banks are up to the job of digitally protecting themselves, the attacks have already stoked
questions about the inconsistent regulations governing when companies must inform regulators
and their customers about a breach.
In the wider world of domestic and international state security surveillance, for example, there
is the National Security Agency that is virtually an unencumbered free agent without any real
type of oversight or regulation. On several occasions during its history the NSA has come under
criticism for spying. Most recently, this was the case when in 2013 Edward Snowden revealed the
extent of the NSA’s secret surveillance, including that the agency intercepts the communications
of over a billion individuals worldwide, tracks the movement of hundreds of millions of people,
and collects and stores the phone records of all US citizens. Post 9/11 both the Bush and Obama
administrations waged a war against whistleblowers and investigative journalists that has had a
chilling affect on both (Solomon and Wheeler 2014).
In Chapter 37, “(Liberal) democracy means surveillance: on security, control and the surveillance techno-fetish,” Dawn Rothe and Travis Linnemann suggest that it is not only surveillance
programs such as PRISM that must be “a target for radical critique, but also the public’s disavowal
of its complicity in more banal and normalized forms of surveillance,” including a slowing down
and unplugging from our mediated lives. As for the recent revelations over state surveillance, they
argue that these are simply the latest iterations in processes that have always been part and parcel
of state power, social control, and capitalist order building. They reject the position that what
is called for is merely a balancing of individual rights and security, arguing that the portrayal of
surveillance in this vein legitimates the state system by implying that some degree of surveillance
is acceptable. Rothe and Linnemann contend that the intermittent outrage over government
intrusion more aptly reflects an enduring capitalist techno-fetish, which they aver is a deeply
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engrained part of our consumer culture. The focus upon “new” surveillance projects operates as
fetish objects. Once fetishized, surveillance technologies, not unlike drone strikes, become objects
of outrage, allowing the underlying state violence of state power to carry on, in essence, unchallenged. Finally, to fetishize “new” surveillance they argue is to overlook and become complicit
in quotidian forms of state violence, coercion, and terror.
In the closing chapter to this handbook, “Limiting financial capital and regulatory control
as non-penal alternatives to Wall Street looting and high-risk securities frauds,” Gregg Barak
explains why criminal law has had no effect on controlling high-risk securities frauds. The
contribution departs from those financial reforms calling for organizational ethics, for stricter
law enforcement, and for the passage of new laws not only because all of these have consistently
failed in the past, but also because high-risk security trading and many of the illegalities originate
from private stock exchanges and “dark pools” representing today more than one-third of equity
trading in the United States and Europe. These high-speed trading pools involving mutual funds,
pension funds, and other institutional investors are where the frauds are more likely to happen
because these trades are conducted outside the public exchanges and beyond their control or
oversight.
Chapter 38 begins by describing the forces of free-market capitalism and the failures of
securities law to prevent Wall Street fraud and looting. It discusses the inefficacies as well as the
non-controls of state-legal interventions into these securities, past and present. The chapter concludes by summing up its argument and identifying 20 related policy proposals and/or political
ambitions that are anti-neoliberalism to the core and reflective of an alternative paradigm viewed
as absolutely necessary for changing the prevailing power relations of free-market capitalism and
for curbing the crimes of the powerful. This new paradigm is part of the movement away from an
ownership economy and toward a collaborative economy based on developing a mixed economy
as well as the financial restructuring of the political economy.
Crises, contradictions and control: a postscript for
the twenty-first century?
More than six years after the financial collapse, a global recession, if not economic crisis, still
persists throughout the world. The well-being of the relatively powerless and masses of people
has continued to deteriorate. Meanwhile, the super-rich and the very powerful are getting much
richer and more powerful than ever before. In 2012 the top 100 billionaires from China, Russia,
India, Mexico, Indonesia, North America, and Europe added US$240 billion to their coffers,
enough money, Oxfam calculates, to end world poverty overnight. Unfortunately, the current
policies in place to address these contradictions are more likely to exacerbate rather than ameliorate them. Unless the power relations behind the policies that speak to the problems of capital
accumulation, reproduction, and consumption fundamentally change, the prospects of controlling the crimes of the powerful as opposed to suffering from them will remain close to zero.
Policy wise, to fix the contemporary crises, the world finds itself caught between neoliberal,
supply-side and monetarist remedies as in Europe and the United States that emphasize austerity
and privatization, on the one hand, or a centralized demand-side and debt-financed expansion
that ignores the Keynesian emphasis on the redistribution of money to ordinary people, as in
China, on the other hand. Paradoxically, the economic and political outcomes are the same –
widening and escalating inequalities – because in either case the world is increasingly turning to
central banks, led by the Federal Reserve of the United States, to manage the recurring financial
global crises. These “solutions” to resolving the problem of capital accumulation depend, in
other words, on the contradictory “dictatorship of the world’s central bankers” whose primary
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concern is about protecting and bailing out the banks, the plutocrats that run them, and the
various systems of market capitalism with little, if any, regard for the well-being of the general
masses of people.
In sum, unless the prevailing political and economic arrangements locally and globally as
well as the contradictions of the bourgeois legal relations of the capitalist state are structurally
addressed, it is very hard to imagine how any other kind of tinkering will alter the negative trends
of unsustainable capital development or make any kind of dent in the volume of let alone in the
driving forces underpinning the crimes and victimization of the powerful. Accordingly, what is
needed as an alternative to the current economic malaises is a worldwide people’s movement on
behalf of a global system of international Keynesianism, an Eco-welfarism, and a Marshall-like
strategic plan of sustainable growth. Consistent with this utopian vision is a realpolitik recognition that resisting the crimes of the powerful has little in common with trying to make the
existing regulatory or penal arrangements of social control work better through reformist-type
modifications of business as usual. Rather, fundamental changes of the political economy through
social, cultural, and global activism are called for. Without eliminating the basic conditions that
nurture these crimes of the powerful, new and improved social controls will not change the
enduring reproduction of these crimes.
Note
1 Quotes taken from WBEZ Chicago’s This American Life, episode 536: The Secret Recordings of Carmen
Segarra. Reproduced with the kind permission of This American Life.
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Part I
Culture, ideology and the
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1
Crimes of the powerful and
the definition of crime
David O. Friedrichs
Introduction
In 1897 an English-language book by Cesare Lombroso, Criminal Anthropology, was published.
Lombroso’s approach to understanding crime was tremendously influential in the development
of criminology in relation to its focus upon conventional, individual offenders and the application of a positivistic approach to the study of crime and criminality. Lombroso, an Italian physician, is quite uniformly identified as a pioneer criminologist, and typically, significant space is
devoted to his career and his ideas in any history of criminology. For Lombroso – and for most
criminologists who have followed in his wake – crime is principally an activity engaged in by
the powerless, but in the year following the publication of Criminal Anthropology, in 1898, a
French judge, Louis Proal, published a book entitled Political Crime. The book was published by
D. Appleton and Company as part of a “Criminology Series” edited by W. Douglas Morrison,
including his own book, Our Juvenile Offenders, The Female Offender by Cesare Lombroso and
William Ferrero, and Criminal Sociology by Enrico Ferri. Proal addressed the crimes that are carried out in the political domain, with the most consequential of these perpetrated or directed by
powerful political leaders. Among other topics, the book addressed tyranny, war and corruption.
Proal and his book are almost wholly unknown to contemporary criminologists, and Proal’s work
is not addressed in standard histories of the development of the field of criminology and criminological theories. Yet let us suppose it had been the other way around: that it was Proal and not
Lombroso who became an iconic figure in the history of criminology. If it had played out this
way the whole character and focus of criminology might be quite different, with the majority
of criminologists focused upon the crimes of the powerful. The crimes of the powerless would
in this scenario be a somewhat more limited focus of criminological research and exposition.
There is significant resistance among many criminologists to engaging with the definitional
issues relating to crime or to specific types of crime. This author has encountered over the
years any number of comments on “tedious” and “interminable” definitional discussions. Many
criminologists clearly prefer to “get on with the work” of addressing specific theoretical and
empirical questions that arise in relation to crime and its control, as opposed to devoting time and
intellectual energy to dialogues relating to definitional and conceptual issues. Such impatience is
understandable on a certain level, and the downside of becoming “imprisoned” by definitional
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conundrums to the point where one is hindered from addressing concrete and consequential
“real-world” issues needs to be acknowledged. But the premise here is that avoidance of core
definitional issues has costly consequences in relation to theoretical and empirical progress. All
too often, we end up with criminologists talking past each other or generating a bottomless well
of confusion and misunderstanding because the core concept of “crime” is not clearly defined.
Addressing the definitional issues has to be a fundamental starting point for any coherent discussion of crimes of the powerful. The historical focus principally on the crimes of the powerless,
not the powerful, is significantly a function of how crime has been defined and imagined.
There is a long and enduring history of invoking the term “crime” without any attempt
to define it. For many people the meaning of the term ‘crime’ is clearly taken to be obvious.
The term crime is most widely equated with conventional criminal offenses, or violations of the
criminal law that are exemplified in the United States by the FBI’s index crimes: murder, rape,
assault, robbery, burglary, auto theft, larceny and arson. This is the type of crime traditionally
of most concern to the American public, along with drug-related offenses and recent concerns
about terrorism, and these offenses account for most of the “mass imprisonment” of the recent
era (Abramsky, 2007). The largest proportion of criminological scholarship addressing crime
through the present era encompasses one or more of these types of crime. But there is also a long
tradition critical of the limitations of a conventional conception of crime (Hall, 2012; Henry and
Lanier, 2001; Tifft and Sullivan, 1980). Accordingly, the claim is made that much of the focus of
mainstream criminologists is seriously skewed.
If criminology as an enterprise has focused very disproportionally on the crimes of the powerless as opposed to the crimes of the powerful, why is this so? It is rooted in part in the historical
circumstance of embracing a certain conception of crime, which over time becomes reinforced
and reified. The media and the broader public discourse on crime, as well as the political classes,
are disproportionally focused upon conventional forms of crime. Graduate students in criminology came to adopt the conception of crime of their professors and mentors, and a cohort effect
continues to reinforce this conception of crime and criminals (Savelsberg and Flood, 2004).
Career advancement is best realized by focusing on the types of crime that is the primary focus of
the public as well as of those who shape the curriculum of criminal justice and criminology programs. The vast majority of students who enroll in such programs are focused upon conventional
criminals and their control. Powerless offenders, often institutionalized, are more readily available
as research subjects than powerful offenders. Furthermore, powerful entities are well positioned
to derail or retaliate against research projects directed at their activities. Powerless entities have no
such influence or clout. Altogether, a confluence of factors militate against a focus upon crimes
of the powerful, and those who choose to do so must often contend with various forms of direct
and indirect pressure to shift their attention elsewhere.
Defining crime and the criminological mainstream
As Robert Agnew (2011: 13) notes, little space and time are devoted to considering the definition of crime in mainstream texts and in discussions of crime and criminological phenomena.
Much mainstream criminology clearly adopts a taken-for-granted approach to what the term
crime (and criminal) refers to, with a strong if not exclusive emphasis upon conventional types of
crime. A volume entitled The Future of Criminology, edited by Rolf Loeber and Brandon C. Welsh
(2012), exemplifies this pattern. Nowhere in this volume do we find any discussion of the meaning of crime or criminal: it is taken for granted that readers understand what these terms refer
to (i.e., conventional law-breaking and “street” criminals). There is no acknowledgment of any
kind that crime and criminals may exist outside the conventional framing of such activity. Nor
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The definition of crime
is there any acknowledgment that “the future of criminology” extends beyond the criminological mainstream, and accordingly there is at a minimum an implicit if not explicit dismissal of the
notion that any criminological concerns outside the mainstream criminological framework are
part of a legitimate criminological enterprise. The exclusion of a vast range of willfully harmful
endeavors – by states, corporations, and other hugely powerful entities – is immensely limiting
for a criminology that aspires to remain relevant in the twenty-first century. This type of institutionalized parochialism – which is quite pervasive within criminology – may be attributed at
least partially to the dismissal of definitional and conceptual issues.
Michael Gottfredson and Travis Hirschi’s (1990) “general theory of crime” is – within the
American context – the single most widely cited and widely tested criminological theory of
the present era (see, e.g., Cohn and Farrington, 2012; Goode, 2008; Madfis, 2012). This general
theory holds that crime (all crime) is best explained as a function of low self-control and poor
parenting. Indeed, Gottfredson and Hirschi claim that this explanation applies not just to those
types of behavior that are commonly characterized as “crime,” but to the whole range of patterns of deviant conduct (e.g., all forms of substance abuse) as well as proneness to accidents
and so forth. The popularity of this theory may well be the attractiveness of adopting a form of
explanation with a limited number (as opposed to a multiplicity) of variables, and the availability
of standard instruments for testing the theory which allow for the generation of findings in a
quantifiable form, with the application of impressive multiple regression equations and so forth.
Gottfredson (2011: 36) has recently argued against the adoption of either a legalistic definition of
crime or a disciplinary definition of crime, in favor of a behavioral definition of crime as “part
of a much larger set of behaviours that provide (or appear to provide) momentary benefit for the
actor but which are costly in a longer term.” It should be obvious that such a definition of crime
inherently aligns crime with the behavioral patterns of members of society who are powerless,
not powerful, and skews the study of crime almost exclusively to street crime. On the one hand,
Gottfredson and Hirschi (1990: 191; Gottfredson 2011: 39) have referred to white-collar crime –
and organizational crime specifically – as “rare.” On the other hand, they have also claimed that
the profiles for white-collar and conventional offenders are virtually parallel. Both claims have
been challenged, as have the huge limitations of the general theory in relation to understanding
white-collar crime (Friedrichs and Schwartz, 2008). Crimes of the powerful are anything but
rare, and powerful criminals have dramatically different profiles from conventional offenders.
Donald Palmer (2012), a professor of sociology and organizational behavior, argues that organizational wrong-doing is in fact “normal.”
The criminological critique of the mainstream conception of crime
At least some criminologists who would be classified as falling within the parameters of the
criminological mainstream acknowledge the limitations of the traditional, mainstream criminological way of defining and studying crime. Robert Agnew (2011), in Toward a Unified Criminology, specifically engages with the work of a range of critical criminologists and puts forth an
integrated definition of crime that seeks to find some common ground between mainstream and
critical criminological approaches to defining crime. The advantages of this integrated definition of crime, which promotes a broadening of the scope of criminological concerns, are fully
addressed by him. John Hagan (2010), in his Who are the Criminals?, offers a potent critique of
the conventional, mainstream framing of the problem of crime, with its highlighting of street
crime or conventional crime and its relative inattention to suite crime or high-level white-collar
crime. Hagan has produced several recent books on genocide and international criminal justice
in relation to crimes of states. Both Agnew and Hagan have been recipients of major forms of
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recognition by the criminological establishment and are highly respected contemporary criminologists. Accordingly, their critiques of the mainstream way of defining of and conceiving of
the problem of crime are at least potentially influential. Joachim Savelsberg (2010) is another
prominent criminologist aligned with the mainstream who has argued for criminological attention to human rights violations. It remains to be seen whether a critical mass of mainstream
criminologists will heed the call for an expanded scope of criminological concerns.
There is a long-standing tradition of critique of conventional conceptions of crime that
have been advanced by self-described radical or critical criminologists (see, e.g., DeKeseredy
and Dragiewicz, 2012; Tifft and Sullivan, 1980; Watts et al., 2008). Richard Quinney (1970)
introduced in The Social Reality of Crime an influential conception of crime as a construct put
forth by the powerful to reflect their interests. The “humanistic” definition of crime put forth
by Schwendinger and Schwendinger (1970) is quite familiar and has been widely cited. The
approach to conceiving of crime as “crimes of capital” by Raymond Michalowski (1985), in
Order, Law and Crime, was another noteworthy contribution. Stuart Henry and Mark Lanier
(2001), in an in-depth consideration of the definition of crime, have advanced a “prism of crime”
definition (see also Agnew, 2011). For some criminologists, the term crime itself is inevitably
so limiting and so constrained by its historical meaning that it should be abandoned in favor of
“social harm” as the focus of our concern, with criminology itself being replaced by “zemiology,” or the study of harm (see Friedrichs and Schwartz, 2007; Hillyard et al., 2004). A call on
the part of Victoria Greenfield and Letizia Paoli (2013) for creating “a framework to assess the
harms of crimes” represents one recent initiative to increase the focus on the harm dimension
inherent to definitions of crime.
Altogether, the radical and critical critiques of the definition of crime promote attention to
the crimes of the powerful, and take a form which recognizes that the crimes of the powerful
tend to be exponentially more consequential than the crimes of the powerless.
Who are the powerful?
If the definition of crime itself is contentious, the notion of “the powerful” also requires some
attention. It is widely recognized that “power” is a key force (some suggest the key force) in the
world inhabited by human beings, and many tomes have been devoted to addressing the concept
of power (e.g. Hearn, 2012). We need not engage with this large literature here, but one should
acknowledge that the powerful is a somewhat elastic term. It can be stretched to encompass the
unambiguously powerful but can encompass as well parties and entities that have only some
degree or measure of power. We have powerful entities (e.g., major corporations) and powerful individuals. In some cases, power is structurally embedded within the political economy; in
other cases, power is situational and circumstantial. Political dictators in totalitarian states – with
Hitler and Stalin being the paradigmatic historical cases – are the most unambiguously powerful
individuals, and in both cases these individuals were responsible for inspiring and setting into
motion crimes on a monumental scale. In the public sector, high-level political and governmental
officials have formidable power; but what of government bureaucrats and low-level government
officials, such as police and corrections officers? They certainly have some power, and they may
exercise considerable power in carrying out specific or implied orders of their superiors, or they
may be abusing the power they have to further their own personal agendas or as expressions of
personal biases. Police abuse of power – some of which is mundane and some especially serious
(e.g. misuse of deadly force) has long been recognized and studied (e.g., Eitle et al., 2014). In the
private sector, CEOs of major corporations and financial institutions also have formidable power,
but lower level executives as well as managers and foremen have situational power.
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The definition of crime
As C. Wright Mills (1956) famously highlighted in his classic book, a “power elite” of the top
government, military and corporate people has disproportionate power within society, and has
various interconnections with each other to advance common interests and to make trade-offs
between themselves in relation to differential power exercised in different realms. The empirical
validity of Mills’ claims has been challenged from the outset (Domhoff and Ballard, 1968; Hearn,
2012: 70). But at a minimum the exercise of power is hugely asymmetric in contemporary society, and at least some significant interlocks and intersections of interests occur within the highest
reaches of society. In relation to crimes of the powerful specifically, the identification of any such
interlocks and intersections is one key challenge. Altogether, we need to recognize that the powerful may be conceived of in traditional terms, as individuals; in modern terms, as organizations;
and in postmodern terms, as networks.
The definition of white-collar crime and crimes of the powerful
Within American criminology in particular, Edwin H. Sutherland is surely the highest profile
figure associated with a challenge to the conventional definition of crime. For some commentators, Sutherland is the most significant criminologist of the twentieth century. His introduction
of the concept of “white-collar crime” is among his more important contributions. We need not
here revisit in any detail Sutherland’s (1945) celebrated exchange with law professor Paul Tappan
(1947), who complained that Sutherland’s application of the term “white-collar crime” to a
range of activities not specifically declared crimes by legislative criminal law was unwarranted.
But the essence of Sutherland’s response to Tappan has remained hugely influential among subsequent students of white-collar crime: the inclusion of violations of civil and administrative law
as well as of criminal law could justifiably be encompassed by the term “white collar-crime”
because the white-collar “class” has too much influence over lawmaking generally and criminal
lawmaking specifically. Accordingly, limiting the definition of white-collar crime to actions
specifically proscribed by the criminal law excludes a vast amount of obviously immensely
harmful activity carried out by the white-collar class. In effect, limiting oneself to the activities
specifically proscribed by the criminal law in relation to white-collar crime plays directly into
the hands of corporations and other powerful social actors who have succeeded in preventing the
“crime” label from being applied to a wide range of demonstrably harmful activities in which
they engage.
For all of the credit Sutherland deserves in relation to introducing the concept of white-collar
crime to the field of criminology – and, more broadly, to the public discourse on crime – he can
also be faulted for having contributed to the long, ongoing historical confusion on the appropriate meaning of the term “white-collar crime.” Sutherland simply did not devote enough thought
and consideration to the definitional issue at the outset of his work on white-collar crime, and
accordingly invoked the term in quite different ways with quite different meanings.
Due to space limitations, I will not here undertake a review of the historical development
of the concept of white-collar crime since Sutherland, other than to make a few pertinent
observations (but see Friedrichs, 2014). First, this history has been characterized by much confusion (Geis, 2007). Second, while the term “white-collar crime” has been applied to hugely
powerful organizations and individuals, it has also been applied to utterly powerless individuals
(e.g., cashiers and stock room employees who steal from their employer). And third, some of
the most widely known studies of white collar crime (e.g., the Yale studies) have incorporated
powerless white-collar crime offenders, in part because doing so contributes to operationalizing key variables. My own solution to the definitional conundrum has been to use the
term “white-collar crime” as a broad, heuristic, umbrella term encompassing a wide range of
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core, cognate, hybrid and marginal specific types of such crime (Friedrichs, 2010). Corporate
crime and occupational crime are the two principal core types. But in relation to crimes of
the powerful, specifically: corporate offenders (or at least large corporations as offenders) are
intrinsically powerful, while occupational offenders range from the relatively powerful (e.g.,
wealthy physicians and lawyers) to the wholly powerless (e.g., low-level employee pilferers),
and everything in between. The concept of state-corporate crime – extensively addressed elsewhere in this handbook – captures the hugely consequential cooperative activity of powerful
entities. Within the financial sector, one has especially powerful entities and actors whose illegal and unethical activities are also hugely consequential, and have been relatively neglected by
criminologists (Barak, 2012; Friedrichs, 2013; Hagan, 2010). If the term “white-collar crime”
is often used to refer to crimes of the powerful, it is clear then that it is not in fact synonymous
with this term. Frank Pearce (1976), in a book entitled Crimes of the Powerful, has been credited
with coining this term, at least within criminological discourse (Whyte, 2009: 1). Pearce did
not specifically define “crimes of the powerful” but rather demonstrated the relevance of a
Marxist approach for understanding the significance of crime perpetrated by the powerful.
As was suggested earlier, many others – including Marx and Engels, Louis Proal, E.A. Ross,
and Willem Bonger – had drawn attention to such crime, but the term itself has only been
quite widely invoked in recent years. David Whyte’s (2009) Crimes of the Powerful: A Reader is
one reflection of the current institutionalization of the term, as is this handbook. In the sections that follow I will limit myself to commenting on only some dimensions of crimes of the
powerful.
The most powerful actor of all? The state
If Sutherland made a huge contribution to the evolution of criminology by directing criminological attention to hugely powerful entities – major corporations – he wholly disregarded an
even more powerful entity: the state. The late William J. Chambliss’ (1989) 1988 American
Society of Criminology presidential address, on state-organized crime, deserves a historical status
parallel to Sutherland’s 1939 American Sociological Society presidential address, introducing the
concept of white-collar crime. Just as one can identify progenitors for the crimes of respectable
businesses – including Marx and Engels – one can also identify those who anticipated Chambliss
in calling attention to the crimes of states. But in both cases, for various reasons, it was Sutherland
in the case of white-collar crime and Chambliss in the case of state crime who inspired significant
(and growing) numbers of criminologists to take up the study of crimes of states – including
quite a few contributors to this volume. If the notion of crimes of corporations was controversial
at the outset – beginning with Paul Tappan’s oft-cited critique – the notion of crimes of states
(to say nothing of criminal states) has been even more controversial, with many commentators
taking the view that harms carried out in the name of states is a matter of concern for students
of international relations, but is not a criminological phenomenon. By now various overviews
of state crime as a criminological phenomenon (e.g., Barak, 1991; Green and Ward, 2004; Rothe,
2009) have been published, as have anthologies (e.g., Chambliss et al., 2010; Rothe and Mullins,
2011). There is a newly established journal, State Crime, and criminological articles and papers
relating to state crime are increasingly well represented in journals and at conferences. In sum,
the criminology of crimes of states has now been fully legitimized as a focus of criminological
inquiry. But it remains somewhat paradoxical that the most consequential crimes of all by arguably the most powerful “actor” of all – the state – have only in the recent era become a focus of
substantial criminological attention. Quite a number of contributors to this handbook address
crimes of states and their control.
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The definition of crime
Mundane crimes of the powerful
The criminological literature on crimes of the state disproportionally attends to the largest scale
of such crimes, especially genocide, war-related crimes, state terror, torture, and fundamental
denials of basic human rights (e.g., Green and Ward, 2004; Chambliss et al., 2010; Rothe, 2009).
I have myself contributed to this literature, also with a focus on such crimes (Friedrichs, 1998,
2010, 2011). And perhaps this is as it should be, as these large-scale crimes of the powerful have
broad, diffuse consequences. There are also crimes of the powerful in the private sector, with a
focus predominantly on environmental destruction, the creation of unsafe working conditions,
and the production of unsafe products. I will here restrict myself to mundane crimes of the
powerful in the public sector, or mundane crimes of the state. Mundane crimes of the powerful
are relatively neglected by criminologists. Don C. Gibbons (1983), in an article published more
than 30 years ago, addressed the issue of “mundane crime.” Dictionary meanings of the term
“mundane” include dull or routine, and Gibbons pointed out that a range of “commonplace,
low visibility and often relatively innocuous instances of law-breaking” (1983: 214) made up a
significant portion of the crime problem in modern societies. Gibbons’ list of mundane crimes
includes: drug abuse violations; gambling; offenses against the family; driving under the influence;
liquor laws; drunkenness; disorderly conduct; and vagrancy. The salient point here is that these
commonplace, rather innocuous offenses on the one hand account for a huge proportion of all
arrests in the United States, and on the other hand have low social visibility and many (but not
all) of these mundane crimes attract little attention from criminologists. On a personal note, my
interest in mundane crimes of the powerful was prompted by a bizarre, 18-hour ordeal trying to
cross the border from Cambodia into Vietnam with a travel companion (Elizabeth Windle) in
March 2014. We finally had to sign confessions for our visa-related errors.
The mundane crimes of the powerful refer to the routine exercise of power by relatively lowlevel agents of the state – civil service or justice system bureaucrats and enforcement personnel – in
ways that impose significant costs on vast numbers of people, especially in developing countries.
That such mundane crime in developing countries is part of the legacy of colonialism – wherein
colonial power imposed hugely oppressed bureaucratic regimes upon indigenous peoples – is one
more dimension of the tragic consequences of colonialism (Haque, 1997; Sumner, 1982). These
mundane abuses of power surface in relation to applications for necessary permits across a wide
range of activities, from obtaining visas to peddling licenses to residential permits. The low-level
agents who perpetrate these offenses may be characterized as the “petty powerful.” Their power
is situational, circumstantial, and contingent. In a strict sense, of course, a significant percentage
of such abuse occurs when the petty powerful enforce “letter of the law” requirements mindlessly and in a rote fashion, even when these requirements are clearly irrational, dysfunctional,
and counterproductive. Such enforcement of laws and regulations may be characterized as a form
of “structural” abuse of power; i.e., abuse in the sense of identifiable harmful consequences even
when the agent is technically in compliance with what is called for by the law or regulation. The
source of abuse in such cases may be traced back to those who create the laws and regulations
in the first place. The petty powerful may pride themselves in such cases with carrying out their
job strictly in accordance with formal requirements and expectations. But for at least some of
the petty powerful the intrinsic satisfactions of exercising power over other people, in some cases
people with significantly higher social status within the broader societal context, is a core motivating factor, and a form of sadistic pleasure may be derived from compelling groveling responses
and visible suffering upon those over whom one has situational power. In some circumstances the
petty powerful may abuse the formal power they have by requiring those over whom they have
power to go through procedures outside of what is formally required, simply to demonstrate that
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D. Friedrichs
they can exercise such power over other people. Of course the solicitation (or routine expectation) of bribes to provide some form of permit is a classic form of abuse of power by the petty
powerful, and is pervasive (even institutionalized) across the developing world, in particular.
The Arab Spring was apparently triggered by such a mundane crime of power. A Tunisian
fruit vendor, Mohammed Bouazizi, had been routinely subjected to abuses by police empowered
to supervise these vendors. As one account notes, “The cops took visible pleasure in subjecting
the vendors to one indignity after another – fining them, confiscating their scales, even ordering them to carry their stolen fruit to the cops’ car” (Fisher, 2011). In December 2010, Bouazizi
was once again contending with police officers who tried to block his path and take his fruit;
his uncle complained to a police chief. A policewoman called in by the chief was outraged, and
returned to the marketplace to confiscate Bouazizi’s fruit. A physical confrontation followed, and
Bouazizi was slapped in the face, shamed in front of some 50 witnesses. He got no satisfaction
from a city hall clerk when he complained. Bouazizi subsequently set himself on fire in protest of
this treatment, and died three weeks later in a hospital burns unit. This episode is widely regarded
as setting in motion the uprisings across the Arab world. Yes, the corrupt and oppressive practices
of autocratic leaders were a prime focus of these uprisings, in Egypt, Libya, and elsewhere. But
surely there is good reason to believe that the pervasive experience of the mundane, routine acts
of low-level government agents – police, inspectors, clerks, and all the rest – provided a hugely
important source of inspiration for the uprisings.
Emerging conceptions of crimes of the powerful: crimes of globalization
If criminology as a field has produced a very large body of literature on some types of crime, it has
almost wholly neglected other types of crime. “Crimes of globalization” is one such neglected
type of crime. I co-authored an article with my daughter Jessica, published in 2002, on “Crimes
of Globalization and the World Bank: A Case Study.” This project evolved out of Jessica Friedrichs’ experience of living among river fishermen in Thailand, in 1999, whose traditional way of
life was being destroyed by a World Bank-financed dam. Since I had long been interested in the
crimes of the powerful I was struck by the fact that the policies and practices of an immensely
powerful entity – the World Bank – were causing demonstrable, severe harm to powerless people
in a developing country, and this type of “crime” had been wholly neglected by criminologists.
Crimes of globalization, then, refer to the crimes of the international financial institutions, not
just the World Bank but the International Monetary Fund as well. The harmful activities of
these international financial institutions did not fit into any recognized criminological typology
“box”: obviously, not those capturing the whole range of conventional types of crimes, but the
international financial institutions are neither corporations nor state entities, in the conventional
sense, so their harmful activities also do not fit into the categories of corporate crime and state
crime. Can these harmful activities be justifiably characterized as “crime,” however? As Maureen
Cain (2010) argues, in her parallel advancement of the term “global crime” for these activities
of the World Bank and the International Monetary Fund, this is in fact crime when the harms
involved could and should have been foreseen by the international financial institution policy
makers. And there is much evidence to support that claim.
Since the publication of the original article on crimes of globalization in 2002, a number of
other criminologists have applied this concept to other cases involving the World Bank or the
International Monetary Fund, and I have co-authored recent book chapters and a book on this
topic (Friedrichs and Rothe, 2013; Rothe and Friedrichs, 2014; Rothe and Friedrichs, forthcoming). One core argument of this book: In a rapidly changing, globalizing world, some types of
crimes (e.g., crimes of globalization) are likely to achieve greater significance and recognition,
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The definition of crime
and other types of crimes (e.g., low-level conventional or street crimes) are likely to be less of a
problem or challenge for a range of reasons.
Concluding observations
A criminology of the crimes of the powerful should adopt as its starting point recognition of the
traditional approach to defining crime almost exclusively as crime committed by the powerless.
The criminological mainstream, with a self-identify as a scientific endeavor, is inherently biased in
favor of definitions of crime that lend themselves easily to operationalization. This bias inevitably
privileges attention to the crimes of the powerless rather than to the crimes of the powerful.
A “prospective” criminology in a complex, globalized world looks ahead toward anticipating
key emerging developments and changes in this world, and recognizes that the meaning of the
core term “crime” itself inevitably evolves with these developments and changes (Aas, 2007).
It is an illusion, surely, that the term “crime” may be defined in only one way, and that any
such definition would be universally acknowledged and adopted. Any invocation of the term
“crime” requires some specification of just which definition or meaning of the term is being
adopted within the context of this invocation. Increasingly, the application of the term “crime”
to activities of the powerful, not the powerless, is a core dimension of an evolving criminological
enterprise.
Acknowledgments
This chapter is dedicated to the memory of Gil Geis – who addressed the definitional issues
relating to white-collar crime so fully and wisely – and to the memory of Bill Chambliss – who
played a key role in initiating contemporary criminological attention to crimes of states and other
powerful actors and entities. They were both warm, wonderful human beings, and great friends
to many of us. An earlier, quite different version of this chapter was presented as an invited Presidential Panel paper at the Annual Meeting of the American Society of Criminology, Atlanta in
November 2013, and was subsequently posted on the ASC website (under “Resources”).
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2
Operationalizing organizational
violence
Gary S. Green and Huisheng Shou
“Organizational violence” – organizational decisions that knowingly risk harm to human
beings – has been traced back at least as far as ancient Greece (Geis, 1968: 11). The purpose of this
chapter is to put forth for debate various dimensional elements for operationalizing that concept,
primarily as a dependent variable in the explanation of crimes committed within organizational
decision-making contexts.
Without some sense of agreement about what constitutes organizational violence, its use could
lose material legitimacy, thereby impeding meaningful investigation into its underlying causes.
For instance, Kramer (1983: 167) calls for comprehending organizational violence in terms of the
environments and structures that facilitate it, but we cannot isolate those environments and structures as predictors of the phenomenon if we cannot agree on what that phenomenon actually
is. Put another way, if those who study organizational violence opt for idiosyncratic rather than
constituent definitional constructs, then the field as a whole will never evolve an understanding of
such behaviors because it will never quite know what it is trying to understand. Simply knowing
organizational violence when you see it – as Justice Potter Stewart declared about obscenity in
Jacobellis v. Ohio (1964: 197) – is hardly the way to undertake scientific inquiry.
Subjectively, organizational violence may be construed narrowly as involving those purposeful organizational decisions that can inflict direct physical harm on human beings (as well as on
other species and the environment). Or it may be perceived much more broadly as involving,
for example, the case of the financial institution-based housing implosion of 2007 that resulted
in four million US citizens losing their homes, becoming displaced or homeless, and subjected
indirectly to the harm caused by the mental violence associated with their material and psychological losses. For the sake of clarity, both concretely and theoretically, it is important that some
kind of definitional consensus is reached about the meaning of organizational violence. Otherwise, confusion and obfuscation will continue. Even worse, overusing the term often wrongly
convicts people verbally who do not deserve the label. On the other hand, failure to use the label
when appropriate will often mask what is arguably the wickedest practice of human immorality
in the context of behaviors within organizations. Humanity demands that we take a moral stand
against organizational violence, independent of scientific inquiry into its causes. However, to
scientifically operationalize organizational violence requires an agreement about its definitional
parameters.
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Organizational violence
Some might argue that the idea of “violence” must been limited to direct and immediate harms
intentionally inflicted upon or threatening particular individuals, such as through battery, robbery,
forcible rape, and murder, and therefore the use of “violence” in the context of legitimate business
serves only as a sensationalized rhetorical metaphor, and is otherwise fundamentally irrelevant to any
indirect and delayed harms associated with organizational decisions. The head of a company is not
likely to pollute the water supply of a city in order to seek revenge on an ex-husband, for instance.
Whatever persuasiveness this argument may have against the idea of organizational violence, one
cannot argue that intentional choices by business decision-makers to recklessly endanger the life and
limb of other human beings shares nothing in common with assaultive behaviors that have typically
been characterized as violent. Immediacy of harm is not an essential criterion for violence because,
as Salmi (2004: 56-57) has noted, violence may be a “result of a deliberate human intervention
in the natural or social environment whose harmful effects are indirect or often delayed.” Therefore, for the purposes at hand, it is the willful reckless physical endangerment of others shared by
organizational decision-makers and by individuals committing violent “street” crime that renders
organizational violence to be violence per se. Organizational “violence” is not a metaphor.
Previous use of “violence” in the context of organizational decisions
Referencing writing about organizational violence could go back at least as far as Upton Sinclair’s The Jungle (1906), a historical novel that depicted unsafe consumer product distribution, dangerous working conditions, and bio-hazardous pollution knowingly committed by large
meat-packing plants. As for the specific use of the term, Ralph Nader’s (1971) piece, “Corporate Violence Against the Consumer,” may be the first written connection between intentional
organizational decisions that harm human beings and the idea of “violence,” followed by several
others who invoked the concept over the following decade and a half (e.g., Monahan et al., 1979;
Monahan and Novaco, 1980; Swigert and Farrell, 1980; Tye, 1985).
Ronald Kramer’s (1983) important piece, “A Prolegomenon to the Study of Corporate Violence,” appeared in Humanity and Society, in which he offered what many consider to be the first
systematic working definition of the conduct:
[C]orporate behavior which produces an unreasonable risk of physical harm to employees,
the general public, and consumers, which is the result of deliberate decision-making by persons who occupy positions as corporation managers or executives, which is organizationally
based, and which is intended to benefit the corporation itself.
(Kramer, 1983: 166)
In 1987, the appearance of two additional significant works – one a case study on Ford Motor
Company’s 1978 Indiana negligent homicide indictment based on its Pinto automobile (Cullen et
al., 1987) and the other an influential anthology entitled Corporate Violence (Hills, 1987) – clearly
signaled that acts committed by organizational agents which threatened human harm are well
within the purview of criminological inquiry into violent behavior. Hills proposed essentially
the same definition of corporate violence as Kramer, but explicitly articulated non-criminal
negligence for inclusion:
[A]ctual harm and risk of harm inflicted on consumers, workers, and the general public as
a result of decisions by corporate executives or managers, from corporate negligence, the
quest for profits at any cost, and willful violations of health, safety, and environmental laws.
(Hills, 1983: vii)
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G.S. Green and H. Shou
The idea that organizational actors make decisions that may be termed “violent” was also evident
in the criminal courts at that time: during the 1980s, some level of criminal homicide charge
was levied against American companies or their executives in at least seven unrelated instances of
employee deaths caused by unsafe working conditions (Maakestad, 1987).
Since the late 1980s, using the concept of “violence” in relation to organizational behavior
that is physically harmful to human beings has become routine. Additional books so titled
include Corporate Crime and Violence (Mokhiber, 1988), Corporate Crime, Corporate Violence (Frank
and Lynch, 1992), The Case for Corporate Responsibility: Corporate Violence and the Criminal Justice
System (Bergman, 2000), and Corporate Crime Under Attack: The Fight to Criminalize Business
Violence (Cullen et al., 2010). Doctoral dissertations on the subject include Courtney Davis’
(2000) Corporate Violence, Regulatory Agencies and the Management and Deflection of Censure. There
have been many case studies which explicitly employ the usage of “violence” associated with
non-criminal purpose organizations, ranging from environmental crimes (Raman, 2005; Rajan,
2001) to manufacturers of dangerous breast implants (Rynbrandt and Kramer, 1995), to criminally incompetent doctors (Liederbach et al., 2001), to restaurants that knowingly serve tainted
foods (Walczak and Reuter, 2004). Organizational violence has been studied in the context of
sexist victimization against women (Hinch and DeKeseredy, 1992; DeKeseredy and Goff, 1992),
racist environmental victimization against African Americans (Stretesky and Lynch, 1998), a
type of violence in general (Barak, 2003), and an industrializing nation as a whole (Green and
Shou, 2013). There is even a sub-literature which addresses the social construction of awareness
about organizational “violence” based on content analyses of the media (Wright et al., 1995;
Burns and Orrick, 2002; Mcmullan and Mcclung, 2006). The phenomenon has been variously
termed “suite violence” (See and Khashan, 2001; Punch, 2000), “toxic capitalism” (Pearce and
Tombs, 1998), “industrial violence” (Schmidt, 2010), and, based on a large volume of work by
Steve Tombs, corporate violence as “safety crime” (e.g., Tombs and Whyte, 2007; Tombs, 1995,
2007). Grounded on the aforementioned proliferation of work connecting humanly harmful
organizational decisions to “violence” and the large amount of such scholarship that has yet to
be produced, a focused analysis of the concept seems prudent.
Nine questions about the dimensions of organizational violence
We see at least nine debatable dimensional elements of the concept of organizational violence
that may be extracted from the aforementioned literature. Because each of the elements is to
a greater or lesser degree dependent upon all others, we will try to present them in a fashion
that facilitates the overall discussion, beginning with what we see as the more fundamental
elements:
1
2
3
4
5
6
7
8
9
Exactly what should constitute an “organization” for the purpose of conceptualizing “organizational violence”?
Does the violence necessitate criminal legal violation or should tortious or other noncriminal behavior also be included?
Does the violence involve only actual harm or must it include risk of harm as well?
Can the violence be non-physical?
Does the organization or its agent(s) commit the violence, or both?
How should intentionality to commit organizational violence be articulated?
Are motives for the violence relevant to the concept?
What is the nexus required between an organizational actor’s decision and its violent results?
Should non-human animals be included as victims of organizational violence?
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Organizational violence
We will now address these questions in terms of their implications for operationalizing organizational violence. Based on those discussions, we will then offer our own working definition for
future consideration.
1 What constitutes an “organization”?
An “organization” should be broadly defined as any legal person other than an individual that
has a non-criminal purpose, and would include governmental and non-governmental entities.
Criminal purpose organizations (those that operate primarily for criminal purpose or by criminal
means) are excluded because the concept of organizational violence should be limited to legitimate economic and political spheres. The inclusion of criminal purpose entities such as street
gangs, organized crime, single drug dealers, and so forth will serve only to confuse the generally
shared setting of where organizational violence occurs and who commits it.
Regarding non-government organizations, both Kramer and Hills have chosen to focus on
“corporate” violence by “managers” and “executives.” We acknowledge that “corporate violence” is a catchy phrase with strong political overtones that implicitly vilifies the rich and
powerful as greedy and uncaring. However, “corporate,” and specifically “corporate executives
and managers,” may imply that these behaviors are committed only by people in much larger
organizations (or at least by those in organizations that are legally designated as corporations),
thereby leading us to ignore the countless physically harmful decisions made in the milieu of
much smaller organizations, including those with no employees.
More than three-quarters of all businesses in the United States (78%) have no employees,
and among those that do have employees, three-fifths (60%) have fewer than five (Bureau of the
Census, 2008). Typically, more than four in five organizations convicted for federal crimes have
fewer than 50 employees. Even the smallest businesses have many of the same opportunities to
commit violent business behaviors (and the same profit motivations) as do larger ones, albeit on a
smaller scale. Moreover, smaller businesses are not held to the same ongoing self-policing internal
compliance program standards as are larger ones, nor are they under the same higher level of
governmental and public scrutiny. Note that both federal and state RICO (Racketeer Influenced
and Corrupt Organizations) criminal statutes include single-person enterprises as organizations.
Therefore, although “corporate violence” may in a very technical sense be seen to already include
small businesses because even one with no employees has at least one owner who can be called a
“manager” or “executive,” we nevertheless strongly advocate the term “organizational violence”
over “corporate violence.” We also assert that an “organization” be conceived as comprising one
or more human actors. This view of organizational violence will necessarily encompass a very
large number of relatively powerless persons, but adopting it does not in any way detract from the
importance of special power relations associated with violent “crimes of the powerful,” including
governmental actors involved in state-based violence.
2 Should organizational violence be limited to criminal behavior?
The question of whether organizational violence should include tortious or other non-criminal
behavior in addition to criminal behavior is of monumental importance because its answer will
have a massive effect on the number of acts which would be included under the concept. We
will first analyze the issue for non-governments and then address governmental organizations.
Our vigorous inclination is to eliminate non-criminal negligence (that is, torts) from the conceptualization, as well as any other non-criminal behaviors. We noted earlier that Hills explicitly
added “corporate negligence” as an element of organizational violence in response to Kramer’s
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G.S. Green and H. Shou
alleged omission of it. Hills’ (1987: 5) rationale is that the idea of organizational violence must
transcend the traditional criminal law and include any act which “could be punished by the
government, regardless of whether the corporate offense is punishable under civil, administrative, or criminal law” (emphasis added). Using governmental punishment as the foundation for
criminal behavior, irrespective of the venue in which it is levied, has been an accepted practice
by criminologists since Edwin Sutherland’s earliest work (e.g., 1940, 1945) on “white-collar
crime.” Sutherland argued to particularly include regulatory administrative law violations as well
as criminal convictions as “criminal” behavior because both include a governmental punishment and both were created by the legislature in response to the harms involved (even though
administrative law requires a preponderance of the evidence and criminal code law requires much
more stringent proof beyond a reasonable doubt). Some of the most horrific acts of violence
perpetrated by organizational actors have been adjudicated in administrative lawcourts enforcing
regulatory law. We strongly support Sutherland’s (and Hills’) criterion that all governmentally
punished acts constitute crimes. And, assuming that prima facie evidence for the corpus delicti of
an illegality is present, we can declare them to be criminal acts regardless of whether they are
officially adjudicated. In short, as long as an organizational behavior that risks human harm
could be punished under criminal or administrative law (including international law) that has a
governmental penalty, it is organizational violence because it is both criminal and violent. We
must be careful here because mere judgment calls (such as whether the act constitutes criminal
negligence) are not illegal prima facie and therefore must be left to the courts to decide.
We reject Hills’ call for including “corporate negligence” adjudicated under “civil” law. Foremost, we disagree that damages in civil court based on negligence represent a “governmental
penalty.” Judicial findings against parties in administrative lawcourts result in fines paid to the
government (and in some cases restitution to injured parties). Conversely, civil courts are merely
places where one party can seek compensatory damages against another party because the latter is
believed to have acted without due diligence to prevent a harm. The government merely enforces
the rules of civil procedure in such lawsuits, sometimes decides (in non-jury trials) who are the
winners, and in very rare cases approves of jury-imposed punitive financial penalties against the
losers. But any governmentally approved compensatory or punitive damages are not paid to the
government; rather, they are paid to the winner of the legal case. We therefore see no “governmental penalty” associated with findings of non-criminal negligence by civil courts. To include noncriminal organizational negligence would open up the concept to acts such as failure to remove
snow from the sidewalk in front of a company’s building (i.e., risk of human harm based on an
organizational decision). If that is “violent” behavior, then one’s neighbor who also fails to remove
snow would analogically be committing non-organizational violence. This example demonstrates
how the inclusion of non-criminal negligence opens up a Pandora’s Box of behaviors that are
relatively so innocuous and trivial that they belie the egregious essence of organizational violence.
Without some governmental penalty attached to an alleged act of violence, completely legal
behaviors can be wrongly verbally convicted as constituting violence. A classic example would
be the long-time designation as “violent” (e.g., Green, 1997) Ford Motor Company’s actions in
regard to its marketing of the Pinto in the late 1960s and early 1970s, even though it knew that the
vehicle’s gas tank mounted behind the rear axle could immeasurably increase the probability of a
fiery explosion as the result of a rear-end collision. Indeed, Ford’s now-famous Grush – Saunby
memorandum that juxtaposes the costs of retooling (to relocate) the gas tank relative to the probable civil settlement payments in burn injury and death lawsuits has been seen as the epitome
of organizational amoral profit rationality. However, as Lee and Ermann (1999) convincingly
demonstrate, the Grush – Saunby memorandum occurred in 1973 (long after the Pinto had been
designed and marketed), it was generated for the National Highway Safety Traffic Administration
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in the negotiation of a possible safety standard and not internal distribution among Ford decisionmakers, it was based on NHSTA-accepted procedures for cost – benefit analyses in such matters,
crash-testing was not an established practice in the industry at the time the Pinto was designed
and manufactured for several years, and the Pinto’s questionable design was quite legal because
it did not violate any regulatory law. Thus, it is difficult to attach a label of “violent behavior”
to those involved, especially when there is no evidence of purposeful action to break the law. In
fact, Ford was concerned about the issue and took proactive measures to investigate it (Lee and
Ermann, 1999). Ford was acquitted of the Indiana negligent homicide charge mentioned earlier.
We offer one more example that will help illustrate the necessity of requiring some level of
governmental penalty associated with organizational violence. Millions of entirely legal abortions could quite reasonably be deemed to constitute organizational violence according to, for
instance, Kramer’s definition, because: (1) organizational decisions are responsible for performing
the abortions for profit; (2) there is no question of physical harm; and (3) unborn children are part
of the “general population” (killers of pregnant women have been successfully prosecuted for
double-homicide (see, e.g., 18 USC 1841), and the US Supreme Court in Roe v. Wade (1973: 165)
placed unborn children under a state’s interest to protect her or him at later stages of pregnancy).
Requiring a criminal legal violation will ensure that unfitting interpretations such as this legal
abortion example are disallowed, but it will rightly include illegal abortions. And it will rightly
include more atypical acts of organizational violence such as doctors found to be criminally
negligent and the assaultive practices used by labor union bosses for purposes of intimidation.
Limiting non-governmental organizational violence only to acts punishable by the government should not in any significant way impede the labeling of egregious organizational activities,
especially given the voluminous listings of administrative law violations. The stricture for governmental penalty will also help disqualify over-utilization by those who want to exploit social
science as a political tool – both the Ford Motor Company and legal abortion examples could be
improperly utilized for such purposes, for instance.
Addressing criminally violent acts by governmental organizations is far more complex because
governments control definitions of criminal behavior, including their own. US non-federal governments are subject to federal criminal penalties when they involve organizational violence
because an “organization” according to the US Sentencing Commission (2013: §8A1.1.1)
includes “governments and subdivisions thereof.” However, actions by persons in federal governments that create risk of human harm (such as environmental pollution or unsafe working
conditions) often have no criminal context and therefore they would theoretically be eliminated
from the idea of organizational violence according to our mandate for governmental penalty.
This technicality creates a difficult challenge, along with all the other acts of violence committed
by governmental actors where no domestic or international criminal violation occurs. We have
no answer for the conundrum associated with these relatively few circumstances, other than to
determine whether the action would be punishable if committed by those in non-federal organizations. Surely there are ways by which the often unconscionable violence committed by state
actors that is technically non-punishable may be rationally argued to be organizational violence
without having to eliminate the governmental penalty requirement.
3 Risk of harm vs. actual harm as violence
One might argue that mere risk of injury associated with an organizational criminal act as defined
above, even if it is a foreseeable risk, is not violent behavior because no harm resulted. That is,
no harm, no foul. But there is probably very close to a unanimous consensus that organizational
violence comprises risk of human physical harm in addition to actual inflictions of injury or
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death, rather than only the latter. We noted at the outset of this chapter that the knowing reckless
endangerment of others is the foundational rationale for connecting organizational violence to
violence per se, and therefore the concept must include risk of actual harm. To argue that risk of
human harm without actual harm is irrelevant to organizational violence is akin to stating that
an errant bomber who misses his or her random human targets because of a failed detonation
did not commit an act of violence because no injury resulted. The foreseeability of risk would
have to be necessary, of course, whether the offender knew, or at least should have known, that
the result of their organizational action or inaction put others at risk. Determining foreseeability
of risk will be discussed below in the section on intentionality.
4 Physical vs. non-physical violence
The term “crime of violence” most generally denotes physical harm. But it can also involve only
a threat of physical harm – the violent crime of “assault,” for instance, need not involve touching or battery of the person, only that some level of fear existed in the victim. One exception
to actual or threatened physical harm in a crime of “violence” is extortion, where a person is
forced to choose between two unwanted alternatives, each of which can be non-violent. It is
the mental harm, or mental violence, associated with extortion that causes it to often be listed in
the same section of criminal codes as robbery (robbery also involves forcing a person to address
two unwanted choices: one’s money or one’s injury). Thus, even in violent street crimes, not all
violence involves physical harm or even the threat of physical harm.
The conceptualization of violence has recently been expanded to include the infliction of mental
anguish, especially in relation to domestic violence (against intimate partners, against one’s children,
and against one’s parents) (see, e.g., Barak, 2003). To give but one example of domestic non-physical
mental violence, threats of harming companion animals of a partner is a way to demonstrate power,
teach submission, and perpetuate a context of terror in an overall battering-control schema (Adams,
1995). But compared to physical harm, determining mental harm caused by an organizational
decision-maker will be far more subjective (and therefore more problematic). One illustration of
this is Stein’s (2005: 448) assertion that downsizing in large organizations is a form of “corporate
violence” because it is an “assault on the human spirit . . . .” If termination from employment raises
the specter of being a victim of organizational violence, organizational violence is endlessly present
wherever some sort of mental anguish is claimed as a result of organizational decisions.
Especially given the relative powerlessness of individuals compared to large organizations,
including the idea of “non-physical” mental violence in the study of organizational violence
would be far too idiosyncratic to withstand scientific scrutiny. Virtually any perceived intimidation by an organizational actor against an individual could then be deemed “violent” behavior by
anyone else (recall the example of “mental violence” against the displaced and homeless inflicted
by the financial institution crisis that was mentioned at the outset of this chapter), and such
amorphous applications would retard the study of organizational violence to a point of no return.
Although mental violence may well be an integral part of complex domestic and other abuse
situations, the study of which would be incomplete without its inclusion, the addition of nonphysical violence to the operationalization of organizational violence is most probably a mistake.
5 Is the violence committed by the organization or by its agents?
Both Kramer and Hills proclaim that organizational agents are the culpable parties for any acts
of violence. Using methodological reductionism (or, perhaps more accurately, methodological
individualism) to study organizational violence – predicated on the idea that the best scientific
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strategy is to attempt to reduce explanations to the smallest possible entities – may seem excessively obvious. But there has been a tendency to anthropomorphize organizations into emergent
actors (e.g., Braithwaite and Fisse, 1990; Geis, 1995; cf. Parisi, 1984; Cressey, 1989).
Kramer and Hills essentially adopt the same methodological individualism position articulated
by the US Sentencing Commission (2013: Introductory Commentary): “An organization can
act only through its agents, and under . . . criminal law, generally are [only] vicariously liable for
offenses committed by their agents.” “Agents” include directors, officers, employees, independent
contractors, and anyone else authorized to act on behalf of the organization. As Herbert et al.
(1998: 869) observed in support of the idea that only people can commit organizational behaviors, “It is one thing, for legal purposes, to hold an organization vicariously liable for its agents’
actions. It is quite another, for explanatory purposes, to assume that an organization acts independently of its agents” (emphasis in original). Organizational actors are always free to choose
alternative business behaviors that do not result in the poisoning of the environment or that risk
the maiming and killing of consumers and workers. Once firms are taken as the responsible parties for the decisions made within them, individuals’ preferences and choices become irrelevant.
Put more accurately, such an approach allows individuals, as agents, to easily distance themselves
from the decisions they make by blaming the business environments in which their firms are
located or based. It is therefore probably imprudent to assume any autonomous act of violence
that emerges at the organizational level. The role that organizations play in theorizing about
organizational violence should suggest nothing more than their influence (through opportunity
or lack of it, culture, or whatever the theory at hand suggests) on an individual actor’s choice of
behavior (Herbert et al., 1998: 869).
6 Intentionality to commit organizational violence
Imputing violent behavior to any individual must include some level of intent or mens rea.
Accidental harms would be excluded to the extent they were completely unintentional. Cressey
(1989) has argued persuasively that unintentional organizational behaviors which happen to violate the law cannot be explained criminologically. Further, as Perrow (1999) has told us, high-risk
technologies (such as space exploration and nuclear power) will inevitably lead to “natural accidents,” regardless of our intent to avoid them. Therefore, equating unintentional legal violation
that risks human harm to “violence” is not only unfair to the entity so labeled, it also contradicts
the egregiousness of the purposeful inhumanity that is a core essence of organizational violence.
In addition to being non-accidental, the risk of harm must be foreseeable in order to be intentional for our purposes. A person who knows of a foreseeable risk, or should have known about
it, is a fair yardstick by which to impute intentionality. The US Sentencing Commission (2013:
§8A1.2) has articulated exactly how to determine whether a risk to human harm was known or
should have been known, and its language should be employed in the determination of foreseeable risk in applications of organizational violence: Did the person “participate in, condone, or be
willfully ignorant of ” a non-accidental legal violation that risked human harm? Adopting further
from the Commission, an organizational actor “condoned” a foreseeable risk if she or he knew
about it and did not take reasonable steps to prevent or terminate it. And the organizational actor
should have known about the risk if they were “willfully ignorant” of it by not investigating its
possible occurrence despite knowledge of circumstances that would lead a reasonable person to
investigate whether a risk would occur or had occurred. Each of these levels of culpability should
be treated as equally blameworthy.
Although case-specific applications of criteria such as “condoning” or being “willfully ignorant” of a risk to human harm may become subjective, as well as whether the risk creation was
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completely “accidental,” at least the foregoing language from the Commission represents tangible
and sensibly articulated standards to relate to actual instances of organizational actor behavior.
Including full blameworthiness for “condoning” and “willful ignorance” will enable persuasive
denunciation of many organizational actors’ claims that they did not participate in a decision
which resulted in organizational violence or that they did not know about one.
7 The role of motive in organizational violence
Motive is not a cause because, as Sutherland (1973: 39) observes, “People steal [for various
reasons] – and they engage in lawful employment [for the same] reasons” (see also Hirschi and
Gottfredson, 2008: 221). Therefore, motive, specifically in the case of organizational violencefor-profit, should not be used as an independent variable in the explanation of organizational
violence because there are always alternative choices of behavior to those that include an illegal
risk of harm to human beings.
That stated, we nevertheless propose, as did Kramer and Hills, that motive is an important
aspect of operationalizing organizational violence – but only as it relates to agents’ decisions that
are calculated to have a beneficial result to their employing organization. These attempts to benefit the organization through the use of violence invariably materialize in the form of economic
gain – either by increasing income or decreasing cost (e.g., knowingly distributing dangerous
foods or other consumer products to avoid loss, choosing to pollute the environment rather
than purchase expensive correct disposal equipment, failure to ensure worker safety because of
its costs). However, the commission of organizational violence by agents based on the motive to
benefit an employing organization should represent nothing more than a definitional restriction.
Such limitation would be specifically designed to exclude violent behaviors committed within an
organizational context for personal gain only (as opposed to violent behaviors that benefit both
the organization and the agent, which should be included).
An example of violence within an organizational context that is committed strictly for personal gain would be driving a commercial truck while illegally intoxicated or flying a jetliner
while illegally impaired by prescription drugs. As well, child molestations by clergy would not be
considered acts of organizational violence because these are of no benefit to the religious organization. However, condoning those molestations or being willfully ignorant of them by others
to avoid adverse publicity would be seen as organizational violence because hiding the scandal
would be motivated by organizational benefit.
To have true meaning, the conceptualization of organizational violence should include some
attempt to benefit the organization.
8 Determining the nexus between an organizational agent’s
behavior and its violent results
One important aspect in employing the concept of organizational violence is whether the organizational behavior is the “proximate cause” of the risk of human harm in question. This is not
the place to dissect the innumerable legalistic technicalities associated with proximate cause, but
it nevertheless should be addressed here as an essential element of organizational violence.
Kramer uses the idea of organizational decisions “producing” risk and Hills frames it in terms
of risk “resulting” from organizational decisions. But how do we determine whether the organizational decision actually produced the risk or whether the risk was actually the result of the
decision? We must ask one simple question: “Was the organizational decision to act or fail to act
necessary for the risk of harm to occur?” The answer to this question will probably be affirmative
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and pro forma in most cases of alleged organizational violence, but asking it will nonetheless help
prevent the over-application of the label upon those who do not deserve it. Thus, the claim
that “firearm manufacturers commit organizational violence because they knew or should have
known about the foreseeable risk that their products will be used in robberies and murders”
would be falsified because the manufacturers had nothing to do with the decisions to employ
their otherwise safe products to injure others. Verifying the organizational decision as the proximate cause of the risk of harm may seem elementary, but it should in all cases be compulsory.
9 Should non-human animals be included as victims
of organizational violence?
Any conceptualization of organizational violence that does not include the victimization of nonhuman animals can potentially be criticized for its speciesist bias (Beirne, 1999). Certainly, nonhuman animals are analogous to human victims of organizational violence, such as fish which
die in polluted rivers, dogs and cats which die from poisonous pet food consumer products, and
work animals which are harmed or killed based on cruel working conditions. Without implying
a lack of regard for the feelings of non-human animals, it is probably better at this point to limit
victimization from organizational violence to human beings. Students of organizational violence should be conscious of the significance of a non-speciesist conceptualization (such as Lin,
Chapter 33, this volume), long as any inclusion of non-human victims of organizational violence
adheres to the concept’s accepted parameters (e.g., that the behavior is subject to a governmental
penalty, that the violence was based on organizational benefit, that the organizational actor’s decision is the proximate cause of the violence).
Conclusion: a working definition of organizational violence
We have tried to deconstruct the concept of organizational violence into its rudimentary dimensional elements and discuss what we believe to be the important questions about them. The
following appear to be the most significant ways to capture the quintessence of what most
criminologists have traditionally seen as organizational violence: (1) it should not be limited to
any kind or any size of organization and the organization must not have a criminal purpose;
(2) it must involve an act to which there is a governmental penalty attached; (3) it should involve
foreseeable risk of harm rather than actual harm; (4) it should be limited to risk of physical harm;
(5) the unit of behavioral analysis should be the actor and not the organization; (6) non-accidental
intentionality must be established by actor participation in the creation of the risk, the actor condoning the risk, or the actor being willfully ignorant of the risk; (7) organizational violence must
be committed for the benefit of the connected organization in some way; (8) the actor’s behavior
must be verified as the proximate cause of the risk; and (9) organizational violence should not at
this time include non-human animal victims. Thus, we offer the following working definition
of “organizational violence”:
Any non-accidental behaviors committed for organizational gain within a non-criminal purpose organization that participates in, condones, or demonstrates willful ignorance of a governmentally punishable
act within that organization that risks physical harm to human beings.
This statement will undoubtedly lead to some level of consternation about whether this or that
real instance of organizational behavior should or should not fall within its bounds. No single
definition of organizational violence will allow perfect classifications, nor will it please everyone.
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But the working definition we have put forth should, in the vast majority of applications, be relatively easy to relate to acts that embody at their core what most people in the field have believed
to be the conceptual essence of “organizational violence.” Discussions must continue about the
various dimensional elements we have presented, as well as any additional ones we may have
missed, so that the field of criminology can find both congruity and consensus about the use of
organizational violence as an academic concept.
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3
Justifying the crimes
of the powerful
Vincenzo Ruggiero
Introduction
The crimes of the powerful have been addressed from a variety of perspectives and interpreted
through an array of analytical tools, as testified by the contributions included in this volume.
Building on the solid foundations laid down by Edwin Sutherland (1983), corporations are
often described as recidivist offenders compelled to undergo learning processes leading to crime
(Pearce, 1976). Outside the economic sphere, some scholars have focused on state agents, highlighting how the formation, distribution and exercise of power produce harmful institutional
conducts (Geis and Meier, 1977; Tilly, 1985; Whyte, 2009), while others have remarked that the
core capitalist states remain the greatest source of state-supported harm, violence and injury
(Rothe and Ross, 2009). Anomie and conflict theory have also been used, suggesting that powerful individuals and groups distance themselves from imputations of criminal conduct while
attributing them to the powerless (Passas, 2009; Ruggiero, 1996; Slapper and Tombs, 1999; Ross,
2000). Finally, micro-sociological aspects have been examined, leading to the observation that the
very dynamics and values guiding the behaviour of organizations and their members often pave
the way for their criminality (Burns, 1963; Dalton, 1959; Mouzelis, 1967; Keane, 1995; Shover,
2007).
This chapter attempts to add to the available wide-ranging literature, focusing less on explanations of why, when and how the crimes of the powerful occur than on the ways in which such
crimes can be justified through philosophical and political arguments. This theoretical investigation will be carried out while focusing on the following conceptual variables: equality, inclinations, needs, toleration, liberty and authority.
On justification
An important precedent to this approach in criminological theory is, of course, the groundbreaking work conducted by Sykes and Matza (1957), whose ‘techniques of neutralization’ reveal
how offenders are able to deny the harm produced or the very criminal nature of their acts. Such
techniques, however, seem to be precisely situated and pragmatically mobilized within contexts
in which notions of morality and legality are negotiated. Ex-post rationalizations, they reflect an
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agonistic endeavour involving one party condemning and the other defending itself. The notion
of justification adopted here, instead, implies the recourse to general principles and philosophies
that are presented as non-negotiable, in that they are thought of as belonging to a collective
patrimony of values. Such principles and philosophies, in brief, are not deemed reflections of a
specific subculture, but core, constitutive elements of our culture.
Sociological analysis of justification proposes a specific reading of organizations and businesses, where resources and arrangements based on personal ties are said to play a crucial role in
determining behaviour (Boltanski and Thévenot, 2006). The crimes of the powerful, following
this line of analysis, may be seen as the result of proximity among actors, mutual trust, imitation,
and the desire to perpetuate bonds, values and group interests. But such arguments do not appear
to distance themselves from the criminological domain, where all of this can be expressed with
the notions of subcultures and learning processes. Proper philosophical and political justification
requires that partial concerns and factional gains be depicted as beneficial to the collectivity;
hence it requires an agreed-upon definition of the common good and the identification of higher
common principles. In this sense, justification is a form of compromise, and ‘a compromise, in
order to be acceptable, must be based on the quest for a common good of a higher order than
the ones the compromise attempts to reconcile’ (ibid.: 20).
One strategy allowing for the configuration of a higher order consists of grounding such
order on the alleged universal appreciation of individualism. By denying the reality of collective
phenomena, for instance, the mere interest of individuals comes to be recognized. This strategy
does not amount to deceit, but is inspired by a serious imperative to justify acts; it is not a pretext,
but a genuine attempt to present actions as conducts which withstand the test of justification.
Equality of souls and inclinations
If we regard the crimes of the powerful as extensions of individual interests, justifications are to be
found in the very history of liberalism. By linking liberalism with the Christian revolution and
its legacy in the modern age, a sacred aura is conferred upon free enterprise and its social effects.
Christianity, we are told, freed a world suffocated by hierarchy, where rank was deemed natural
and reason belonged to born elites (Siedentop, 2013). It built a world of equal individuals ‘sharing
a common fate and endowed with equal moral status’ (Collins, 2014: 7). Individual conscience
developed, as did communities, as a free association of moral agents defined by St Paul as the
‘body of Christ’. Enemies of liberalism and individualism, therefore, are enemies of Christianity.
While powerful offenders may justify their acts by claiming the saintly origin of their predatory instinct, they may at the same time claim that their rectitude is testified by the intimate,
individual relationship they establish with the divinity they worship. Before Max Weber associated religious belief and self-discipline with the entrepreneurial spirit, philosophers formulated
theories of morality revolving around individual rectitude, theories that ignored collective forms
of life while encouraging solipsism. Individualism, in Plato, is characterized by homo erectus,
namely a person who abandons the cave in which she is held and the uncomfortable position she
is forced to assume, and walks in straight paces towards virtue. His theoretical model is ‘vertical’
and excludes deviations or inclinations. According to this model, therefore, leaning towards vice
is a logical impossibility for those who have acquired independence in the form of erect posture.
During the eighteenth century, the century of Immanuel Kant, depictions of individualism as
independence abound, with Kant himself abhorring children for their ‘leaning’ on others and
their passive attitude towards the mechanics of instincts. In his moral writings the others never
appear, the only protagonist being the ego and her reason functioning in solitude (Arendt, 2006).
Inclinations, on the other hand, are dangerous for autonomous individuals, because they allude
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not only to deviant conducts, but also to offers of care and solidarity to those in need (Cavarero,
2013). Rather than leaning towards others with acts of generosity, the ‘erect’ individual is allowed
to act politically; that is, to take initiatives, operate in new areas, be they economic or moral: in
brief, to experiment with unique conducts. Acting is the faculty to initiate, the art of giving life
to something new: the crimes of the powerful, from this perspective, are tantamount to novel
discoveries, unprecedented forays into the static moral world made up of continuity and habits.
Inclinations as care of the other entail solidarity and mutual responsibility, associated with reproduction and opposed to the total commodification of life. Against morbid individualism and infinite accumulation, groups may incline towards the defence of nature, ecological justice between
generations, political participation and control of economic initiative. ‘Such claims, along with
the counter-claims they inevitably incite, are the very stuff of social struggle in capitalist societies’ (Fraser, 2014: 68). The crimes of the powerful are indeed counter-claims, namely a forceful
upsetting of rules, challenges to notions of legality, which aim at neutralizing the legitimacy of
collective claims.
Needs and tolerance
Justifications of the crimes of the powerful may follow another trajectory, one based around the
notion of need. The individuals described above, having achieved independence and rectitude,
may advocate the crucial importance of needs defined by the telos to which they refer. To say that
they need something is merely shorthand for the complete statement that they need something
in order to acquire something else. The Marxist tradition distinguishes at least three different
categories of needs: individual natural needs, or the means of biotic survival; social needs, or
the means to an existence that is fulfilled in some ethical sense; and economic needs, the means
required for the individual to serve the logic of capital (Heller, 1976). The crimes of the powerful
adopt the third telos; that is, a logic of appropriating resources before they are wasted. This echoes
John Locke’s views around economic initiative, which is required to establish private ownership
wherever fruits and game risk to rot and wherever rules allow such waste. Surprisingly, however,
the crimes of the powerful also follow what may be termed a ‘Pareto logic’, in the sense that
even wealth illegally appropriated may be regarded as loss if no one appropriates it. From this
perspective, powerful individuals and groups who abstain from crime cause a ‘Pareto-inferior
change’, which refers to any change leading to at least one player experiencing a fall in utility.
The crimes of the powerful, therefore, aim at causing ‘Pareto-superior change’; that is, utility for
all social players.
Tolerance for the crimes of the powerful may be generated by this very notion of ‘utility’,
which we encounter when powerful actors pursuing their interest find resort to coercion unnecessary. Successful criminals may present themselves as philanthropists, in the sense that their deeds
and their outcomes may appear as benefiting others rather than the perpetrators. These philanthropic powerful offenders, in brief, manage to repel the criminal label from their activity and to
persuade others that their goals correspond to those of the collectivity. Criminal entrepreneurs,
for instance, can often claim that their crimes (for example, producing or exporting prohibited
or harmful goods) contribute to keeping and creating jobs (Ruggiero, 2007). It is in these cases
that we are faced with what is deemed an ethical paradox of toleration.
The paradox lies in the fact that tolerating other people’s acts may be opposed to the imperatives of our ethical code. Believing that a certain kind of conduct is wrong can turn into the
feeling that the conduct in question should be prevented. Such feeling, however, is avoided if
toleration of that conduct is justified by adhering to higher principles that supersede our ethical code (Mendus, 1988). In the example given above, the higher principles embedded in job
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creation may lead to condoning the crimes of the powerful and recognizing some moral value
in them. Even crimes associated with tyrannical systems may find toleration, as in Xenophon’s
dialogue between Hiero the tyrant and Simonides the poet that I will now discuss.
Hiero has been a private man before becoming a tyrant, and is asked by Simonides to explain
how the pains and joys of the two conditions differ. Hiero claims that power brings fewer pleasures and greater grief than the condition of an ordinary person of moderate means. Those who
are politically or economically powerful have to strive to maintain their status and their wealth,
they are constantly fearful that they may be deprived of what they possess and, as a consequence,
become powerless. Praise and respect do not balance this fear, because these are only bestowed
upon them for the sake of flattery. Wealth itself ceases to generate new pleasure over time, as
growing amounts of it find the powerful insensitive to that to which they are already accustomed.
‘So, in the duration of pleasure too, one who is served many dishes fares worse than those who live
in a moderate way’ (Strauss, 2013: 5). It would be interesting to enquire whether Alfred Marshall
took inspiration from Xenophon for the formulation of his celebrated theory of marginal utility:
‘the marginal utility of a thing to anyone diminishes with every increase in the amount of it he
already has’ (Marshall, 1961: 79). Applying this principle to the accumulation of power, money
and resources, we are led to conclude that there are natural limits to social privileges and that the
abuse of one’s position is unlikely, due to spontaneous self-restraining mechanisms. ‘The richer
a man becomes the less is the marginal utility of money to him’ (ibid.: 81). Xenophon’s main
focus, however, is fear rather than satiability: fear that the disadvantaged may challenge the unjust
distribution of wealth or even plot tyrannicide, which will lead to the erection of statues honouring those who commit it. Fear is only tempered by the realization that inequality may constantly
increase provided something is left for the needy, because ‘the one who lacks something takes his
fill with delight whenever it comes to sight before him’ (Strauss, 2013: 6).
Another core concern of the powerful, however, is the existence of other powerful individuals
and groups who may possess more, and this turns into bitter competition. For, as the ordinary
individual desires a house or a field, the powerful desire cities, extensive territory, harbours or
citadels, ‘which are things much harder and more dangerous to win than the objects desired by
private men’ (ibid.: 11). This is why, in Xenophon, crime is an option, as plundering temples
and human beings is the only guarantee that power is maintained and augmented. If crime, on
the other hand, tarnishes the honourability of the powerful, this does not change the situation
substantially, the powerful normally being less honoured than feared. Power, therefore, may well
rule without or against the laws. Hiero in fact considers that, in order to become powerful, some
unpopular or even criminal measures have to be taken, but he also admits that the conservation of
power itself, once achieved, requires incessant ‘innovation’ in a cumulative, virtually infinite process. From the Hegelian perspective, such process corresponds to history, which offers a concrete
social and political reality while providing an understanding of how to change it. The powerful
are impelled to ‘go beyond’, to deny reality and overcome its restraining force: negation is realized
‘by action, struggle and work so that a new political reality is created’ (Kojève, 2013: 174). This
exercise of ‘negation’ includes violating rules and decriminalizing conducts.
Relative liberty?
Tolerance towards the crimes of the powerful may also be granted when another key category of
liberal thought is taken into account. Adam Smith strives to establish when the absolute liberty
ideally enjoyed by all ends up injuring someone. He posits that violations may undermine our
natural rights, for example, the right of liberi commercii, namely the right to exchange goods and
services with those who are willing to deal with us. Those who hamper such a right violate what
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Smith terms iura perfecta, that is to say, ‘rights that we have a title to demand and, if refused, to
compel another to perform’ (Smith, 1978a: 8). Iura imperfecta, conversely, pertains to expectations,
to duties which may be performed by others for our benefit, but to which we have no entitlement or can compel others to perform. ‘Thus, a man of bright parts or remarkable learning is
deserving of praise, but we have no power to compel any one to give it him’ (ibid.: 9). Similarly,
beggars may be the objects of our charity and may be assumed to have a right to demand it, but
we are not compelled to share our wealth with them. In this initial classification, Smith argues that
perfect rights relate to communicative justice, whereas imperfect rights refer to distributive justice.
After expounding on the very well-known theory according to which the pursuit of selfinterest, thanks to the laws governing markets, assures a beneficial outcome for society as a
whole, he reiterates that the economic dynamic performs a crucial educational function, making
antisocial behaviour counterproductive and transforming selfishness into its opposite: that is to
say, regard and consideration for others. Private selfishness turns into public altruism. But antisocial behaviour returns in his Theory of Moral Sentiments, where Smith (1978b) examines what
makes certain conducts praiseworthy and certain actions the spontaneous object of approbation
and admiration. Utility, authority and wealth are his answers, with fortune playing a crucial
role: in this way he separates a material status (being wealthy) from the way in which that status
is acquired. Wealth is said to emanate power and elicit admiration in that the poor owe their
subsistence to those who may be generous enough to share it. The hope that this may happen
leads to the neglect of the ways in which ‘fortune’ is actually accumulated, leaving therefore the
wealthy in the condition to negotiate the degree of virtuosity of their acts. Persons endowed with
wealth, in other words, may constantly move the threshold beyond which their conduct is to be
deemed immoral. Smith is well aware of this dynamic, for example, when he notes that wealth
represents an important source of authority, but also an important object of dispute. In a situation
where property may be acquired, he argues, there are advantages to be gained by committing
acts of injustice, because ‘that situation tends to give full rein to avarice and ambition’, and for
the necessity to establish a ‘civil government’. But then he concedes that ‘civil government, so
far as it is instituted for the security of property, is in reality instituted for the defence of the rich
against the poor, or of those who have some property against those who have none at all’ (ibid.:
12). One may conclude, in this respect, that even illicit or unorthodox economic practices, like
conventional economic activity, will contribute to the dream that privileges will be extended
and that power, the usual attendant of wealth, will be in some measure diffused among all the
members of the community.
In the chapter ‘Delinquency’ of his Lectures on Jurisprudence, the author further clarifies his
views on the subject matter. The initial distinction is made between damage produced by ‘willful
injury’ or the malice propense of the offender, and damage caused by ‘faulty negligence, or culpa’
(Smith, 1978a: 103). In a list of what we would now describe as crimes of the powerful, he mentions ‘those injuries which may be done to one’s personal estate’, a variety of frauds, including
the acts of ‘cheating another out of his property’ and offences like perjury and forgery. He then
describes in some detail ‘fraud with regard to insurance’, where ‘the insurers, on the masters giving in an account of the value of the ship and cargo, insure her for that sum’. A ‘master’, we are
told, may make mendacious claims, and ‘having insured his ship above the value, might take an
opportunity of wrecking her on some place where he might easily save himself and crew; and
by this means enrich himself to the great loss of the insurers’ (ibid.: 132). We are also warned
that the detection of such operations is very difficult, and that the large profits made in this
way are the cause of the great temptation to commit this specific form of fraud. After briefly
discussing some examples of ‘financial crime’, such as ‘forgery of bills, India bonds, banks bonds,
bank notes and all other payables’, Smith moves his attention to ‘the crimes which the sovereign
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may be guilty of against the subjects’. Well, if ‘financial crimes’, again, are too difficult to detect,
those committed by the sovereigns against their subjects do not produce ‘willful injury’, but are
normally caused by pure ‘faulty negligence’. Does Smith, here, condone or encourage a variety
of crimes of the powerful?
As we have seen, the virtuous circle translating self-love into public good may also turn into
a vicious circle. But when this occurs it is likely that the damage caused cannot be attributed to
specifically identifiable entities. The crimes committed by the powerful are hard to detect and
responsibilities are difficult to apportion, also because often such crimes are the result of negligence rather than injurious intentions. We are faced, therefore, with malice propense rather than
with culpa. Such crimes, moreover, violate imperfect rather than perfect rights. Authority emanates
from wealth, whatever the modality in which it has been accumulated, and is aimed at protecting
those who possess property against those who possess none. Smith could not have anticipated
the future success of his formulations and the ways in which his views, wittingly or otherwise,
provide an ideal justification for the crimes of the powerful.
Absolute liberty
Conquest brings the opening of new and inexhaustible markets even when carried out through
illegal aggression. John Stuart Mill, the philosopher of classical liberalism, a theorist of political economy and a proponent of women’s rights, condones this typical crime of the powerful,
which is condemned by Adam Smith. Mill spent a large part of his adult working life drafting
‘dispatches’ or official documents on British policy in India (Lal, 1998). Between 1836 and
1856 he was responsible for the vast correspondence pertaining to the East India Company’s
relations with the Native Indian States. He also represented the Company in negotiations with
government during the rebellion of 1857, and defended its interests against plans to transfer the
responsibility for India directly to the Crown. How could the apologist of ‘liberty’ support such
a predatory enterprise?
The main idea handed down to us by John Stuart Mill is that individuals are free and sovereign,
and that happiness is not the direct and conscious objective of conducts; rather, it is the unintended
outcome of other objectives: ‘the happiness of others, the improvement of mankind, art, beauty,
the contemplation of nature, any activity pursued for its own sake’ (Himmelfarb, 1982: 15). This
philosophy of anti-self-consciousness echoes Adam Smith’s notion of individual interest as public
good. Mill, however, shifts the emphasis from the outcomes of individual choice onto individual
choice itself. The opening lines of On Liberty offer a concise summary of his whole enterprise.
The book is said to assert one very simple principle, namely that no authority should govern by
means of compulsion and control the dealings of individuals, whether the means be physical force
in the form of legal penalties, or the moral coercion exerted by public opinion. Interference of
government in any member of a community is only justified when it is intended to prevent harm
to others. Conversely, there is no justification for the authority to intervene to ensure the ‘physical
or moral good’ of those who, by making choices, may cause harm to themselves. The individual:
cannot rightfully be compelled to do or forbear because it will be better for him to do so,
because it will make him happier, because, in the opinion of others, to do so would be wise,
or even right.
(Mill, 1982: 47)
Liberty not truth is the mark of individuality, he asserts, meaning that dissenters from conventional truth express their individual independence more than proponents of that truth. The
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invective against tradition and dull conformity is expressed in a tone that is as combative as it is
persuasive. We need protection, Mill says, not only from the tyranny of the magistracy, but also
from that of the prevailing opinions and feelings, and our fight should be against ‘the tendency
of society to impose, by other means than civil penalties, its own ideas and practices as rules of
conduct on those who dissent from them’ (Mill, 1982: 63). This fight against customs is the only
exercise that guarantees the liveliness of our mental and moral powers. Feelings and character
must be active and energetic, not inert and torpid. Finally,
An intelligent deviation from custom is better than a blind and simply mechanical adhesion to it. . . . Energy may be turned to bad uses; but more good may always be made of the
energetic nature than of an indolent and impassive one.
(Ibid.: 124)
An ‘intelligent deviation’ is what in economic thought is known as innovation, and in the sociology of deviance is one of Merton’s ‘adaptations’, which allows individuals to pursue legitimate
ends (money and success) while using illegitimate means. Intelligent deviation, therefore, immediately brings to mind crimes committed by powerful people. Mill, however, advocates the cultivation of individuality ‘within the limits imposed by the rights and interests of others’. Deviance,
therefore, must not hurt others, their life, health or interests, and should be confined within the
boundaries of victimless behaviour.
‘If anyone does an act hurtful to others, there is a prima facie case for punishing him by law
or, where legal penalties are not safely applicable, by general disapprobation’ (ibid.: 70). Conducts causing harm to others, therefore, may escape formal punishment where statutory penalties
are difficult to apply or are non-existent. Using our contemporary vocabulary, we may suggest
that conducts for which penalties can be ‘safely applicable’ correspond to conventional criminal
conducts, while those for which legal intervention is problematic are the preserve of powerful
individuals and groups. Mill appears to suggest, therefore, that the crimes of the powerful are
punishable through mere general disapprobation.
A range of conducts examined in On Liberty fall in this grey area where liberty encounters
crime, and Mill’s attempt to classify them mirrors our own contemporary endeavour to formulate
a taxonomy of offences and the harm that these produce. Even in situations where liberty and
crime, in a sense, almost coincide, he considers freedom as a priority by stating unequivocally that
‘leaving people to themselves is always better than controlling them’ (ibid.: 165). We are faced
here with two familiar concepts regularly recurring in debates around white-collar and corporate
crime. ‘General disapprobation’ and ‘punishment by opinion’ echo analyses of the crimes of the
powerful as conduct whose definition should be elaborated, and whose criminal nature is perceived, within the occupational context in which it occurs. Punishment or persuasion becomes
the question. Mill’s argument reminds us of this dilemma, although his belief that ‘leaving people
to themselves is always better than controlling them’ would suggest that persuasion, accompanied
by disapprobation, would be preferable.
Intervention against malpractice, in many cases, ‘would produce other evils, greater than those
which it would prevent’ (Mill, 1982: 70). We are therefore left with two main solutions: either
the conduct affecting others is met with free, voluntary consent by those affected, or those
affected somehow ‘disappear’. We are yet in another crucial part of Mill’s argument, where the
author discusses the variable liberty within a highly controversial commercial activity, namely
the marketing of poisons. Here, he notes that authority control should not infringe the liberty of
producers or sellers, or that of buyers. Persons should simply be warned of the dangerousness of
the good they buy. In a clarifying example, Mill describes a person attempting to cross a bridge
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that has been ascertained to be unsafe. There is no time to warn the person of the danger, but she
may be seized and turned back without any real infringement of her liberty, ‘for liberty consists
in doing what one desires’, and she does not desire to fall into the river (ibid.: 166). In other cases,
the person may desire just that, and once warned of the danger should be left free to make her
choice. The conclusion stemming from this example may be that those in charge of the building
of the bridge should be granted the freedom to make it unsafe. Potential victims, on the other
hand, should be granted the freedom to voluntarily become victims, thus ‘participating’ in the
free entrepreneurial process. The crimes of the powerful, in this sense, are justified through the
disappearance of the victims, on the one hand, and through their consent to being victimized,
on the other.
Authority
‘Authority is the possibility for an agent to act upon others without others reacting despite being
able to do so’ (Kojève, 2004: 26). This is an elegant formulation that echoes Mill’s notion of consent. We have seen that Mill’s concern is not to prevent perceptible damage to others, but rather
to prevent harm being inflicted upon them without their consent (McKinnon, 2008). Authority
examined from the perspective of consent may be seen as an entity that does not change itself
in relation to the action it performs, as change would signal its failure. If I want to get someone
out of my room and I have to use force to do so, I show lack of authority. Naturally recognized
by its subjects, all human authority must have a cause, a reason or a justification of its existence.
The main ‘pure’ forms of authority identified by Kojève are linked with different philosophical
schools: Hegel (master and father), Aristotle (leader or chef) and Plato (judge or the pretence of
impartiality, objectivity, disinterest). These pure forms are not the result of a social contract: their
genesis is spontaneous. More precisely, there is a theological or theocratic theory, whereby the
prime and absolute authority belongs to God and all others derive from Him. Elaborated by the
scholastics, this theory is then appropriated by partisans of hereditary monarchies. Plato’s theory,
on the other hand, is based on the assumption that authority derives from justice and equity,
and when based on more or less brute force it is a sheer pseudo-authority. Aristotle’s theory
indicates that real authorities occupy the position they do by showing wisdom, knowledge, and
the capacity to predict and transcend the present. In Hegel, the whole notion is reduced to the
relationship between the master and the slave, the victors and the vanquished, ‘the former having
risked his life in order to gain recognition, the latter having preferred subjugation rather than
death’ (Kojève, 2004: 50).
The crimes of the powerful can find justification in all the theories listed above; for example,
they may be seen as the result of the divine right to freedom, individualism and hereditary wealth,
as expressions of justice and equity supported by consent, or as the inevitable outcome of the
master – slave relationship accepted by those who are subjugated. It is in Aristotle’s conceptualization, however, that we find a compelling aspect, namely that authority possesses the capacity
to predict the future and transcend the present. Authority, in the form of crimes of the powerful, surpasses the natural time that prioritizes the present and the past: the time of the crimes of
the powerful is the future. It is in the future that powerful offenders will enjoy the advantages
acquired and transmit them to their progeny and peers, where the augmented inequality will
become increasingly difficult to challenge, and where the foundational nature of their acts will
be weighed. The crimes of the powerful, in brief, inhabit a grey area in which conducts await
the outcome of the criminalization – decriminalization conflict, in the sense that they may be
subject to regulation or may become accepted routine. Some of these crimes, in fact, possess a
decriminalization impetus, while others implicitly invoke legal pragmatism, in that they challenge
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legal reasoning and request departure from precedents. These foundational crimes are inspired
by an ‘experimental’ logic and driven by a consequentialist philosophy. Powerful actors so driven
adopt illicit practices with the awareness that they are, indeed, illicit, but justify them through
their founding force, namely their capacity to transform the previous jurisprudence and establish
new laws and new types of legitimacy. The crimes of the powerful, in sum, restructure the legal
and political spheres while playing a legislative role.
Negative and positive liberty
Consent and authority return under different guises in the influential distinction between two
purely descriptive concepts, respectively termed negative liberty and positive liberty (Berlin,
1969). The former is freedom from coercive interference by others in relation to certain areas
of personal conduct. Within certain relevant domains, nobody is entitled to deny others, either
directly creating obstacles or calling on institutions to do so, opportunities to choose the behaviour to adopt. Positive liberty, on the other hand, is freedom to be one’s own master. It involves
a ‘wish to be the instrument of my own, not of other men’s acts of will’ (ibid.: 131). In brief,
individuals have a right to exercise their own will in the private domain as well as in the public
arena, where participation amounts to self-government, namely decision-making opportunities
(McKinnon, 2008). We shall discuss the ambiguity of this formulation below.
Applying negative liberty to powerful offenders, we are led to argue that such offenders may
claim a degree of immunity in relation to their choices, particularly within certain protected
domains of conduct. No coercive interference by others is allowed in such domains, where
choices, Berlin omits to note, are rendered possible due to the political power of those making
them. Here is where his distinction reveals its ambiguity, in that negative liberty needs a substantial degree of positive liberty, without which no immunities in relation to choice of conduct
could be gained. In sum, negative and positive liberty can amalgamate in a perfectly homogeneous whole, making choices possible and interference by external forces difficult. Berlin’s
distinction, therefore, seems to originate in ethical concerns pertaining to the individual and
their ‘informal’ life, but unwittingly leads us to the ‘formal’ sphere in which individuals interact,
namely the political arena.
‘Real power to determine the future of democratic societies rests in the hands of a remarkably
small number of people’ (Miller, 2003: 40). This statement is a good starting point for a discussion
of contemporary political issues, which here inevitably can only be cursory. Politics has become
the exclusive preserve of a caste, an elite who claims its right to govern due to the incompetence
of ordinary people, including those who designate them as representatives. Voters have to limit
their role to the choice of their qualified leaders, being unqualified to decide on issues directly.
The ‘democratic’ process itself generates this form of political deskilling among citizens, whereby
people lose touch with those making choices that affect their lives. A political decision, in effect,
requires judgement with respect to available options, factual information relating to the likely
outcome of those options, and sensitivity with regard to their ethical fairness.
It would be risky to ask the general public to make major policy decisions unless they have
the skills and information to make good judgments, but they have no incentive to acquire
these unless they are given significant decisions to make.
(Ibid.: 47)
The crimes of the powerful, in this case, find justification in the fact that the general public is
incapable of identifying options, assessing their likely outcome, let alone establishing the ethical
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value of the acts it is called upon to judge. The minority monopolizing the realm of politics is
therefore able to also monopolize the decision whether acts are to be deemed criminal or not.
Conclusion
Justification puts the crimes of the powerful in a peculiar light, as I hope I have shown in this
chapter. It is a strategy that may or may not incorporate deceit, but mainly aims to present
conducts as being beyond good and evil, to allow them to escape any sort of judgement. Of
course, it implies a high degree of hegemonic power, but even when hegemony is weak it
makes claims, it establishes a right to forcefully upset rules and challenge notions of legality.
Perfectly consistent with Hegelian interpretations of history, the crimes of the powerful occur
in specific social and political contexts that offer opportunities for change. The powerful
are compelled to ‘go beyond’ and ‘negate’ those contexts, and in doing so they find justification for their actions, whose illegality is perceived as a form of innovation, within a process
of inevitable historical evolution. Justifications provided by Adam Smith pinpoint how the
crimes committed by the powerful are hard to detect and responsibilities difficult to apportion.
Such crimes, moreover, are the result of negligence rather than injurious intentions; they fall
into the category of malice propense, rather than into that of culpa. Ultimately, they only violate
imperfect, not perfect rights. In his turn, John Stuart Mill is not concerned with the harm caused
by powerful actors, but only with establishing whether that harm is inflicted with or without
the consent of those suffering it.
The crimes of the powerful are ‘experimental’ and experiments may lead to the foundation of
new ethics, new rules and new socio-political arrangements. In this sense, these types of crimes
have been described above as capable of restructuring the legal and political spheres and playing a legislative role. The distinction between negative and positive liberty, finally, has given an
unexpected opportunity to clarify that both types of liberty coalesce in specific minorities who
can find justification for their actions through a careful amalgam of the two.
The imperative of justification does not rule out that individuals and groups attempt to
exempt themselves from it and opt for the use of deception or violence. Hegemony is never perfect: however, the justification model allows us to identify the shifts into deception and violence,
and ‘to discriminate between situations oriented toward justification and situations of domination and contingency’ (Boltanski and Thévemot, 2006: 346). On the other hand, distinguishing
acceptable justification from unacceptable associations (in our case, the crimes of the powerful)
becomes increasingly hard, as the skills required to make such a distinction are proportionate to
the power held by actors in the extremely skewed, polarized, elitist political systems of today.
In Greek the term idiotes was used to describe someone who lived an entirely private existence
and who took no part in the public life of the city. Idiotes today are those who believe that the
pursuit of private gains, whether enacted legally or illegally, turns into beneficial achievements
for all. The evolution of the political sphere, sadly, seems to be set to produce increasing numbers
of unskilled political actors, as exemplified in the statement: ‘You, the people, have the right to
air your views; and we, the ruling class, reserve the right to disregard them’ (Badiou, 2005: xvi).
Idiotes, in this case, will proliferate, and with them the justifications of the crimes of the powerful.
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4
Corporate criminals constructing
white-collar crime
Or why there is no corporate crime on the
USA Network’s White Collar series
Carrie L. Buist and Paul Leighton
A standard critique of media portrayals of crime correctly states that there is an over-emphasis
on street crime compared to white-collar crime, especially given the prevalence and enormous
costs of the latter. This situation partly reflects the pattern of legislators and enforcement agencies focusing more on harms done by the poor (street crime) than harms done by the rich
(white-collar crime), but the media further magnify the carnival mirror-like distortions of the
criminal law and criminal justice system (Reiman and Leighton 2013). COPS, all the varieties
of Law & Order, CSI, etc. hardly ever deal with a white-collar crime. Occasionally, rich people
kill, but not through corporate acts that harm workers, consumers, the environment and/or
communities.
An apparent exception is the USA Network’s White Collar series, which finished its fifth season
in 2014. In the show, convicted art forger and con man Neal Caffrey receives a conditional release
from prison to assist FBI agent Peter Burke in solving cases for the White Collar Crime Division.
As a single show on a modest-sized cable channel, White Collar does little to disrupt the standard
critique, but it still deserves scrutiny because media representations of crime are ideologically
charged; they shape public perception of the “crime problem” and appropriate policy responses.
Indeed, the ideological slant from corporate media creating programs about the criminality of the
wealthy and powerful will not be confined to fictionalized drama, so White Collar is an opportunity to understand how corporate media distort harmful elite deviance.
Fox TV Studios (owned by the notoriously conservative Rupert Murdoch) produces White
Collar that airs on USA Network (which has been owned by Fortune 500 firms during the show’s
five seasons).
While white-collar crime does not have a specific generally accepted definition, however, in
the speech where he coined the term, Sutherland discussed white-collar crime as the behavior
of men working in legitimate business fields who often used criminal means to gain money and
influence in a variety of professional fields such as banking, oil, and real estate as well as in political
arenas (Sutherland 1940: 2). So what type of mirror does the corporate medium turn on itself,
its owners, advertisers, and financiers? And what type of understanding would a viewer have of
white-collar crime from watching White Collar?
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C.L. Buist and P. Leighton
The distortions of news because of corporate ownership are well established (Bagdikian 2004).
For example, in 2010, GE made profits in the USA of $5.1 billion but paid no taxes (Kocieniewski
2011). The story ran on several networks, but not on the GE-owned NBC nightly news or the
network’s flagship public affairs program Meet the Press. The NBC Nightly News did have time
during its broadcast on the day the GE tax story broke for a segment about the Oxford English Dictionary adding such terms as “OMG” and “muffin top” (Farhi 2009). An article on the “missing
story” noted that one media critic “cited a series of GE-related stories that NBC’s news division has
underplayed over the years, from safety issues in GE-designed nuclear power plants to the dumping
of hazardous chemicals into New York’s Hudson River by GE-owned plants” (ibid.).
Similarly, the neglect of actual white-collar crimes by White Collar may be mapped against the
misdeeds of the show’s corporate owner. The concern, then, is that the same dynamics that created
the “missing (news) story” also create “missing (crime) stories” and specifically “missing (corporate
crime) stories” – even from a series about white-collar crime. Corporate ownership of the media
means that corporate criminals construct white-collar crime and elite deviance in a way that neglects
the crimes and abuses of power by “legitimate” businesses. The misinformed public lacks information about corporate abuses of power and harms, which means it is easier for these harms to persist.
In an earlier piece, Leighton (2010) pointed out that the crimes portrayed on White Collar are a
narrow apolitical set of white-collar crimes that do not include abuses of power by corporations
or government. For White Collar, white-collar crime means jewel and art theft, mostly done by
high-end professional criminals and organized crime trafficking. Few reputable people commit
occupationally related white-collar crime, the essence of white-collar crime according to common definitions. Even then, their crimes are not what Quinney describes as crimes of domination:
“crimes of control” (acts by the police and the FBI in violation of civil liberties), “crimes of
government” (political acts that violate US or international law), and “crimes of economic domination” (corporate acts involving price fixing, pollution, workplace safety, dangerous products,
and financial harm to the public) (Barak et al. 2015: 61).
This chapter further explores that hypothesis through a content analysis of the first two seasons of White Collar, when it was owned by GE. Their frequent and prolific corporate offending
includes environmental pollution, bribery, price fixing, defense contract fraud, safety concerns
about their nuclear power reactor, and fraud in the sale of mortgage-backed securities. The section below, Methodology, describes the sample, data collection, and analysis. The second section,
Results, compares the perpetrators and crimes on White Collar with the acts described by Sutherland’s “White Collar Criminality” (1940). The third section, Discussion, reviews the crimes and
abuses of power by GE. The conclusion sets this study in the context of other corporate media
reporting of crime.
Methodology
White Collar first aired in October 2009 when GE had a majority ownership of the USA network’s immediate corporate parent, NBC Universal. In January 2011, GE’s ownership in NBC
Universal fell from about 80 percent to 49 percent when telecommunications giant Comcast
picked up a 51 percent stake. Thus, we focus here on the first two seasons of White Collar, which
was written and produced before the change in control.
The first two seasons of White Collar comprise 30 episodes (14 episodes in season one and 16
in season two). To do the coding, we employed several data sources. First, we watched the show,
which is available for on-demand viewing through services like Netflix as well as reruns on the
USA network. Second, we used detailed (3,500-word) summaries of episodes available on tv.com
and shorter summaries from usanetwork.com (which airs the show).
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Constructing white-collar crime
As noted by Weber, “a central idea in content analysis is that many words of the text are classified into much fewer content categories” (1990/2004: 118). The same logic applies to classifying
the hours of video (44 minutes per episode) into meaningful content categories. Following up
on Leighton’s critique (2010), we initially coded each episode to identify the perpetrator, crime,
and victim.
The next step in the process is to develop the themes where the codes will find their new
homes. We approached the process using “open coding,” which allowed us to identify as many
possible themes as we could (Denzin and Lincoln 2003). As Charmaz (2004) contends, the coding process is a way in which a researcher can begin to define what it is he or she is encountering
during the process. For example, the codes for smuggler, counterfeiter, and professional high-end
thief were less important than that all were professional criminals who did not enjoy the respectability and trust that are the usual hallmarks of white-collar crime (Friedrichs 2010). A second
category then captured “Respectable Individuals” who are not necessarily perfect people – they
may have gambling debts to organized crime – but they earn a living from a conventional, professional, and legitimate job (lawyer, bank manager, etc.).
Coding may vary widely and there is never one right way to code. The important consideration is that the “classification procedure be reliable in the sense of being consistent” (Weber
1990/2004: 118). Our original coding scheme of perpetrator, victim, and crime may be consistently applied to 26 of the 30 episodes. The other four involved a deviation from the usual
episode where solving a crime or crimes was central to the plot. Instead, these episodes focused
on advancing the subplot about a music box – an objet d’art that once belonged to Catherine
the Great and contains a secret. Our efforts to apply categories of “Professional Criminal” and
“Respectable Individual” produced several anomalies that did not reflect problems with the
integrity of the categories as much as the show’s efforts to obfuscate the dynamics of white-collar
occupational crime.
Consistency also involves intercoder reliability (Neuendorf 2002). Each of the authors watched
the episodes and read each summary twice. Each author made his or her own assessment of perpetrator, victim, and crime, then verified the accuracy of the coding conducted by his or her
co-author. Differences were not substantive and often revealed emerging themes. Memo writing
(Charmaz 2004) helped this analysis by clarifying the theme’s development.
Results
The results of coding the first two seasons of White Collar are presented in Table 4.1. Column
one includes the episode name and a shorthand way to reference it (i.e., S2E4 is season two,
episode four). Column two highlights information about the most significant perpetrators,
with PC indicating “Professional Criminal” and RI indicating “Respectable Individual.” Column three captures information about the crimes and victims. Column four, “Notes,” captures
additional observations to support our coding and/or aspects of the plot that serve to deflect
attention from the harms done by legitimate businesses. Our comments on crimes and harms
not raised by the show are not meant to be exhaustive, but merely illustrate the types of missing
issues.
From our analysis of the data, three important themes emerge. First, White Collar is about
the thieves who steal valuable objects and high-end organized crime. Second, when legitimate
individuals commit white-collar crime, they act alone or never with another person at the same
company; corporate crime does not exist. White-collar criminals typically commit street crimes
as well, thus minimizing the issue of white-collar occupational crimes. Third, the motive for
crime never critiques consumerism or the American Dream.
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Art restorer [PC/RI]
Israeli counterfeiter [PC]
Nephew of organized crime
boss [PC] instigates theft;
college professor murders
[PC/RI]
Former U.S. State Department
official and journalist [RI]
High-end loan shark [PC]
Chinese money launderer [PC]
Counterfeiter [PC]; FBI agent
[RI]
Wall Street broker [RI]; Con
men running fraudulent
telemarketing operation [PC]
S1E1 Pilot
S1E2 Threads
S1E3 Book of Hours
S1E6 All In
S1E7 Free Fall
S1E8 Hard Sell
S1E5 The Portrait
S1E4 Flip the Coin
Perpetrator
Episode
Theft of diamond from business and
replacement with a forgery. Caffrey framed
for heist. Illegal surveillance of FBI agent by
another FBI agent.
“Pump and Dump” boiler-room operation
where victims buy shares of stock based
on fraudulent claims; stock loses value and
victims had average loss of $30,000.
Murder of FBI agent, money laundering, and
illegal gambling.
Smuggling of Iraqi gold artifacts looted from
museum. Framing of an innocent US soldier.
Theft of $2.6 million painting from residence.
Smuggling of data sewn into designer dress.
Murder of another counterfeiter. Kidnapping
of fashion model.
Theft from church of 500-year-old Bible.
Murder of organized crime boss’s nephew and
fencing of stolen Bible.
Forgery of 1800s government bonds with
current value of $150 million. Theft of bond.
Murder of rare book dealer providing paper
for forged bonds.
Crime/Victim
Table 4.1 Perpetrator, crime and victim in each episode of the first two seasons of White Collar
In a pump-and-dump operation, the perpetrator buys
“penny” stocks (cheap, thinly traded), pumps up the
price through fraudulent claims, then sells their shares.
Victims are left with worthless stocks.
Wall Street broker runs the fraudulent boiler-room
operation separately from his legitimate business,
so the episode avoids questions about the improper
business practices of financial service companies against
their customers.
Making the State Department official a former employee
removes the issue of governmental crimes in Iraq.
Focus is on the burglary from the private residence, not
earlier crime of a museum improperly taking it from the
daughter born out of wedlock to the artist.
Interagency rivalry between FBI and INTERPOL has some
responsibility for the FBI agent’s death. Government
agencies do not violate the public’s rights or harm them;
government wrongdoing is excessive interagency rivalry.
Illegal surveillance is against a government agent, not
the public. Government agencies do not violate the
public’s rights or harm them.
College professor coded as PC because she indicates
a familiarity with high-speed chases and murders
someone in the mob.
Art restorer coded PC because he steals a bond from
the National Archives and replaces it with a counterfeit,
then kills his accomplice by entering the FBI building
posing as a lawyer.
Perpetrator is possibly linked to organized crime.
Notes
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Professional criminal [PC]
Manager of crime syndicate
[PC]
S1E12 Bottlenecked
S1E13 Front Man
S1E14 Out of the
Box
S2E1 Withdrawal
Bank robber [PC]: Bank
employee [RI]
Thief [PC]
S1E11 Home
Invasion
S1E10 Vital Signs
Federal District Judge (with
implications that an FBI agent
is also involved) [RI]
Doctor and charity [RI]
S1E9 Bad Judgment
Armed bank robbery of $8.2 million, assault
on guard.
Murder to enable thefts of jade elephants to
bring together the pieces of a 1421 Chinese
set.
Murder of an accomplice who has stolen
supplies and appears to have forged an antique
bottle of wine. Caffrey forges another bottle of
wine to force the auction house to authenticate
them, expecting both would be discovered
as forgeries. But the other bottle is genuine;
Caffrey has been played to draw attention
to the wine and drive up the price. Money
needed to repay Russian mafia from earlier job.
Two kidnappings. Perpetrator threatens to kill
Neal’s friends to extort him to steal gold.
Mortgage fraud committed through
document forgery on about nine victims.
Bribery.
Charity offers girl a new kidney in exchange
for a $100,000 donation after she was
removed from an organ transplant list.
Trafficking of human organs (smuggling)
finances the charity founder’s own search for
an organ needed because of kidney disease.
He has embezzled $30 million.
(Continued)
This episode furthers the subplot, making it problematic
to code. It is not included in the analysis.
Armed robbery of millions from bank vault with help
from individual employee rather than embezzlement
or coordinated control fraud (Barak 2012) by the
executives.
Passing mention that “Weatherby's” auction house sold
six bottles of a 1947 wine at $50,000 each, although
the vineyard produced five bottles that year. The
unexplored issue is that the auction house received a
commission and thus has some conflicts of interest in
the authenticity of objects for sale. The authenticity of
wine in this episode minimizes the problem of stolen,
looted, or forged auction items.
Because the organization is an illegitimate charity,
no questions arise about the harmful practices or
fraudulent billing practices of for-profit hospitals. A
2012 study added “to the case – advanced by health
care researchers and Medicare overseers in at least six
government and academic studies in the last three
years – that the rise of for-profit providers is fueling
waste, fraud, and patient harm in the $2.8 trillion US
health care sector” (Waldman 2012). Doctor’s own
illness is driving crime, not excessive entitlement,
consumerism or the American Dream.
No fraud by financial institutions in mortgage lending,
securitization, loan processing or foreclosure practices.
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Perpetrator
State senator and campaign
employee [RI]; pimp [PC]
Criminology professor [PC/RI]
and his students [RI]
Weapons dealer, racketeer,
former drug trafficker. [PC]
Murderer, identify thief [PC]
Lawyer [RI]; Mob boss [PC]
US Marshall [RI]; Attorney
[PC/RI]
Episode
S2E2 Need to Know
S2E3 Copycat
Caffrey
S2E4 By the Book
S2E5 Unfinished
Business
S2E6 In the Red
S2E7 Prisoner’s
Dilemma
Table 4.1 (Continued)
Theft of $100,000 by underling of crime
boss from money laundering operation.
Crime boss kidnaps underling’s girlfriend
then makes death threats to get the money
back. Attempted murder of individual trying to
broker an exchange.
Investigation into the theft of $100 million
Japanese bonds uncovers that the perpetrator
had earlier murdered a wealthy person to
assume his identity (identity theft). Attempted
murder for hire of insurance investigator to
cover up crimes.
Adoption lawyer fraudulently claims birth
mother wants their baby back. Lawyer needs
money to pay off gambling debt to mob
boss.
US Marshall is selling confidential information on
the location of witnesses under government
protection. The buyer is a defense attorney
who is having the witnesses murdered. Both
are framing an innocent FBI agent.
Art theft ($4 million painting from gallery),
forgery of art work.
Illegal campaign contributions funneled
through an escort service. Attempted
extortion of FBI agent Burke, who is
investigating the senator.
Crime/Victim
Wrongdoing by government official is individualized;
no systemic problems or policy concerns. Defense
attorney coded as PC because of multiple murder for
hire plots.
Lawyer has a solo practice; no questions about the
billing practices of large law firms. Gambling debt is the
driving force, not consumerism or the American Dream.
Illegal contribution by illegitimate business minimizes
political corruption by legitimate business or system
of “legalized bribery” (“the beneficiaries of corruption
have managed to legalize most of it”) (Friedrichs 2010:
147–148).
Professor coded as PC because there was a decade-long
series of thefts copied from the techniques of talented
criminals.
Focus on individual acts, not support for money
laundering by financial institutions.
Notes
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Smuggler [PC]
A prisoner [PC]
Energy trader [RI]
Billionaire Ponzi scheme
architect [PC]
S2E9 Point Blank
S2E10 Burke’s Seven
S2E11 Forging
Bonds
S2E12 What
Happens in Burma…
S2E13
Countermeasures
S2E14 Payback
S2E15 Powerplay
S2E16 Under the
Radar
Counterfeiter [PC]
CEO of technology firm [RI]
S2E8 Company Man
Three kidnappings and extortion to open
World War II German submarine containing
billions of dollars of art and antiquities.
Smuggles a ruby and frames another
individual.
Theft of plate and supplies to make
counterfeit $100 bill
Kidnapping of FBI agent Burke and extortion;
escape from custody. US passport forging
operation.
Energy market manipulation: trader causing
city-wide blackouts during a heatwave by
withholding power, which company resells at
higher price. The blackouts cause deaths and
millions of dollars in losses to individuals and
business. Theft of flash drive. Plan to murder.
In an effort to win a defense contract, CEO
fraudulently overstates progress while also
attempting to sell the company to overseas
buyers. When head researcher disagrees with
lie and plan, CEO murders him. Employee
having affair with researcher attempts to
murder CEO.
No widespread Enron-like practices, which include
an Enron’s energy traders caught on tape talking
about "all the money you guys stole from those poor
grandmothers in California.” One description of the
tapes noted: “The conversations are amazing, basically
a bunch of crooks gloating about the savage rogering
they're giving to the people of California and how
much money they're making” (Doctorow 2004).
No exploration of state crime, even in context of Nazi
looting.
Crimes against government, not state crimes.
Crime against government, not state crimes.
These episodes further the subplot, making them
problematic to code. They are not included in the
analysis.
Murder and woman’s revenge divert attention from
problem of defense contract fraud.
C.L. Buist and P. Leighton
Because the field lacks a consensus definition of white-collar crime, we believe an appropriate comparison for the acts in White Collar is the list Sutherland provided in his presidential
address:
[M]isrepresentation in financial statements of corporations, manipulation of the stock
exchange, commercial bribery, bribery of public officials directly or indirectly . . . to
secure favorable contracts and legislation, misrepresentation in advertising and salesmanship,
embezzlement . . . misapplication of funds, short weights and measures . . . misgrading of
commodities, tax frauds, misapplication of funds in receiverships and bankruptcies.
(Sutherland 1940: 2–3)
While incomplete, Sutherland’s focus is on crimes committed in legitimate business (1940: 3),
but in more than half of the coded episodes of White Collar the perpetrators are professional
criminals who steal expensive items, or wealthy mobsters. The crime that appears most frequently is interpersonal murder, and no employees, consumers, or community members die
indirectly from executive decisions. (In S2E15, the perpetrator is a rogue energy trader, not an
executive.)
In about one-third of the shows, a person we labeled a Respectable Individual engaged in
crime. However, white-collar criminals on White Collar always acted alone, either in a solo professional practice or simply as a lone wolf. The doctor embezzling $30 million from the charity
(S1E10) apparently did not have any help, for example. At other times there is a suggestion of having an accomplice (S1E9, S2E15), but never does a white-collar crime involve two people from
a legitimate business working together. In contrast, some of the most devastating white-collar
crimes involve control fraud, where the executives work together to corrupt financial controls
and loot the company (Barak 2012). Similarly, the Wall Street executive engaged in stock fraud
(S1E8) does so through an illegitimate brokerage operation in concert with a con man, thus
avoiding all issues about the “legitimate rackets” (Sutherland 1940) run by firms like Goldman
Sachs and other financial institutions.
The count of Respectable Individuals above does not include four instances where the perpetrator was coded both PC and RI. While Sutherland highlights how white-collar criminals use
their respectability and resources to continue to commit occupational crimes without recrimination, the Respectable Individuals on White Collar do not commit repeated occupational crimes.
They murder and/or, in the case of the college professors, commit crimes like theft related to
their field of expertise, not academic dishonesty, conflicts of interest, or crimes related to their
professional role. Although the energy trader (S2E15) was not coded as a Professional Criminal,
his misdeeds include theft and a planned murder for hire, leaving the idea that crooked energy
traders are as unnatural and rare as murder for hire. Likewise, the CEO engaging in defense contract fraud (S2E6) murders, further erasing purely occupation crime and distorting the level of
pathology required to be a corrupt defense contractor.
Finally, in only two cases did White Collar explore the motives of Respectable Individuals
who engage in white-collar crime, and in those cases it did everything possible to downplay structural critiques of consumerism, capitalism, and the American Dream (Messner and
Rosenfeld 2013). The adoption lawyer (S2E6) defrauds his clients because of gambling debt to
organized crime. Entitlement is not an issue; the social impact of licensed casinos and debt to
legitimate financial institutions are erased. The doctor who embezzles from charity (S1E10)
needs money to search for the right organ donor, a personal story that raises no questions about
problems at for-profit hospitals, payments from pharmaceutical companies, or bankruptcy
because of medical bills.
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Discussion
White Collar does not expose crimes of the powerful or the structural characteristics of capitalism
that make it so prevalent. While pretending to be about white-collar crime, White Collar distorts
and conceals so much – and in so many predictable ways – that it is a Corporate Agenda for
Crime Control and the opposite of the Agenda for Corporate Crime Control. It fits into a pattern of disappearing consciousness of corporate crime and increasing abuses of that power (Reiman and Leighton 2013). It is thus another example of agnotology, a field dedicated to culturally
constructed ignorance, especially by special interests obscuring the truth. Ignorance is a strategic
ploy: “we rule you, if we can fool you” (Proctor and Schiebinger 2008: 11).
Some may argue that plotlines about corporate and governmental crime would not be interesting; however, there are successful big-budget films like Julia Roberts’ Erin Brockovich (pollution
from chemical company causes cancer), John Travolta’s Civil Action (pollution from chemical
company causes cancer), Al Pacino’s The Insider (informant on tobacco company), and the HBO
production Enron: The Smartest Guys in the Room drew popular and critical acclaim. In addition,
many television programs revolve around scams of varying complexity that are not necessarily
harder to understand than a range of real white-collar crimes.
Plots could be easily spiced up with details about strip clubs, prostitutes and cocaine, which
the Wall Street Journal notes were involved in the LIBOR interest-rate-fixing scandal (Enrich and
Eaglesham 2013) – and are likely a part of other “legitimate” business activities as well. Further,
reality presents good raw material for character. Columbia University economist Jeffrey Sachs
described the moral environment on Wall Street as being “pathological”:
[T]hese people are out to make billions of dollars and [they feel] nothing should stop them
from that. They have no responsibilities to pay taxes . . . no responsibilities to their clients . . .
no responsibilities to counterparties in transactions. They are tough, greedy, aggressive and
feel absolutely out of control in a quite literal sense.
(Quoted in Ritholtz 2013)
Thus, there are models of successful media and a reservoir of compelling characters that could
exist in a world of money, greed, sex, and drugs.
Imagine what could be done when, for example, during the first season of White Collar, the
pharmaceutical giant Pfizer agreed to a $2.3 billion settlement over illegally marketing drugs –
“the largest health care fraud settlement and the largest criminal fine of any kind ever” (Harris
2009). Furthermore, “the government charged that executives and sales representatives throughout Pfizer’s ranks planned and executed schemes to illegally market” other drugs as well. This
episode “occurred while Pfizer was in the midst of resolving allegations that it illegally marketed
Neurontin, an epilepsy drug for which the company in 2004 paid a $430 million fine and
signed a corporate integrity agreement – a company-wide promise to behave.” If White Collar
produced a “ripped from the headlines” episode about Pfizer, the plot could help dramatize how
illegal marketing means higher costs for health insurance and for taxpayers (through Medicare)
as people are prescribed drugs they do not need and suffer harm from the side effects of drugs
that are providing no therapeutic benefit. But GE makes MRIs and other medical equipment,
so it is not in their interest to shine the light on pharmaceutical companies and doctors who are
important customers. Thus, on the show, a single doctor, embezzling from a charity because of
his own medical condition, represents wrongdoing in the medical profession.
This analysis plays out in a number of other areas because GE is a diversified company that
makes consumer appliances, parts for power plants, jet engines, nuclear power plants, wind farms,
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and medical equipment. Its lending division provides more than half of the profits, so “many Wall
Street analysts view G.E. not as a manufacturer but as an unregulated lender that also makes dishwashers and M.R.I. machines” (Kocieniewski 2011). Media ownership and extensive advertising
works to create a positive view of the company and gloss over GE’s habitual criminality, which
involves diverse crimes over many decades (Barak et al. 2015: 205–207).
In the 1950s, for example, GE and several other companies agreed in advance on the sealed
bids they submitted for heavy electrical equipment. This price fixing defeated the purpose of
competitive bidding, costing taxpayers and consumers as much as a billion dollars (Hills 1987:
191). Not surprisingly, price fixing and collusive behaviors by legitimate businesses do not appear
on White Collar.
In the 1970s, GE made illegal campaign contributions to Richard Nixon’s presidential campaign, but on White Collar an escort service is used to funnel illegal campaign contributions and
support political corruption. GE settled charges over widespread illegal discrimination against
minorities and women, but on the show employees are only hurt when the boss personally murders them. Also during this time, three former GE nuclear engineers resigned to draw attention
to serious design defects in the plans for the Mark III nuclear reactor because the standard practice
was “sell first, test later” (Hills 1987: 170; Glazer and Glazer 1989). Not surprisingly, defective and
dangerous products are not part of White Collar plots.
In the 1980s, GE pled guilty to felonies involving the illegal procurement of highly classified
defense documents, and 108 counts of felony fraud involving Minuteman missile contracts. In
spite of a new code of ethics, GE was convicted in three more criminal cases over the next few
years, plus it paid to settle cases involving retaliation against four whistleblowers who helped
reveal the defense fraud. (GE subsequently lobbied Congress to weaken the False Claims Act that
protects whistleblowers.) In 1988, the government returned another 317 indictments against GE
for fraud. A 1990 jury convicted GE of fraud on a contract for battlefield computers, and the fine
included money to “settle government complaints that it had padded bids on two hundred other
military and space contracts” (Greider 1996: 350; see also Clinard 1990; Greider 1994; Pasztor
1995; Simon 1999). Defense contract fraud on White Collar is neither widespread nor ongoing,
but the problem of an individual CEO who makes fraudulent claims about his product, then
kills to cover it up.
GE is also one of the prime environmental polluters, linked to 52 active Superfund sites in
need of environmental cleanup in the US alone. GE is responsible “for one of America’s largest
Superfund sites, the Hudson River, where the company dumped more than a million pounds of
toxic wastes” over a period of decades (Center for Public Integrity 2007). Instead of cleaning up
their part of the 197-mile site, they mounted an eight-year challenge to the Superfund law that
requires polluters to remedy toxic situations which they created. Environmental pollution does
not appear anywhere on White Collar.
GE created a number of finance arms to help people and companies buy its products, and
provides credit services to many more, so it has no interest in critiquing consumerism or even
greed. “GE Capital is one of the world’s largest and most diverse financial operations, lending
money for commercial real estate, aircraft leasing and credit cards for stores such as Wal-Mart. If
GE Capital were classified as a banking company, it would be the nation’s seventh largest” (Gerth
and Dennis 2009). GE is one of the entities sued by the Federal Housing Finance Agency over
“securities law violations or common law fraud” in the sale of mortgage-backed securities to
Fannie Mae and Freddie Mac (FHFA 2011). On White Collar, mortgage fraud becomes the actions
of an individual judge – perhaps in collaboration with an FBI agent – forging signatures in fewer
than ten real estate frauds. It does not expose fraud and abuse of power by financial institutions,
misrepresentations in securitized mortgage products, high executive pay and bonuses for those
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who drove the economy to crisis, an assault on private property rights by institutions that cheaply
hire “robosigners” to file foreclosure affidavits swearing to facts they do not know (Barak 2012;
Reiman and Leighton 2013).
A review of GE’s diverse crimes indicates that a large number of corporate crimes used in
an episode of White Collar would interest viewers in misbehavior that GE has likely engaged in.
While we have mapped this tightly to GE, we do not believe there will be a substantial change
under the corporate ownership of Comcast. Comcast also requires advertisers for all of their
programming, so they cannot illuminate too many illegitimate business practices before offending potential sponsors. In addition, the executives of Comcast may well sit on other corporate
boards and own substantial shares in other companies, so they do not have an interest in exposing
criminal activities or making the public question whether there is adequate regulatory scrutiny
of business.
Conclusion
Because the majority of White Collar is devoted to crime of the underworld, it neglects what
Sutherland meant by white-collar crime. As such, White Collar is a minimal refutation that television drama is about street crime because there’s little about the “legitimate rackets” (Sutherland
1940). Even when showing actual white-collar crime, White Collar minimizes its scope and
presents white-collar criminals as “bad apples” rather than as logical projections of structural
problems. Michalowski and Kramer (2006: 11) once noted, “The most cost-effective way to
achieve the goal of a large audience is to keep people entertained, and one of the best ways to
keep people entertained is through stories that fit ideal-typical images of crime.” This certainly
rings true when looking at our findings from White Collar, whose plots are more likely to feature
gangsters than banksters and “bad apples” who are typically engaged in street crimes like murder
that are portrayed in other primetime crime dramas.
The storylines on White Collar are not surprising given that corporate-owned media are
obligated more to shareholders than to the public good, and corporate owners will use media to
advance their own interests. Bagdikian (2004) notes that these ownership interests lead to reporting the failings of public bodies and the powerless, but insensitivity to failures in the private sector
in ways that protect the corporate system and rob the public of the ability to understand the
real world. It also leads to more specific failures to cover wrongdoing by the parent companies
of media corporations. In general, these media corporations are instrumental in selecting what is
broadcast and how it is framed, not only in dramas like White Collar, but in popular news outlets
as well.
In this sense, we would raise a concern about the disparate treatment of events that occurred
only two days apart in April 2013: the terrorist bombings during the Boston Marathon in Massachusetts, and the explosion of West Fertilizer Company in West Texas. While there are differences in the intentionality of the Boston Marathon bombers and the West Fertilizer explosion
(Reiman and Leighton 2013), that difference became key to downplaying an event that resulted
in greater loss of life, injury, and the destruction of nearby property – and that holds a mirror to
a devastating social problem.
While the Boston bombing was front and center on our televisions, computers, social networking sites and in our newspapers, fewer Americans knew what happened in West, Texas,
although four people died in Boston and 14 in Texas (11 of them first responders and public
safety personnel). Hundreds of people were injured in both locations; however, approximations
in Texas were still higher than in Boston. Two buildings and one restaurant were damaged from
the bombs in Boston, along with a boat in which one perpetrator hid. In Texas, over 75 homes
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were destroyed along with an apartment complex, several schools, a nursing home with over 100
residents, and several city blocks (Mahapatra 2013).
Like many white-collar crimes, the explosion at the fertilizer plant in West, Texas tended to be
reported as an accident, even though the company had been cited at least twice since 2006. The
dangerous chemical ammonium nitrate was housed at the plant and caused the blast. However,
the Environmental Protection Agency (EPA) does not regulate the chemical. The Occupational
Safety and Health Administration (OSHA) requires the chemical to be stored in a separate fireproof room, but the West Fertilizer Company had not been inspected by OSHA since 1985 so it
is difficult to say whether or not they were in compliance (Pace 2013).
The fertilizer plant is an example of state-corporate crime, which recognizes that government
and business are the most powerful social actors (Michalowski and Kramer 2006). Specifically,
state-facilitated crime results from omissions like bureaucratic failure and regulatory dysfunction (Kauzlarich et al. 2003: 247), which combine with profit-seeking behavior. State-facilitated
corporate crime is less the product of state negligence than the conscious pursuit of a “businessfriendly” environment that minimizes criminal liability for corporations and their executives,
regulates reluctantly, and promotes weak, underfunded, even dysfunctional, regulatory agencies.
While the Boston Marathon bombings fitted well with people’s existing notions of dangerousness and threats, it also promoted a Corporate Agenda for Crime Control because fear of
terrorism will lead to major surveillance and technology contracts. The corporate-owned media
could not explore the explosion in Texas as a crime, and even discussing it as an accident could
not raise questions about deficiencies in business regulation – either of which might promote
an Agenda for Corporate Crime Control. “We rule you, if we can fool you” (Proctor and
Schiebinger 2008: 11).
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Part II
Crimes of globalization
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5
Capital and catharsis in
the Nigerian petroleum
extraction industry
Lessons on the crimes of globalization
Ifeanyi Ezeonu
introduction
On April 24, 2013, a devastating but avoidable industrial accident in Savar, a suburb of Bangladeshi capital city, Dhaka, once again provoked an increasing need to interrogate “political
economy as a criminogenic force”. On that day, a poorly constructed multi-storey building
housing garment factories producing for Western markets collapsed, killing about 1200 people
and injuring several others. The major clients of these poorly maintained and poorly regulated
factories reportedly included Walmart, Cato Fashions, Benetton, and the Dutch retailer C &
A. Critics traced this disaster to the reluctance of the Bangladeshi government to enforce an
industrial safety regime for fear of alienating Western corporations which provide the low-paid
factory jobs (The Daily Ittefaq, 2013; Manik and Yardly, 2013). In search of poorly regulated and
non-unionized manufacturing outposts, Western corporations have found compliant partners
among the leaders of the Global South, including Bangladesh, and in the context of this chapter,
Nigeria. In Bangladesh, for example, these low-wage garment industries are the largest employers
of labour; and the government has created the enabling environment for them to thrive, including lax regulation and a brutal suppression of organized labour (Manik and Bajaj, 2012; Manik
and Yardly, 2013). In the absence of an effective regulatory regime and robust labour unions, the
corporations have found the perfect environment for neoliberal exploitation.
In fact, since the resurgence of market economics in the late 1970s and early 1980s, preventable industrial accidents have become a defining characteristic of Western corporate activities in
the developing world. The usual victims are vulnerable populations in the countries concerned.
Neoliberal policies have been blamed for the Bhopal chemical accident of December 1984
in India which killed about 3800 people immediately and several thousand others over time
(Broughton, 2005; Eckerman, 2006); the industrial fire accident in a garment factory in Karachi,
Pakistan, which killed nearly 300 workers (Hasan, 2012; Walsh, 2012); and most recently, the
Soma mine accident in Turkey, in which 301 workers lost their lives (see Ozel, 2014).
The avoidable accidents mentioned above, even at the expense of its citizens, represent some
of the deleterious effects of the global ascendance of untrammelled capitalism and the collusion
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of state apparatuses in this process, even at the expense of its citizens. Evidence suggests that these
accidents were mostly enabled by the increasing reluctance of developing countries, in furtherance of the praxeological ideals of market fundamentalism, to regulate their domestic economies
(see The Daily Ittefaq, 2013; Manik and Yardly, 2013; Ozel, 2014; Walsh, 2012; Broughton, 2005).
In Nigeria, the crippling effects of such policies, especially in the petroleum extraction industry
in the Niger Delta region, is well documented (see Okonta and Douglas, 2003; Human Rights
Watch, 1999a). Since Friedrichs and Friedrichs’ (2002) pioneering work on crimes of globalization, a growing number of criminologists have contextualized these market-driven harms as
crimes, and have called for the recalibration of the epistemological framework of their discipline
to accommodate and account for these forms of criminal behaviour (see Ezeonu, 2008; Ezeonu
and Koku, 2008; Wright and Muzzatti, 2007; Rothe et al., 2006). This chapter continues in this
tradition with respect to the activities of the petroleum extraction industry in the Niger Delta
area of Nigeria.
Crude oil deposits in Nigeria was first discovered in commercial quantities in Oloibiri, a
small rural community in the Niger Delta area, in 1956. By the early 1960s, oil exploration
activities especially by Shell D’Arcy (now Shell Petroleum Development Corporation of Nigeria, or simply “Shell”) had established the presence of huge deposits of crude oil resources across
the region. Since then, the Niger Delta has become a site of large-scale oil-extraction activities
and the economic engine of the country. It also hosts a significant number of transnational
corporations involved in oil extraction. Nevertheless, without a strong regulatory framework,
this region has equally become a perfect site for neoliberal experimentation. In the past three
decades, for instance, economic activities in the area have been sustained at a very high cost
to the indigenous population. This cost manifests principally in the contamination of their
ecosystem and its concomitant economic and health implications; as well as in the paradoxically high rate of poverty. The economic exploitation of the Niger Delta, and the disabling
consequences to the local population, have been aided particularly by various regimes of the
Nigerian government, in a mindless pursuit of a neoliberal objective and sometimes in the quest
to ingratiate themselves (often with little or no democratic credentials) to Western corporate
and political interests.
Using the interrogative lens of the criminological heterodoxy known as the “crimes of globalization”, this chapter discusses the political economy of oil extraction in the Niger Delta as a
criminogenic event. The chapter examines the harmful activities of transnational oil-extracting
corporations in this area, along the lines of a growing body of literature that conceptualizes
preventable market-driven harms as criminal. The chapter is divided into three sections. The
first section historicizes the development and significance of petroleum resources in the Nigerian economy, as well as the predacious interests of Western capital in the Niger Delta region;
the second section articulates the theoretical frame of crimes of globalization; while the final
section discusses the political economy of petroleum resource extraction in the Niger Delta as
criminogenic.
Historicizing petroleum resources in the Nigerian economy
Nigeria, like most Sub-Saharan African states, has been the slaughterhouse of global capitalism
since its first citizen was commodified and taken across the Atlantic for profit. The overwhelming population of people of African descent across South and Central America, the Caribbean,
and North America demonstrates the expansiveness of this trade. The monstrous effects of the
transatlantic slave trade on both the African continent and among the African diasporic population have been extensively discussed (see, e.g., Rodney, 1973; Williams, 1944). In fact, Williams
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(1944) documents a compelling account of the contribution of the transatlantic slave trade to the
expansion and consolidation of British capitalism.
Similarly, the map of Africa as we know it today is a graphic representation of the commercial partition of Africa among imperial European countries, which at the Berlin Conference of
1885 shared the continent among themselves to avoid trade (and trade-related armed) disputes.
This conference precipitated the post-Slave trade scramble for Africa. Since then, the West and
its corporations have remained active in the exploration and exploitation of African resources.
Like most African states, Nigeria was birthed in this economic exploitation. In his influential
book on the political economy of European imperialism in the Niger Delta, the doyen of African
history, Kenneth Dike, observes that “the history of modern West Africa is largely the history of
five centuries of trade with European nations; commerce was the fundamental relationship that
bound Africa to Europe” (Dike, 1956, p.1). By “trade”, Kenneth Dike actually meant the forceful exploitation of African resources by rent-seeking European capitalists aided by their imperial
states. Originally, the principal product of interest in the Niger Delta during this period was
palm oil, which was very much in demand in a rapidly industrializing Europe, both as a machine
lubricant and for soap making. Other commodities of interest included ivory, timbre, and gold
dust, among other products (Dike, 1956).
While trade in crude oil did not start actively until the 1960s, interest in the country’s petroleum resources is as old as European imperialism in Nigeria itself. As far back as 1908, a German
company – the Nigerian Bitumen Corporation – had started exploring for oil in the present-day
Lagos State before the uncertainties of World War I forced it to cease its operations. Oil exploration was, however, revived in 1937 with the emergence of Shell D’Arcy Exploration Parties, a
consortium established jointly by the Royal Dutch Shell and British Petroleum. This consortium
later became known as the Shell-BP Petroleum Development Company, Limited; often abbreviated as Shell-BP. From November 1937, when the company received its exploration licence, up
until around 1957, the exploration rights of Shell-BP covered every part of the country. In 1956,
the company made its first discovery of crude oil in commercial quantities in the Niger Delta
village of Oloibiri; and between 1960 and 1962, it obtained Oil Mining Leases (OML) covering
about 15,000 square miles. The remaining acreage was returned to the Nigerian government
(Pearson, 1970; Human Rights Watch, 1999a; Okonta and Douglas, 2003).
By the mid-1950s, other transnational petroleum prospecting corporations had also developed
an interest in the Nigerian emerging oil industry, and accordingly had obtained prospecting
licences. These corporations included Tenneco, Gulf, Agip, Safrap, Phillips, Esso, Mobil, Amoseas,
and Union. While oil exploration took place across most of the country, the Niger Delta region
with the greatest deposits of petroleum resources soon became the economic vertebrae of Nigeria. For instance, the contribution of oil revenue to Nigeria’s foreign exchange jumped from 8 per
cent in 1963 to 21 per cent in 1967. In 1967, revenues from the domestic oil industry amounted
to £27 million, making up 17 per cent of the government’s tax revenue. By 1974, the federal
government of Nigeria drew over 80 per cent of its total revenue, and more than 90 per cent of its
export income from the oil industry. These percentage figures remained almost the same several
years after, and are often used by the Shell Development Corporation of Nigeria to propagandize
its relevance to the Nigerian economy (Pearson, 1970; see esp. pp. 359 and 368; Human Rights
Watch, 1999a, p.25; Shell, 2010, 2014). The oil sector has remained a major source of Nigeria’s
internal and external revenue. Between 2008 and 2012, the Nigerian federal government earned
an estimated $42 billion from its oil and gas joint venture with the Shell Petroleum Development
Corporation of Nigeria (SPDC). This is in addition to about $6 billion in tax and royalties around
the same period from Shell Nigeria Exploration and Production Company (SNEPCo), which
operates the country’s offshore business in the deep sea (see Shell, 2014). While corporations in
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this industry often do not release public information on their profits from their Nigerian operations, evidence suggests that they have also benefited enormously from their activities in the
country (see Human Rights Watch, 1999a). A path is, thus, created for the addiction of both the
Nigerian government and the transnational corporations involved in this industry to oil money.
Most of the production and exploration activities in this industry are still undertaken today by
virtually the same Western corporations; sometimes these are in collaboration with the national
oil company, the Nigerian National Petroleum Corporation (NNPC).
The Shell Petroleum Development Corporation remains the biggest actor in the industry
(see Okonta and Douglas, 2003; Human Rights Watch, 1999a; Gboyega et al., 2011). Described
fittingly as a “Gulliver on the Rampage” (Okonta and Douglas, 2003, p.44), Shell’s tentacles
crept across the world, spreading death, poverty and destruction in its areas of operation. With
powerful shareholders, including former Queen Beatrix of the Netherlands and Queen Elizabeth
of England, Shell has left a durable footprint of destruction among indigenous populations in
countries such as British Borneo, Mexico, Venezuela, Australia, Peru, Brazil, Bangladesh (Okonta
and Douglas, 2003). In Nigeria, its recklessness is well reported (see Pilkington, 2009; Ibekwe,
2013; Okonta and Douglas, 2003; Environmental Rights Action, 2010).
Market economics: from Adam Smith to the latter day “Saints”
The Scottish economist, Adam Smith, laid the philosophical foundation of free market economics when in 1776 he published his celebrated book, An Inquiry into the Nature and Causes of the
Wealth of Nations (popularly abbreviated as The Wealth of Nations). In this book, he anchored the
economic well-being of nations to the selfish activities of profit-seeking entrepreneurs. Smith
(1976 [1776]) suggests that the only way to stimulate and sustain economic growth around the
world is by allowing private individuals to pursue their self-interest unhindered by the state.
He proposes that left on its own, a free market economy would operate on a rationality that
would transform individual selfish interests into public virtue. As he aptly puts it: “it is not from
the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but
from their regard to their own interest” (Smith, 1976 [1776], p.18). Adam Smith argues that in
seeking to advance his self-interest and to benefit himself in the midst of market competition,
the entrepreneur unwittingly benefits the rest of the society by producing something of value
that other members of society are willing to pay for. He believes, therefore, that an unregulated
economy would promote a healthy competition and create the incentives for entrepreneurs
(in pursuit of their self-interests) to provide the much-needed goods and services in society.
Smith’s market economy is, therefore, based on “the dual idea of free markets and competition”
(Cropsey, 2002, p. ix).
Free market economics dominated much of the nineteenth and the early twentieth centuries,
but began to wane in the late 1920s and early 1930s, following the onset and ravages of the Great
Depression. This crisis, provoked essentially by the unregulated activities of Wall Street speculators, brought Western economies (and by default, those of the world) to a crash. The magnitude
of the crisis was beyond anything imaginable in the United States before this time. The stock
market tumbled; industrial productivity (from U.S. Steel to General Motors) fell drastically; and
businesses were devastated. The rate of unemployment rose from 3.2 per cent in 1929 to 24.9
per cent in 1933; and increased further to 26.7 per cent a year later. At a certain point during
this crisis, 34 million people were estimated to be without any income whatsoever. “City revenues collapsed, schools and universities shut or went bankrupt, and malnutrition leapt to 20%,
something that had never happened before in the United States history – even in the harsh early
days of settlement” (Johnson, 2000, pp. xiii–xiv).
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As most European markets were closely tied to the US economy, the economic slump in the
United States quickly extended to Europe. European economies could not withstand the stress,
having already been severely weakened by World War I. Germany, Europe’s strongest economy,
was further burdened by the obligation to pay war reparations. So, from Washington to Bonn,
London to Paris, and the rest of the dependent economies of the world, the Great Depression
created enormous hardships. It stultified manufacturing, rapidly increased unemployment and
exacerbated the rate of poverty around the world. This economic reality, to a great extent, controverted and delegitimized the simplistic assumptions of Adam Smith about the rationality of the
marketplace and the irrelevance of the state as a facilitator of economic development. The duration of the crisis also proved wrong his hypothesis that the market economy is self-regulating and
self-correcting. The Great Depression generated “an overwhelming consensus that laissez-faire
had failed” (Klein, 2007, p.20) and that governments inevitably needed to intervene to prevent
a complete implosion of the global economic system. It therefore offered the enabling environment for governments and some economists to rethink the credibility and economic potentials
of a free market. As Polanyi (1944, p.73) warned subsequently, “to allow the market mechanism
to be sole director of the fate of human beings and their natural environment . . . would result
in the demolition of society”.
Following the global crisis triggered by the Great Depression and torn between failed economies based on an unfettered market and an aversion to a socialist one, an alternative economic
model proposed by John Maynard Keynes (i.e. Keynesianism) gained ascendancy. Unlike classical
economics, Keynesianism stressed the crucial role of the state as an umpire in economic development, especially through its investments in public infrastructure and the development of human
capital. It also encouraged the establishment of social safety nets to cushion the effect of the
temporary dislocation of (usually poor) people within the capitalist system. Soon, the Keynesian
economic model was embraced by most Western states, and became so popular that by the early
1970s, even the Republican US President, Richard Nixon, was reported as saying, “We are all
Keynesians now” (Biven, 1989, p.188).
However, concerned about the popularity of Keynesian economics in the West, some free
market economists, led by Friedrich Hayek, alongside business leaders, philosophers and historians, had met in Mont Pelerin, Switzerland in 1947 to strategize about restoring the domination
of the global economy by the forces of the market. The resultant Mont Pelerin Society became,
for a long time, the most relentless advocate of a fundamentalist form of market economy, or
neoliberalism, as this modern form of market economics came to be known (see Harvey, 2005;
Finn, 2006). Members of this society, but especially Friedrich Hayek and Milton Friedman, would
eventually play frontline roles in spreading the neoliberal economic philosophy (see Hayek, 1963,
1976, 1979; Friedman, 1982, 1996).
The efforts of the Mont Pelerin Society were aided by three major events to hasten the demise
of Keynesianism. These events were: the 1973 military putsch in Chile against the democratic
government of that country’s Marxist leader, Salvador Allende Gossens; the 1979 election of Margaret Thatcher and the Tory government in Britain; and the coming to power of Ronald Reagan
in the United States in 1981. The Chilean military coup was led by General Augusto Pinochet,
a self-professed anti-socialist officer; and as events after the coup demonstrated, an unapologetic
lackey of the West. Anecdotal evidence suggests that this coup was itself directed by America’s
Central Intelligence Agency (CIA). The coup offered market economics a new lease of life.
Abandoned essentially by Western governments, its chief exponents found in General Augusto
Pinochet’s military dictatorship an opportunity to relaunch their economic experiments unchallenged by contrarian policies or the fear of public accountability demanded during periodic elections. Under cover provided by the dictatorship, which brutally suppressed opponents of “free
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market”, Milton Friedman and a cabal of University of Chicago-trained economists (colloquially
known as the “Chicago Boys”) took control of Chile’s economy and imposed the neoliberal
order in the country. They forcefully deregulated the economy; and imposed the policy prescriptions of the Washington Consensus on the country (Klein, 2007). Williamson (1989) described
this Consensus as a cocktail of economic policies aimed at breaking down political borders on
behalf of the market, pulling back the state from economic activities and creating the enabling
environment for the forces of the market to regulate such activities.1
In the West, the Chilean experiment resuscitated the invocation of the selfish entrepreneur
as the engine of economic growth. In Britain, Margaret Thatcher and the Conservative Party
(prompted by the likes of F.A. von Hayek) led a vicious attack on the welfare state, organized
labour and the right to collective bargaining. In the United States, Ronald Reagan and the
Republican Party, who demonized “welfare dependency” and fetishized small government,
spearheaded a similar attack (see Klein, 2007). In refocusing on Adam Smith’s selfish entrepreneur as the facilitator of economic growth, neoliberal economists see the role of the state in the
new economy as merely that of creating and protecting an environment for market competition
(Friedman, 1982; Harvey, 2007). Milton Friedman (1982, p. 2) captures this mindset most succinctly when he argues that the sole duty of the state is “to protect our freedom both from the
enemies outside our gates and from our fellow-citizens: to preserve law and order, to enforce
private contracts, to foster competitive markets”. Generally, supporters of neoliberalism see
anything beyond these roles as overreaching. Grover Norquist, an American uber-conservative
activist, puts it even more dramatically: “I’m not in favour of abolishing the government. I
just want to shrink it down to the size where we can drown it in the bathtub” (Reed, 2013).
With the enormous political power commanded by market-friendly politicians, particularly
Margaret Thatcher and Ronald Reagan in the 1980s; the expansive influence of the Bretton
Woods institutions; and the implosion of the defunct Soviet Union and its allied economies in
Eastern Europe, the process of “drown(ing)” the state in Norquist’s proverbial “bathtub” was
consolidated in most countries by the end of the 1990s. Despite the recent global recession,
triggered, once again, by the avarice of market economics, its defenders still hold it up as having
no alternative. Today, a luxurious private real estate paradoxically named “The Garden” is being
developed on the grounds of what used to be the Berlin Wall – the historical landmark of the
capitalist–socialist divide (see Nilsson, 2014).
Crimes of globalization: an ontological
recalibration of criminology
This section of the chapter discusses “political economy as a criminogenic force” (Matthews,
2003, p.5; see also Tombs and Hillyard, 2004). It places market-driven social harm at the epicentre
of criminological inquiry.
In 1940, Edward Sutherland in his celebrated article, “White-collar Criminality”, extended
the criminological searchlight beyond the traditional focus on street crimes by conceptualizing
the illegal activities of business corporations and their agents as criminal (see Sutherland, 1940).
Since Sutherland’s well-received work, the scope of criminological inquiry has expanded radically. One of the nascent heterodoxies in the discipline has been broadly defined as “crimes of
globalization” (Friedrichs, 2007; Friedrichs and Friedrichs, 2002; Rothe et al. 2006; Wright and
Muzzatti, 2007; Ezeonu, 2008; Ezeonu and Koku, 2008). Inaugurated in a 2002 influential article
published by David Friedrichs and Jessica Friedrichs in the journal Social Justice, this emerging
area of criminology is anchored to the argument that the global neoliberal regime (advanced by
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Western states and economists, and managed by international financial institutions such as the
WTO, World Bank and the IMF) causes enormous harm in many parts of the world, especially in
the Global South. These scholars argue that these harms should be classified as crime “whether
or not specific violations of international or state law are involved” (Friedrichs and Friedrichs,
2002, p.16). This position underlines the belief among an increasing number of sociologists and
criminologists that violation of laws should not solely determine the way we understand criminality (Ezeonu, 2007; Kauzlarich and Friedrichs, 2003; Friedrichs and Friedrichs, 2002; Barak,
1991), and that paying little attention to social harm in the expansive literature of criminology
constitutes one of the greatest flaws of the discipline (Hillyard and Tombs, 2004; Tombs and
Hillyard, 2004; Friedrichs and Friedrichs, 2002). Pointing to the weakness of limiting the scope
of criminological inquiry to the state legal constructs, which exclude a wide range of identifiable
harms and injuries, Friedrichs and Friedrichs (2002, p.17) posit that:
If the policies and practices of an international financial institution . . . result in avoidable,
unnecessary harm to an identifiable population, and if these policies lead to violation of
widely recognized human rights and international covenants, then crime in a meaningful sense has occurred, whether or not specific violations of international or state law are
involved.
In rejecting the hegemony of legalism in the criminological imagination and in putting
market-generated social harm at its epicentre, these scholars have rejuvenated the discipline and
helped recalibrate its boundaries along the line that has gained much support (see Hillyard
and Tombs, 2004; Tombs and Hillyard, 2004). Presenting the neoliberal dynamics as producing perhaps “the most extensive and far-reaching harms” in societies where they operate, Steve
Tombs and Paddy Hillyard have even called for the disbandment of academic criminology and
the establishment of a new discipline around the broader problem of social harm as one way of
addressing the limitations of traditional criminology (Tombs and Hillyard, 2004; see p.44 for the
quotation). However, unlike Tombs and Hillyard (2004), criminologists of globalization want a
more expansive discipline that accommodates “a wide range of objectively identifiable” marketgenerated social harms.
Scholarships on crimes of globalization no doubt fall within the vortex of heterodoxy
described by Reece Walters as “deviant knowledge”. Walters conceives of these forms of knowledge as those which challenge the state construct of crime, and that are “unfavourable to, and/or
critical of, agents of power” (Walters, 2003, p. 2). Traditionally, criminology focuses on the state
constructs of crime as reflected in the criminal code. The dominant class and/or groups to shape
their societies in their favour have mostly used these constructs. Thus challenges to traditional
criminology are often considered heretical, as they “[mess] around with some of the most powerful constructs the State has at its disposal” (cited in Walters, 2003, p.79). However, since Friedrichs
and Friedrichs’ (2002) article, a bourgeoning body of scholarship has moved towards that direction (see Wright and Muzzati, 2007; Rothe et al., 2006; Ezeonu, 2008; Ezeonu and Koku, 2008).
This chapter also borrows from their conceptual framework.
However, the chapter broadens the conception of crimes of globalization to cover the harmful
effects of the global neoliberal project in general whether they are administered by international
financial institutions or independently by the state. In other words, the chapter conceives of this form
of crime simply as market-generated harms that are both “avoidable” and “unnecessary”. Thus,
this school of criminology could also be described as “Market Criminology” (i.e. the criminology of preventable market-generated harms).
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Oil and the plunder of the Niger Delta: a lesson
on crimes of globalization
Since the early nineteenth century, Western corporations have plundered the resource wealth
of southern Nigeria, especially in the Niger Delta. Mass murder of indigenous populations,
avoidable market-generated poverty, and corporate-funded human rights abuses have also followed this process (see Dike, 1956; Okonta and Douglas, 2003; Pilkington, 2009; Human Rights
Watch, 1999a, 1999b). This section of the chapter discusses the devastating effects of a neoliberal
economic regime that governs the extraction of petroleum resources in the Niger Delta area
of Nigeria. It focuses on three principal areas in which people’s welfare and the community
economy have been impacted by neoliberalism: poverty, environmental pollution, and human
rights abuses.
Poverty
As James Gustave Speth puts it in his “Forward” to the 1994 Human Development Report:
Behind the blaring headlines of the world’s many conflicts and emergencies, there lies a
silent crisis – a crisis of underdevelopment, of . . . poverty . . . of thoughtless degradation
of environment. This is not a crisis that will respond to emergency relief. Or to fitful policy
interventions. It requires a long, quiet process of sustainable human development.
(Speth, 1994, p. iii)
The above observation is particularly true of many Niger Delta communities, especially in their
relationships with transnational petroleum extraction corporations that operate in the region and
with the repressive apparatus of the Nigerian state that protects these corporations. Studies show
that in spite of the enormous wealth the petroleum resources in the Niger Delta has generated for
both the Nigerian government and the extraction industry, the majority of the indigenous population who reside in the oil-rich area live in extreme poverty (UNDP, 2006). Corporations that
barely operate under any form of regulation continuously decimate even their sources of subsistence, such as farmlands, rivers, and the rich biodiversity. As the anchor of the nation’s economy,
the Nigerian federal government has shown little interest in regulating the petroleum industry.
This has had a devastating impact upon the lives and livelihoods of people in these communities.
Since the 1980s when the Nigerian government introduced an IMF brand of market reforms,
poverty has increased in this area. Evidence from the country’s National Bureau of Statistics
strongly supports this position. For instance, in what constituted the old Bendel State (now split
into Edo and Delta states), the rate of poverty rose from 19.8 per cent in 1980 to 78.44 per cent
in 2004. Similarly, in the old Rivers State (now the Rivers and Bayelsa states), the poverty rate
rose from 7.2 per cent in 1980 to 49.07 per cent in 2004 (UNDP, 2006, p.35; National Bureau of
Statistics, 2004).2 This was a period of rapid expansion of neoliberalism in Nigeria (see, Ezeonu,
2013). While there are a number of extant laws to regulate economic activities with respect to
the environment, public welfare, as well as public health (see Okonta and Douglas, 2003; Amnesty
International, 2009), these laws are generally poorly conceived, and sometimes barely meet the
international standards with respect to oil exploration activities. Often the laws are also so weakly
enforced that the petroleum industry “remains largely self-regulated or, frequently, unregulated”
(Amnesty International, 2009, p. 41). This weak enforcement of regulations in the petroleum
industry is clearly deliberate, given that since the mid-1980s, the federal government had rigorously pursued IMF-type, albeit home-grown, market reforms (see Ezeonu, 2013).
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Second, the federal government has a long-term economic interest in the activities of the
petroleum industry, being both in partnership with some of the corporations and a major financial beneficiary of the industry generally. While the power to regulate the industry lies principally with the federal Department of Petroleum Resources (a unit of the Federal Ministry of
Petroleum Resources), there has been no serious effort (or any discernible desire) by this government’s department to perform this important regulatory function (Amnesty International, 2009).
Under this circumstance, the petroleum industry operates imperiously, with little consideration
for the lives and welfare of the people. Regarding the activities of the biggest oil corporation in
the region, Shell Petroleum Development Corporation, Okonta and Douglas (2003) report that
the company has become more than a colonial force, with the ability to command the services
of Nigerian security services for its corporate interests.
Despite its petroleum resource wealth, the Niger Delta region remains one of the poorest and
most underdeveloped in the country. Meanwhile, its oil wealth has been used to develop major
cities outside the region, such as Lagos, Abuja and Kano. This same wealth has also financed
major construction projects across the country, including the mega-steel development company
at Ajaokuta, as well as roads, bridges and other major constructions in the country. Based on
the self-assessment of the indigenous population of this region (i.e. “a perception index”), the
poverty rate in the entire region, calculated in 2006, stood at 74.8 per cent (UNDP, 2006, p. 36).
What is particularly instructive about this situation is:
not only the increasing incidence of poverty, but also the intense feeling among the people
of the region that they ought to do far better . . . [given] the considerable level of resources
in their midst, and the brazen display and celebration of ill-gotten wealth in Nigeria, most
of which derives from crude oil wealth
(UNDP, 2006, p. 36)
To a very great extent, the increasing level of poverty in the Niger Delta is strongly correlated with the disabling effects of petroleum extraction activities in the region. As has been well
reported, these extraction activities have completely dislocated the ecology of the indigenous
economy. The UNDP (2006, p. 135) reports that the Niger Delta is blessed with “an enormously rich natural endowment in the form of land, water, forests and fauna”. Nevertheless,
these resources have often been polluted and/or degraded by petroleum extraction activities.
For a number of people, this impacts heavily upon their economic wealth and is a direct cause
of their poverty, since as farmers and fishermen, these “natural resources have traditionally been
primary sources of sustenance”. As the Amnesty International (2009) further observes, the disabling effects of environmental pollution in the Niger Delta are enormous; and the contamination of the ecosystem often leaves the local population with toxic food and water sources, thereby
increasing their susceptibility to different kinds of health challenges.
These problems are too serious to be ignored as criminal, especially as the economic activities
that often lead up to them are preventable by the corporations; or by the state through a robust
regulatory framework that is vigorously enforced. Nevertheless, it is neither the policy of the
Nigerian government to regulate the industry, nor the intention of the corporations concerned
to self-regulate. This, no doubt, explains the degree of resentment and conflict that often define
the relationship between the oil communities and the corporations; and sometimes between these
communities and the agents of the Nigerian state who protect the corporations.
Despite the expanding body of literature on corporate social responsibility, it is very doubtful
that corporations whose principal objective is to maximize profit at all costs could undermine
their commitment to the shareholders because of certain ethical considerations (see Friedman,
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1996). At least, in the case of the petroleum extraction industry in the Niger Delta, this has not
been demonstrated. This is understandable given the position of neoliberal theorists on social justice. For example, Friedrich Hayek, a leading advocate of neoliberalism, completely dismissed the
idea of social justice in market-moderated society, describing it as absurd and a “mirage”. In his
acerbically amoral defence of self-interest, he pushed back against attempts by any state to directly
cushion the effects of poverty through policies supportive of distributive justice, and reminded
“those who attack great private wealth” and the advocates of social justice that wealth “would
not exist but for the decision of others to risk their resources on its creation”. He further argues
that those “who have built up great fortunes . . . have thereby benefited more people through
creating opportunities for more rewarding employment than if they had given their superfluity
away to the poor” (Hayek, 1976, p. 98).
Linking social justice to the destruction of individual liberty, and therefore “socialism”, Friedrich Hayek describes the pursuit of social justice as an “atrocious idea” (Hayek, 1976, p.99), “an
empty formula” (Hayek, 1979, p.3), and “that incubus which today makes fine sentiments the
instruments of the destruction of all values of a free civilization” (Hayek, 1976, pp. xii and 99;
see also Lister, 2013). He argues that the “rules of just conduct” should be left for individuals
to decide, and not for corporations or the government (Hayek, 1976, p. 48; Finn, 2006, p. 28).
This is equally the position of Milton Friedman, another neoliberal firebrand, who cautions that
we should “leave the ethical problem for the individual to wrestle with” (Friedman, 1982, p. 12;
see also Friedman, 1996). In other words, these apologists of market fundamentalism were not
only opposed to government regulation of the economy, but were also indifferent to even the
pretentious chatter of the exponents of corporate social responsibility. In fact, dismissing the “analytical looseness” of corporate social responsibility and its posturing, Milton Friedman (1996,
p. 8) declared boldly, “the [only] social responsibility of business is to increase its profits”. This
position is not only dangerous but also contradictory, given that Friedman (1982) himself had
argued strongly for the need of the state to protect our freedom from those who threaten it.
Unfortunately, as fundamentalist market economists have demonstrated, it appears that the only
freedoms worth protecting are those of corporations, and of those individuals whose selfish
interests the corporations serve.
With this form of predatory mindset portrayed by both the theorists and enforcers of neoliberalism, it is not surprising that the youth of the Niger Delta region, following in the courageous
footsteps of their great ancestors such as King William Koko, Isaac Adaka Boro and Ken Saro
Wiwa, are today resisting the callous and disabling economic activities of transnational corporations in the area.
Environmental pollution
As has been severally demonstrated with respect to the petroleum extraction industry in the Niger
Delta, unregulated or poorly regulated markets decimate and continue to threaten the environment (Amnesty International, 2009; UNDP, 2006). Protests against and compensation demands
for ecological destructions are often among the major sources of tension and conflict between
corporations operating in the extraction industry and their host communities. In the same way
that the chief exponents and enforcers of the neoliberal regime mock distributive justice for the
poor people of the Niger Delta, they apparently see ethical practices regarding the environment as
existing merely in the domain of individual actors, rather than that of corporations. Thus, in their
quest to maximize profit, they have wrecked the ecology of the region in the most grievous ways.
The region has become, probably, the site of some of the worst ecological disasters in the
world, as the expansion in oil production activities has considerably increased incidents of oil
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spills. These spills sometimes result from accidents, but also from community sabotage to protest
the activities of the petroleum industry (UNDP, 2006). While the Niger Delta ecosystem contains some of the best repositories of biodiversity in Africa, the unregulated activities of transnational oil corporations are increasingly polluting its water sources (including portable water
supplies), destroying vegetation, damaging fertile lands critical for agricultural purposes, and poisoning the air. The country’s Department of Petroleum Resources estimated that between 1976
and 1996, about 1.89 million barrels of crude oil were spilled in 4835 incidents (Environmental
Rights Action, 2010, p. 1). Similarly, UNDP (2006, p.76) reports that about 3 million barrels
of oil were lost in 6817 spillages between 1976 and 2001. A more recent account even put the
amount of crude oil barrels lost to oil spillages since 1958, when crude oil extraction started in
Nigeria, at between 9 and 13 million (Baird, 2010, p. 1). These are in addition to frequent and
unregulated gas flaring, which sometimes take place close to residential areas. This pollution
would have been prevented, or at least better managed, if the corporations actually cared about
the lives and livelihoods of the people in their host communities, or the safety of their environment. Okonta and Douglas (2003) point out that in most cases the corporations’ recklessness is
often encouraged by the belief that the absence or weakness of regulations would make it difficult
to prosecute them successfully.
As Hawken (1993) observes, “commerce and [environmental] sustainability [are] antithetical
by design” (p. xii), since “the primary freedom of the modern, global marketplace is to grow
unremittingly, regardless of the consequences to the environment or society” (p. 78). This position seems particularly true of a developing society like Nigeria, where the global pressure to
deregulate the economy and the connivance of a weak and compromised set of government
regimes have exposed the natural environment of the Niger Delta to the ravages of market forces.
It is instructive that government’s passivity to (or involvement in) the corporate abuse of the
environment is common in the developing world. In more industrialized societies, the relationship between business and the natural environment is usually moderated by the state, in spite
of neoliberalism. Often public pressure, the environmental movements and occasional pollution
scandals (such as the 2010 Deepwater Horizon oil spillage, involving British Petroleum, BP, in
the Gulf of Mexico) ensure that corporations are not entirely left to determine their relationship
with the environment. Unlike the Niger Delta where corporations often use the state repressive
apparatus to ward off communities demanding compensation for oil spillages and environmental
pollution (see Human Rights Watch, 1999a), the United State Department of Justice has secured
a number of punitive damages against BP in the case of the 2010 Gulf of Mexico spillage. These
damages include the criminal convictions of 11 cases of manslaughter, a felony conviction for
lying to the United States Congress, and both criminal and civil settlements amounting to
$42.2 billion (see Krauss and Schwartz, 2012; Fontevecchia, 2013).
Human rights abuses
Perhaps the most egregious harm encouraged and sometimes funded by corporations in the
Niger Delta is the violation of the fundamental rights and liberties of the local population who
oppose their presence and unethical business practices. While the kangaroo trial and execution of
Ken Saro-Wiwa and the other eight Ogoni community and environmental activists by the brutal
regime of General Sani Abacha represent the international face of these abuses, the Niger Delta
has historically been the killing field of Western corporations and their government backers.
Although it is commonly assumed that the exploitation of this region by Western financial
interests started with the discovery of petroleum resources in the 1950s, scholars show that the
corporate abuse and plunder of the Niger Delta and its people have been going on since the
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earliest days of transatlantic slavery in the fifteenth century (Dike, 1956). As Kenneth Dike
documents, this region was a major source of slaves to European merchants and corporations,
and “from the seventeenth century onwards . . . became the most important slave mart in West
Africa” (Dike, 1956, p.25). By the nineteenth century, when slavery had become economically
less viable and had been abolished in many Western societies, corporations had switched to trade
in palm oil in the Niger Delta area. This was the period of the industrial revolution and of high
demand for palm oil, which was used to lubricate machines and for making soaps and margarine.
Although European traders initially used middlemen from the region to access palm oil from the
southern hinterlands, these middlemen were latter displaced by the traders, who used European
armies to impose a new trading order controlled by them and which was designed specifically
to benefit them (see Dike, 1956). So, as the above literature demonstrates, the current abuse of
human rights in the region in pursuit of corporate interests and profit is neither new nor even
more brutal than in the past. The only difference is its motivation by the Western corporate
interest in a new commodity: petroleum resources.
The transnational corporations in the Niger Delta rely heavily on the country’s repressive
state apparatus to impose their corporate will on the local population. The state security personnel themselves, with the clear support of political leaders, often carry out these suppressive
missions brutally and enthusiastically. The best known of these human rights abuses was the
1995 murder of Ken Saro-Wiwa and eight other Ogoni community leaders, who were tried
and executed for alleged murder by the military dictatorship of General Sani Abacha. Of course,
it is widely believed that the murder charge was a bogus scheme by both the transnational
corporations and the Nigerian government to get rid of Mr Saro-Wiwa who had become a
veritable voice against the reckless pollution of his Ogoni homeland. He had become too vocal
and uncompromising for both the government and the petroleum industry. In June 2009,
Shell agreed to pay the sum of US$15.5 million to the families of the executed men to settle
a legal case instituted against it by these families in New York, in which Shell was accused of
collaborating with the then military government to execute the men (Pilkington, 2009, p. 2).
Similarly, Shell has been accused of funding the Nigerian military operation in the Niger Delta,
providing them with both mobility vehicles (land vehicles and patrol boats) and ammunition
(see Pilkington, 2009).
The Nigerian security personnel are also known to maintain a terrifying presence in the
region, principally to protect the industry. Their presence often results in tension and clashes
with the local communities. Such conflicts have repeatedly resulted in the military pillage of
these communities, during which atrocities such as murder and rape were common. In 1999
during one such conflict, a few policemen protecting some of these corporations lost their lives.
In reaction, the then President Olusegun Obasanjo sent the military into the small community of
Odi, in Bayelsa State, which was implicated in the death of the policemen. The prowling soldiers
severely brutalized members of the community, killing, maiming and raping in the process. The
army also mostly razed homes. It is estimated that in the mayhem which followed the military
deployment, between 200 and 1000 members of this community were killed by the military,
while more than 50 women were raped by the marauding soldiers. Among the dead were old
people, women and children who could not escape the mayhem. Victims’ accounts of these rapes
are documented (see Amnesty International, 2006, pp. 14–15; see alsoHuman Rights Watch,
1999c; Ibekwe, 2013). The then President Obasanjo refused to apologize for this brutality or to
investigate the killings and rapes. No military personnel have been held accountable for these
crimes (Amnesty International, 2006).
Mr Obasanjo himself, a retired army general, was a former military dictator, and many of
his former military colleagues are active in crude oil business in the area. Many of these former
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military bosses corruptly acquired crude oil wells during the country’s many years of military
dictatorships. Equally, given the significance of crude oil to the country’s economy, the government’s (and Mr Obasanjo’s) compatibility of interest with the industry is understandable. In 2013,
a Nigerian Federal High Court, ruling in a case instituted by the Odi community against the
federal government in respect of these abuses, ordered the government to pay the community
N37.6 billion (about US$235 million) in damages within 21 days (Ibekwe, 2013, p. 1). Nevertheless, the current federal government, led by Goodluck Jonathan, himself a Niger Delta man from
Bayelsa State, has so far refused to obey the court order. The fact that Mr Jonathan comes from
Bayelsa State explains the strong bonds among the petroleum industry, the federal government
and the Nigerian domestic bourgeoisie.
As has been demonstrated by the disabling nature and effects of market-generated harms
discussed above, it no longer makes any ontological sense for criminological inquiry to be limited to the legal constructs of the state. States and corporations are often implicated in legally
defined crimes, a fact that scholars of state and corporate crimes have given attention to (see
Kauzlarich and Friedrichs, 2003; Sutherland, 1940). However, the expansion of the criminological imagination to accommodate an understanding of the neoliberal political economy as
a criminogenic force is still new and marginal in the discipline. But the development of this
nascent area of scholarship is helping to remake criminology in the twenty-first century, from
a tool of domination and social control to an adjunct of social justice. As Tifft and Sullivan
(1980, p. 51) remind us:
[I]t is not the social harms punishable by law which cause the greatest misery in the world.
It is the lawful harms, those unpunishable crimes justified and protected by law, the state, the
ruling elites, that fill the world with misery, want, strife, conflict, slaughter and destruction.
Conclusion
The Niger Delta region of Nigeria has been a site of enormous wealth and plunder. For
years, transnational corporations have pillaged its resources at the expense of the indigenous
communities. Since crude oil was discovered in the area in 1956, these corporations have been
deeply invested in its extraction and expropriation at a great cost to the lives, livelihoods and
safety of the ordinary people in the host communities. The plunder of the Niger Delta has
largely been enabled by the Nigerian government in its frantic quest to adjust its domestic
economy to the global neoliberal project. The domestic bourgeoisie has also supported it;
many of them share both business and class interests with the owners of the foreign capital
that exploit the area.
This chapter has discussed the harmful effects of the neoliberal political economy in the
petroleum extraction industry in the Niger Delta. Borrowing from a budding school of criminology known as “crimes of globalization”, it conceptualizes these harmful effects as criminal
events. In doing this, the chapter breaks from the traditional legal construct of crime that has
historically legitimized the state dominance of the criminological enterprise. While Friedrichs
and Friedrichs’ (2002) conception of the crimes of globalization aptly captures the criminogenic
dynamics of the global neoliberal project, the collaborative roles of domestic capitalists, many
of whom control the apparatus of state power, encourage a re-contextualization of preventable
market-generated harms (whether enabled independently by the state or under pressure from
international financial institutions) as “Market Criminology”. This is in recognition of the fact
that the source and theatre of criminal victimization in this form of crime is the unregulated or
poorly regulated forces of the market.
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Notes
1 While John Williamson contests the association of neoliberalism with Washington Consensus (Kennedy,
2010), both concepts run mostly on similar assumptions, especially with respect to the liberalization of
trade, market and interest rates, as well as privatization and deregulation (see e.g. Williamson, 1989, 2008).
2 The 2004 rate was calculated by adding the rates for Delta and Edo states, which together formed the
old Bendel State; and the rates for Rivers and Bayelsa states, which together formed the old Rivers State.
On 27 August 1991, the old Bendel State was split into Delta and Edo States, while the old Rivers State
was split into Rivers and Bayelsa States.
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6
State and corporate drivers
of global dysnomie
Horrendous crimes and the law
Anamika Twyman-Ghoshal and Nikos Passas
Introduction
The press is awash with accounts of serious cross-border crimes, the responsibility for which
is attributed to dangerous and radical groups. This has included the Islamic State, “bad apples”
working in banks, organized criminal groups, and rogue state actors. The responses to these
kinds of problems have ranged from a tsunami of international conventions against terrorism,
transnational crime and corruption, intensified intelligence operations, military interventions,
and humanitarian projects.
As the current approaches do not seem to yield the desired results – as crime threats continue
to grow – it is important to transcend discourses that individualize and externalize blame and
examine structural sources of these risks in search of better, less costly, and more effective policies. Typically, crime control policies focus on supply rather than demand. For instance, policies
focus on eliminating the production and exports of illegal drugs rather than trying to reduce the
demand that gives rise to profitable illegal markets. In this analysis the approach is to look back
and consider the role played by decisions, policies, and initiatives in the Global North by public
and corporate actors. This is not merely an attempt at broadening accountability but a way to
identify the extent to which neoliberal policies contribute to criminogenic processes.
In order to shed light on these criminogenic processes, this chapter employs the analytical
framework of global anomie theory (GAT) and focuses on two case studies. The first one is maritime piracy off the coast of Somalia, where efforts have centered on improving the governance of
the state, tackling the al Shabaab group, and assisting with famine and economic challenges. The
second is the theft of the Chagossian nation, a case of forced eviction of an entire people against
a host of basic international legal principles. Despite the globalization of media and availability
of information on this case, it is a story that the mainstream media has ignored for the most part.
Both case studies deal with what may be termed “horrendous crimes,” a term to capture a set
of behaviors broader than those officially defined as illegal or criminal. With this term we refer to
practices that constitute a serious threat and cost to society but may be deemed lawful by certain
legal standards. We understand the essence of crime as: “misconduct that entails avoidable and
unnecessary harm to society, which is serious enough to warrant state intervention and similar to
other kinds of acts criminalized in the countries concerned” (Passas, 1990, p. 401). By using this
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broader definition we do not distance ourselves from legal standards, but seek to avoid national
laws that may be unhelpful in defining global phenomena because of their domestic particularities, biases, and political agendas (Friedrichs, 2007). These crimes include transnational and
international crime, as well as state, corporate, and state-corporate crimes. The latter crimes often
fall below the radar of conventional criminology, but are crucial to consider since they exacerbate
economic inequality within and across nations (UN, 2002) and have broader criminogenic effects.
This chapter begins with an outline of the analytical framework, proceeds with the two case
studies, and concludes with research and policy implications.
Analytical framework
The core argument of global anomie theory (GAT) is that the most important part of crossborder crimes is the globalizing processes and neoliberal practices weakening the normative order
that leads to crime (Passas, 2000). Neoliberal globalization also exploits and victimizes vulnerable populations, subjecting them to international, cross-border, and “horrendous” crimes. The
combination of globalization and neoliberalism produces opportunities for serious crimes and
motivates people to take advantage of them, while at the same time weakening social controls
leading to deviance amplification. This framework is consistent with other works that also associate globalization and neoliberalism with the production of crime (Sheptycki, 2005; Franko Aas,
2007), and transnational crimes in particular (Williams and Baudin-O’Hayon, 2002).
Anomie refers to a societal state where the guiding power of conventional/legal normative
standards is weakened. In such an environment deviance and crime rates rise. To the extent that
controls do not work, this becomes part of a vicious circle leading to the formation of deviant
subcultures and the normalization of misconduct. This process can be set in motion and reinforced by structural disjunctions between culturally induced goals and available legitimate means,
sudden social change, as well as other sources such as pathological governance or “dysnomie”
and criminogenic asymmetries.
GAT seeks to identify the causes of both the initial emergence of misconduct as well as those
that fuel it further and maintain or expand criminal patterns. The chronological processes leading
to deviance and deviance amplification or normalization are outlined in Figure 6.1 (TwymanGhoshal, 2012).
First, the GAT considers the features and impact of globalization and neoliberalism. Globalization is a process of internationalization on an unprecedented scale (Held, 2000; Giddens, 2003),
a growing interconnectedness of states and societies, which operates on multiple levels including
economy, politics, culture, ideology, and environment (Steger, 2013).
Globalization occurs on both an objective material level and a subjective plane of human
consciousness (Steger, 2013). Reference group and relative deprivation analysis shows how the
meaning and content of success goals and “needs” vary in different parts of the world and social
structures (Passas, 1990).
The form of globalization that has been dominant over the past few decades is one fueled
by neoliberal ideology (Steger, 2013), which advocates “free trade” between nations and disembedding the market from its social context. The role of the nation-state is to enable trade by
minimizing state interference and allowing flows of information, money, and objects. In effect,
these policies have supported the development of a global economy not bounded by national
borders, creating a global division of labor that is focused on mutual dependence and a single
international market rather than subsistence and self-sufficiency of individual countries. These
policies also rely on consumerism and exponential capital accumulation, while espousing the
goals of meritorious success and discourses of equal opportunities.
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Figure 6.1 Analytical framework
Market globalist ideas have been promoted by the International Monetary Fund (IMF) and
the World Bank (WB) across the developing world, and have required dramatic political transformations that directly affected not only entire national economies but also state capacities to
govern their territory. Neoliberal globalization stresses the importance of unfettered materialism
and lofty aspirations. It prioritizes the accumulation of wealth over all other objectives (such
as reducing poverty, increasing education, protecting local agriculture, the environment, etc.),
and national strategies are realigned in order to accommodate this purpose, minimizing state
interference to promote free (rather than fair) trade (Passas, 2000). These are key features of our
contemporary global society, which provide the background conditions for the erosion of law
and the dislocation of institutional order.
Diverse populations have been exposed and conditioned to capitalist values of material acquisition; alternative priorities; other forms of happiness; new freedoms; and social mobility. At the
same time, the majorities of these populations have been subject to worker exploitation, inequities, and injustices. Globalization has restructured the way in which we live, creating local transformations the content of which varies according to location and internal conditions (Sheptycki,
2005).
GAT suggests that these globalizing forces raise aspirations, expectations, and hopes to unrealistic levels. Increased mobility, media communications (such as the internet and television),
military and aid interventions provide points of internal and external comparisons. Exposure
to material and cultural differences render poverty, oppression, inequalities, and other problems
less acceptable or explicable. As communities become increasing interconnected and part of a
“global village,” people become aware of existing power, financial, technological, cultural, and
other asymmetries. This awareness raises perceptions of absolute but also relative deprivation.
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Economic inequalities have been widening both within and across countries in the past three
decades (UN, 2013). Social problems and social dysfunction, ranging from mental illness, obesity,
drug abuse, to violence and imprisonment are aggravated by unequal societies (Wilkinson and
Pickett, 2009). This extreme economic asymmetry has resulted in 85 persons owning as much
wealth as the bottom 3.5 billion people (Oxfam, 2014). Moreover, neoliberalism’s minimal interference in the market means the reduction or abolition of welfare state arrangements through
waves of privatization and deregulation. The fostering of needs and desires that are subsequently
blocked or left unfulfilled for those at the bottom creates strains towards deviance and anomie
as people are left without support or safety nets. For those at the top, inconsistent regulation and
law enforcement allow selective impunity.
Further, when goals are internalized without a legal pathway towards attaining them, the result
is systematic frustration, stress, and disappointment. Individual adaptations are diverse (Merton,
1938), but the most relevant ones for our purposes are “innovation” and “rebellion.” The former means the adoption of alternative means to achieve goals even if these are illegal. The latter
involves the substitution of both goals and legitimate opportunity structures by radically different ones. Crime may become a solution to these structural problems and contradictions, while
internalized controls are neutralized (Sykes and Matza, 1957).
Further, GAT points to the potential normalization and amplification of illegal adaptations.
If structurally created problems are solved by crime that goes unpunished, these solutions may
evolve into deviant subcultures through processes of interaction. Where social controls cannot
sanction and curb these behaviors, they may become normative for others. Weak and ineffective
social control thus leads to anomie, the “withdrawal of allegiance from conventional norms and
a weakening of these norms’ guiding power on behavior” (Passas, 2000, p. 20), which means that
deviance occurs without strain. These processes are thus conducive to aggravated instability and
lower confidence in official institutions.
GAT’s fifth phase considers the impact of neoliberal globalization, normative deviance, failures
of the international system, and ineffective civic governance on governability. Good governance
acts as a buffer between globalizing forces and their effects on society (Hastings, 2009; Munck,
2005; Giddens, 2003). Deficient governance is linked to organized crime, drug trafficking, money
laundering, corruption (Williams and Baudin O’Hayon, 2002), and piracy (Young, 2007; Murphy,
2009; Sakhuja, 2010). Thus, “good” governance is key to crime prevention (Waller and Sansfacon,
2000; UN Habitat, 2007) and crime rate reductions (Neumayer, 2003). The problem however
is that at the time when good governance is needed, “global dysnomie” makes matters worse.
The concept of “global dysnomie” (Passas, 2000) refers to challenged governability or pathological governance as a consequence of the following:
•
•
•
Lack of adequate international standards.
The existence of multiple diverse and at times contradictory legal provisions.
Inconsistent enforcement of existing international norms, which result from:
° lack of cooperation
° extra-territorial application of domestic standards or
° ad hoc and discriminatory applications of the law.
An added contributing factor to dysnomie is national-level civic governance failures (TwymanGhoshal, 2012, 2014). Civic governance is defined as regulatory authority dispersed across society, including formal and informal institutions to set limits and provide incentives by including
civil society in the social control mechanisms. It is the process of fostering a strong civic culture, where decisions are made and implemented across society, rather than a purely top-down
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approach; it is about the collaboration of political parties with non-economic institutions and
civil society (Giddens, 2003).
Civic and international community failures contribute to dysnomie, a patchwork of diverse
and conflicting legal traditions and practices where international laws are applied, inconsistently
reflecting national agendas rather than universal principles.
Somali maritime piracy
Maritime piracy is frequently in the news as vessels are captured and held in Somali territorial
waters for ransom. Piracy off the coast of Somalia began around the time the government of Siad
Barre was ousted in 1991 and has remained an international concern ever since.
In order to fully understand the current situation in Somalia we need to look at its recent
history that explains much of the country’s insecurity, weak infrastructure, and repeated foreign
interventions. From arbitrary colonial divisions (British, Italian, and French) to repeated radical
social restructuring after gaining independence in 1960, Somalia has been a country in transition
for a long time.
Under the rule of Siad Barre, the country went from scientific socialism (through an allegiance with the Soviet Union) through an unsuccessful war with Ethiopia, to a free market
economy (through an allegiance with the United States). Mismanagement and militarization
generated the need for foreign aid and the experience of new lending policies under IMF and
WB structural adjustment programs. Loans came with strict austerity programs, huge reductions
in public spending, tax reforms, liberalization, privatization, and deregulation (De Waal, 1993;
Chossudovsky, 2003; Mubarak, 1996). Government expenditure on health and education was cut,
the public sector shrank, and civil servants’ pay reduced to $3 per month (Chossudovsky, 2003;
Lewis, 2002). In addition, many mechanisms developed to cope with droughts were removed
(UNEP, 2005; Marchal et al., 2000). Somali life was radically restructured, from a socialist safety
network to shrinking public spending, to a new economic system with a minimalist welfare
structure.
After the ousting of Siad Barre in 1991, the country descended into a violent and long civil war.
The lack of a central government served to intensify neoliberal globalization: rather than disconnecting Somalia from the rest of the world, it accelerated the growth of the commercial economy
in Somalia, surpassing pre-1991 figures (Powell et al., 2008; Marchal et al., 2000; Mubarak, 1996).
Out of 18 development indicators, 14 showed improvement under anarchy (Leeson, 2007). However, this growth was distributed unequally, making the poor poorer (De Waal, 1993).
Somalis were gradually exposed to new referents through access to information via the internet, a larger number of newspapers (Freedom House, 2005), and the growing Somali Diaspora.
One of the largest per capita Diaspora networks in the world (Hammond, 2007), it created a
reference group, which was geographically distant but emotionally close and trusted. The significant remittance flows from labor importing countries to Somalia support livelihoods and even
the survival of extended family members at home. This access to the world served to magnify
asymmetries and means–ends discrepancies as injustices were revealed.
The structural and cultural transformations fueled means–ends discrepancies and asymmetries. Notably, in the aftermath of 9/11, al Barakaat, the most successful Somali remittance
company and business model that combined security and telecommunications, was destroyed
by US-led sanctions upon the baseless assumption that it had lent support to al Qaeda and bin
Laden (Passas, 2005). Although the ensuing crisis was diminished by the concerted efforts of the
donor community, it did cause a “trust deficit” between regulators and remittance companies
(Cockayne and Shetret, 2012).
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Media and policy attention on Somalia has focused on famine, maritime piracy, and terrorism
as critical challenges. However, apart from these problems, it is important to note that interventions from outside the country have produced and worsened crises for Somalis causing additional
obstacles, which helps explain the emergence of piracy.
The lack of central government since 1991 resulted in the absence of any law enforcement
mechanisms and made the country vulnerable to exploitation. Somalia was victimized by two
sets of foreign predatory activities, particularly from countries in Europe and Asia: large-scale
illegal, unreported, unregulated fishing and toxic waste dumping off the coast of Somalia. Both
have been reported by NGOs but have not been covered in mainstream media (FAO, 2005; High
Seas Task Force, 2006; UNEP, 2005; Greenpeace, 2010; TED, 1998). These predatory activities
had a significant impact on the population, depriving it of resources and exacerbating the “trust
deficit” with the international community.
These foreign activities provided motives for those living in coastal regions to engage in
piracy to protect their livelihoods. That these were no mere rationalizations was confirmed in the
wake of the 2004 December tsunami, when toxic waste barrels washed up on Puntland beaches
(UNEP, 2005). This boosted public tolerance for piracy, which was seen as necessary to protect
coastal waters from further foreign encroachment. Puntland is where the majority of seized vessels have been moored awaiting ransoms in the spike in piracy in the 2000s (Thompkins, 2009).
Interviewed pirates explained that they were merely unemployed fishermen who felt compelled
to take action to protect Somali waters because of the absence of a central authority (TwymanGhoshal, 2012).
With ransom payments coming in, piracy was perceived as a successful solution to a problem:
it enabled individuals to make money and feel that justice was served for damages caused by
foreigners. The years of successful pirating had a normative effect not only upon those who organized larger piracy operations, but also upon others in Somali society. Pirates became normative
referents; the behavior became part of accepted social conduct not only for those facing hardships
due to exploitation (folk living off the ocean), but also for others who did not experience strain.
Young men who grew up in an environment of conflicting traditions and practices lacked educational and legitimate employment opportunities, and saw piracy as a promising career choice
as pioneer pirates of the 1990s became role models.
Such deviant subcultures weakened the guiding power of conventional norms and undermined the rule of law. Under Islam, piracy was considered haram, a forbidden act. This established
norm was no longer binding and piracy become tolerable, even acceptable. The growth of subcultures beyond those who initially experienced strain and the lack of social control mechanisms
contributed to a dysnomic environment.
Another critical source of dysnomie was failures of the international system. At an international level, maritime piracy is governed by the UN Convention on the Law of the Sea 1982
(UNCLOS). The convention limits piracy to acts of violence, detention or any act of depredation
for private ends occurring outside the jurisdiction of any single state, in a ship-to-ship (or aircraft)
conflict (article 101). Yet, most piracies occur in territorial waters, and therefore outside the scope
of this Convention. Territorial waters fall under the jurisdiction of nation-states, but not all of
them have piracy laws. Countries that have criminalized piracy have diverse and incongruent
laws reflecting national priorities.
This is illustrated by the way in which coalition forces have dealt with captured Somali pirates.
UNCLOS requires that countries take action against pirates (article 100) but it does not specify
the mechanism or procedures for seizure, arrest, indictment, or punishment of pirates or handling
of their property. This is left to the jurisdiction of the seizing state (article 105). The nationstates which are part of the international coalition to curb Somali piracy have dealt with captured
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pirates in different ways, ranging from not engaging with pirate skiffs at all, giving pirates food
and supplies and letting them go, firing warning shots at suspicious vessels, killing pirates, sinking
pirate boats, confiscating equipment and setting pirates out to sea without provisions (in effect
sending them to a slow death), capturing and processing pirates through a foreign criminal justice
system (most coalition countries do not want to bring Somali pirates to their own jurisdictions
for trial for fear of creating discontent at home), and bombing the coast to destroy the boats and
equipment of alleged pirates (Twyman-Ghoshal, 2014).
In 1988 the Convention for the Suppression of Unlawful Acts against the Safety of Maritime
Navigation (SUA) was passed with the aim of filling the gaps left by the UNCLOS definition of
piracy. The SUA does not have a two-ship requirement, does not distinguish between territorial
waters and the high seas, and is not concerned with the motivation of perpetrators. SUA does not
use the term piracy, but applies to acts of violence that are intentional “within a ship” which endanger the safe navigation of a vessel (article 3). In 2008, Security Council Resolution 1846 confirmed
that piracy and armed robbery against ships qualify as unlawful acts under SUA. Although SUA
has a number of advantages over UNCLOS it is nevertheless considered to be a defective remedy
(Tuerk, 2009). For an unlawful act to qualify under SUA it must “endanger the safety of maritime
navigation.” SUA therefore fails to address offenses such as theft and armed robbery, which remain
the most common forms of contemporary piracy globally (Twyman-Ghoshal and Pierce, 2014).
Another key problem is that both SUA and the 2005 SUA Protocol only apply to state parties.
Despite having 161 parties and being in force since 1992, SUA has only been used in one case to
date. Notably, the two countries responsible for the largest share of piracies in the 2001 to 2010
period, Indonesia and Somalia, are not state parties to SUA (Twyman-Ghoshal and Pierce, 2014).
Other international conventions on transnational crime such as the UN Convention against
Transnational Organized Crime 2000, the UN Convention for the Suppression of the Financing
of Terrorism 1999, and the UN Convention against Corruption 2003 could be used to prosecute
all forms of organized piracy (Passas and Twyman-Ghoshal, 2012). However, only state parties to
these conventions may use them, if they have the will to do so.
International cooperation is imperative when dealing with global crimes. UNCLOS, still the
key international piracy legislation, is silent on cooperation in territorial waters and the form of
cooperation in the high seas (article 100).
Despite the volume of global crimes and “horrendous” harms they cause, modern nationstates lack the political will to face up to the needs of a globalized society and insist on protecting
their sovereignty. This is a critical impediment to global norm-making mechanisms. For piracy,
the problem is rooted in conflicting national interests; coastal nations (which have resource and
boundary claims) conflict with maritime nations (which are concerned with trade issues).
The tension between sovereignty and global norm-making mechanisms was clear when
Somali piracy escalated in the mid- to late 2000s. Under UNCLOS, hot pursuit is limited to the
high seas and ships cannot enter the territorial waters of a nation-state (article 111(3)). Faced with
the limited application of UNCLOS, the UN Security Council adopted Resolution 1816 in 2008
which allowed international coalition vessels to sail into the territorial waters of Somalia and to
“use all necessary means to repress acts of piracy and armed robbery.” In 2012, this was extended
to include the Somali coast, allowing the first European Union aerial offensive that destroyed
speedboats, fuel depots, and arms stores allegedly belonging to pirate gangs in Handulle (Puntland). The Security Council was explicit that infringing Somali sovereignty was an extraordinary
measure, which applies only to the current situation in Somalia and should not be considered as
establishing customary international law.
This conflict is also visible in the inconsistent enforcement of international rules in Somalia where international laws on toxic waste dumping or IUU fishing have not been enforced.
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Coalition forces have only focused on activities that affect international trade, i.e., maritime
piracy and terrorism. The inaction against IUU fishing may be because the countries from which
the IUU fishing fleets originate are the same as those contributing assets to counter piracy efforts
(Hughes, 2011).
The non-universal respect for sovereignty was demonstrated by the acts of the United States
and Ethiopia against the Islamic Court Union (ICU). During its six months in power, the ICU
achieved an unprecedented level of security in Muqdisho (Pendergast and Thomas-Jensen, 2007),
and over much of southern and central Somalia. Basic services were restored, road blocks were
removed, rubbish was disposed of, the airport and seaports were opened and rehabilitated, government buildings were re-established, and courts were in session (Barnes and Hassan, 2007).
During this time, the number of piracy attacks off the coast of Somalia dropped dramatically.
Unhappy with the high levels of insecurity and corruption, Somalis gave support to the ICU,
which was the first government since 1991 to show success in uniting the country.
In 2006 Muqdisho experienced a wave of assassinations and disappearances, particularly
among ICU members. These covert operations were reportedly orchestrated by the United
States, which was weary of an Islamist government in Somalia. The US funded Muqdisho warlords to disrupt ICU (Barnes and Hassan, 2007; Pendergast and Thomas-Jensen, 2007). Finally,
supported by the US and Security Council Resolution 1725, an Ethiopian military intervention
drove ICU out of Muqdisho in the worst level of violence experienced by the city since 1991.
In January 2007, the US carried out targeted air strikes against Al Shabaab, a radical wing that
emerged out of ICU in the aftermath (ICG, 2007). These US and Ethiopian military interventions infringed Somali national sovereignty in another instance of inconsistent application of
international rules.
The rise and fall of the ICU had a two-pronged impact on piracy. First, the prosecution of
piracy by the ICU in Galmudug displaced many pirates north to Puntland. Second, the international interventions drove ICU from power, removing the one effective Somali counter-piracy
strategy.
The international community approach towards smaller state formations that developed in
Somalia folloing the 1991 civil war was also inadequate. Regional self-governance efforts in
Somaliland, Puntland, and Galmudug have remained unrecognized and unsupported. A weak
but functioning self-governing state was able to develop in Puntland, which has the necessary
infrastructure and stability for commerce to flourish, but which was too weak to create effective
norms and control mechanisms. As subcultures developed, controlling piracy became challenging, especially due to a lack of financial resources, international recognition, and support.
To police the coast, the Puntland authorities came up with a commercial solution; they hired
foreign security companies to provide coastguard duties. To finance themselves, the companies
were allowed to issue fishing licenses to foreign ships unilaterally and without interference from
Puntland authorities. The outsourcing of coastguard duties to foreign corporations that operated
with no Puntland oversight failed and further undermined the trust of Puntlanders, who were
already weary of foreigners in their coastal waters.
Neighboring Somaliland adopted a different approach: it used a domestically supervised coastguard staffed and operated by locals. Although small, this coastguard enjoyed popular support
and was effective in countering piracy (Hansen, 2009). This modest home-grown coastguard
was effective. The Puntland–Somaliland comparison highlights the need for civic governance
that allows citizens and groups to articulate their interests, mediate differences, and exercise legal
rights and obligations. The inclusion of civil society was essential for the legitimacy of Somaliland’s governing force and was therefore an effective social control mechanism. It suggests that
the quality of governance can facilitate or stymie crimes.
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The blockage of home-grown anti-piracy efforts and the insistence on an externally imposed
central government without broad civic support are yet another illustration of actions adding to
dysnomie at the very time Somalis require good governance to deal with the deviance amplification and anomic processes caused by neoliberal globalization.
Forced eviction of Chagossians
The second case study looks at the forced eviction of the Chagossians. Between 1967 and 1974,
away from the eye of the media and the international community, the entire population of Diego
Garcia was forcibly evicted from their homes and displaced to Mauritius and Seychelles.
The Chagos Archipelago is a chain of small islands with three main islands: Diego Garcia,
Peros Banhos, and Salomon. The islands were settled permanently when they were under French
rule in 1783, although visitors from Malaysia, Portugal, and the Middle East date back to 1743.
The island became a British colony in 1814. Chagossians today are made up of African, Indian,
and Malagasy origins.
In 1965, following talks with the United States about developing a military facility on Diego
Garcia, the UK separated the Chagos Islands from colonial Mauritius and created a free-standing
colony known as the British Indian Ocean Territory (BIOT) (Vine, 2004). In exchange for
relinquishing the Chagos Islands to form a new British colony, Mauritius was granted independence, provided a GBP 3 million grant, and given an undertaking that the archipelago would be
returned to Mauritius when it was redundant as a defense installation (Lunn, 2012).
This deal occurred despite two UN General Assembly Declarations. Declaration 1514 (1960)
aimed at preventing the colonial powers from disrupting the national unity and territorial integrity of a country, in an effort to maintain their presence and sovereignty. When BIOT was
announced, the UN General Assembly passed Resolution 2066 (1965) directing the UK to “take
no action which would dismember the territory of Mauritius and violate its territorial integrity.”
In 1966 in an Exchange of Notes rather than a treaty, the UK and the US agreed to make
Diego Garcia available for US military use (Allen, 2008). The secret agreement was concealed
from the US Congress, the British Parliament, and the UN. The only consideration requested
by the UK was a reduction of GBP 5 million towards a research and development surcharge for
the purchase of a Polaris missile (Brack, 1971, as cited in Vine, 2004). The agreement included a
requirement by the US that all inhabitants of the island be removed before the US took possession (Bancoult 1, 2000). The UN Charter’s decolonialization rules mandated the protection of
permanent inhabitants. Thus, a “fiction” was created that the island had no permanent inhabitants (Chagos Islanders, 2012; August Aust, 1970, as cited in Vine, 2009), which was repeated by
both the British and the Americans (Vine, 2009).
In 1967, BIOT Ordinance No. 1 mandated a compulsory acquisition of land in the Chagos
Archipelago from private owners (Vine, 2009). From 1968 islanders who had left for medical
or tourist purposes were not permitted to return. Imports to the island were reduced through
supply ship visiting restrictions, and medical and educational staff who left due to deteriorating
conditions were not replaced (Vine, 2004). After the 1971 Immigration Ordinance that mandated
the exile of the entire population, an estimated 1000 to 2000 Chagossians were transported to
Mauritius and Seychelles (Vine, 2009; The Chagos Islanders, 2012). Although violence was not
used (The Chagos Islanders, 2012), all pet dogs were exterminated in the last days of the mass
eviction (Vine, 2009). With only minimal personal belongings, Chaggosians disembarked in
the ports and left to create a new life without any resettlement support (Vine, 2009). The same
year, construction of the US base begun, which included demolishing houses of the islanders
(The Chagos Islanders, 2012).
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Forced eviction is defined as “the permanent or temporary removal against their will of individuals, families and/or communities from the homes and/or land which they occupy, without
the provision of, and access to, appropriate forms of legal or other protection” (General Comment
No. 7, ICESCR, 1997). There are numerous international conventions that make forced eviction
unlawful. These include the Universal Declaration of Human Rights 1948, the International
Covenant on Economic, Social and Cultural Rights 1966 (article 11, paragraph 1), and article 5
(e) of the International Convention on the Elimination of All Forms of Racial Discrimination
1965, all of which were in place at the time of the forced eviction of BIOT. More conventions
have been introduced since, stipulating that forced evictions constitute a violation of basic human
rights; the Convention on the Elimination of All Forms of Discrimination against Women 1979,
the Convention on the Rights of the Child 1989 (article 27, paragraph 3), and the Rome Statute
of the International Criminal Court 2002. Article 7 of the Rome Statute makes deportation or
forcible transfer of a population, which is a “wide-spread or systematic attack directed against
any civilian population,” a crime against humanity.
The Chagossians suffered two major harms. First, they were deprived individually and collectively of their possessions and homeland. Second, the forced relocation was not supported by any
efforts or financial assistance for resettlement. Most Chagossians ended up in dilapidated shacks
or slums, impoverished, with high rates of unemployment (Vine, 2004; Lunn, 2012).
In the context of post-war decolonialization and decline of British power, the US stepped in
(Bezboruah, 1977) and pursued a more discreet form of dominance and exploitation (Mitchell
and Schoeffel, 2002). To ensure its economic control over various territories, the US would use
“periodic displays of military might . . . within the rules of an economic system most favorable
to the United States” (Vine, 2004, p.128). Diego Garcia was one of the US strategic security interests. The islands were a prime location to control critical sea lines of communication – essential
for international trade. It served growing US corporate interests in the region and America’s
dependence on oil (Bowman and Lefebvre, 1985; Sick, 1983; Larus, 1985).
At the same time, the creation of the UN and new international norms led to broad social
change. Earlier standards of exploitation by colonial powers were no longer accepted. The commercial needs of established European and US interests had to be pursued in different ways.
Duringt this period of [legitimate] means – [state] ends discrepancies, the search for alternative
avenues to achieve economic dominance resulted in a new form of imperialism. In this case, the
illegitimate means used by powerful state actors included recolonizing a territory (from Mauritius to BIOT) and dislocating an indigenous population in pursuit of their security and economic
objectives. This arrangement violated the new normative order. The circumvention was deliberate, as indicated by the signing of an Exchange of Notes rather than a US–UK treaty (Allen, 2008)
and by a “fibbing policy” that repeatedly assured the US Congress and UK Parliament that the
island had no permanent residents (Winchester, 2001).
Depopulation of Diego Garcia was demanded largely to ensure that no emerging independent
state could place restrictions on the use of the military base (Bezboruah, 1977). The UK was a
willing accomplice, guaranteeing the removal of the Chagossians from Diego Garcia and neighboring islands (Vine, 2004). In addition to their eviction, Chagossians have been banned from
visiting Chagos (Bancoult v. Mcnamara, 2002).
The forced eviction of the Chagossians from their homeland is a state crime defined as
“acts/actions or inaction/omissions committed by government agencies or caused by public
policies whose victims suffer harm as a result of social, political, and economic injustice, racial,
sexual, and cultural discrimination and abuse of political and/or economic crime” (Barak, 2011,
p. 36). Colonialism is replete with examples of oppression or repression by powerful states over
large populations. The UK and US act in the Chagos Archipelago is misconduct similar to
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conventional offenses that appears regularly in local media. The difference with the Diego Garcia
crimes is that they are downplayed, ignored, or denied by powerful state actors. For years, the
British Foreign Office and High Commission discounted the living conditions and poverty of
the Chagossians, arguing that the responsibility lies with the Mauritian government.
The forced eviction was rationalized initially only by those involved directly but later by governments as a whole, in the name of defense and economic needs. Between the mid-1960s to
1974, three British prime ministers and 13 cabinet ministers had personal knowledge of the facts
but none raised an objection (Martin and Pilger, 2004). Following a petition by the UK government, the Law Lords ruled in 2008 that due to the current state of uncertainty (i.e., the post 9/11
climate) the security concerns of the UK and its ally, the US, were of paramount importance
(Lunn, 2012).
The compensation paid to the Chagossians served as another official excuse. In the 1970s
£650,000 was paid to the government of Mauritius to assist in resettlement (Lunn, 2012), and in
the 1980s in settlement of a lawsuit £4 million was paid to the Mauritius government in full and
final settlement of any Chagossian claims and also included a renunciation to return to Chagos
(The Chagos Islanders, 2012). In that same case the Mauritius government added £1 millionworth of land for the Chagossians. The first payment only trickled down to the migrants in
small amounts five to ten years after the forced eviction (Vine, 2004). The second payment was
distributed to 1344 Chagossians in Mauritius who received £2976 each. No payments were
made to Chagossians in Seychelles.
Another rationalization has been that Chagossians are integrated in Mauritius and Seychelles,
and any repatriation would involve further harm to the group (Martin and Pilger, 2004). It was
also argued that the islands cannot sustain the return of Chagossians due to environmental problems. This was based on a feasibility of resettlement study commissioned by the UK government,
which found that the eviction of Chagossians was unlawful and that they had the right of abode
in the Island, except for Diego Garcia (Bancoult 1, 2000). The findings of the preliminary report
in 2000 suggested that there were no obvious reasons why Peros Banhos and Salomon Islands
could not be resettled. However, the second part of the report released in 2002 suggested that
it would be precarious and expensive. Thus, new Orders were issued in 2004 prohibiting the
repatriation of the islanders (Allen, 2008).
Yet, another study, commissioned by the UK Chagossian Support Association and funded by
the Joseph Rowntree Reform Trust, found that resettlement is possible and would require an initial investment of £25 million over the first five years, a sum that is spent yearly on other British
Overseas Territories, including St. Helena, Monserrat, and the Falkland Islands (Allen, 2008). Today
it is estimated that between 3000 and 5000 US troops and civilians live on Diego Garcia (Vine,
2009), where the US navy has described the living conditions as “outstanding” (Pilger, 2004).
One final excuse was that some Chagossians signed a document to renounce their right to
ever return to their homeland after the Bacoult 1 settlement. The legality of this has been disputed by Chagossians, who claim that they were not informed of the nature of the document
that they were unable to read and put their thumbprint on (Vine, 2009).
These acts violate international and national law; they undermine the credibility and legitimacy of the UN and national bodies such as Congress and Parliament that prove unable and
unwilling to deal with these crimes. There was no compelling pressure leading to the theft of
the Chagossian nation. There was no security threat from the islanders. Rather, the Diego Garcia
military base was part of a US strategy for global economic access without colonies (Vine, 2004;
Smith, 2003), and later served bombing raids in Iraq and Afghanistan (Jones, 2011).
The Chagossian experience is not unique. Indigenous populations have been evicted in
Greenland, Puerto Rico, Marshall Islands, and Japan. The commission of such state crimes is a
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manifestation of and contributing factor to global dysnomie, where the enforcement of international laws becomes optional and discriminatory. This undercuts the legitimacy of the international system and creates a precedent used by leaders of other countries too. It normalizes state
crime and brings about trends towards anomie, as the guiding force of international norms is
diminished.
Decolonialization, new human rights, and former colonies’ sovereignty clashed with the interests of [neo-]colonial powers, leading to failures and inconsistencies in the application of international standards and the selective application of national laws. These conflicts of interest continue
to hamper justice and fair law enforcement as illustrated by recent cases lodged by Chagossians
in the UK, US, and the European Court of Human Rights. All three attempts for an equitable
outcome to the crimes of the past have been blocked.
In the US, Olivier Bancoult brought a case against former employees of the Department of
State and Department of Defense for forced relocation, racial discrimination, torture, and cruel,
inhuman and degrading treatment (Bancoult v. Mcnamara, 2002). The US District Court of
Columbia dismissed the motion on procedural grounds, stating that federal officers and employees have immunity for any negligent or wrongful acts or omissions while acting within the
scope of their employment (under the Westfall Act). In addition the court stated that the cause
brought was outside its subject matter jurisdiction and falls under the political question doctrine
(Bancoult v. Mcnamara, 2002).
In the United Kingdom, initially Olivier Bancoult had a success in the Court of Appeals,
stating that the Order in Council preventing the islanders from returning was unlawful and an
abuse of power. The government petitioned the Law Lords, who in 2008 overruled the decision, stating that “the government was entitled to legislate for a colony in the security interest
of the United Kingdom” (Lunn, 2012, p. 7). This, despite article 73 of the UN Charter that
obliges a colonial government like the UK to obey its “sacred trust” to protect the human
rights of its people, which includes indigenous people of its colonies who are considered British citizens. Instead, the 2008 decision reinstated the 2004 Orders in Council banning the
islanders’ return.
The European Court of Human Rights (ECHR) case was also decided on a procedural matter.
The decision was that the Convention for the Protection of Human Rights and Fundamental
Freedoms did not apply to BIOT. Although the UK had made a declaration that Mauritius was a
territory to which the Convention applies, at the time that the UK ratified the right to individual
petition (in 1966), the Chagos Islands were no longer part of Mauritius. No such declaration has
been made for BIOT. In effect, the applicability of human rights law was deemed to be dependent
on the notification by a colonial power, thereby suggesting that a colonial power decides which
colonies have human rights and which do not.
Thus, even though several laws deem a group’s forced eviction illegal, the rules were not
enforced when cases came before national or international courts. The notion that a federal court
(as in the US case) will not question a foreign policy decision of the executive branch illustrates a
major handicap to the prosecution of state crime. Both the UK and the ECHR have interpreted
the respective laws within the confines of state sovereignty and existing power relations, rather
than in the spirit of universal human rights.
In 2010 the UK established a Marine Protection Area (MPA) around BIOT, with the exception of Diego Garcia. The conservation area prohibits commercial fishing and includes a no-take
marine reserve. The decision was made without consultation with the Chagossians (Lunn, 2012).
A Wikileak cable shows that one of the main reasons for the MPAs around BIOT was to bar
any future Chagossian resettlement on the islands (Jones, 2011). Currently, Mauritius is pursuing a case through the Permanent Court of Arbitration against the UK challenging its power to
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establish an MPA around the Chagos Archipelago (The Republic of Mauritius v. The United
Kingdom of Great Britain and Northern Ireland).
Finally, the internal dynamics, particularly in the UK, reveal contradictory views among the
courts, the executive, and special interest groups (mainly Chagossian and human rights groups)
when dealing with the BIOT. National-level civic governance was powerless and ineffective in
preventing and repairing the harms caused by state crimes. The case shows that civic society is
helpless in the face of government misconduct and unable to remedy an old crime – clearly some
countries require a democratization of democracy (Giddens, 2003). The UK government had the
duty to protect the rights of all of its citizens, including Chagossians, but this was trumped by
perceived needs of a colonial power that abused its control over a former colony.
Conclusion and implications
At the theoretical level, this chapter found the GAT framework helpful in two cases of serious
transnational misconduct. GAT suggests that globalization and neoliberalism are conducive to
processes leading to anomie, dysnomie, and serious crime. This occurs because of discrepancies in
economy, politics, culture, and law that are multiplied, made more palpable and criminogenic. It
also occurs because of deliberative state violations and lack of enforcement of domestic and international laws. The process of globalization provides opportunities and motivations for deviance
by and against nation-states as it simultaneously contributes to breaking down state apparatus
for controlling and preventing crime. Governability is negatively impacted by neoliberal policies
that fuel wealth and power inequalities, undercut normative standards and control mechanisms,
and shrink welfare safety nets. These processes produce problems and pressures for individuals
and groups, the solutions to which are more likely to be deviant. Deviance is neutralized and,
when successful and allowed to continue unabated, becomes normative for others in society, even
to those who do not endure the same pressures. As deviance becomes normalized, governability
is further undermined and weakened. Large populations become vulnerable to both crime and
exploitation by powerful government and corporate actors.
These two case studies in neoliberalism and the globalization of crime have illustrated the ways
by which domestic, national, or sovereign pathologies of dysnomie have their external negative
sources of responsibility as well. Piracy, smuggling, terrorism, and continuing dysnomie in Somalia are intimately connected with governmental and private actors from many countries. Illegal
and unrecorded overfishing by foreign fleets, unconscionable dumping of toxic waste, military
covert and overt operations by the US and Ethiopia, ill-conceived Western counter-terrorism
measures, outsourcing of government functions to private companies, foreign aid interventions
that ignored and disrupted local control efforts and civic governance, and unsanctioned crimes
committed against Somalis are all part of the picture.
In sum, neoliberal globalization processes are conducive to the massive victimization of innocent parties not only in Somalia and its Diaspora but also the entire ethnic group of Chagossians.
Powerful states dispossessed them, declared their land as ‘unpopulated’, deprived them of human
rights, silenced their voices, and frustrated their efforts for reparation and justice for decades in
national and international courts. When the ECHR refers to “the callous and shameful treatment” of Chagossians, it confirms that they were “expelled from their homes” on the islands,
and recognizes “the hardships which immediately flowed from that” (Chagos Islanders v. The
United Kingdom, 2012, p. 24) before declaring itself unable to repair the harms, the effects of a
stomach-turning dysnomie are evident.
These cases have indicated that the governance challenge at hand includes the capture or
manipulation of international organizations and the biased, inconsistent, and wanting application
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of international and national standards. Together with the resulting impunity of perpetrators of
horrendous crimes and de facto rewards for gross misconduct, all this weakens the legitimacy
of global institutions and norms. Global dysnomie, however, though not inevitable, seems to be
growing beyond control. Scholars and policy analysts should focus on debunking neoliberal
globalism as a means of international consensus building, and assist in the development of homegrown initiatives and good civic governance.
The case studies expose double standards and inexcusable abuse of power hidden for too long
from publicity. Investigative and critical journalism is thus necessary. It is unacceptable that media
globalization allows the Diego Garcia theft and the wanting foreign interventions in Somalia
either to be kept out of the news or covered superficially with partial truths and out of context.
The awareness-raising task is also a top priority for scholars who can establish the facts,
generate original data, and produce empirical analysis of the externalities of neoliberal globalization. Evidence-based debates on these issues should hopefully promote genuine political will
for change, bring about more informed lawmaking and enforcement, increase the effectiveness
of humanitarian aid, facilitate the promotion of local and better governance, increase security,
and boost economic growth. Scholars have a role in finding a better and more sustainable way
of connecting the local with the global in the framework of international norms that are more
consistently and fairly applied.
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7
Truth, justice and the
Walmart Way
Consequences of a retailing behemoth
Lloyd Klein and Steve Lang
The retailing revolution was predicated on maximized profits through the control of manufacturing, distribution, and consumption. Walmart was an important force in the transformation
of the original retailing revolution. Walmart’s business model emphasized enhanced earnings
through cost cutting in all aspects of manufacturing and retailing. Gupta (2013) documents that
Walmart is responsible for 13 percent of the US$2.35 trillion United States economic development while 140 million Americans shop at Walmart and the retailing giant employs 1 percent
of the American workforce. We take a close look at Walmart, and other such corporate retailing
businesses, and spotlight this business process and its ultimate consequences on workers. But our
wider goal is to develop a larger and more important analysis of the how Walmart and similar
businesses exploit developing countries for enhanced corporate profits. Bypassing environmental
standards, creating dangerous manufacturing conditions, and subverting workers’ rights to form
protective unions, these industrial behemoths use foreign nations as convenient bases for importing cheaply manufactured goods to the United States.
Neoliberalism sustains the immense political and economic power employed by the corporate
sector. Cooperation between corporations and governmental structures enable corporate entities
to negotiate favorable terms on retail employee compensation, lower costs associated with trade
exports from developing countries, and control international manufacturing subsidiaries producing retail goods in markets outside the United States. In essence, there was an increased reliance on
outsourcing the production of retail goods starting with the 1970s and continuing to the present
day. The global flow was increasingly centered offshore and in developing nations characterized
by lower labor costs and minimal regulatory constraints.
Over time, calculated business decisions formulated by corporate interests exerted a significant
impact on employment, dissemination of goods and services, and the overall well-being of the
immediate area where the particular business manages its retail or service operations. Consideration of corporate profitability under the standard business model is a leading factor in the role
of corporate retail outlets. The overall impact of retail practices serves to enhance the lives of
community residents or inversely create a whole new set of latent problems unforeseen in the
community planning process enabling establishment of that business. The “Walmart Effect”
emerged when neoliberal arrangements enabled Walmart and other retailing firms to pursue
outsourcing trends favoring production overseas, control over employee compensation, and the
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ability to control the workplace through preventing unionization and luring customers into their
stores with promises of “low prices.”
How did this larger process evolve to the point that we can understand the impact of neoliberal corporate-governmental processes favoring Walmart and other retail corporations? An
analysis of several different historical periods and retail business innovations help us understand
the evolution of Walmart and the company’s contemporary corporate practices. There was a time
in the history of American manufacturing where domestic factories would hire workers assigned
the job of producing a litany of goods ranging from household appliances to automobiles, and
actually supply stores with the produced goods for the intended purposes of consumer acquisition and consumption. The end result was a product produced in America for consumer purchase and use. In addition, this process was instrumental in the support of the retail establishments
offering the product and the strengthening of the American economy through job creation and
the collection of taxes on business profits.
The economic viability of the early retail stores was subsequently impacted by the increase in
franchises such as Woolworth and other stores collected into a centralized mall or strip mall space.
These larger retail firms with a national (and subsequent international base) came to dominate
the landscape in many urban and suburban areas. Many of these mall structures were anchored
by major department stores selling a wide range of products (Klein, 1999).
Walmart was created with Sam Walton’s expansion of a small 5 and 10 cent store into a department store with a focus as a discount outlet. Walmart subsequently expanded throughout the
southern and Midwestern regions of the United States. The expanded Walmart stores and the
subsequent Super Walmart centers offering more products and additional services impacted local
business the same as department stores and the establishment of localized malls or strip malls.
Small business could not compete on the same price level and still maintain a profit. Thus, many
locally based stores did cease their business operations and leave the main streets in urban areas
and towns throughout the United States (Lichtenstein, 2009). The catalog business relying on
mail and phone orders in department stores such as J.C. Penney and Sears, Roebuck, and Company continued to thrive for a while.
But the retail landscape was clearly changing. Similar retailing outlets such as Kmart, Target,
Family Dollar, and other such franchise outlets appropriated the business model created by Sam
Walton. The other businesses offered the same retail goods and negated the need to order most
retail merchandise through catalogs. In addition, the competition for profits led to conspicuous
corporate strategies to reduce the cost associated with the manufacturing and retailing of consumer goods. The reduced factory wages in developing nations and inattention to preserving
basic protective measures for the health of the workers would have significant consequences for
the labor force workers within the international manufacturing sector. In addition, low wages
and lack of benefits paid to retail workers selling the foreign goods in domestic US retail stores
had an impact on the everyday lives of the employees.
The retailing revolution and consequences of international growth
The retailing revolution was strongly dependent upon outsourcing. As Friedman (2005) observed,
outsourcing involved the displacement of labor from American factories into various manufacturing locations around the globe. Goods were produced for cheaper costs and exported globally.
The developing trend of outsourced foreign manufacturing production reversed the “made in
America” model. As a result of these manufacturing changes, the extent of exports was significantly higher than the total volume of imports coming into the United States. According to the
Economic Policy Institute (2007), the total US trade deficit with China reached $235 billion in
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2006. Between 2001 and 2006, this growing deficit eliminated 1.8 million US jobs. The world’s
biggest retailer, US-based Walmart was responsible for $27 billion in US imports from China in
2006 and 11 percent of the growth of the total US trade deficit with China between 2001 and
2006. Walmart’s trade deficit with China alone eliminated nearly 200,000 US jobs during this
period. The focus on profit margins and the resultant impact on American economic growth
served to maintain Walmart’s retailing profits while driving the continued expansion of retail
outlets. Increasingly, manufactured goods are produced at lower cost in factories emulating the
traditional sweatshop conditions not seen worldwide since the advent of the Industrial Revolution, with greater retail profits resulting.
Consumer goods produced in disparate places such as Bangladesh, China, India, and other
developing countries were imported for sale into Western countries for retail distribution and
the generation of profits. It must be emphasized that distribution is spread out among a myriad
number of retail outlets. Whereas many critics attribute these processes to the seemingly deleterious influence of Walmart, we must also include the participation of retailing establishments
such as K Mart, Target, Best Buy, and the lower end Family Dollar/Dollar General stores. These
establishments serve to actively engage and participate in the ongoing exploitation of workers
and the “race to the bottom.”
The desire for decreased costs and enhanced profits, while selling goods at relatively inexpensive prices, was achieved through finding less expensive labor markets (Lichtenstein, 2009).
The chosen labor markets in developing countries may be categorized according to two factors:
(1) Walmart’s direct subcontracting of manufacturing with China and other countries; and
(2) the pressure placed upon suppliers to subcontract on their own in order to meet the pricing
levels demanded by Walmart executives. In the first case, Walmart works directly with other foreign entities to procure factories and subcontracted laborers paid to produce goods at the lowest
possible prices. The result is retail goods sold in the United States and throughout the world
(Gupta, 2013). It should be noted that Apple and other major corporations are also involved in
the same process. In the second case, Walmart contracts with suppliers for specific products with
the stipulation that the products must be manufactured at low cost. The only way to attain this
standard is the relocation of manufacturing to developing regions where the suppliers subcontract with local factories (Greenwald, 2005).
The runaway factory in its relocation to places emphasizing deregulation of labor laws, environmental standards, and harmful working conditions was a 1960s development suiting the needs
of Walmart and other retailing businesses (Kravis and Lipsey, 1982). Corporate manufacturing
was summarily shifted to the southern United States, followed by Mexico, and finally to Japan,
China, India, Bangladesh, and numerous other developing countries. The aforementioned race to
the bottom was facilitated when retailing outlets operating prior to the establishment of Walmart
and their retail competition utilized global regions wherein exploitative work conditions could
serve to maximize corporate profits. Workers in China, Japan, Bangladesh, and other places were
paid approximately 15 cents per hour for the sewing of garments, manufacturing of everyday
consumer items, and most items retailing in the various American discount stores. Such practices
encouraged Walmart’s global expansion and the active participation of their competitors.
There are two other factors important in the understanding of how international growth
facilitated this invidious and exploitative process. The first factor is a focus on the basic business model justifying the relocation of manufacturing in areas conducive to lessened labor and
production costs. The “Walmart Way” was predicated upon low prices and an assured high level
of profitability for the retailing giant (Lichtenstein, 2009). The outsourcing of production to
international locations offered significant advantages, including lowering the costs of production,
and the process was completed with the exploitive practices imposed upon retail staff in stores
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across the United States and around the world (Massengill, 2013). Without publicly accounting
for the fact that cost savings came from the underpaid workers producing these goods and the
low wages paid to “Walmart Associates,” Walmart was able to advertise its low prices.
The arrangements for these overseas factories were negotiated between Walmart (and other
retailing outlets) and the governments of numerous countries around the globe. Workers in
places like China are assigned living spaces close to the factory. This is not unlike production
in the United States where workers in locations such as outside Chicago lived in towns created by factory owners (Lindsey, 1943). Overseas governments ensured that workers followed
basic procedures and continued the operation of the factory assembly processes. Managers were
trained and sent from Walmart Headquarters in Bentonville, Arkansas. Trained managerial personnel ensured that the process of procuring laborers and the continued manufacturing process
remained operational. In addition, local business professionals were trained to work alongside the
corporate executives in the daily functioning of the factory system.
Walmart and the “China Syndrome”
The advent of the 1960s and the expansion of domestic companies into transnational entities saw
a great opportunity for generating corporate profits. Numerous corporations moving overseas to
places like Japan set the model in place. The same formula of low wages and cheaper operating
costs was consistent for the major electronics corporations producing and retailing consumer
goods. The runaway sweatshop became more common and accepted as a business model conducive to facilitating the mass production of goods at decidedly lower costs. Imports into the United
States began inching up at the expense of exports to foreign markets (Branson et al., 1980).
The Walmart model was predicated upon building a loyal consumer base through the continued practice of providing lower consumer prices. Such an outcome could not be attained if the
same production process was contained within the United States. Walmart and other retailing
corporations were facing the cost associated with constructing factories, paying workers’ salaries
at union levels in states where labor was organized, costs associated with environmental control
standards, and the expense associated with materials used in the manufacture of consumer goods.
These problems, as previously noted, could be circumvented through expansion into a region of
the world where cheap labor and a laissez-faire attitude toward regulation of labor and manufacturing processes was accepted. The continued expansion of capital flow was predicated upon
neoliberal cooperation in giving Walmart autonomy over their labor processes and economic
model.
Walmart and other retailing companies entered this continually expanding transnational scene
with the establishment of manufacturing facilities in China (Chan, 2011). Several factors are
essentially associated with this global expansion. Walmart’s intention was clearly to produce
more consumer goods at a lower cost utilizing the economic advantages of lower wages, nonunionization, non-regulation of working and environmental conditions, and the facilitation of
exports into America through negotiated trade agreements between China and the United States.
Walmart was also avoiding taxation on profits generated overseas and benefiting from the lower
import fees assessed through long-standing trade agreements.
Such a scenario has been depicted in several noteworthy documentaries on Walmart and its
strategy to establish manufacturing centers in China (Greenwald, 2005; PBS, 2011). According
to information in both documentaries, Walmart established factories in China that summarily
underpaid workers, subverted adequate working conditions, and negotiated substantially lower
payments to the Chinese government than would be the case if they paid corporate taxes in
America. Chinese workers were paid as little as 15 cents per hour and worked six days a week
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under sweatshop conditions. Chinese workers would produce clothing, children’s toys, and other
goods purchased by consumers in Walmart stores throughout the United States. Most of these
workers were brought into the urban-based factories from their original residence on farms
throughout the country. The workers would have to pay for a small apartment out of their own
low wages whether they lived in the assigned space or not.
Walmart was not the owner of the factories and not responsible for the recruitment of the
Chinese workers. Walmart (and other corporations maintaining similar practices) subcontracted
with business agents representing Chinese manufacturing entities to have their products produced in this manner and exported to the United States for retail sales. These business agents
negotiated deals with factories for the manufacture of the desired products. The Chinese factory operators were responsible for the day-to-day operation of the manufacturing process.
Walmart’s overall participation was focused on the training and monitoring of the ongoing
factory operations. Walmart, as the parent company, would bring in an executive to deal with
any difficult situations arising from employee issues or political matters related to the Chinese
government. In addition, Walmart maintained support from the United States government
attaining high-level intervention in specific situations demanding political intervention with
the Chinese government.
The actual working conditions in the Chinese factories were dangerous to the welfare of
the workers. Workers were utilizing hazardous chemicals, dealing with extreme heat, and overcrowded factory floors. This situation is not unlike similar conditions during the 1900s wherein
American workers were beset by similar sweatshop conditions. A parallel may be drawn to the
Triangle Shirtwaist Factory fire in 1912 with its similarity in the exploitation of factory workers
(Drehle, 2003). The dangerous conditions led to an infamous fire that claimed the lives of over
100 workers who were either trapped in the structure or forced to jump from windows. We
have seen such occurrences in both China and Bangladesh (the latter country’s issues are detailed
in the next section). Some recent events within the past few years have included fires in a Chinese factory engaged in the production of Apple’s popular iPhones. The impact of this incident
included decidedly negative publicity for Apple and a major delay in the shipment of phones to
consumers ordering the devices (Clifford and Greenhouse, 2013).
Bangladesh and the rise of the labor backlash against Walmart
The ever-expanding flight of global capital into other developing nations produced similar
impacts. Walmart, Sears, and other retailing outlets reached out to Bangladesh as a source of
products produced by a low-paid labor force in dangerous or unhealthy manufacturing conditions. Just as in China and India, Walmart and other retailers contracted with a factory to produce clothing. The factory was contained in an aging building structure with the usual lack of
safe working conditions and adequate compensation paid to the workers.
Events occurring in Bangladesh underscored the rather hazardous and exploiting situation
for workers in other parts of the world. We focus on two serious factory accidents occurring
two years apart. The Tazreen Fashions factory fire occurred on November 24, 2012 with at least
112 workers killed and an estimated 150 injured. A fire ravaged the nine-storey Tazreen Fashions
factory located in Ashulia, Dhaka, Bangladesh. Five of the 14 production lines were making
Walmart clothing and managers failed to clear the factory for a fire drill due to a tight production
deadline. Just as in the Triangle Shirtwaist Factory fire, workers attempting to exit the building
upon hearing the smoke alarm were blocked from leaving due to locked collapsible gates. The
workers were sent back to their workstations and told that there wasn’t a fire. Two years later, the
Rana Plaza building collapse occurred and was considered the deadliest catastrophe in the history
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of the global garment industry. Rana Plaza was an eight-storey building located in Savar, Bangladesh. It consisted of five garment factories and employed approximately 5400 people engaged in
producing apparel for many brands. On April 23, 2013, major cracks were apparent in the walls
of the building. However, managers required that workers return to work the following day.
Workers were told that the building had been repaired. Over 3000 garment workers were inside
the building when it collapsed that morning. At least 1138 garment workers were killed in the
collapse with approximately 2500 injured (Bajaj, 2012).
Butler (2013) reported that one in six clothing factories used by Walmart in Bangladesh had
failed a safety review stressing structural, fire, and electrical safety issues in the months following
the collapse of the Rana Plaza building. One factory was so unsafe that it had to be shut down and
another had an illegal eighth floor. Construction was temporarily halted at two factories. Bajaj
(2012) reported that Walmart and a number of leading retail firms failed to compensate the families of more than 1200 workers. The international Labor Organization worked with Bangladeshi
Officials, labor groups, and several retailers in generating a compensation fund for the families of
the 1200 workers who perished in the disaster and the more than 1800 workers who were injured.
Several of the European retailers cooperated in the effort but Walmart, Sears, Children’s Place, and
other retailers were unresponsive to the plight of the deceased or injured workers. It was revealed
that Walmart had contracted for at least 55 percent of the factory production. Rajan Kamalanathan,
Walmart’s vice-president for ethical sourcing, stated that Walmart did not intend to participate in the
compensation funds. He said that “there was no production for Walmart in Rana Plaza at that time
of the tragedy” and that the Walmart-related production at Tazreen was unauthorized (Greenhouse,
2013). Walmart, The Children’s Place, and Sears all declined to participate in the compensation fund.
Sears claimed that an unauthorized contractor had been producing on its behalf in Tarzeen.
Walmart, Sears, and 24 other Canadian companies joined in an alliance to upgrade factory safety
in Bangladesh. Greenhouse (2013) further reports that some industry analysts claim that Walmart,
Sears, and other American retailers are “reluctant to join the compensation efforts because they
fear it could be seen as an admission of wrongdoing, perhaps leading to legal liability.” Greenhouse (2013) reported on speculation from some critics that American corporations fear looking
hypocritical if they contribute to a compensation fund after asserting that any production done
for them in the factories was unauthorized.
There is an interesting contradiction between Walmart’s claims and the actual production
agreement with Bangladesh factories. Following the factory collapse in 2013, Walmart released
a list of more than 200 factories that had been banned from producing its merchandise due to
“serious or repeated safety problems, labor violation or unauthorized subcontracting” (Grabell,
2013). According to reports, at least two of the factories on the Walmart list continued to send
massive shipments of sportswear and girls’ dresses to Walmart stores during the months following
the factory disaster. The pattern is not confined to the period following the Rana Plaza disaster.
Information conveyed by Propublica documents that Walmart was implicated in the same ruse
going back several years. In June 2011, Walmart claimed to have banned the Bangladeshi garment
factory Mars Apparels from producing goods for their stores. However, documentation from US
Customs records and Mars owners reveals that Mars shipped tons of sports bras to Walmart.
The Mars Apparel factory arrangement continued two years after Walmart claimed to have
terminated business with the factory. Another Bangladeshi clothing maker, Simco Dresses, was
officially blacklisted in January 2013 but continued shipping to Walmart Canada into March
2013. A Walmart spokesman claimed that the Mars shipments were permitted because of confusion over whether Walmart’s standards applied. Mars was producing garments with a Fruit of the
Loom Label. Thus, it was not clear whether Mars needed to meet Walmart’s standards or Fruit
of the Loom’s.
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Grabell (2013) further observes that the shipments raise questions about Walmart’s ability to
monitor its worldwide supply chain and questions its efforts to ensure decent working conditions
within factories situated in low-wage countries. There was another telling factor in this situation.
Walmart’s power as a major player in the retailing sectors becomes significant. Bangladeshi factory owners claimed that Walmart’s approach of publishing a blacklist with minimal details might
unfairly harm family businesses. Perhaps the best way to sum up Walmart’s controlling role may
be attributable to Dan Schlademan, a United Food and Commercial Workers leader charged with
directing the union’s Making Change at Walmart campaign, who stated: “It’s either a question
of Walmart just telling people what they want to hear or it’s that Walmart has created a supply
chain system that they have no control over.”
The aftermath of these factory disasters led to a call for reform from the International Labor
Organization (ILO). Several European retail firms signed a binding pact pledging to maintain
fire and safety codes within the Bangladeshi factories. As detailed by the Huffington Post, “ that
contract, known as the Accord on Fire and Building Safety in Bangladesh, will require Western
brands to underwrite safety improvements in dangerous factories, with financial commitments
established on a sliding scale according to how much business each company has in the country” (Huffington Post, 2013). However, Walmart and a number of American retailers refused to
participate in this agreement. Walmart announced that it planned to develop its own safety
program to address the dangerous working conditions in factories in Bangladesh. Walmart
would conduct “in-depth safety inspections” at every factory facility in Bangladesh where
retail products for the company were produced. Walmart pledged to make the reviews public
within six months while instituting new standards in worker safety. Walmart’s decision came
after seven major retail brands agreed to work together and sign a strong, legally binding safety
accord with sanctions facing companies that failed to live up to its standards. Reaction came
from Scott Nova, Director of the Worker Rights Consortium, a nonprofit organization that
strongly backed the safety accord. Nova argued that the program proposed by Walmart was not
“meaningfully different from previous, non-binding pledges to address worker safety concerns.
We are past the point where non-binding self-regulatory initiatives from Walmart is going to
fool anyone” (Huffington Post, 2013). Walmart was now at a crossroads in their relationship with
workers and the union movement.
Walmart and the battle over unionization
The factory disasters in Bangladesh emphasized Walmart’s treatment of workers and their corporate opposition to unions. The closest that Walmart came to a concession with worker protection was a global pact with Gap, Target, and other American retail stores. The global pact called
for inspecting clothing factories within the next nine months and concentrating on renovation of those factories. Workers would be paid while the factory remained closed. This North
American alliance would offer financial assistance to workers temporarily displaced by factory
improvements or lose their jobs when factories are closed for safety reasons. The troubling news,
according to Scott Nova, was that the North American alliance did not properly empower
workers. The global accord, on the other hand, gave worker representatives the power to initiate
enforcement proceedings against companies that fail to comply with their obligations. With the
involvement of local unions, factory workers would be informed of the potential danger of a
factory and retain their right to refuse entry into potentially unsafe buildings. The global accord
also established a board made up of labor and retail representatives that would oversee dispute
resolutions that would be enforceable in the courts of the country where the company is based
(D’Innocenzio, 2013).
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The intent of the North American alliance, as contrasted with the global alliance, was to block
or minimize the presence of unions. Walmart had a long history opposing and fighting unions.
On the domestic front, Walmart was staunchly against the establishment of unions in their retail
stores from the beginning of their operations. Sam Walton never had to consider the presence or
impact of unions given the original 5 and 10 cent store, and the early Walmart retailing operations were located in right-to-work states where unions were virtually non-existent. The issue
of unions would eventually emerge when Walmart tried to expand into states or countries where
worker organization was commonplace. Ehrenreich (2011) documents how Walmart vehemently
opposed unions and even went so far as to monitor interactions between employees. Discussions
within the store, break room, and even the parking lot were noted. Labor union supporters would
be fired and strong dictums handed down sanctioning such behavior among other employees.
Walmart was not reticent to close a store or refuse to establish a retail outlet rather than permitting a union to exist. Such is the case in Chicago, New York City, and even as far away as
Germany. The labor situation in Chicago and New York rested on Walmart’s request to open
stores in the urban area. However, Walmart’s initiative was thwarted by a long-standing rejection
of labor unions in any of their retail outlets. In the case of New York City, Walmart’s proposal
to open a retail store in Brooklyn was defeated in a hearing conducted by the NYC Council.
Testimony focused on Walmart’s anti-labor practices and the practice of low wages extended to
the “associates” employed to serve customers in the various stores. Ironically, Charles Barron,
a New York City politician, suggested that he was engaged in negotiating an agreement with
Kmart for retail expansion (Harris, 2011). The same process applied in Chicago and Washington,
DC. In the case of Chicago, there was an eventual agreement where Walmart did open some
stores in the area. The Washington, DC situation was somewhat more complex. The original
proposal to permit Walmart access to open retailing outlets was dependent upon an ongoing
proposal to raise the minimum wage. Walmart opposed this practice and was ready to leave the
area. However, the mayor vetoed the minimum wage proposal and Walmart did open some stores
in the area (Davis and Debonis, 2013).
On the international front, Walmart has been unsuccessful in opening stores in South Korea,
Russia, and India and took action to close a retail outlet in Germany (Berfield, 2013). In the case
of Russia, Walmart wanted to buy a local company but could not come to an agreement with
regard to price. Walmart encountered problems in India when the Indian government insisted
on applying a requirement that foreign retailers source 30 percent of the products they sell from
small and medium-sized Indian businesses. The Indian government was investigating allegations that Walmart violated rules governing foreign investment in the retail industry, and that
Walmart was conducting an internal probe on possible violations of US anti-corruption laws.
In the case of Germany and South Korea, after opening stores in both countries, Walmart
closed them in 2006. In South Korea, Walmart also stuck to its American marketing strategies,
concentrating on everything from electronics to clothing and not on what South Koreans go to
big markets for: food and beverages. Germany was a more complex issue. A BusinessWeek article
claims that “Germans didn’t like Walmart employees handling their groceries at the check-out
line. Male customers thought the smiling clerks were flirting. And many Europeans prefer to
shop daily at local markets.” Further, the Huffington Post (2011) pointed out that Walmart probably could not handle the pro-union culture of Germany. Prior to pulling out of Germany
altogether in 2006, Walmart closed at least one store that was already unionized prior to the retail
company’s takeover of the various German outlets.
More recently, Walmart has seemingly realized the extent of international resistance to their
retail practices. According to Bose and Rose (2014), Chinese consumers are reluctant to buy
Walmart products due to concerns over their safety and authenticity. In business circumstances
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similar to those in Germany, consumers would rather shop at local retail stores and purchase
brands that are familiar and “genuine.” Walmart’s business share in China dropped from 11.3 percent to 10.4 percent. As a result, Walmart will be closing 29 stores in China. These developments
come as United States and European markets are declining due to increased competition and
resistance to Walmart’s overall business practices.
Conclusions
An assessment of Walmart and the resultant impact upon socio-economic change tells us much
about the development of the retailing revolution and the globalization of transnational corporations. Walmart became a force unto itself, producing a significant impact upon the production
sector, factory workers, and the consumer sector to which the goods were marketed and sold.
There is a clear sense of control over these sectors, as the cost of production and the price of retail
goods are interrelated. This would not normally be a serious issue given Adam Smith’s focus on
laissez-faire economy and the natural adjustment of these processes. However, Walmart’s tight
stranglehold over both production and consumption constituting a virtual monopoly served
to raise a number of questions about corporate control. Thus, Walmart became an important
economic force to be reckoned with by international communities, government entities, and the
combination of factory workers and retail associates increasingly engaged in Walmart’s growing
web of influence.
An examination of Walmart and the resultant problems of factory worker exploitation, insufficient retail associate wages, environmental issues, and workplace conditions would not be complete without understanding the implications of a fundamental contradiction between the actions
of Walmart internationally and domestically. There was the transnational Walmart engaged in the
exploitation of workers and the resources of international entities. When Walmart would receive
condemnation for these practices, the company reacted by ameliorating some of these conditions
with improved wages and supervision. However, the same caring attitude did not seem to carry
over to the retail side of the business back in the US where workers faced the same old restrictions on the ability to unionize and Walmart Associate wages were still low. Within their retail
outlets, the result is a corporation concerned with public relations over the real implications of
its domestic policies.
What may we conclude from an overall analysis of Walmart and their employed corporate
practices? Walmart is clearly a corporate behemoth and cannot be “leashed” by the various government entities. Their attitude is “my way or the highway.” They will close retail establishments
if the economic situation goes against their retail model, either by municipal or governmental
authorities rejecting the “Walmart Way” or in cases of workers organizing. In the case of the
latter, workers will either be fired or disciplined and the entire retail business will be shuttered. In
essence, Walmart’s stance enables us to revisit and reinvent the old adage once applied to General
Motors: What’s good for Walmart is good for America and the world. Challenges to this assertion from labor organizations and grassroots groups (including Making Change at Walmart)
indicate that the corporate ideology is not shared by entities outside Walmart’s self-contained
corporate bubble. Consumers and concerned officials are responsible for responding to Walmart’s
exploitative practices. Failure to do so leads us to conclude with the observation that “we have
the enemy and they are us.”
Questions from this examination emerge regarding the “Walmart Way” and the plight of
American workers and the ongoing suppression of the union movement. Walmart, Kmart,
and other business entities stress profits over wages and benefits provided to their retail associates. Walmart and other retail businesses are the latest in a long series of attacks on labor and
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the welfare of employed workers. The unionization movement in the manufacturing industry,
whichbegan in the early twentieth century in the US and peaked in the 1970s, began to seriously
decline with outsourcing to and competition from abroad in the 1980s, and has been further
eroded by the increasing number of businesses choosing to preclude workers’ rights and benefits.
Walmart adopted a neoliberal model that was consistent with government officials who often
overlook exploitative practices. The illogical ideological rationale: As a private business, Walmart
was somehow to be exempted from adhering to the rights of their employees to form unions
and could opt for a “right-to-work standard” precluding unions altogether. The case study in
Germany and other places gives us a hint as to the presumptive power wielded by Walmart in
both its domestic and international settings.
Finally, some questions must also be framed regarding Walmart’s role in perpetuating the
exploitation of workers in developing nations. The case studies in China and Bangladesh indicate the degree to which these policies would impact upon the balance of economic imports
and exports. Ninety percent of American imports originate in China and the balance of trade
strongly favors the Chinese business community. The larger implications of this economic situation strongly influence our budgetary interest payments to China and the ability to which we
can balance the budget and achieve economic growth. This last point is beyond the purview of
the current analysis offered in this chapter. However, it is important to realize that these relations
in international trade have a significant impact upon the American economy.
References
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Berfield, S. (2013) “Where Walmart Isn’t: Four Countries the Retailer Cannot Conquer.” Business Week,
October 10.
Bose, N. and Rose, A. (2014) “Walmart’s Chinese Syndrome a Symptom of International Woes.” Reuters,
February 21.
Branson, W., Giersch, H. and Peterson, P. (1980) “Trends in United States International Trade and Investment since World War II.” In The American Economy in Transition, edited by Martin Feldstein. Chicago, Ill:
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Butler, S. (2013) “One in Six Walmart Factories in Bangladesh Fail Safety Review.” Guardian, November 13.
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Davis, A. and Debonis, M.D. (2013) “Walmart Opens First Two District Stores.” Washington Post, December 4.
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Giroux.
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Klein, L. (1999) It’s in the Cards: Consumer Credit and the American Experience. New York: Praeger.
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8
Human trafficking
Examining global responses
Marie Segrave and Sanja Milivojevic
Introduction
In the 15 years since the Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women
and Children (hereinafter the Palermo Protocol; the Protocol) was opened for signature, security
and crime prevails as the overarching paradigm that informs international, regional and national
responses to human trafficking. There is a growing body of robust, critical scholarship that has
interrogated the validity of the tsunami of counter-trafficking policy and legislation that followed in the wake of key international commitments in 2000. However, the urgency of countertrafficking efforts continues apace, with an ever-expanding network of counter-trafficking efforts
operating independently and collaboratively across national and regional borders.
The purpose of this chapter is to take stock of the counter-trafficking strategies that are in
place and to consider the limits of conceptualising human trafficking as a crime, particularly in
relation to its ability to adequately capture the various forms of gendered exploitation that occur
in connection with the migration–labour nexus that impacts upon those least able to negotiate
lawful migration and labour options in countries of transit or destination. Within the context of
the political economy of globalised capital, featuring the celebration of the freedom of mobility
and labour (related, of course, to markets, products, money, technologies, and certain groups of
people), there is the often ignored and/or silenced, undesired and restricted. This may matter less
to markets and products that are undesirable – for guns, drugs, money there is no issue of harm –
but in the case of the impact upon restrictions on people (and their migration and labour) there
is a growing recognition of the collateral damage of being classified as a global non-citizen. This
chapter seeks to consider the burden of this damage and the intransience of human trafficking as
the overarching justification for regulatory systems that claim to be in place to protect, identify
and prevent victimisation and exploitation of the most vulnerable. As we argue, one of the most
compelling analyses of counter-trafficking strategies recognises that they work in concert with
other state initiatives that seek to shore up state power (often, in relation to human trafficking, in
the name of state benevolence), as well as to disconnect state practices from the environments that
sustain exploitative conditions. As non-government and government-led strategies effectively
operationalise shared definitions, understandings and responses to human trafficking, the call to
identify the conditions that sustain exploitation is increasingly drowned out.
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This chapter begins with a survey of counter-trafficking strategies at the international and
regional level, offering some examples of the connection between these mechanisms and nationally implemented policies. It details the consistent elements of defining and responding to human
trafficking, including the examination of how we assess the success of such initiatives. Indeed,
as we argue below, it is in the measure of success that priorities and assumptions about how this
practice/phenomenon is conceived are revealed. We then examine the alternative conceptualisations of human trafficking outside of this predominant agenda, namely human rights, pertaining
to slavery, forced labour and gender discrimination. In this context we examine how we draw
boundaries for naming and identifying exploitation and the consequence of this in relation to
methodology and research. Finally, we argue that human trafficking remains a concept that is
at once a crime which requires a legal response while also being a concept that endures within
a morally impenetrable vacuum. The outcome of this is that critiques of broader state practices
being heard in the debate are largely not acted upon, not least because in other areas of concern
(border control, migration regulation within and at the border) state priorities are not negotiable.
In this sense, despite early iterations of theorisations of globalisation and the loss of state power, we
see instead the shoring up of power through the entangled exercise of border regulation, criminal
justice and a narrowly defined state benevolence to victims of crime.
History: the boundaries of human trafficking historically
and contemporaneously
The historical and contemporary global, regional and national anti-trafficking frameworks rest
on a conceptualisation of trafficking that link this practice to three key pillars: (transnational and/
or organised) crime, (commercial) sex and (undocumented) migration (Milivojevic and Pickering
2013; see also Weitzer 2014). Anti-trafficking interventions in both the Global North and Global
South are developed, applied, validated and evaluated on assumptions (rather than evidence) that
human trafficking is a crime that involves crossing borders, a crime largely located in the sex
industry, and with clearly defined (ideal) offenders and victims (Milivojevic and Segrave 2012).
Consequently, as others and we have established, trafficking is conceptualised as crime that needs
to be policed, legislated, regulated and supressed through criminal justice measures deployed at
the border and beyond (Segrave et al. 2009; Lee 2011; Weitzer 2014).
These interventions, as will be demonstrated herein, leave little to no room for understanding
the broader social context in which vulnerability of those who are silenced and restricted is created and enforced. In the crime-fighting narrative that dominates contemporary anti-trafficking
frameworks there is no consideration that root causes of exploitative practices and vulnerability
of women and men negotiating the migration–labour nexus need to be captured and addressed as
condicio sine qua non successful anti-trafficking interventions. What is missing is an acknowledgement that nation-state practices contribute to and enable exploitative and restricting conditions
in the international labour market and global mobility more broadly. We will return to these
concerns later in this chapter, following the outline of the historical development of traffickingas-a-crime anti-trafficking framework.
The Palermo Protocol and the Trafficking in Persons Report
In the early 2000s, human trafficking was moved from the sphere of human rights to the sphere
of international law within the context of transnational organised crime. This move reflected
the transition of human trafficking, organised crime and migrant smuggling ‘from the margins
into the mainstream of international political concern’ (Gallagher 2009: 790). It was widely
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reported that ruthless traffickers were profiting greatly from the trade, with guesstimates about
the profit from the business varying from US$7 to 28 billion (Zhang 2009) and traffickers were
depicted as ‘highly organised, extremely violent’, and as a perpetual threat ‘to law and order and
national security’ (Galian 2000: 11; see also O’Brien 2013; Milivojevic and Pickering 2013). With
increasing concerns regarding the threat of organised crime, permeable borders became the site
of containment for individual nation-states.
Consequently, trafficking ‘was not treated separately from the overall migration policy
approach to intensify controls and repress illegal immigration’ and to limit the impacts and reach
of organised crime (Apap et al. 2002: 7). These patterns were evident both within individual
nation-states across wealthy nations such as Australia, but also within the context of growing
regional powers vis-à-vis the European Union where the abolishment of internal borders was
soon replaced with increasingly restrictive and punitive migration policies across Fortress Europe.
Consistently these measures were justified by the need to prevent organised crime, including
human trafficking rings, and to protect vulnerable women from the Global South (Apap et al.
2002; Andrijasevic 2003; Lee 2011). As Berman (2003: 39) has argued, the anti-trafficking rhetoric enabled ‘the complex circumstances of trafficking and other forms of gendered migration [to]
function as a metonym for crime and an opportunity to intensify border control in the name of
protecting citizens and women’. Restoring order at the border began to dominate policy and legislative frameworks in national, regional and international counter-trafficking efforts. Prioritising
border policing, prosecution of traffickers and repatriation of victims emerged as fundamental
policy responses, providing also the key measurements for success of anti-trafficking interventions
(Segrave et al. 2009; Berman 2010).
Motivated by the international political drive to address human trafficking, nation-states
started pouring money into anti-trafficking programs, while a plethora of international and
national governments’ agencies, NGOs, committees, commissions and academics began to engage
with the issue (Kelly 2005; Anderson and Andrijasevic 2008; Zhang 2009). The culmination
of this process was the Palermo Protocol, passed in November 2000 in Palermo, Italy. This
document firmly located trafficking within the context of transnational organised crime, as the
Protocol was passed as a supplementary protocol to the UN Convention against Transnational
Organized Crime. Trafficking, according to the Protocol, is defined as a process consisting of ‘the
recruitment, transportation, transfer, harbouring or receipt of persons’, by means of:
the threat or use of force or other forms of coercion, of abduction, of fraud, of deception,
of the abuse of power or of a position of vulnerability, or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for
the purpose of exploitation.
(UNODC 2004: 42)
As Edwards (2007) and Gallagher (2009) have outlined, the Palermo Protocol is an instrument
of international law. There is a detailed description and analysis of the Protocol in its final format
that has followed its passing in 2000 (see Segrave 2014) with the primary conclusion being that
the instrument is firmly focused on criminal justice, primarily prosecution and punishment of
offenders, notwithstanding the articulated recognition within the Protocol of the human rights
of victims.
Back then, human trafficking was specifically and strategically located outside of the human
rights regime and indeed it has been argued that this has been its greatest contribution: its location under the auspices of the UN Office on Drugs and Crime has been argued as enabling
international, regional and national legal and policy reforms that are rarely seen in response to
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human rights instruments (see Gallagher 2009: 793). However, this remains the subject of debate.
One key concern was and remains the depiction of human trafficking as primarily an issue of
crime, specifically of organised crime, and the requisite legal response this supported.
It is well-travelled ground to note the limitations of this framework – with an emphasis on
targeting crime while other issues and priorities take a back seat, namely upholding the rights of
victims (Agustin 2005; Kapur 2005; Berman 2003; Bumiller 2008). Importantly, an understanding
of the complex conditions which give rise to human trafficking in its myriad forms is also sidelined
(Edwards 2007; Segrave et al. 2009). Some argue that it is other existing human rights instruments
that might better serve to respond more effectively or more specifically to human trafficking in
its myriad variations (cf. Hathaway 2009). However, our primary interest is to point to the consequences of the dominant focus, driven by the Palermo Protocol’s logic of law and order. Before
doing so we consider some boundaries and limitations of the Palermo Protocol, and other alternative mechanisms for responding to human trafficking that are in place at the international level.
While the Protocol defines exploitation broadly, an offering that includes at a minimum
the exploitation of prostitution or other forms of sexual exploitation, forced labour, slavery or
slavery-like practices, and servitude or removal of organs, it fails to define ‘abuse of power’, ‘vulnerability’, ‘control’ (Weitzer 2014: 8), or ‘consent’ (Doezema 2002). It may be argued that the
Protocol offers breadth, enabling nation-states to respond to human trafficking in its specificity
in context. Indeed, the ambiguity in defining elements of the definition is partially the result of
intense lobbying of feminist groups during the two-year period of negotiations (Doezema 2002),
but also an outcome of the fact that the Protocol is not a human right but ultimately a criminal
justice instrument (Anderson and Andrijasevic 2008). However, the breadth of the Protocol has
created significant problems in measuring anti-trafficking efforts, limiting the ability for accurate
accounts of the impact and effectiveness of counter-trafficking strategies.
Importantly, as we have noted elsewhere (Milivojevic and Segrave 2012: 237), the presumptive link between organised crime and human trafficking that forms the basis of the Protocol
and the Convention connection has been the subject of significant debate and counter-evidence
(see also Turner and Kelly 2009). The Protocol also links all forms of trafficking – whether it be
trafficking for the purposes of sexual or other forced labour, slavery or removal of organs – and
provides a framework for the requisite response, assuming that the same response is required based
on the recognition that these practices fit under the remit of transnational organised crimes.1
The Protocol focuses on prevention via criminalisation, with additional efforts around protecting
and assisting victims of human trafficking with respect to their human rights (see the Palermo
Protocol, Article 5 and Section II).
Yet there is little evidence that this is the most effective response to achieve the intended aim
of reducing, if not eliminating, human trafficking. At the international level meaningful data
and analysis of the impact of counter-trafficking efforts are not predominant. At the national and
international level we see the reliance on monitoring data that is descriptive of implementation
efforts, rather than offering insight into impact (see Milivojevic and Segrave 2009;). Even with
the recent creation of the Working Group on Trafficking in 2005 to oversee implementation and
identify weaknesses and gaps of the Palermo Protocol, the recommendations reflect an absence
of reporting of measurable impacts and also concern from some states that the Protocol is too
narrow (CTOC Working Group on Human Trafficking 2013: 7). This suggests that despite an
effort to oversee its implementation, a monitoring body is unable to provide any useful evaluation
that could lead to an informed review of the current strategy, as opposed to coming together to
clarify how the strategy should be implemented.
Border managements is closely linked to the prevention commitment within the Protocol –
despite being in some ways at odds with the commitments and concerns upheld within the
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Smuggling Protocol, one of the other two supplementary protocols to the Convention. This has
been a consistent concern. This is articulated in provisions such as Article 11, which provides
that nation-states ‘shall strengthen, to the extent possible . . . border controls as may be necessary
to prevent and detect trafficking in persons’ (UNODC 2004: 47), without specifying what such
border control should entail (Edwards 2007). Saving ‘trafficking Cinderellas’, victims with ‘gut
wrenching testimonies of broken dreams, withered illusions, rape and humiliation’ (Mirkenson
cited in Doezema 2000: 31) was a key rationale for the reinforcement of external borders of the
Global North and the introduction of restrictive migration and mobility policies (Apap et al.
2002; Segrave et al. 2009; Lee 2011; Milivojevic and Pickering 2013). Border control enables the
prevention strategy pertaining to the prevention of crime and the prevention of victimisation to
become one and the same. Recent and past work examining the decision-making processes of
immigration and other officials at national borders, whether it is at ports (Weber and Gelsthorpe
2000) or airports (Pickering and Ham 2014), points to the importance of interrogating the
implementation of such policies. Their research, conducted over a decade apart and in different
national contexts and institutional settings, points to the consistency of gendered and racialised
accounts of ‘risk’ in relation to both potential criminalisation and potential victimisation. These
accounts raise questions about how the international commitments adopted under the auspices
of being a signatory to the Palermo Protocol translate into practice and how this evidence can
be used to make states accountable and to enable the international community to consider the
clarity of its recommendations and provisions for implementation.
In addition to border management, ‘clamping down’ on trafficking through the law and order,
criminal justice interventions is clear in the language used to describe anti-trafficking efforts post
the Protocol, with phrases such as ‘war on trafficking’ dominating the early narratives (DeStefano
2007; Kempadoo 2007). The US administration under George W. Bush was especially concerned
about eradicating trafficking through linking the practice to national security and sex work, and
has implemented its own national strategy that has had a global impact (Wasileski and Miller
2012: 111; Outshoorn 2005). The US Trafficking in Persons Report (TIP Report), arguably one of
the most influential on anti-trafficking, ranks nation-states based on whether they meet the minimum standards in combating trafficking as defined by the US, and focuses on 3Ps: Prevention of
trafficking, Protection of victims and Prosecution of traffickers (USDOS 2014).
The report has undergone change since its first publication in 2001, in terms of its focus, the
breadth of human trafficking it is concerned with and the number of nations that are subject to
assessment. However, while the 2014 Report focuses on ‘The Journey from Victim to Survivor’,
and although President Obama has argued that ‘we must . . . address the underlying forces that
push so many into bondage’ (USDOS 2014: 6), successful prosecutions and enactment of laws
prohibiting trafficking are still key benchmarks for nation-states to achieve the highest-ranking
assessment (Tier One – USDOS 2014: 40). Prevention of trafficking and protection of victims are
difficult to measure and report upon, and are prioritised behind criminal justice outcomes. Many
national anti-trafficking efforts adopt a similar model of reporting; measuring success via descriptive numbers of criminal justice statistics including the number of victims who access support
during this time (see Milivojevic and Segrave 2012). Yet the criminal justice outcomes are rarely
used to question the logic of the response. While estimates by the USDOS put the number of
humans – men, women and children – trafficked across international borders each year in 2007
to be between 600,000 and 800,000, in 2014 the global law enforcement data provided in the
most recent TIP Report suggested that annual prosecutions and convictions across the globe are
below 10,000 and 6,000 respectively (USDOS 2014: 45).
The emphasis on criminal justice measures, embraced by the structure and emphasis within
the Palermo Protocol and enforced by the diplomatic pressure that accompanies individual
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nation-states’ desire to receive a favourable TIP ranking, belies the data which suggest very little
other than that we need to reconsider the logic of investing so heavily in law and order. We also
need to think very carefully about the construction of victimisation and offending.
However, human trafficking is not isolated to the Palermo Protocol and TIP Report for identification, definition and action on the international stage. In part this is due to the breadth of what
is encapsulated by human trafficking: there are elements of issues pertaining to gender, labour and
migration within incidents of human trafficking that enable trafficking to be the subject of other
international frameworks. It also reflects the breadth of international law and the human rights
canon. As Edwards notes (2007: 10), there are a ‘large number of instruments which touch upon
legal obligations relating to trafficking’ that generate the attention and efforts of the myriad associated international agencies with commitments to a wide variety of counter-trafficking efforts.
We will briefly outline some key instruments that are in place complementing the contemporary
international/regional anti-trafficking framework.
The slavery, labour and gender-based anti-trafficking frameworks
We begin first with the broadest of the international instruments that encapsulates slavery, a term
often used interchangeably (although not unproblematically: see Doezema 2000; Weitzer 2014)
with human trafficking. The 1926 Slavery Convention was broadly committed to the prevention
and suppressing of the slave trade via all appropriate measures. This Convention was followed by
the 1956 Supplementary Convention on the Abolition of Slavery, the Slave Trade, and Institutions
and Practices Similar to Slavery, which expanded its definition of slavery to include the notion
of the ‘slave trade’ as:
all acts involved in the capture, acquisition or disposal of a person with intent to reduce him
to slavery; all acts involved in the acquisition of a slave with a view to selling or exchanging
him; all acts of disposal by sale or exchange of a person acquired with a view to being sold
or exchanged; and, in general, every act of trade or transport in slaves by whatever means
of conveyance.
(Article 7(c) of the Supplementary Convention)
While there are many nation-states which are parties to this Convention, it remains largely unenforced and is rarely used in relation to cases of human trafficking (Edwards 2007: 25).
While the Palermo Protocol defines trafficking as ‘slavery or practices similar to slavery’
(Article 3(a)), it has been argued that the Protocol promotes a ‘partial perspective on the problem
of modern slavery’ and that the existing slavery-specific instrument would be better suited to the
breadth of situations within which human slavery occurs internationally (Hathaway 2009: 4).2
Others argue that the protocols are weak and were rendered obsolete by its inadequate enforcement (see Gallagher 2009). Slavery is also upheld within Article 8 of the 1966 International
Covenant on Civil and Political Rights (ICCPR), which makes reference to forced and compulsory labour, servitude and slavery. Via the Human Rights Committee monitoring of the
implementation of the ICCPR this mechanism has been used as a way to report on what are
perceived as state parties’ failures to uphold their obligations. For example, the 2013 review of
the US in relation to the ICCPR saw a shadow report submission by the United States Human
Rights Network in relation to US compliance pertaining to issues of slavery and human trafficking (see USHRN 2013). However, the ICCPR, despite its significance within the Human
Rights canon, is not leading the counter-trafficking fight, although the Committee may comment on trafficking issues.
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More recently, in June 2014, the International Labor Organisation (ILO) adopted the legally
binding ILO Protocol on Forced Labour which ‘aims to advance prevention, protection and
compensation measures, as well as to intensify efforts to eliminate contemporary forms of slavery’
(ILO 2014). The ILO recognise human trafficking as sitting under the umbrella of ‘forced labour’,
thus enabling global estimates of forced labour to be produced that fail to differentiate between
the continuum of exploitative practices this may include, such as human trafficking (ILO 2012).
The ILO estimate that globally ‘20.9 million people are victims of forced labour globally, trapped
in jobs into which they were coerced or deceived and which they cannot leave’, and clarifies
that forced labour includes ‘forced labour imposed by the State, and forced labour imposed in
the private economy either for sexual or for labour exploitation’ which may include but is not
limited to instances of human trafficking (ILO 2012: 13).
Within a labour-focused, rather than slavery-focused, framework, the efforts to respond can
arguably be more focused on improving labour conditions and regulations globally to achieve
better outcomes for workers regardless of citizenship status. However, it may also be argued that
this framework has no relationship to the practices of human trafficking for organ removal and,
potentially, trafficking for the purposes of marriage, and as such it is making a clear distinction
between types of human trafficking without acknowledging this. We have also argued elsewhere
that the ‘forced’ element of forced labour can serve to undermine and/or silence agency, thus
focusing attention away from the interconnected legal and political issues that impact upon
migrant labours generally (Segrave 2014).
Beyond the slavery and labour frameworks lies the gender-focused approach. Within
the 1979 Convention on the Elimination of All Forms of Discrimination against Women
(CEDAW) Article 6 refers specifically to the requirement that state parties ‘take all appropriate
measures, including legislation, to suppress all forms of trafficking in women and exploitation
of prostitution of women’. CEDAW, through the Committee on the Elimination of the Discrimination Against Women, oversees state reports on efforts to address gender-based issues as
per the Convention, including human trafficking to which CEDAW devoted a dedicated event
during the fifty-second session in 2012. CEDAW has played a role in articulating prevention
strategies and victims’ rights as well as calling for root causes of trafficking to be addressed
(Edwards 2007: 30); however, its gendered focus necessarily delimits the breadth of practices
it may actively address.
The divisions and differences between the approaches described above and the Palermo
Protocol and TIP Report are not merely rhetorical or conceptual; rather, they directly ‘impact
the understanding of the phenomenon and the approach taken to protection, and redress,
whether at an international or national level’ (Edwards 2007: 11). Critically, as the discussion
has outlined above, none of these instruments easily attends to human trafficking in terms of
the breadth of what trafficking encapsulates or in terms of the requirements for reducing, if
not ending, human trafficking. It is critical to examine international frameworks because these
set an agenda for the international community and this is evident in the ready adoption of the
Palermo Protocol which has had the greatest impact, alongside the TIP Report, in influencing
the development of counter-trafficking measures globally (see Gallagher 2009). Buying into
international conventions provides reasoning and justification for the response of nation-states
which makes challenging the wisdom and logic of such approaches increasingly difficult. At
the same time, the role of the state in creating, sustaining and promoting exploitative practices
within the labour–migration nexus is entirely bypassed. In order to deconstruct the problematic approach to defining and responding to trafficking, and how we measure the success of
anti-trafficking initiatives, we need to look into the ways in which trafficking knowledge has
been constructed thus far.
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Knowing about human trafficking
Our focus now is to turn to the challenges raised by the lacklustre international and national
priority frameworks for addressing human trafficking. We focus here on three issues raised
above but explored here in further detail. The first is the absence of evidence. The second is the
importance of attending to citizenship. The third is the need to hold states accountable, which we
argue that currently no institution or organisation locally or internationally is able to do. These
are interrelated issues.
Evidence as noted above is largely absent in the area of human trafficking. We have witnessed
over the past few years the increasing commitment to addressing ‘all’ forms of human trafficking,
which is expanding beyond the early narrow focus on sex trafficking to include forms of labourrelated trafficking. However, as we have argued elsewhere, ‘while the parameters of the understanding of and the response to human trafficking have broadened, the details of the nature of the
response have remained relatively unchanged’ (Segrave 2009: 205). We are becoming increasingly
aware, in nations such as Australia and the UK, that unlawful non-citizens are subject to a range of
exploitative work practices not all of which will meet the legal requirement of human trafficking
and not all of which will come to the attention of authorities as victimisation, not least because
they involve non-citizens working irregularly (Segrave 2014).
‘Illegal’ workers are a concern and problem for nations globally, and Australia is not alone in
making various commitments to the detection and deportation of unlawful migrant workers.
While some are willing to acknowledge that there is overlap between irregular migration status and
victimisation, identifying that nations should respond to this by extending generosity to victims as
per the Protocol (CTOC 2013), for those implementing policy priorities on the ground, making
decisions when face-to-face with individuals, the ability to make these distinctions is influenced
by organisational priorities and personal bias (Segrave et al. 2009; Pickering and Ham 2014).
Evidence requires understanding with whom immigration and other authorities are coming into
contact, when and how, and the process that follows. Without understanding the decision-making
process and context, how can we make sense of the number of those identified, and the numbers
ultimately prosecuted? So, too, evidence requires attending to the impact of efforts – including
efforts that are intended to help or support victims that may not achieve this desire.
It is assumed, as we have argued in relation to Australia, that victims of human trafficking
primarily require welfare-oriented support (counselling, housing, medical) rather than assistance
in finding another job, or to seek compensation for harm and/or payment for unpaid labour (see
Segrave 2009). Yet when it comes to non-citizens exploited in the workplace, but not trafficked,
we provide them with financial support and none of the supports we offer to trafficking victims
(see Segrave 2009). If we are not offering anything that appeals to victims, as we have found
in our research in Australia, Thailand and Australia (Segrave et al. 2009), then the incentive for
victims to remain in the criminal justice process is limited but so too, potentially, is the desire or
willingness to participate in criminal justice processes in the first instance, thus reducing what
we know and understand about the diversity of exploitative practices that are occurring. That is,
the current raft of victim support provisions cannot be determined to be effective because some
victims access them. Across every component of the counter-trafficking strategy in place in individual nations, what we need is evaluation that provides both quantitative and qualitative insight
and context, which enables a better-informed assessment of what is and what is not adequately
addressed within the current response.
The second concern is to address the intersection of citizenship and illegality, and this must be
situated within the global economy and the continued shifting power of the nation-state. It is clear
that examining the intersection of illegal migrant work–exploitation–criminalisation–trafficking
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requires analysis of the illicit international political economy of labour, where labour itself is a
commodity that is part of the illicit market, and the negotiation of migrant lives and livelihoods
in the midst of numerous national and international tensions and priorities. This requires holding
the state to account for exploitation that is occurring not just because of what it is failing to do
but also in fact as a result of what it is doing (see Segrave 2014). Migration labour and economics
policy and practice are intimately connected and, as a consequence, efforts in one area have implications and impacts for practices and patterns across all three areas. Internal border enforcement
practices extend beyond the criminalisation of asylum seekers and irregular migrants to include
labour regulation and the rescue of victims of trafficking (Segrave 2014). In so doing they ‘serve
to reinforce the identity and perceived security of the nation-state and its legitimate members’
(Weber and Pickering 2011: 20), including the identity of legitimate labour and legitimate victims,
adding a further layer to contemporary practices described by Bosworth as ‘governing through
migration control’.
This brings us to our final idea that is to point to the limits of international protocols. While
some, such as Gallagher (2009), celebrate the importance of global agreements and efforts to
address trafficking, we argue that international agreements can have the unintended impact of
effectively relieving nations of the duty to attend to the specificity of an issue that is playing out
within their jurisdiction (Milivojevic and Segrave 2012). Signing the Palermo Protocol, adopting
what the USDOS TIP Report is looking for and delivering on this, all adds up to a performance
of counter-trafficking that may have little relevance within one nation compared to another.
Nations such as Australia that are wealthy islands have very different human trafficking circumstances to deal with compared to nations such as Thailand, South Africa or the United States.
States also, in adopting these approaches, are not challenged to look more carefully at what we
have noted above; that is, the ways in which national policies and priorities across a range of
fields including labour, migration,and criminal justice can produce and sustain conditions within
which exploitation such as human trafficking occurs. Altough isolating human trafficking within
a framework that is overshadowed by the Convention on Transnational Organised Crime complexity is largely silenced by the persistent call for shoring up criminal justice efforts and ensuring
support to those victims who are identified as such (by the legal litmus test).
Conclusion
As we have indicated and others have noted, there is ‘no lack of international human rights
standards that address both rights and obligations of states in relations to the issue of private
exploitation’ (Gallagher 2009: 817); however, they are not being applied in instances of trafficking and/or trafficking-related (by which we mean cases that do not meet the standard of proof
requirements for investigation or prosecution) exploitation. It remains the Palermo Protocol and
the diplomatic pressure of the US Department of State annual assessment via the TIP Report that
laid the ground for what nations should be doing. Our concern with the Palermo Protocol and
the TIP Report is that together they fail to locate the context within which human trafficking
occurs, thus rendering criminal justice measures as a standard measure through which to determine the success and/or effectiveness of national counter-trafficking efforts. They also remain
broad and non-specific in relation to what is meant by human trafficking, barely engaging with
the logic of assuming that how we can prevent and respond to organ trafficking is equal to that
of how we may prevent and respond to labour trafficking that occurs in the fishing industry off
the shores of South East Asia.
Gallagher defends the developments internationally as critically important steps towards
addressing trafficking, recognising that ‘trafficking and its associated harms are multidimensional
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problems that do not, in the end, belong to one discipline or one branch of law’, and further
that ‘combating contemporary exploitation may not be possible but any serious attempt will
require a full arsenal of modern, smart weapons, not just one precarious blunt sword’ (Gallagher
2009: 847–848). We would argue that the Palermo Protocol remains a blunt instrument. In this
chapter we outlined the apparent failure of various frameworks that were supposed to address
trafficking; a failure in part that enables nation-states to continue to look outward rather than
inward for ways to understand human trafficking and how best to respond. We argue that the
main concern is not the instruments in and of themselves but their effective delimiting of trafficking as a ‘problem’ that states must develop ‘weapons’ for, a position that promotes a reactive,
defensive strategy that fails to consider the intersection of migration, labour, finance, gender and
race. Finally, what the international instruments fail to do is to reflect upon how states play a key
role in constituting vulnerability and opportunity for exploitation and profit making. This is not
to suggest that the nations are deliberately doing so, but rather that national priorities pertaining
to border enforcement, labour regulation, targeting transnational organised crime and responding to victimisation are presented as separate and distinct areas that in practice are all intimately
connected to the activities of the state apparatus, the accumulation of capital, and the commodification of crime control.
Notes
1 It is worth noting that the extent to which transnational organised crime delimits the recognition of
trafficking within national or international mechanisms is the subject of disagreement (see Hathaway
2009; Gallagher 2009).
2 In making this argument, however, Hathaway recognises the need for the largely unaccountable implementation of the decades-old slavery conventions to be updated into a more clearly defined and prescriptive response mechanism.
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9
Globalization, sovereignty
and crime
A philosophical processing
Kingsley Ejiogu
Introduction
The moral and ideological roots of human rights and sovereignty of nations may be traced back
to philosophers like Thomas Hobbes, Jean Jacques Rousseau and John Locke. These philosophers established that the sovereignty of a nation is predicated on the nation's ability to create
and enforce laws within its sovereign boundaries – otherwise understood as social control.
Bassiouni (2011) observed that the Enlightenment age in Europe formalized the conceptual
philosophies that propelled issues of human rights onto the global platform in the nineteenth
century. Incidentally, just as globalization was significant in establishing and enforcing laws on
human rights, it created opportunities and new platforms for undermining those same rights.
The evolution of the processes and structures of globalization impact upon the conceptual
framework of human rights and crime control as it attempts to erode the littoral sovereignty of
nations. Globalization thus extends the physical littoral borders of individual nations to a nonlittoral world within the cyberspace accessible to agents of social and behavioral change as in the
former state. Bassiouni (2011) is in agreement that the concepts of sovereignty and human rights
are under test by the evolving processes, emerging systems and actors of globalization and their
interrelated agencies of privatization, states and groups. Primary among these evolving systems
is the creative synergy between transnational crimes and the virtual community (Denning and
Baugh, 1999; Cohen, 2002).
The operative procedure of undermining human rights in transnational crime such as terrorism, and the intensive agenda and rise of state and institutional private armies, find linkages
in diminishing state sovereignties and the neoliberal economy. Irrespective of arguments to the
contrary, there is definitely a shift in the order of global governance and international diplomacy.
This order is more reflective of an increasing interest in the democratic political culture aligned
with its economic private sector-led successes and liberal tendencies. The challenge is to find a
manageable route to adjust to these changes, especially for cultures hostile to democratic change
re-created in the virtual borderless world of the cyberspace. State and insurgent crimes are transmitted and reflected in uprisings, terrorist activities, human rights repressions and direct state
insurgencies, overreaching international diplomacies such as war crime tribunals and the creation
of private armies. But of significance and much less examined is the impact of the rise of new
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powers, and questions about the authority of old powers to control dominant ideas about global
culture currently dramatized and empowered by the reach of the Internet. The imperative is to
understand the direction of global thought against changing values of what constitutes crimes
(state and non-state), human rights, national armies and sovereign boundaries; and hypothetically
how one phenomenon is invariant rather than based on the other.
On the new global political agenda these three dimensions of policy are critical to understand
the new direction of international sovereignty and crime creation and control: human rights
abuse, terrorism and private armies, and the third technology, links through the rest as the potent
operative agency. The purpose of this chapter is to join the criminological dialogue and activity
on the re-creation of crime cultures across the world. How does the virtualization of society
place the sovereignty of nations with weak state institutions at risk of hegemony by transnational crimes and global institutions? In particular, the crimes explored in this chapter cover the
transnational crimes of terrorism and human rights abuse. The question of terrorism and insurgency is ironically a query of human rights and sovereign determination. The criminal responses
advanced by the interaction of society with the Internet does not in any way point toward the
creation of new crime types, but seems to reflect necessary societal structural growth processes
that follow any new phenomenon. However, it is vital to understand the adaptive criteria for
devising crime control strategies on this global virtual scale. To buttress this argument, the study
will seek answers through a philosophical dimension. Bassiouni (2011) notes that globalization as
a structural reformation of human socialization and interrelations among nations is in transition
into a future beyond prediction. At the same time, emerging societal-organizational forms that
are embedded within the contemporary global forces of capital and anti-capital accumulation
will have shaped those future relations. Accordingly, certain pertinent questions need answers
in order to understand the creation and control of global crimes, the dominance and appropriation
of power by special interest-led international institutions, and the increasing reductive influence of
sovereign boundaries.
The chapter commences by examining the consequences of the global political economy and
relationships in defining and determining the role of terrorism as a maligned agent of change,
as well as the implications of globalization for noxious state and non-state human rights abuse.
Subsequently, it explores the criminological axis of the international human rights agenda, in the
context of the virtualization of communities and the implications of the use of a private army
in warfare on state sovereignties and its possible third dimension as a sequestered agent of terrorism. The non-littoral borders of globalization make the attrition of weak sovereign entities
into smaller, non-functional insurgent groups a fait accompli of the Internet new world. In the
conclusion, suggestions are provided on the need for present-day criminological thought and
processes to be mindful of the evolving changes wrought by globalization in the re-creation of
criminal harms and institutional control at the intersection of sovereign boundaries.
Terrorism and virtualization
Just as advances in technology have meshed national destinies within one globalized entity so that
activities at one end of the world elicit immediate responses on the other, it has also conditioned
psychologies, moral panics and global paranoia about crime and reality (See Tonry, 2009). As we
create the global person, it is essential to also follow his perception of this new reality for international and state social control purposes, by understanding how the forces that direct his new
world condition each other. Indeed, social control practices need to originate reflections from the
international perspective, especially for a nation like the United States whose moral grandstanding and statecraft elicit direct political, economic and violent responses across the world, greatly
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impacting subsisting regime authorities, citizen perception, agenda and participation in government crime policies and control.
From a global lens, policies that consider only domestic situations are unmindful of the political power of US technologies, advanced via interactive platforms of the Internet like Facebook
and Twitter, and the reach of US democratic moral arbiter that advances equality, social justice,
and the possibilities of extending the proverbial good life to everyone, irrespective of nation, race,
class or gender. The reality is that people around the world are responding to the products of
the US democratic culture beyond and within sight of their sovereign governments. Freedom of
thought, assembly and the pursuit of happiness are indeed concepts of great genius. Nonetheless,
greater attention is allotted to US military might when issues of international power negotiations
are considered than its sociopolitical statecraft. Like crime, military might is profuse around the
world, among new powers emerging with strong economies and technology to place challenging concerns.
Globalization is controlled by the same natural order of change that is necessary for the
growth, development, ascendancy and dominance of powers. This changing order necessarily
evolves with attached criminal behavioral patterns. The impact of a nation’s military might is
strengthened by the power of its political ideology and information technology. It is this ideology
and technology that appears more like the new power, and should be watched more closely as
it creates a new world across cultures steeped in norms and values thousands of years older than
the United States.
Terrorism is one transnational crime that has earned emphasis, appeal and reach through the
use of the virtual tools of the Internet. It is instructive at this early start that terrorist groups have
proven capacity to absorb powers and followership to negate state authorities through overwhelming insurgencies and the use of virtual recruitment tools. But terrorism raises a variety
of questions in the advancement of the new global agenda. The global agenda here mentioned
is the shrinking portfolio of sovereign governance and thought into one virtual global psyche
within the cyberspace. Combs (2003) provides an illustrative definition of terrorism as “a synthesis of war and theater.” With this definition comes the belief that terrorism has another set
of stage actors as a political appendage employed to label groups and governments not favorable
to the global agenda.
In addition, terrorism arouses traditional contentions about crime from the legal, political
and military perspectives (Griest and Malay, 2003; Vetter and Perlstein, 1991). Ironically, while
governments struggle to contain the criminal offshoots of globalization (Andreas, 2011), they
sponsor terrorism outside their frontiers, and domestically to subdue their own citizens (Combs,
2003). Terrorism is used by nationalist and internationalist movements and as instruments of
state policy directed against individual groups, communities, and democratic as well as autocratic regimes. It is important to emphasize this point to understand the erratic nature of terrorist labeling and unraveling among the world’s major powers, and why understanding terrorism’s
critical agenda in the borderless world of cyberspace is relevant for sorting out the future of the
nascent post-sovereign global relation and the implications for human rights.
Unraveling the relationship between nations and terrorism necessitates a review of the role
of globalization in extending the reach, operational tactics and technology of terrorism. As
cited in Andreas (2011, p. 403), the United Nations Office of Drugs and Crime states that
“Organized crime has globalized and turned into one of the world's foremost economic [and]
armed powers and Transnational crime has become a threat to peace and development, even for
the sovereignty of nations.” This threat is reflected in the ease with which transnational crime
is re-created to recruit converts across the virtual world. In the book Understanding Terrorism:
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Challenges, Perspectives, and Issues, Martins (2009) examined the impact of globalization upon the
growth of terrorism. Globalization armed terrorist groups for asymmetrical warfare by providing
the impetus and technology for unpredictability. Because the primary goal of globalization was
to improve profits, the negative consequences of its operations were probably never articulated.
In the words of the present US Secretary of State while serving as Senator John Kerry, “We are
compelled by the globalization of crime to globalize law and law enforcement” (Andreas 2011,
p. 403). This statement by Senator Kerry is a marker in the evolution of the globalization of social
control. Globalization of law enforcement comes with the challenges of jurisdictional coordination and time frames, and uniformity of social control approaches, investigations, prosecution
and perceptions of justice (Dervan, 2011). Globalization opened the world for terrorists to access
resources and create sympathizers. In this way stateless terrorist groups emerged with a global
agenda and an ideology to dominate the world, like the current rampaging ISIS (Islamic State in
Iraq and Syria). The use of cyberspace by terrorists reveals a conflict between professed intentions
of championing the cause of the oppressed, and advancing self-urges of grandeur, political clout,
religious fervency and criminal covetousness.
Solutions and applications in international political relationships are often couched in context
and relativity. For instance, despite the overwhelming global war on terrorism, state sponsored
terrorism is still generally subsumed. Martins (2009) identified the local and international ramifications of this “terror from above.” In the international scene, state terror evident in the recent
incursions of Russia into Ukraine is a foreign policy tool for garnering political, economic and
hegemonic speed. The governments involved in this crude practice, clouded by these advantages,
justify their antics with ideological posturing. Terror from above like other brands of terrorism
aims to better the lot of a certain groups by exterminating another as seen in the Jewish genocide
in Hitler’s Germany and the ethnic genocide in Rwanda. Such domestic repressive activities of
the state commonly localized are globally idealized in the cyber world. Within the context of
the cyberspace, could globalization of law enforcement assume a form of terror from above for
nations with weak state institutions? The cyberspace advances extreme capacities to create the
environment for genocide, cultural and ideological domination.
The coercive powers of the state camouflage its terror practices. The practice of global control
has grown into the emergence of full portfolio private armies. Whether from above or below,
terrorism at most is a crude form of political, economic and ideological negotiation. That its
idealization now persists through the borderless reach of the cyberspace among political actors is
a pointer to a missing link in the negotiation of human coexistence.
Sticking with Combs (2003), the dramatization of violence before an audience within
the changing dimension of global governance and the virtual new world of the cyberspace,
today’s terrorist could easily assume tomorrow’s hero. This relates to the troubling assumption
by “power-dominant values” that their specific interests are everyone else’s. The power of the
Internet to share these values also hemorrhages the power of individual nations to control
expanding criminal values. While globalized sovereign boundaries dissolve, powerful interests
struggle for inclusions and exclusions within the multi-diametric political, economic, judicial
and security cyberspace unfolding. What power-dominant value will finally emerge? How
will the changing forces of economic dominion from new and emerging powers like China
seek to alter some aspects of these values by having their perspectives grafted in? Some of these
contending forces apply unconsciously, such that when we think we are seeing one thing, we
are in fact witnessing another. For instance, how do the different cultures within international
political security negotiations perceive each other’s increasingly visible ambitions, insecurities
and attitudes?
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Globalized crime and human rights
State crime traverses nations with clear and legally binding notions of human rights and underdeveloped and dictatorial regimes in parts of the world where such notions are clearly unaffirmed.
State human rights abuse includes those abuses done within the state, and those done without,
that could be considered extraterritorial where they are advanced beyond the boundaries of
sovereign domains. Globalization has had a destabilizing impact upon cultural autonomy (Roach,
2005). At the same time, Schwarzmantel (2005) has underlined the compatibility of cultural
autonomy to the cosmopolitan melting point of norms and values where each culture may
maintain its uniqueness within the normative dictates of a plurality of cultural forms. Such future
transformations include the evolving makeover of typical criminal behavior and control to global
forms; a close metaphor of “globalization of behavior.”
In the article ‘Criminalizing war: Criminology as ceasefire’, Ruggiero (2005) examined aspects
of crime during the prosecution of war to identify pacifist elements within the field of criminology. It is important to ask if criminology as a discipline inadvertently or reluctantly allows
the criminal elite behavior of state officials to continue unchecked. Ruggero’s in-depth analysis
criticized mainstream criminology for the avoidance of the issue of war as a crime type. Ruggiero
favors the unlikely prospect of the criminalization of war. Risk management is a concept utilized
for political and policy decisions. This is a question of the application of cultural variations to
determine measures taken in response to and management of risk.
Criminology would benefit from the acknowledgment of the uncertainty and limitations
involved in the conceptualization of risks for different cultures in order to advance alternative
solutions. However, with the globalization of law enforcement, who monitors powerful nations
when they advance state aggression against the less powerful, either through the use of state
military infrastructure or the use of private entrepreneurs in the guise of private military contractors (PMCs), including the utilization of a global agenda of sociopolitical re-engineering via
the cyberspace?
Incidentally, there are a few platforms from which to examine how nations with weak state
institutions can have their opinions and notions of crime control given equal consideration in
the globalization of crime control policies. It is irrelevant to restate that very significant levels of
transnational crimes are increasingly being transmitted from these weaker nations, as the virtualization of communities has insignificant spatial relevance.
Although authoritarian infringement of human rights is noxious, the tenets of sovereignty
make it challenging to bring the nations under legal conformance to its ideals. State crime exacerbates with economic scarcity, while the violation of human rights is commonly associated with
poor statecraft. The structure of democratic institutions limits the use of violence of coercion and
repression. The dynamics of state coercion and repression is as much a natural act as it is a social
and political fact. For instance, Gaston (2008) questioned the maladaptive use of private military
contractors as agents of war. Such uses should be articulated under relevant international laws
and procedures for addressing human rights abuses. Private military contractors have no abiding
limits to human rights abuses due to legal lapses (Gaston, 2008; Welch, 2009). The globalization
of national armies is evident in the national diversity of about 113,000 US Private Security Contractors (PMSC) deployed during the Iraq War (Cancian, 2008; Stiglitz, 2002; Wouters, 2010).
The mercenary soldiering industry diminishes the security of state boundaries and national allegiances (Staden, 2008; Kinsey, 2008). It is essentially a global army. The PMSC, just like the global
cyberspace, are highways of power with relevant ethical and legal dimensions. Both effectively
cross sovereign and cultural centers of states, nations, powers and dominions, tying up one global
common of sovereign security as a commodity.
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The implications for underwriting possibilities of unencumbered human rights infringements
granted by pseudo-sovereign powers to these institutions exist. The theoretical perspective articulated here is that the contemporary actions of these institutions and systems effectively build on
the foundation advanced by Barranca (2009) on the unbecoming conduct and threats to national
sovereignties of globalization. There is the need to create a process that allows the sovereign state
power of crime control, even when a transnational crime type is considered, against the imposition of global institutional control.
Contemporary criminology on global crime control
Labeling theorists view labels of criminality imposed by the state as concepts that can change
from state to state depending on societies’ existing value systems. Therefore, crime defined by
state laws runs through a polar continuum that is value related. The Durkheimian exposition of
societal anomie identified that crime is normative even in a society of saints (Calhoun, 2002).
State laws are also value ridden depending on the dominant interests upon whose authorities
those laws are made. The perfect law may not have been created and perhaps will never be.
These checks on the application of sovereign laws around the world are imperative to control the
human predilection for subjectivity. Jeremy Bentham’s foundational expository in criminology
accurately classified humans as self-interested beings. However, certain forms of crime receive
much levity by criminological thought and a very small measure of monitoring and control.
Orthodox criminology holds the greatest blame for these lapses; though other parts of the discipline in totality cannot be excused either.
Historically, the self-interest of active nation-states and organized societies has been used to
perpetrate heinous criminal acts against individuals, groups and less powerful states. These acts of
state crime aroused the academic and humanist passions of young intellectuals of Cesare Becarria
and Jeremy Bentham’s day to elucidate the theories of due process and human rights (Draper,
2002). Over the past 200 years, these preformed natural rights have flourished in democratic
cultures. With the reluctance of criminology to assume its role to identify, study and disseminate
knowledge of criminal behavior of all kinds, state crimes just like corporate crimes are valued as
lesser crimes, or no crimes at all. Savelsberg et al. (2002) suggest that this is a natural tendency for
class protectionism, in which case mainstream criminology (as opposed to critical criminology,
which has developed over the past quarter of a century a rich literature on state criminality as
reflected in Part VII of this handbook) turns a blind eye to a major form of elite deviance, or out
of self-interest, being that the state is the major consumer and sponsor of criminological literature. Hence, the impact of the state upon the hegemony of positivist criminology and its research
occurs through academic funding and the development/reorganization of academic programs
that, for example, focus on retail and stateless terrorism while ignoring wholesale or state terrorism (Chomsky, 1988). In addition to studying the former types of terrorism, critical criminology
also studies the unfunded latter forms of state terrorism (Barak, 1991).
An examination of state crimes at the turn of the century reveals that the impact of criminological thought has had no measurable effect, for example, on state-supported terrorism activities
(e.g., US torture at Abu Graib and Guantanomo Bay) deferring to International Human Rights
Law. Kauzlarich et al. (2001) observed that state crime has been studied for the past three decades,
but its pace has not matched some of the other fields of criminological inquiry. On the other
hand, one may argue that the inquiry of state criminology has been developing at an equal or
faster pace than the inquiry of white-collar criminology, especially given the fact that the latter has been around for more than 75 years. Comparatively speaking, the former literature has
been experiencing a proliferation in its productivity (see the reference lists from the chapters in
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Part VII of this handbook) when placed side by side with the dearth of published white-collar
crime research (McGurrin et al., 2013). Admittedly, to date neither field of inquiry has had any
effect on state policy or on the sanctions and/or criminal enforcement of the violations of powerful state and white-collar law-breakers.
Is criminology relevant to issues of human rights? How has the discipline fared? What are its
goals and future projections? The agenda of global values and the rise of non-spatial virtual communities tasks criminology to ask critical questions. What makes state crimes uncensored? And
does a state by its sovereignty embody the right to commit human rights crimes with impunity?
Being self-interested in nature, it is possible that interests would clash regularly between sovereign
entities and groups where one group puts their own well-being above others. In such cases fights
and wars would be inevitable. In the present-day global community, interests are more widely and
quickly distributed through the reach of the cyberspace beyond the control of individual states,
as new communities of interests, behaviors and actions from across physical sovereign boundaries. Therefore, states as determinants and promoters of human rights are in question and under
threat. This brief thought process established the global concept of human rights. What role is
expected of criminology in these situations?
Barak (1990) argued that the crimes of the state are frequently ignored by criminology. And
to absolve criminology of aiding and abetting likely criminal state behavior, he advocated that
criminology could critically approach issues of state crime through “investigation of state interventions, overlapping activities of criminal versus non-criminal organizations, and the distinction
between individual and state actors” in order to understand the impact upon the human rights of
state-sponsored intrusive activities such as surveillance and wiretapping. Barak asserts that contemporary criminological literature is state-centric, almost always following state definitions of
crime and criminality. He observed that the main problem is the detachment of criminological
analysis from the nature of social and politico-economic stratifications, institutional arrangements
and inequalities. Also of concern is the diversion of scholarship to analytical perspectives that
are primarily based on ideological premises and idiosyncrasies of actors in the political industry.
In the spirit of understanding how the study of crime and the reaction to crime can proceed
without the understanding of social injustice and a state’s law and order policies, criminology
requires a refocusing, a recall of the sociological and psychological rendering of its early beginnings; an integration of the social relations of the political and economic arrangements with an
understanding of the meaning of life and humanness to properly advance into a future where its
focus will go back to the concepts of right and justice for the individual person (Barak, 1990).
Here, perhaps, criminology must quickly deconstruct old attitudes of the status quo and seek
to be relevant to a global future that is indiscreet of national boundaries as well as of individual
and group social status. The future platform for criminological thought on crime, sovereignty
and human rights infringement must necessarily involve the cyberspace as a nation’s transit
between monitoring and controlling their individual localities to placing claims on non-spatial
virtual localities that are neither theirs nor anybody else’s. Thus, criminology must find new
philosophical pathways to re-create social control sovereignty that mediates the concerns of
emerging nations whose sovereignties are increasingly under threat from the new polemics of
institutions and global criminal behavior and law enforcement (Andreas, 2011) by redirecting its
thoughts around the individual, the local and the global.
In the contemporary neoliberalist inventions of the privatization of governance, criminology
as the theoretical arm of the discourses of crime is increasingly being overwhelmed because of
the slow response to align theory to immediate practice. Maguire and Duffee (2007) have also
examined this criminological dilemma and reluctance to adopt critical positions in their articulation of the polemics of criminology and criminal justice. As criminology loses more of its
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theoretical purity, it is difficult to anticipate that it will continue to advance its paths away from
critical analysis of state crimes and its implications for global human rights.
The main problem for criminology aligns with the long-standing academic dialogue between
the mainstream and critical criminology. This discourse is even more interesting in the case
of terrorism. Paradoxically, sociological and psychological explanations take precedence in the
examination of terrorism compared to criminology (Gibbs, 2010). Indeed, because these two
related disciplines strictly articulate their conceptual directions within the human social world,
and cognitive behavior respectively, it has aided their quick understudy of the terror phenomenon; compared to criminology which seems undecided whether to examine terrorism as a
crime or the manifestation of institutional deprivation of the underprivileged. Ruggiero (2005)
identified what he terms the “sociology of misery” among criminologists who examine issues
of political violence as a conventional crime. Deviance is viewed as a progressive battle between
society and the socioeconomically deficient individual or group. Even so, crime and political
violence for some may be based on considerations beyond lack, deficiency or even abundance.
Uncritical criminological studies and essays often appear to be the work of Salvationists structured to fight for social justice by condemning institutional actors and being sympathetic to the
apparent weaker actors irrespective of the situational elements and typology of the engagement.
In this sense, Ruggiero explains that some forms of violent protest, though not immoral, have
deviant implications. It is important for criminology to explain why crimes committed by political agitators of the Right (e.g., neo-Nazis, the Klan) receive less strident examination compared
to eco-terrorists of the Left.
Further, criminology is limited by the lack of uniformity in the definition of violent social
and political habits like terrorism (Forest et al., 2011). This is not to say that all assumptions in
the field should have similar origins, definitions or goals. In reality the suggestion of disciplinary
uniqueness demands a sort of conformity and direction in relation to the terms that act as its
vehicle of cultural transmission. If, beyond its social and political masquerade, terrorism is essentially a violation of both criminal and international law, then expectation is for criminological
inquiry to provide acceptable theories with which practitioners and researchers can confront the
problem of reducing the need for asymmetrical criminal harm committed for and against the
state. In one sense, such a suggestion is ongoing, in part, such as utilizing opportunity or social
leaning theories as a means of explaining non-state, but not state, terrorist activities (Forest et al.,
2011). Perhaps criminology has been shy of navigating an area replete with potholes because, as
noted by Ruggiero (2005), the offender (the political violent actor) righteously feels holier than
the victim – whether, in the case of the US state, it is torturing an “enemy combatant” or assassinating him by a drone-fired missile; or, in the case of ISIS, it is beheading another news journalist.
To examine the frameworks for criminological answers to the global terror question of the
twenty-first century, criminologists should follow the lead of left realist criminology. While much
of the left realist literature has focused on state-initiated acts of terror, it does so to be inclusive
of all forms of terrorism and to counter the overwhelming emphasis of the Right, of mainstream
criminology and of the state to focus only on retail, stateless terrorists. In other words, to achieve
an integrated analysis and understanding of terrorism, criminology must focus on both wholesale
and retail terrorism, not on one or the other. Moreover, similar to street crime, global transnational
crimes like terrorism must be assessed alongside the socioeconomic and formal state apparatus
of social control that may be used to restrain terrorists working on behalf of or against the state.
Left realism generally articulates the functions of society in the creation of the offense and
offender, and treatment of the victim. It is implied that to prove the fact of crime in the act of
terrorism, crime demands a definition beyond individual and group theoretical dilutions. However, critical criminology examines the forces that act and react to the forces of social control of
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offending, the role of the informal social forces of society in the creation of an offense, and victimization. Sadly, it does not provide much credence to the existence, functions and development
of moral predication. In fact, while agreeing that criminology needs to pay additional attention to
the development of the explanatory models for terrorism, Gibbs (2010) noted that this quest must
begin by examining its underlying causes. Globalization has transformed and enlarged the opportunities of crime on an international scale, enabling these criminal systems to exploit the political
and socioeconomic and ideological differences across the world and key gaps in law formation
and enforcement practices in nations with weak institutions of governance (Hall, 2012). At the
same time, because of the inherent contradictions of the accumulation of global capital (Harvey,
2014), the transnational agenda of crime control must be conscious of the dilemmas involved in
disseminating a uniform neoliberal agenda across a diversity and plurality of world cultures that
experience these policies in terms of their well-being very differently.
Conclusion
This chapter has examined the evolving values of globalization in relation to transnational crimes
of terrorism and human rights abuses at the meeting point of sovereign boundaries. The chapter points to the critical role of the cyberspace in predicting the future of crime control across
nations. Globalization in relation to the cyberspace is creating new societal values in virtual communities with diminishing allegiance to discrete spatial sovereign boundaries. In this way crime
and behavior receive globalized identities, sympathizers and controls. Incidentally, profits and
power remain a major factor in the changing dimension of global policy and relationships from
broken sovereign walls to the rise of private armies. Gains and power are also the creative force
of interest groups and virtual communities. Perhaps there are really no new crimes; old ones are
merely re-created as human sensibility evolves and adapts to new thinking (Garland, 1997). The
global path of the development of transnational crimes such as terrorism or human rights abuses
necessarily follows the new borderless world of the Internet.
While economic power will continue to direct tomorrow’s global values in the cyberspace,
the engulfing powers of the democratic culture and novel forms of globalized criminal behaviors
will likely come with them. Depending on whether or not nation-states have gained or suffered from the dynamics of neoliberalism, privatization and austerity will shape whether or not
they will support or resist the forces of capitalist state social control. Concomitantly, bourgeois
and democratic governance has facilitated the sustaining momentum of capital expansion. This
governance has also acted to globalize the world as it breaks down sovereign communities into
communities of interest in virtual locations. Any attempt to short-change this process due to
ideological puritanism would find obvious difficulty in retaining the support of the people whom
the products of economic success and the pursuit of happiness have so acculturated to now seek
freedom by all means. With the ascendancy of transnational crimes, criminology has as a duty not
to retain the semblance of the theoretical puritan but to provide a platform for weaker nations to
negotiate their own crime control agenda beyond their broken sovereign walls. The philosophical
pathways that underpin global crime and the heuristic mechanisms of its transnational control
are demanding of serious criminological inquiry.
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Part III
Corporate crimes
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10
Corporate crimes and the
problems of enforcement
Ronald Burns
Introduction
Corporations primarily exist to generate profit. As such, they consistently seek to gain competitive advantages directed toward maximizing profits. Unfortunately, some of their actions fall
outside of the law, violate human rights, and/or harm society. Combined, their crimes are more
costly than street crime. The primary intentions of the corporate actors are not necessarily to
harm or injure anyone or anything; however, pressures to perform result in violations and harms
that traditionally have gone largely unnoticed by the general public and law enforcement. Competition, pressures from various sources (e.g., shareholders, supervisors), globalization, limited
law enforcement responses, and related factors contribute to the occurrence and perpetuation of
corporate crime.
Society is changing at a constant and rapid pace. Technological developments and advancements, and international travel, commerce, and communication have changed the way we live and
how crime is committed. In light of these changes, there is some concern that law enforcement/
regulatory agencies are not prepared for what is occurring and what is ahead with regard to
corporate crime. Accordingly, this chapter addresses several important areas of corporate crime,
including the history of corporate crime, theoretical approaches used to explain corporate crime,
and research and methodological issues pertaining to corporate crime, including discussion of
current corporate crime enforcement efforts in the United States, the limitations of these efforts,
and reasons for these limitations. Particular attention is devoted to the groups primarily charged
with exposing and enforcing corporate crime, as well as legislative efforts and prosecutorial issues
pertaining to corporate crime. The chapter concludes with a look at what may be done to better address corporate crime, and a brief account of international corporate crime enforcement
efforts.
Corporate crime is a subcategory of white-collar crime that generally “involves offences committed by companies or their agents against members of the public, the environment, creditors,
investors or corporate competitors” (Grabosky and Braithwaite, 1986, p. 2). Among the different
types of corporate crime are corporate violence, corporate theft, corporate financial manipulation,
and corporate political corruption (Friedrichs, 2010). Ultimately, corporate crime is a complex
term that incorporates many different actions and behaviors committed by various groups.
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Enforcement efforts related to corporate crime extend beyond law enforcement and regulatory officials simply identifying corporate misbehavior and making arrests. In particular, enforcing corporate crime involves investigations to discover violations, investigations to construct
cases against violators, efforts to secure voluntary compliance, and initiating legal action to stop
the violation or punish the violator (Frank and Lynch, 1992). In summarizing the need for the
enforcement of corporate crime, Michalowski and Kramer (2006, p. 175) note, “Insofar as they
control nearly all production and distribution, corporations must be held responsible for maximizing social well-being, not just for generating private profit.”
History
Edwin H. Sutherland is credited with introducing the term “white-collar crime,” which includes
corporate crimes. Other commenters prior to Sutherland’s influential work referenced crimes
of the powerful, although not as pronounced and concise as Sutherland, and several scholars
have clarified his definition to more accurately address white-collar crime. Among those who
earlier referenced what is today considered white-collar crime were Cesare Beccaria, Karl Marx,
Friedrich Engels, and E.A. Ross (Friedrichs, 2010).
Sutherland’s work helped set the stage for empirical evaluations of corporate crime, which
contributed to clarifying the term white-collar crime. Among the early researchers who examined corporate crime and criminals were Donald Cressey (1953), who interviewed imprisoned
embezzlers, and Marshall Clinard (1952) and Frank Hartung (1950) who studied black market
offenses in World War II and violators of the wartime regulations in the meat industry, respectively. The study of white-collar and corporate crime waned during the 1960s, yet received
notable attention in the 1970s and early 1980s.
Despite recognition of the term white-collar crime in the twentieth century, white-collar
crime, including what would today be considered corporate crime, existed throughout much
of history. For instance, Green (1990) cites examples of laws throughout history, including a
fourteenth-century BC law prohibiting judicial bribe taking, and examples of white-collar crime
in ancient Greece and ancient Persia. Geis (1988) cites the example of Henry III (1216–1272)
passing laws to prohibit the practice of purchasing large amounts of food and then controlling the
prices. Green (1990) also noted that by 1812, England had passed complex regulations regarding
labor practices. To be sure, the offending groups were not incorporated in the same sense as modern corporations, although their actions could be deemed corporate crime, and there are many
other examples throughout history which provide evidence of corporate crime, and enforcement
efforts directed toward it.
Corporate deviance existed long before corporate crime, given that the laws regulating corporate behavior emerged in a piecemeal manner over time. Throughout history, corporations
were permitted to engage in a harmful, immoral, and deviant manner as there was little regulation restricting their behavior. The regulation of corporate behavior largely emerged in relation
to corporate scandals and public concern, although the proliferation of corporations themselves,
which was spurred by the Industrial Revolution and advancements in transportation that facilitated the distribution of goods, also contributed to the need for greater regulation of corporate
behavior.
Public concern for the enforcement of corporate crime fluctuates largely in response to the
exposure of notably problematic corporate crimes. For instance, several high-profile cases around
the turn of the twenty-first century (e.g., those involving Enron, WorldCom, and Adelphia) generated much concern for corporate misconduct. Politicians responded through legislative efforts,
and authorities cracked down on corporations, holding them more accountable and requiring
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them to make their actions and records more accessible to the authorities. Eventually, the public
concern that emerged surrounding these events subsided, as the public and politicians directed
their attention to other social problems, such as the terrorist attacks and related concerns for
homeland security. Similar situations occurred throughout history, for instance, as the Food and
Drug Administration (established in 1906), the Food Safety Inspection Service (1907), and the
Federal Trade Commission (1914) were created to address public concern regarding corporate
harms (Lynch et al., 2000).
The courts and legislators have been notably influential in efforts to enforce corporate crime.
For instance, early state laws were unable to regulate corporate practices that were typically
interstate in scope; thus the US Supreme Court gave the federal government the power to
regulate interstate commerce, and generally transferred the primary regulatory responsibility for
larger corporations from the states to the federal government (Friedrichs, 2010). Further, the US
Congress passed the Sherman Antitrust Act in 1890, which included both civil and criminal
provisions, and protected the public from monopolization and business practices that resulted in
a restraint of trade (Berger, 2011).
A laissez-faire economic philosophy with relatively little regulation characterizes the nineteenth century in the US. Earlier federal regulatory and law enforcement agencies focused on
banking and agriculture, and during the later 1800s and early 1900s several regulatory agencies
were created to help address corporate crime. For instance, the Interstate Commerce Commission was created in 1887 to regulate the railroad industry, and became the first federal regulatory
agency charged with specifically regulating potentially harmful activity (Friedrichs, 2010). Further, the Securities and Exchange Commission was created following the stock market crash of
1929 via the Securities Act of 1933 and the Securities Exchange Act of 1934. The agency was
designed to restore investor confidence and provide investors with more reliable information to
ensure honest dealing. Laws that would assist with the enforcement of corporate harms, however,
emerged only slowly (Lynch et al., 2000).
Similar to the development of today’s regulatory agencies, the history of the federal law
enforcement agencies is characterized by the emergence of various agencies in response to pressing social issues. Federal law enforcement agencies originated at different times, although the
federal agencies that currently play important roles in the enforcement of corporate crime did
not emerge until relatively later in the development of the US. For instance, the Federal Bureau of
Investigation emerged in 1908, and the Secret Service originated in 1865. The Bureau of Internal
Revenue, a precursor of the Internal Revenue Service, was set up by the Revenue Tax Act of 1862
which created the first personal federal income tax in the US. Federal law enforcement experienced much growth and maturation from the second half of the nineteenth century through the
early part of the twentieth century, as the nation grew and needs arose (Bumgarner et al., 2013).
David Friedrichs (2010) identified cycles of regulatory expansion that have occurred throughout the twentieth century in the US. He noted that the first cycle was the Progressive era
(1900–1914), when public concern for the abuses of large corporations generated “significant
government intervention in harmful corporate and occupational activities on behalf of the public
interest” (p. 284). The second period of regulatory initiatives emerged during the New Deal era
of the 1930s, which was inspired in part by the 1929 stock market crash and Great Depression
which occurred following the actions of unregulated abuses by major corporations and major
financiers. The third period of expanding federal regulation began in the Great Society era of the
1960s and 1970s, which included a growing awareness and public protest over harmful corporate
behavior. There were 28 regulatory agencies policing corporate crime by the 1960s; the number
jumped to 56 over the next two decades as public concern regarding corporate misbehavior
increased (Meier, 1985).
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Recognition of corporate harms against the environment, including high-profile incidents
such as the illegal dumping of hazardous waste (e.g., in Love Canal), generated much public
concern regarding corporations wrongfully and illegally harming the environment. Public concern largely contributed to the creation of the Environmental Protection Agency in 1970, a
federal regulatory agency that helps protect the environment. Concern for corporate crime is
further evidenced in the creation of the Consumer Product Safety Commission, Occupational
Safety and Health Administration, and Mining Enforcement and Safety Administration between
1970 and 1973 (Friedrichs, 2010). Despite these periods of pro-regulation, there have been several periods when deregulation was the primary focus. In fact, the latter part of the twentieth
century and the beginning of the twenty-first century are characterized by political efforts to
deregulate industry, as the emphasis on government regulation of the economy began to erode
in the late 1970s.
Congress initially gave the president power to make regulatory rules in 1790 and to other
officials in the executive branch in 1813 (Bryner, 1987). Presidents can hamper regulatory efforts
in various ways, for instance, through reducing the budgets and staffs of regulatory agencies,
and appointing individuals who favor deregulation to head regulatory agencies. As an example,
George W. Bush appointed J. Steven Griles, a lobbyist for the mining industry, to head the Bureau
of Mines (Berger, 2011). Relatively recently, support for the deregulation of financial markets was
largely evident beginning with the Reagan administration and continuing through George W.
Bush’s terms in office. President Obama has strongly emphasized regulation during his terms in
office, and perhaps ushered in a new period of regulation that may provide great promise for the
control of corporate crime. President Clinton, a democrat, leaned more toward pro-regulation
than the latter-day Republican presidents, as he addressed some notable antitrust cases and environmental regulation. However, he was generally supportive of deregulation of financial markets
(Berger, 2011).
Theoretical overview
Various theoretical perspectives help explain why corporate crime exists, and no single theory
explains its incidence. Explaining corporate crime is clouded by efforts to explain such behavior
on a macro level, or in relation to the larger society (e.g., the effects of capitalism), in relation to
the impact of organizations, or based on differences among individuals. The impacts of capitalism
in particular are noted in Marxist or neo-Marxist theory (Engels, 1895, 1958), which generally
suggests that capitalism creates classes in which the powerful control less powerful groups. The
emphasis on generating power and control, then, would presumably encourage corporate crime.
Radical and critical perspectives on crime became increasingly popular during the 1970s, and
were influenced by Marxist theory. These theories focused more on the criminalization process,
or how crime is conceived and responded to, rather than the particular causes of crime. The
historically lax enforcement of corporate crime, it is argued, is largely attributable to government
authorities and other powerful groups in society showing a limited interest in responding to the
crimes of the powerful.
Frank and Lynch (1992) highlighted the contrast in thought regarding assessments of the most
significant barriers to the regulatory effectiveness in addressing corporate crime. They noted that
pluralist theorists typically focus on organizational factors, including the lack of resources for
effective enforcement, limited expertise on behalf of the personnel, insufficient incentives to formally act, and an organizational culture that encourages regulators to seek voluntary compliance.
Conflict theorists, however, primarily focus on the power of the corporate sector to influence
regulatory power, which ultimately hampers enforcement efforts.
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The characteristics and influences of an organization or corporation have also been examined
and used to explain corporate crime. For instance, corporations may have cultures that encourage
misconduct through active or subtle persuasion, or tolerance or indifference toward misconduct.
Some organizations have been identified as crime coercive or crime facilitative. The former
encourage personnel to commit crime, whereas the latter provide conditions conducive to corporate crime (Needleman and Needleman, 1979). Various organizational factors, both internal
and external, appear to influence the occurrence of corporate crime. For instance, the pressure
to generate profits could be influential, as could economic crises in which the ability to generate
profits is hampered. Further, the nature of the work performed in some corporate sectors generates greater opportunities to engage in corporate crime, and to have different levels of potential
detection and likelihood of sanction.
Many theories used to explain corporate crime are micro level in nature; they focus on the
individual. For instance, the roots of criminological theory are grounded in the works of Jeremy
Bentham (1789, 1948) and Cesare Beccaria (1764), who generally believed that individuals make
rational decisions and should be held accountable for them. Beccaria noted that individuals seek
to maximize pleasure and minimize pain; a concept that certainly provides a starting point for the
study of why individuals engage in corporate crime. For example, introducing more severe penalties for corporate offending would, according to proponents of rational choice, deter individuals.
Toward this end, Gallo (1998) noted that law enforcement efforts have impacted corporate crime
given that the actors involved are generally informed, rational individuals who are deterred by
the threat of being caught.
Examinations of rational choice and corporate offending include Piquero et al.’s study
(2005a), which found that the desire for control influenced rational choice considerations.
Further, Paternoster and Simpson (1993) provided a theoretical perspective to corporate misconduct that includes both personal and organizational factors such as consideration of the
severity of sanction, perceived level of legitimacy and fairness, and characteristics of the criminal event.
Individual-level theories are often categorized according to biological, psychological, and
sociological theories. Sociological theories have generated the most interest among scholars
attempting to explain corporate crime. Biological or biosocial theories are becoming increasingly noted in the research literature; for instance, Beaver and Holtfreter (2009) found a statistically significant Gene X Environment interaction which increased the likelihood of fraudulent
behaviors in the sample they studied, although only among male participants with a high number
of delinquent peers. Aside from this and a handful of other studies, biological theories have been
used sparingly in efforts to explain corporate crime.
Psychological theories of corporate crime have focused on traits such as personality, mental
processes, the impacts of early childhood traumas, and related issues. Personality traits are among
the more commonly studied explanations of corporate crime (Friedrichs, 2010). Research in the
area mostly suggests that personality is not a particularly strong predictor of engagement in corporate crime, as white-collar offenders typically appear to be psychologically normal (Coleman,
1998). Some studies, however, suggest that white-collar crime offenders are more likely to demonstrate high levels of hedonism, narcissism, and conscientiousness (Blickle et al., 2006). Other
researchers noted that individuals with a desire for control were significantly more willing to
violate the law than their counterparts (Piquero et al., 2005).
Among the more commonly cited sociological theoretical explanations of corporate crime are
differential association, variations of Merton’s version of anomie, neutralization theory, control
theory, and several integrated theories. These and other sociological theories generally focus on
the influences of society on corporate crime.
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Edwin Sutherland’s influential introduction of the term “white-collar crime” coincided with
his belief that his theory of differential association could help explain why individuals from all
classes commit crime. His theory is largely predicated on the belief that behaviors (including
criminal behavior) are based on learning from associations and interactions with significant
others (Sutherland, 1940). Along these lines, corporate crime could be explained in part by the
negative influences of co-workers within a corporation.
Various adaptations of Robert Merton’s (Merton, 1968) work on anomie offer insight into the
occurrence of corporate crime. Merton’s theory generally explained crime through proposing
that some individuals without legitimate means to achieve their goals resort to illegitimate means
to attain them. With consideration of Merton’s work, Langton and Piquero (2007) examined
the ability of Agnew’s (Agnew, 1992) general strain theory using data from convicted whitecollar offenders and found that the theory was useful for predicting some types of white-collar
offenses; however, it may not be generalizable to those who commit corporate-type offenses.
Further, Schoepfer and Piquero (2006) found some support for institutional anomie theory in
relation to embezzlement.
Sykes and Matza (1957) earlier introduced neutralization theory in their assessment of how
juvenile delinquents justified their illegal behaviors and eased their guilt. The techniques of
neutralization include denial of victim, denial of injury, denial of responsibility, condemning the
condemners, and appealing to higher loyalties. This theory has also been used to explain corporate behavior; for instance, Piquero et al. (2005b) found that neutralization techniques played an
integral role in decisions to engage in corporate crime, especially for older persons and if profit
was involved. The use of rationalizations to justify wrongful behavior exists across a wide range
of white-collar offenders (Shover and Hochstetler, 2002), and neutralization theory does not
necessarily explain why corporate crime initially occurs. Instead, it provides an understanding of
how offenders rationalize or attempt to justify their actions.
Travis Hirschi (1969) earlier offered a control theory of juvenile delinquency which generally
proposes that individuals are controlled by forces and will engage in misbehavior without the
necessary social bonding. Empirical support for control theory is found in a study of automobile
corporation executives in which subjects who reported stronger attachments and commitments
were less likely to admit to white-collar offenses than their counterparts who had weaker bonds
(Lasley, 1988).
Some scholars attempted to integrate theories to better explain white-collar and corporate
crime. Among those who proposed integrated theories of white-collar crime is Braithwaite (1989),
who used structural Marxist theory and differential association theory. Researchers have also noted
the interconnectedness of white-collar crimes, for instance, with the introduction of state-corporate
crimes, which are “criminal acts that occur when one or more institutions of political governance
pursue a goal in direct cooperation with one or more institutions of economic production and
distribution” (Kramer et al., 2002, p. 263). Research in the area includes the examination of the role
of the G.W. Bush administration with regard to state-corporate crime in relation to global warming,
with consideration of the government’s ties with energy companies (Lynch et al., 2010).
Research and methodological issues
Various research and methodological issues surround the enforcement of corporate crime. Primary among them are the need to prevent, identify, and respond to corporate misbehavior.
These enforcement-oriented practices are strongly impacted by legislative efforts which guide
corporate behavior and enforcement actions, and prosecutorial practices which help determine
sanctions for and can have deterrent effects on corporate crime.
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Enforcing corporate crime
Enforcement efforts directed toward corporate crime have largely been reactive in nature, and
when they have proactively addressed corporate crime their actions have been directed toward
small businesses and subordinate managers (Benson and Cullen, 1998; Friedrichs, 2010). Reacting to a problem means that the problem exists, and similar, unexposed problems are occurring.
The reactive approach taken by those tasked with enforcing corporate crimes is reflective of the
history of law enforcement in general, although recent efforts by local police departments have
stressed a more proactive approach, which could perhaps serve as a blueprint for all authorities
responsible for enforcing corporate crime.
Corporate crime is notably underreported and there is a lack of systematic documentation of its incidence (e.g., Burns and Lynch, 2004). What is known about corporate crime
generally comes from agency records (e.g., arrest records, criminal complaints), victim input,
self-report studies, and direct observation of corporate crime. Each of these sources contains
many limitations, which subsequently hampers efforts to understand and respond to corporate
crime.
Corporate crime enforcement efforts often require great efforts, inter-agency cooperation,
and many resources. They can involve both public agencies and individuals in the general public.
Among the primary government agencies that largely help expose corporate crime are government regulatory agencies, law enforcement agencies, and politicians. Prominent among the nongovernment groups and individuals that largely assist in exposing corporate crime are the media,
informants, whistleblowers, and the general public.
A primary challenge in the enforcement of corporate crime has been the lack of transparency
regarding such behavior. Further, corporate crimes are particularly costly in many respects, for
instance, as they pertain to victim costs, prosecution, and regulation, and enforcement. In commenting on the challenges associated with prosecuting corporate crimes, Cullen and colleagues
noted that “the decision to prosecute is complex because prosecutors must balance their desire
to enforce the law against the reality of limited resources” (Cullen et al., 2006, p. 347). Periods following corporate scandals enable regulators to assume more of an enforcement-oriented
approach which contrasts with their more traditional approach of trying to balance their compliance and enforcement missions (Snider, 2009). In her examination of the enforcement of corporate crime following the Enron scandal, Brickey (2006, p. 419) noted that “The corporate fraud
prosecution cycle following Enron’s collapse ha(d) an unparalleled number of criminal trials of
senior corporate executives in just three years.”
Despite the widespread effects of corporate crime, limited effective enforcement and regulatory practices persist. Compared to conventional crime, corporate crimes are heavily underreported, which makes it appear that they don’t occur as often as they do and are not as problematic
as they truly are. The lack of reporting stems from many factors, including victims being unaware
of the harms they incur from corporate crime. Further, corporate crimes are more discreet, as the
effects of the illegal behavior are often removed in time from the actual commission of the crime.
Corporate crime offenders are typically not present at the scene of the crime.
In addition to these differences, the intent of corporate crime is not always so apparent
(e.g., Ivancevich et al., 2003), as corporate offenders are less likely than conventional criminals,
particularly violent offenders, to wish to inflict harm. Instead, corporate offenders generally
wish to generate (often additional) capital. Corporate crimes are often viewed as “mistakes”
or “the cost of doing business,” and the associated harms are often attributed to recklessness or
negligence. Ultimately, the inability to directly link corporate harms with corporate decisionmaking, and the challenges associated with determining a corporate actor’s intent, result in much
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misinterpretation of corporate crime, the underreporting of corporate crime, and the lack of
enforcement of such practices.
Government groups, individuals, and groups from the general public help expose corporate
crime. Among the groups in the general public are informants, whistleblowers, the media, consumer interest groups, consumers, and the general public itself. Whistleblowers and informants
are helpful in the sense that they are privy to inside information. Consumer interest groups
contribute by tracking faulty products that help identify corporate misconduct. The media have
been particularly influential in exposing corporate crime through investigative journalism. One
of the more influential pieces of investigative journalism was Upton Sinclair’s 1906 book The Jungle, in which he exposed harmful practices in the meatpacking industry, generated public uproar,
and contributed to the creation of the 1906 Pure Food and Drug Act and the Meat Inspection
Act. The general public and consumers expose corporate crime in several ways, perhaps most
significantly by demonstrating concern for corporate misbehavior, which in turn perpetuates
political response, and making efforts to recognize corporate crime when it occurs. Despite the
benefits and assistance of these and other groups, the exposure and enforcement of corporate
crime has largely remained the responsibility of law enforcement and regulatory agencies.
Law enforcement in the United States is decentralized, as law enforcement agencies exist at
the local, state, and federal levels. Most law enforcement personnel work at the local level, and
this group most often interacts with the public and closely monitors local activities. Such large
numbers and close proximity to the citizenry would suggest that local law enforcement plays
a significant role in exposing and enforcing corporate crime. However, local law enforcement
agencies are particularly limited in this regard, and have responded in a piecemeal manner to
corporate crimes, often in response to citizen complaints. Among the limitations are local police
officers being preoccupied with conventional crime, their lack of access to corporate practices,
jurisdictional issues, their lack of resources, a lack of specialization and training, and their general
lack of concern for corporate crimes which they generally view as the responsibility of other law
enforcement groups and regulatory agencies. State law enforcement agencies generally suffer the
same limitations, and are notably smaller in number and more distant from the public than are
local law enforcement agencies.
Federal law enforcement groups are largely responsible for exposing and enforcing the laws
regarding corporate crime. Federal agencies have nationwide jurisdiction and greater levels of
specialization to directly address most forms of corporate crime compared to other law enforcement groups. The complexity of many corporate crimes requires specialized training and education, specifically with regard to accounting, auditing, and business administration (Schlegel,
2000). There are dozens of federal law enforcement agencies, although the large majority do not
primarily focus on corporate crime, as their legal jurisdiction is much wider. Primary among the
other federal agencies that house personnel with interests in exposing and enforcing corporate
crime include regulatory agencies such as the Securities and Exchange Commission, the Food
and Drug Administration, the Consumer Product Safety Commission, and the Environmental
Protection Agency. For instance, the Securities and Exchange Commission seeks to protect investors and maintain the integrity of the securities market, and typically deals with cases involving
insider trading, accounting fraud, and offering false or misleading information regarding securities and the companies that offer them (Ivancevich et al., 2003).
Although regulatory investigators have the authority to enter and inspect corporations without warrants or probable cause and regularly collect information regarding corporate behavior as
they pertain to regulatory reporting requirements, investigating and prosecuting corporate crime
remains a difficult task (Frank and Lynch, 1992). Compounding the difficulties is the fact that
federal regulatory agencies are generally understaffed and lack the funding to adequately address
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corporate crime. These challenges have been particularly problematic during the presidential
administrations that supported deregulation (Berger, 2011).
Regulatory agencies regulate industry, and in doing so have to recognize the interests of both
society and the corporations within the industry which they regulate. Corporate crime enforcement efforts have at times been accused of infringing the free market, and at other times have
been accused of not doing enough to protect society. Regulatory enforcement of corporate
crime has generally adopted two distinct styles: persuasion and prosecution. Persuasion involves
encouraging corporations to conform, and relies on compliance, education, negotiation, and
cooperation. It is the softer of the two approaches. Prosecution involves a reliance on the imposition of the law to encourage and sanction. Historically, regulatory practices have leaned toward
persuasion, and prosecute when efforts directed toward persuasion fail. Another approach, selfregulation, or voluntary compliance, is supported by advocates of deregulation who believe that
companies can monitor their own behaviors. Proponents of deregulation argue that regulatory
enforcement actions generate additional problems and hamper economic progress. The particular styles adopted by the various regulatory agencies vary according to several factors, including
economic and legal challenges in implementing regulations, the detectability of corporate crimes,
and the political environment (e.g., Kagan, 1989).
Regulators and other law enforcement officials have often been reluctant to adopt a strict
enforcement approach, or the legalistic style of enforcement, due in part to the complexities
associated with many corporate crimes, and the extensive resources often required to effectively
formally adjudicate them. In turn, they often rely on their civil powers instead of invoking the
criminal law (Lynch et al., 2000), enabling corporate offenders to avoid the construction of the
negative images associated with “criminals” as opposed to “individuals who violated civil law.”
Corporate self-policing or self-regulation has been proposed to address the limitations associated with the enforcement of corporate crime. Self-regulation seems an effective approach
given the hidden nature of corporate crime, the lack of resources of corporate crime enforcement groups, the corporate self-interest in maintaining a positive reputation, and the fear of
stricter government intervention and regulation. It is also a more cost-effective approach from
the government’s perspective. However, it has been noted that self-regulation is unlikely to be
effective or extensive unless external pressures encourage corporations to seriously engage in
self-regulation (Braithwaite and Fisse, 1987). Further, Stretesky and Lynch (2009) examined the
US Environmental Protection Agency’s Self-Policing Policy which waives or reduces penalties
when companies voluntarily discover, disclose, and address environmental violations, and found
that facilities which used the policy had similar subsequent Toxic Release Inventory (TRI) emissions as sites that did not use the policy, and added that formal enforcement actions were the best
predictor of TRI reductions.
Private police agencies have grown in large numbers since World War II, and they also play
a role in exposing and enforcing corporate crime. These agencies, however, as they exist in the
corporate or business setting, have often concealed rather than expose and enforce corporate
misbehavior (Friedrichs, 2010), due in part to their interests in protecting the groups for whom
they are employed.
Legislation and prosecution
Several systems of law are used independently or simultaneously to address corporate crime.
Victims may file civil suits against the corporation that harmed them, or the government may
invoke the criminal law or use various administrative, regulatory controls. A benefit of private
civil suits is that the victim(s) is compensated for harms. Private civil suits occur rarely relative to
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the extent of corporate crime victimization, although they would seemingly serve as a deterrent
to corporate crime, since the civil damages awarded in civil suits are frequently many times larger
than the maximum fine that the government could impose (Frank and Lynch, 1992).
There is disagreement, however, regarding the effectiveness of private civil suits in deterring
corporate crime, as it is argued that the financial costs and potential negative publicity would
act as a deterrent, although there are examples over time in which corporate leaders have made
explicit decisions to expose themselves to private civil suits based on their belief that the costs of
settling the cases would be less than the profits generated (Frank and Lynch, 1992). The famous
Ford Pinto case in the early 1970s in which Ford calculated that it would be cheaper to settle
cases rather than recall and repair the harmful vehicles provides clear evidence (Dowie, 1977).
The laws they are required to enforce hamper those tasked with enforcing corporate crime.
Primary among the obstacles in enforcing corporate crime has been limited and ineffective
legislative actions, which are sometimes, and perhaps often, the result of corporations using their
social, political, ideological, and economic capital in shaping the law. Such power is also used to
counter regulatory enforcement strategies used against them (Snider, 2009).
Nevertheless, several legislative efforts have helped authorities enforce corporate crime, and
to some extent discouraged corporations from engaging in crime. Among the notable legislative
efforts are the Crime Control Act of 1990, which provides banking regulators with expanded
tools to address fraud and other crimes in the savings and loan industries; the Racketeering Influence and Corrupt Organizations Act (1970), which seeks to prohibit the use of an enterprise
and racketeering, and was originated in response to organized crime but has also contributed to
combatting corporate crime; the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989, which enhanced many penalties associated with crimes committed by financial institutions; the Foreign Corrupt Practices Act, which prohibits companies that report to the Securities
and Exchange Commission from collaborating with foreign parties to influence their decision to
obtain or retain business; and the Comprehensive Control Act, or the Federal Sentencing Guidelines that Congress passed in 1984 and was later amended in 1990. Among other contributions,
the guidelines provided consistency in the sentencing of corporate offenders. Certainly, other
legislative acts have contributed to the enforcement of corporate crime, including mail and wire
fraud statutes, and insider trading laws (Shichor et al., 2002).
One relatively recent legislative effort was the 2002 Sarbanes-Oxley Act, which emerged in
response to the collapse of Enron and other major corporate scandals. Among other goals, the
Act sought to address corporate crime through mandatory financial reporting and increased
penalties for corporate offenders. It also promotes accountability through protecting whistleblowers, emphasizes criminal liability, and demonstrates a more proactive and enforcementoriented approach that differs from the reactive approach assumed in the past. Further, the Act
has increased the allocation of resources devoted to the Security and Exchange Commission and
the Department of Justice to fight corporate crime. There are conflicting views regarding the
Act’s effectiveness, as it is suggested that it contributed to the increased adjudication of corporate
offenders with the goal of deterrence and retribution (Meeks, 2006), although it is also suggested
that judges have been somewhat reluctant to impose tougher sentences, and the potential deterrent effects of this aspect of the legislation have been hampered (Harvard Law Review Association, 2009).
The successful prosecution of corporate crimes is important for the effective enforcement of
corporate crime, although it has been challenging on a number of fronts. Primary among the
difficulties associated with prosecuting corporate crimes are the heavier burden of proof required
in criminal courts compared to civil courts, determining whether to prosecute the corporation
or individuals within the corporation, political pressures, a lack of resources, and the complexities
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associate with many corporate crimes. Further, the relatively lenient fines historically meted out
to corporate offenders have discouraged prosecutors from using the criminal courts (Frank and
Lynch, 1992). Research suggests that regulators generally believe the criminal laws have much
potential to address corporate crime; however, they are reluctant to use the criminal justice system
due to its perceived inefficiency and leniency (Snider, 2009).
Prosecution is often used after methods of persuasion and encouragement of compliance fail.
Prosecutors who wish to file criminal as opposed to civil charges face the burden of having to
demonstrate guilt beyond reasonable doubt. In civil courts, the level of proof required is a preponderance of evidence, which is easier to demonstrate. With regard to deciding to prosecute corporations or individuals, it was suggested that “the preferred statutory scheme should generally provide
for both individual and enterprise liability, with the appropriateness of each to be determined
case by case through the exercise of sound prosecutorial discretion” (Cullen et al., 2006, p. 356).
Historically, punishment has seldom been directed at individuals (Ermann and Lundman, 1996).
The goals of prosecuting corporate crimes differ from those of prosecuting street crime,
which have largely involved special deterrence and incapacitation. In contrast, the primary prosecutorial goals for corporate crime have more directly focused on general deterrence (Cullen
et al., 2006). There are some exceptions to the historical use of light sentences for corporate
offenders, although “these actions have yielded significant, but not lasting, financial and other
consequences for large organizations” (Ermann and Lundman, 1996, p. 41).
Conclusions
Despite the many historical challenges encountered with the enforcement of corporate crime,
there is much room for hope. Change, however, is necessary. Society is changing, which dictates
that social control efforts must adapt. Anticipating the future enables effective planning, and the
onus is on law enforcement officials, regulators, politicians, corporations, and society in general
in all countries to help confront corporate crime.
Several commenters have offered their thoughts on how to best address corporate crime in the
future. For instance, Berger (2011) noted that there needs to be a greater societal emphasis on ethics and professionalism; and regulatory, political, and media reform with the goal of making corporations more accountable and law-abiding. Others suggested that a multi-pronged approach is
needed to ensure trust in the free enterprise system, and to promote fair and balanced corporate
practices in the US. Such an approach, it is argued, should include corporate managers making
proactive efforts to discourage misbehavior, stricter accounting systems, stronger governance
systems, and more effective sentencing practices, such as more freely imposing prison sentences
upon corporate offenders (Ivancevich et al., 2003). Reactive techniques have been ineffective in
meeting the goals of deterrence and punishment (Meeks, 2006).
Technological changes must also be anticipated in efforts to enforce corporate crime. The
ease with which corporations interact with other corporations, political leaders, and consumers
in various countries is unprecedented, facilitating the spread of corporate crime. Technology
and its advancement create new avenues for crime. Technological advancements also generate
new avenues for enforcement. Investigations are facilitated, for instance, through more effective
analyses of more easily attainable data and technological devices that improve upon historical enforcement practices. For example, advancements in night vision and other detectionenhancing products assist regulators with regard to the illegal dumping of hazardous waste.
Future efforts directed toward the enforcement of corporate crime may be enhanced through
more freely using the criminal law to address corporate harms, and using the threat of adverse
publicity. Corporations rely heavily on their images and reputations (Burns, 1999), and thus
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drawing substantial negative attention to corporations engaged in illegal behavior could go far
toward discouraging such practices (e.g., Braithwaite and Geis, 1982; Gallo, 1998).
Unfortunately, there is no single means by which effective change can occur. Various proactive efforts in several areas of regulation, law enforcement, legislation, politics, and other areas are
needed. Each proposed approach to combat corporate crime must be considered with regard to
resources, context, societal change, the need to balance enforcement with regulation, operationalization, and avoiding over-regulation.
Progress toward more effective enforcement of corporate crime has occurred, for instance,
with the crackdown on corporate crime around the turn of the twenty-first century. The hope
is that the many challenges and obstacles experienced in the past may be overcome. Society is
changing at a rapid pace, which provides both optimism and pessimism regarding the enforcement of corporate crime. On an international level, the US is not alone with regard to its limited
response to corporate crime.
Enforcing corporate crime globally
The large majority of studies on corporate crime have focused on issues within the boundaries of
nation-states, which, in today’s society, “is misleading and potentially dangerous” (Wonders and
Danner, 2002, p. 166). Among other limitations, the lack of an international focus on corporate
crime neglects the globalism of many leading corporations, and the expected continuation of
globalism in general.
The many limitations of current efforts to address corporate crime globally include a lack of
cooperation among law enforcement and regulatory agencies in different countries, jurisdictional
issues, political pressures, differing bodies of laws, international relations, different levels of interest
in doing so, and varying degrees of resources. There is no global law enforcement or regulatory agency, although INTERPOL and the United Nations seem well positioned to oversee and
respond to harmful corporate behaviors of a global nature. These groups, however, suffer several
significant challenges in doing so, which is unfortunate, as commerce, travel, communication,
business, and crime are increasingly becoming international in nature.
Comparatively, many other countries face the same difficulties as the US. China, for example,
is the world’s most populous country and has become the world’s fastest growing major economy.
Like the US, China lacks large, systematic data sources on corporate crime and an unwillingness to fund major studies in the area. Accordingly, corporate crimes remain hidden from the
general public due to the country not wanting the image of being rife with upper-class crime,
and because government officials may very well be involved in the crimes personally and do not
wish to draw attention to them (Ghazi-Tehrani et al., 2013). The country, amidst its phenomenal
growth, lacks coordinated efforts and resources to control corporate crime, for instance, as they
pertain to the production and distribution of counterfeit goods. Strong political connections
with business leaders, jurisdictional problems, and untamed environmental harms largely challenge the country. Much like the US, China’s economic interests have often outweighed concerns
for corporate crime (Ghazi-Tehrani et al., 2013).
In discussing how China can best address corporate crime as its economy and population
continues to grow, Ghazi-Tehrani and colleagues (2013, p. 256) noted that the country would
benefit from “increased and better-coordinated enforcement than by adding more unenforced
laws.” They added that of equal importance, China should collaborate and coordinate with other
countries and third-party organizations to help ensure better regulation. Standing in the way
of progress in these areas, they noted, is the country’s need to balance enforcement efforts with
concern for the country’s continued growth.
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Corporate crime is and has been a notable social problem. Enforcement efforts in the area
have improved throughout history, although many challenges remain. The problems associated
with corporate crime and the relatively limited enforcement responses to it are not confined to
the US, as other countries, including China, face similar difficulties with regard to corporate
crime and its enforcement. In fact, efforts to “scare,” “force,” or “threaten” corporations into
operating within the boundaries of the law have been limited in their effectiveness, as they may
work under some conditions and with some organizations.
Understanding why individuals and organizations engage in corporate crime and recognizing
the limitations of efforts to control these crimes provide a foundation for further discussion of
what may be done to better address these crimes. It is hoped that we can build on the present
work and make progress in several areas, for instance, by encouraging corporations to view social
control efforts as something other than impediments to the “bottom line.” Further, we can work
toward promoting and establishing corporate cultures of compliance in which socially responsible behavior becomes the sine qua non. Ultimately, however, it is much easier to write about
changing corporate cultures than it is to actually change them.
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11
Corporate-financial
crime scandals
A comparative analysis of the collapses
of Insull and Enron
Brandon A. Sullivan
Introduction
This chapter examines two major historical corporate-financial crimes in the American energy
industry. Corporate-financial crime scandals have frequently occurred throughout history
(Markham, 2006), causing immeasurable harm to society while receiving inadequate attention
from academics, practitioners, and policy makers compared to traditional street crimes (Geis,
2007; Lynch et al., 2004; Simpson, 2002). Incentives in the securities market and corporate
cultures and structures encouraging organizational deviance create opportunities for corporatefinancial crimes, only some of which become widely known through highly publicized scandals.
Research into these crimes illuminates potential measures to prevent abuses undermining the
legitimacy of the financial and justice systems.
This chapter uses open source information from scholarly accounts and newspapers to present
a comparative historical case study of two corporate-financial crime scandals: Insull and Enron.
Insull involved the misuse of securities and complex corporate financing structures to carry
out a massive fraud with over US$750 million in losses. Insull developed an innovative strategy
for power distribution in the early 1900s, as a small Chicago utility company grew into one of
America’s largest utility conglomerates. Insull sold utility securities to many small investors who
believed these investments were sound, even though profits were heavily inflated and debt was
hidden through deceptive accounting. Enron used similar accounting strategies to mask fraud,
relying on mark-to-market (or fair value) accounting to speculatively inflate assets and remove
debt from balance sheets using shell corporations. Enron collapsed when the debt could no
longer be hidden, resulting in the largest corporate bankruptcy in American history at the time,
at over US$60 billion in losses. Enron was the first, and arguably most egregious, in a long list
of corporate-financial scandals from the 2000s. Both Insull and Enron are similarly large and
negatively impactful corporate-financial crimes in the energy industry separated by 70 years.
Both Enron and Insull exemplify what Black (2005) termed “control fraud,” where company
leaders use their businesses to defraud others while at the same time manipulating external and
internal controls to both carry out the crimes and prevent detection. Control frauds are highly
deceptive even to so-called experts and are touted as safe and profitable investments. Companies
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like Insull and Enron were at one time presented as models of positive business practices in corporate America, despite being largely insolvent for a number of years prior to their collapse. Similar
claims were made about other businesses that turned out to be control frauds deeply entrenched
in corporate-financial crime, including many Savings and Loans (S&Ls) in the 1980s and major
Wall Street firms in the late 2000s (Barak, 2012).
Control frauds, using accounting fraud as their primary weapon and shield, typically report
sensational profits, followed by catastrophic failure. These fictitious profits provide means for
sophisticated, fraudulent CEOs to use common corporate mechanisms such as stock bonuses
to convert firm assets to their personal benefits.
(Black, 2005, p. xiv)
These frauds are carried out by exploiting criminogenic environments lacking effective regulation and enforcement, and further tilt the scales in their favor through political contributions and
lobbying for deregulation (Black, 2005).
Despite the persistence of major corporate-financial scandals, no serious attempt has been
made to address root causes of corporate abuse on a policy level. Similar scandals like WorldCom, Tyco, Adelphia, Global Crossings, HealthSouth, and Fannie Mae undermine public confidence and trust in business and government, culminating from the near-endemic failure of
existing regulatory structures. While calls for reform often result from major corporate-financial
crimes, enacted policies are either watered down over time through corporate lobbying efforts
for deregulation or failures to address fundamental underlying problems. Many opportunities for
corporate-financial crimes could be limited by simple policies designed as checks in corporate
structures and eliminate potential conflicts of interest (Benson and Simpson, 2009). Further
research will aid in identifying policy alternatives and crime prevention mechanisms to reduce
harms caused by corporate-financial crime. This chapter emphasizes the failure of policies to prevent corporate-financial crime and the need for policy makers to address root causes of problems
instead of mitigating their symptoms.
This chapter offers an in-depth examination of the scandals themselves and the policy lessons
to be drawn from them. First, case histories of Insull and Enron are described in detail. Second,
specific aspects of both cases are reviewed, including the societal, control, and organizational
contexts. Third, policy implications are discussed, focusing particularly on unaddressed problem
areas.
Insull
The first case is the collapse of the Insull utility holding companies in the early 1930s. The concentration of corporate power in Insull holding companies created a house of cards dependent on
continuous speculative investment. Insull took out enormous debts and failed to recognize signs
of instability brought on by worsening economic conditions. The Insull scandal was a major contributing factor to the 1930s Securities Acts and other New Deal regulations aimed at addressing
conflicts of interest and providing stability in banking, securities, and utilities industries.
In the early 1900s, only the wealthy could afford electricity. Power companies had individual
lines, central power stations were rare, and small generators powered most buildings instead of
central stations (Cudahy and Henderson, 2005). More than 30 power companies in Chicago
provided electricity for different buildings and streets from individual generators (McDonald,
1962). Streetcar companies would use their generators during morning and evening commutes
when transportation levels were greatest and street-lighting companies only used their generators
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at night. This began to change in 1892 when Thomas Edison’s former personal secretary, Samuel
Insull, left the newly created General Electric to become president of a small, Chicago-based
power company called Chicago Edison Company and secured power within the company by
purchasing a substantial amount of stock (McDonald, 1962; Munson, 2005). Insull had vast
knowledge of both the financial and technological aspects of the electricity industry, providing a
competitive advantage against other Chicago utilities (Cudahy and Henderson, 2005).
Insull believed the existing power supply structure was an incredibly inefficient and wasteful
system because it kept prices too high for the average American to afford electricity (Munson,
2005). Chicago Edison constructed the Harrison Street Station, the largest centralized power
station in the world at the time to provide cheaper and more efficient electricity (Cudahy and
Henderson, 2005). Insull established an anti-competition philosophy within his companies and
sought to dominate the utilities industry. This attitude permeated the entire organizational culture of Chicago Edison, as salesmen were pushed to undercut prices of smaller companies. Insull
blocked competition by establishing power facilities restricting other companies from supplying
their customers. Insull also bribed politicians and streetcar companies to purchase power from
Chicago Edison, becoming the sole issuer of electricity for several government-run transportation systems (Cudahy and Henderson, 2005).
Insull’s efforts paid off, as the companies grew dramatically throughout the early 1900s.
Achievements included: customer growth, from 5000 in 1892 to 200,000 in 1913 (Munson, 2005);
increased electricity sales 12 per cent annually from 1900 to 1920 (Munson, 2005); increased
construction projects, from $500 million in 1902 to $2 billion in 1912 (Munson, 2005); decreased
consumer costs, from 20 cents per kilowatt-hour in 1897 to 5 cents in 1906, then 2.5 cents in
1909 (McDonald, 1962); expanded to 400 communities in 13 states (Cudahy and Henderson,
2005); developed over 30 state regulatory commissions with centralized, monopoly control over
electricity distribution (Munson, 2005); ownership of Insull securities by thousands of individual
investors, with sales increasing from 6000 in 1921 to over one million by 1930 (Cudahy and
Henderson, 2005) under the perception of Insull securities as a safe investment, as the 1929 stock
market crash did not immediately impact utility holding companies (Munson, 2005).
Insull’s increasingly complex utility company structure is characteristic of control fraud,
requiring a tremendous amount of constantly flowing capital to be sustained. Middle West Utilities was set up as a utility holding company to control the Insull expansion. Insull convinced
many investors of middle to lower socioeconomic status of the security of electricity investments
(Munson, 2005), highlighting the relative safety of investing in utilities with marking tactics
such as the phrase: “if the light shines, you know your money is safe” (Cudahy and Henderson,
2005, p. 52). Guaranteed dividends encouraged wide investment, providing funding for Insull to
acquire numerous other electric companies (Bonbright, 1972; Munson, 2005).
The seeds of Insull’s downfall were planted when a private investor named Cyrus Eaton bought
large amounts of Middle West securities. Fearful of losing control, Insull Utility Investments
(IUI) was created to protect against an outside takeover (Munson, 2005), creating a new layer of
holding companies on top of the pyramid of existing Insull-controlled companies (Cudahy and
Henderson, 2005). Corporation Securities of Chicago (Corp) was also created as another holding
company to purchase shares of stock in IUI. Each holding company owned stock in the other,
with Insull managing both companies. However, the actual number of power-generating utility
companies in the conglomerate was decreasing while utility holding companies were growing
rapidly. After the stock market crash, utility companies maintained strong financial grounding
due to the consistent demand for electric power, but holding companies themselves were not
as stable. Insull’s business practices did not change to reflect the plummeting financial market,
although dividends began to be issued in stock rather than cash to retain enough capital to
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continue expansion (Munson, 2005). Insull reassured investors and company employees that the
companies and investments were sound. He then took out $20 million in additional loans from
J.P. Morgan to purchase $56 million in IUI securities owned by Eaton, offering his companies as
collateral (Cudahy and Henderson, 2005; Munson, 2005).
When Insull could no longer pay interest on the loans, New York bankers appointed accounting firm Arthur Andersen to audit the holding companies. Up until that point, Insull was able
to manipulate auditors to obtain favorable reviews, but this leverage could not be exerted over
independent auditor Arthur Andersen. Andersen accountants re-examined Middle West’s bookkeeping and discovered the company was insolvent, having been profitless for years and funded
entirely by IUI and Corp investors (Cudahy and Henderson, 2005). IUI and Corp were declared
worthless stocks (NYT, 1934c). When the worthless value of the utility companies was publicized, investors rapidly attempted to sell their securities and Samuel Insull was forced to resign
from leadership positions in his conglomerate of utilities and holding companies. Insull investments dropped over US$150 million in value in one week in September 1931, with share prices
falling from US$570 to US$1.25. Middle- and lower class shareholders lost their entire investment at a combined total of over US$750 million (Wasik, 2006).
The newly created Securities and Exchange Commission (SEC) subsequently opened an
investigation into the holding companies, citing accounting irregularities, asset value inflation,
and securities misrepresentation (Munson, 2005). Samuel Insull left the United States for Europe
as criminal indictments were issued against him and other executives for embezzlement, fraud,
and larceny. He maintained innocence of these charges of engaging in control fraud, admitting
that mistakes were made in misjudging the financial condition of companies but investors were
not purposely defrauded (NYT, 1934b). In a subsequent criminal trial, Insull and his 16 codefendants were acquitted of all charges (NYT, 1934a). Both federal and state prosecutors again
unsuccessfully attempted to convict Insull on related charges in the months to follow but Insull
escaped criminal sanctions (Cudahy and Henderson, 2005).
New Deal legislation recognized that control frauds like Insull had swindled the American
people and rested on the assumption that “big business” could not be regulated effectively by the
states alone (Cudahy and Henderson, 2005). Reforms included federal regulation of securities
(Securities Act of 1933 and Securities Exchange Act of 1934) and utilities (Public Utility Holding Company Act of 1935 and Federal Power Act of 1935). This legislation contributed to the
long-term stability, consistency, and reliability in energy distribution as well regulated utilities
retaining monopolies over defined geographic locations. Although not without problems, this
model became the standard for generations until renewed criticisms of regulation in the 1970s,
eventually contributing to the development and downfall of Enron.
Enron
Enron was once well respected, having been named the most innovative company in America
six years in a row by Fortune, but this reputation turned to one of greed and fraud after Enron
collapsed amidst accusations of securities fraud and inside trading. Enron involved similar complicated financial structures as Insull, resorting to speculative risk-taking to inflate stock values
and cash in stock options to the personal benefit of the company’s executives. Fraud began when
executives became primarily concerned with increasing stock prices to attract investors, relying
heavily on control fraud and accounting manipulations instead of furthering legitimate business
ventures. Enron illustrates the dangers of both organizational deviance through deception and
manipulation of financial markets, and the increasing complexity and lack of transparency of
corporate finance. Along with the collapse of WorldCom, Enron was responsible for the passage
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of corporate governance reforms in the Sarbanes-Oxley Act of 2002, which aimed to increase
accountability for executives, accountants, and securities analysts.
Enron emerged in 1985 under the direction of Chairman and CEO Kenneth Lay, becoming
the first interconnected natural gas pipeline in the United States (Healy and Palepu, 2003). Lay
sought to expand Enron’s operations by changing the energy supply structure through deregulating natural gas markets and allowing greater flexibility in pricing and partnerships. Enron took
advantage of the newly deregulated energy market by trading financial contracts de-emphasizing
direct control of physical assets (Van Niel, 2009). Under the leadership of Chief Operating
Officer (COO) Jeffrey Skilling, Enron began to purchase other energy companies, pipelines,
broadband fiber optic cable lines, and electricity plants to control major sectors of the energy
distribution chain (Healy and Palepu, 2003; Van Niel, 2009). This strategy of increasing control
over distribution and trading energy allowed Enron to legally siphon off and store energy to sell
long-term contracts at higher rates (Skeel, 2005).
The complexity of Enron’s business dealings revolved around control fraud, consisting of a
maze of accounting strategies disguising the company’s true financial condition. Two techniques
critical to the fraud were mark-to-market accounting and “special purpose entities” (SPEs).
Mark-to-market allows transactions to be recorded based on projected future earnings instead
of actual, immediate earnings. Instead of listing actual prices of buying and selling natural gas,
Enron listed projected profits on various long-term contracts made with third parties, recording
profits even if the project actually lost money (Healy and Palepu, 2003). For example, Enron
lost over US$1 billion building a power plant in India whose generated energy was unaffordable
to the Indian citizens but still recorded US$20 million in earnings (McLean and Elkind, 2003).
With Enron’s losses being portrayed as profits, Enron Chief Financial Officer (CFO) Andrew
Fastow heavily utilized over 300 SPEs that functioned as shell corporations to remove debts from
Enron’s balance sheet (Healy and Palepu, 2003; Van Niel, 2009). As both the CFO of Enron
and the manager of the SPEs, Fastow had insider knowledge of the company’s financial dealings,
allowing him to personally profit from the transactions. Enron assumed most of the risk from the
SPE projects, but the SPEs hid the growing debt and project losses, creating the artificial impression that the company was fiscally sound.
Another common pattern of control fraud involved an executive compensation structure
allowing company assets to be converted into personal profits, as many top executives were paid
in stock options instead of cash (Coffee, 2002). Initially intended to attract top talent and align the
interests of shareholders and managers, stock options created an incentive for executives to artificially inflate stock prices and sell back the stock at the higher price to make multi-million dollar
personal profits (Healy and Palepu, 2003; McLean & Elkind, 2003). Enron’s stock prices increased
from US$19 per share in 1997 to US$40 in 1999 and then to US$90 in 2000 (Windsor, 2009).
The true value of the stock options was hidden from investors because they were not claimed as
expenses on financial statements, further disguising the heavy debt load (Van Niel, 2009). This
focus on short-term profits instead of long-term stability contributed heavily to Enron’s collapse.
By 2001, Enron’s true fiscal condition could no longer be hidden. As new projects failed,
Enron executives could no longer continue making the company appear profitable. On August
14, 2001, Skilling announced his resignation as CEO and President of Enron, having taken over
the position from Lay just six months earlier (Oppel and Berenson, 2001). Lay resumed control of
Enron and cited personal reasons for Skilling’s resignation (Windsor, 2009). Lay tried to reassure
investors and employees by stating that the company’s condition remained healthy. At the same
time however, Enron executives (including Lay and Skilling) cashed their stock options and made
millions of dollars while employees of Enron-owned businesses were locked out of their accounts,
forced to watch their life savings completely dissipate (McLean and Elkind, 2003).
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In late 2001, Enron restated financial earnings from overvalued profit projections for several
prior years to reflect numerous profitless projects. Some US$618 million in losses were rereported along with US$600 million in decreased profits and US$3 billion in newly disclosed
debt (Windsor, 2009). By November 29, 2001, credit rating agencies reduced the value of Enron
securities to junk status (NYT, 2001). On December 2, 2001, Enron filed for bankruptcy and
tens of thousands of employees lost their jobs. Investors, creditors, shareholders, and employees of
Enron were severely harmed by the collapse, particularly those investing their retirement savings
in Enron (Oppel and Sorkin, 2001; Windsor, 2009).
Many Enron executives were indicted and convicted. Skilling was sentenced to 24.3 years in
prison and Fastow to six years, while Lay’s sentence was commuted when he passed away (NYT,
2006). Accounting firm Arthur Andersen was found guilty of obstruction of justice for shredding thousands of Enron-related documents in the wake of the collapse, ultimately leading to the
90-year-old firm’s collapse.
Discussion
The corporate-financial crimes of Insull and Enron are not anomalies occurring in a vacuum,
but result from complex interactions among social institutions, corporations, and individuals.
While the factors discussed below contribute to environments of organizational deviance, they
do not explain how or why these contexts and organizational characteristics come together and
eventually erupt into corporate-financial securities frauds. Without considering the historical
context of the criminogenic environment produced through structural relations within a developing system of public–private finance, these corporate-financial scandals are often portrayed as
mechanistic, knee-jerk or determinist reactions or innovations by “collective action” to facilitate
the survival of these organizations by way of fraudulence (Barak, 2012). These crimes are distinctive (although massive in size, scope, and impact) illustrations of control fraud carried out by
leaders of firms to amass large amounts of unwarranted power and wealth. In order to provide
explanations for these forms of organizational deviance, analyses must incorporate theories of
fraud stemming from a political economy of crime. Control fraud theory provides the theoretical basis for understanding how these crimes develop in criminogenic environments to produce
corporate-financial fraud.
Several interrelated contexts provide the basis for understanding the corporate-financial
crimes of Insull and Enron, including the societal, control, and organizational contexts. This
structural analysis focuses on the political-economic environment (societal context), the lack of
control mechanisms to prevent these control frauds from developing (control context), and the
organizational processes and structure of interactions shaping organizational deviance (organizational context).
Societal context
The societal context focuses on the political-economic environment surrounding the Insull and
Enron scandals, including stock market speculation, increasingly concentrated corporate power,
political influences on regulatory oversight, and the introduction of new players in markets
lacking appropriate regulation. Rampant stock market speculation in the 1920s was a breeding ground for fraud. Constant expansion of utilities pushed prices down for many, but this
rapid expansion was built on a house of cards. While Insull weathered the early effects of the
Great Depression, company executives massively inflated stock values and took on excessive
debt before finally collapsing in 1932. Enron followed similar patterns of speculative stock price
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manipulation, as fraudulent reporting and accounting tricks replaced traditional, disciplined business and accounting practices in many well-known and powerful corporations (Cunningham,
2003), fueling economic expansion but hiding the true value of company securities (Rockness
and Rockness, 2005).
For both Enron and Insull, political and legislative actions encouraged illegal and unethical
behavior through either corruption or negligent inaction. In addition to a history of bribing
public officials to gain exclusive contracts and a large contribution to presidential candidate (and
former head of Illinois Commerce Commission) Frank Smith harming his reputation, Insull
continued expanding operations despite an ailing economy, in large part through the encouragement of the Hoover administration and state politicians. In the wake of the 1929 stock market
crash, politicians and industry leaders worked together to reassure the public of the soundness
of the financial system by continuing to spend, maintain employment counts, and promote the
soundness of the failing market (Wasik, 2006). Insull continued to acquire debt, despite the
deepening depression, and eventually overextended, leading to the demise of the unstable Insull
holding company structure.
After the 1970s changes in political finance laws, corporations and their employees were
permitted to contribute to campaigns and create political action committees (PACs), increasing
corporate influence over policy making (Prechel and Morris, 2010). Corporate lobbyists for
Enron in the late 1990s became large political contributors to candidates supportive of deregulation and limits on existing regulatory powers (O'Brien, 2005). Securities issuers influenced policy
makers to limit liabilities for accountants for fraud and prevented attempts to restrict non-audit
(consulting) services provided by firms simultaneously serving as auditors (Coffee, 2002; Gerding,
2006; Rockness and Rockness, 2005).
An attitude of non-intervention in business pervaded both Insull and Enron as new market opportunities opened up with little transparency and oversight. Political-economic changes
increasingly concentrated power and wealth in a few elite corporations at the expense of smaller,
more dispersed companies. Insull took advantage of the lack of centralized power utilities to
monopolize power generation and distribution under holding companies, as once independently
operated utilities came under the control of a small number of owners like Insull. Enron’s promotion of deregulation enhanced their power in energy trading to increase revenue and acquire
many smaller companies. Enron executives knew that by advocating ambiguous regulatory
changes and expanding to unknown markets (broadband, energy, and weather trading), they
could vastly expand their market share and control multiple sectors of the energy industry. These
unprofitable trading schemes covered up by accounting manipulations allowed Enron to appear
highly successful for many years, but ultimately led to the company’s downfall.
The laissez-faire attitude toward regulation dominated the societal context of Insull and
Enron, with proponents arguing that businesses are best left to be self-regulated, with direct
government oversight kept to a minimum. The central goal of the Insull utility companies was
to create a private monopoly over power distribution. Insull took a different approach than other,
similar corporate-financial frauds by advocating for the regulation of utility companies to counteract pushes for public ownership. To Insull, private monopolies would keep corrupt politics out
of private business, drive down consumer prices, and increase service quality (Anderson, 1981;
McDonald, 1962; Munson, 2005). In one respect, this was a creative adaptation of the laissez-faire
economic approach, as Insull recognized the greater ease of manipulating state regulators than
unpredictable scrutiny from hundreds of municipal governments. Insull became a chief advocate
of state regulation to allow legal monopoly over much of the utilities industry (Wasik, 2006).
State regulators in turn advanced utilities by negotiating price reductions, effectively functioning
as an industry advocate.
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Since the reforms of the Insull scandal, energy distribution had been heavily regulated. These
regulations began to erode with the Natural Gas Policy Act of 1978, which allowed consumers to
choose from among multiple suppliers instead of locking them into regional distributor contracts
(Van Niel, 2009). The Energy Power Act of 1992 brought about similar structural changes in
electricity distribution, as third-party entities were permitted to purchase and redistribute blocks
of wholesale electricity from power generators and to local companies (Van Niel, 2009). Brokers
became middlemen negotiating deals between consumers and suppliers, with the goal of eliminating restrictions on energy movement between regions to create more efficient distribution
and drive down consumer costs. However, this changing political-economic environment was
ripe for control fraud, as many new third-party brokers were opportunists seeking easy money
in the newly deregulated market.
The political-economic environment of the 1990s catered to the interests of large corporations and securities issuers at the expense of individual investors, and ultimately the integrity of
the financial system as a whole. The prevailing wisdom, which persists in the present day, is for
free market forces to operate without (or with minimal) government restrictions. Enron not only
benefited from deregulation, but Enron executives Ken Lay and Jeff Skilling were chief proponents of deregulation. This contributed to a regulatory infrastructure with limited capacity to
prevent the worst harms from the Insull and Enron scandals.
Control context
The control context focuses on social control mechanisms, including formal government agencies and non-governmental and informal control systems, such as industry organizations, stock
exchanges, and self-imposed oversight entities. The governmental authority to govern sales of
securities was not in place until after Insull’s collapse. There was no oversight mechanism for
reigning in potential control frauds until they were already on the verge of collapse. Once the
SEC was in place in 1934, an investigation and subsequent charges were issued against key Insull
executives, although far too late to prevent massive investor losses. By the time of Enron, a regulatory structure overseeing securities markets had been in place for nearly 70 years. However,
neither government regulators (SEC) nor informal control agents (ratings agencies, auditors,
analysts, etc.) were able to uncover the fraud until Enron was already on a highly publicized
downward spiral. This is typical of control frauds, where effective market discipline is not
adhered to, but instead collective willful ignorance is exercised, with non-existent or suspicious
business practices and non-transparent financial transactions ignored or accepted as signs of
healthy company growth.
Regulators consistently lacked the proper resources (and political will) to identify the Enron
fraud until the company was on the verge of collapse (Skeel, 2005). The SEC ultimately failed
to closely audit Enron’s financial transactions and accounting irregularities (Van Niel, 2009). In
fact, the SEC had earlier examined Enron’s use of mark-to-market accounting rules and legitimized these subjective and speculative profit estimations (McLean and Elkind, 2003). At the same
time, the SEC reduced observations of major accounting firms, further compounding fraudulent
opportunities. However, these failures were due in part to a political-economic climate limiting the ability of the SEC to effectively enforce securities laws (O'Brien, 2005). During periods
of economic growth, regulators and policy makers face pressures to avoid restricting economic
opportunities and corporate profits (Gerding, 2006). Regulators are often marginalized by these
political constraints hindering the investigation and sanctioning of corporate-financial fraud.
Non-governmental control mechanisms were non-existent or ineffective. Key evaluation and
oversight entities that are supposed to be independent, objective evaluators of financial and
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trading practices, ultimately helped to create the Enron illusion. Their failure to appropriately
evaluate Enron’s condition effectively condoned the fraudulent accounting methods used to
manipulate stock values. Investors, analysts, rating agencies, and creditors generally did not ask
appropriate questions about how Enron made massive profits, instead seeming content to blindly
accept Enron as a successful company. Enron failed to produce basic accounting products such
as balance sheets, income statements, and cash flow statements. Financial analysts responsible for
overseeing the soundness of the securities market were employed by investment banks doing
business with Enron and issued inaccurate stock value assessments due in large part to conflicts
of interest in funding stock research, contributing to Enron’s deception (Aronson, 2002). Even
after accounting irregularities became public in October 2001, Lehman Brothers and Merrill
Lynch both rated Enron stock with strong buy recommendations. Enron paid more than US$125
million in fees to these and other investment banks from 1998 to 2000, creating a conflict of
interest undermining the objectivity of their evaluations (Healy and Palepu, 2003; McLean and
Elkind, 2003).
Others conflicts of interest and/or acts of collusion existed among Enron and Insull auditors. Insull manipulated self-appointed auditors to approve fraudulent accounting records until
J.P. Morgan appointed Arthur Andersen as auditor, which ultimately uncovered the control
fraud. Ironically, Arthur Andersen was hired by Enron nearly seven decades later and was instrumental in covering up their accounting fraud, ultimately leading to Andersen’s demise. Andersen
was paid US$52 million, half for auditing and half for consulting (Van Niel, 2009), which in part
influenced them not to report Enron’s true financial condition for fear of losing business. Had
Andersen brought this to light, the firm would likely have been fired as auditor, but brought
much-needed public scrutiny and SEC investigations. Arthur Andersen instead relinquished its
once stellar reputation for honesty and integrity for short-term profits.
Organizational context
The societal and control contexts alone do not explain how these frauds ultimately developed,
but rather form the criminogenic environment essential for the Enron and Insull control frauds
to flourish. The organizational context addresses specific behaviors of both companies and their
executives in executing control fraud. Central to these frauds is organizational deviance, where
collective actions are taken to carry out corporate-financial crime, regardless of whether or not
these actions are illegal at the time.
Excessive risk-taking and speculation included manipulation, deception, omission, and destruction of evidence to cover up wrongdoing. More money could be made through these illegitimate
means than legitimate business operations, as fraudulent behavior became normalized within each
company. Both Insull and Enron are classic examples of stock manipulation, as stock values were
artificially inflated through overly complex and fraudulent accounting practices. Stock prices of
Insull’s IUI and Corp were highly priced even though the companies held little capital and few
assets aside from each another’s stock. Enron, on the other hand, used SPEs as shell corporations
to hide debt and make the company appear profitable when it was actually losing money. Since
much of Enron executive pay was issued in stock options, there was an incentive to increase the
stock price and then sell the stock back before the price dropped, which is what many key executives did prior to the collapse.
Unchecked fraud resulted in the concentration of vast amounts of artificial wealth, inflating
bubbles that would eventually destroy both companies. Both Insull and Enron increasingly relied
on speculative securities trading to increase their stock value, often resorting to fraudulent tactics to meet unrealistic Wall Street projections. Organizational cultures in both companies were
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overtaken by social pressures to maintain consistent and increasing profits, leading to the inflation of stock values to give the appearance of healthy fiscal performance and allow executives to
cash their stock options, taking millions of dollars out of the company. Insull executives profited
enormously from the fraud, although they lost their money when the companies collapsed, while
Enron executives took massive amounts of money out of the company for personal gain. While
speculation and risk-taking are not inherently dangerous and can be essential for advancing
legitimate innovations, companies not producing real goods or services and taking excessive risk
for the sake of money alone pose a hazard to the financial system.
Complex finance made understanding what was occurring particularly difficult, offering
a partial explanation for why the fraud was not detected until after the scandal had come to
public light. The complexity of the financial structures was overwhelming to the point that not
even those inside the companies fully understood them. The Insull financial holding company
structure was so complicated that even Samuel Insull himself did not entirely understand how
it worked. Enron executives knew that as long as new projects were created to show profits on
balance sheets, numbers would appear favorable and investors would trust their money with the
company. The iconic status of Insull and Enron allowed them to raise capital without having to
explain their financial structures. Although enough information (or perhaps, more appropriately,
the lack of transparent records) was available to the public for a rational investor to sense something suspicious (Cudahy and Henderson, 2005), few were able to dissociate themselves enough
to question the fiscal “black boxes” until long after the scandals became public.
The chaos ensuing from the Enron and Insull collapses is characteristic of other cases of
corporate-financial crime, with the political-economic environment, lack of effective controls,
and profit-driven organizational deviance. These corporate-financial crimes had been ongoing
for many years, but came to light relatively quickly as both companies went rapidly downhill in
highly publicized scandals revealing the severe consequences of the control frauds. The Insull and
Enron collapses brought severe economic and social hardships for ordinary investors, many of
whom were middle- and lower class Americans. When Enron was finally forced into bankruptcy,
tens of thousands of employees and investors lost their jobs and life savings. Other social costs
included loss of confidence in corporations and securities, psychological distress, and criminal
justice system efforts to sort through the resulting chaos.
Implications
This comparative case study identified commonalities and differences between the Insull and
Enron scandals, including multiple factors weakening efforts to address corporate-financial crime.
Laws changed after Insull to criminalize behaviors not illegal at the time were the foundation for
later criminal indictments of Enron executives, including the 1930s Securities Acts that created
the SEC. After the collapse of Enron (and WorldCom several months later), confidence in the
stock market eroded and the Sarbanes-Oxley Act of 2002 was quickly passed, aimed retroactively
at addressing Enron and similar corporate misconduct (Skeel, 2005). President George W. Bush
upon signing the Sarbanes-Oxley Act called it the “most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt” (Bumiller, 2002). While designed to
increase the accountability of corporate executives, accountants, and securities analysts, many key
elements precipitating control fraud were left largely unaddressed.
Perhaps the most striking example of the failure to learn from history is illustrated in the
differences between the handling of the aftermath of Enron and Insull and large-scale corporatefinancial frauds in the late 2000s. While Enron and other control frauds at the time were followed
by attempts to address the frauds through criminal prosecutions, elite financial fraud ceased to be
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taken as seriously only a few short years later. Once the criminal prosecutions of the early 2000s
had concluded, business as usual returned with even fewer resources for investigating corporatefinancial crime. After 9/11, 500 of the 2300 FBI white-collar crime agents were transferred to
national security, representing a lack of commitment to addressing financial fraud as priorities
shifted toward counter-terrorism (Black, 2013).
While control efforts were seriously lacking for Enron, subsequent developments from the
subprime mortgage crisis proved to be even more widespread and damaging. In lieu of criminal
prosecution, deferred prosecution agreements (DPA) became even more prominent, as virtually
no companies are now indicted without a DPA already in place (Spivack and Raman, 2008). This
indicates a shift in focus away from criminal liability and toward cooperation with corporate lawbreakers with the goal of achieving the desired behavioral changes without the risk of negatively
impacting the company. Failures of control mechanisms demonstrate that laws on the books are
not sufficient to address major corporate-financial crime. Regulators and prosecutors with sufficient resources, motivation, and political will to tackle the problem are essential.
The subprime mortgage crisis and subsequent bail-out of major financial institutions exemplified many persistent problems posed by corporate-financial crime. Regardless of the fact that
these frauds largely contributed to the near collapse of the global economy, no serious efforts have
been made to prosecute the fraud contributing directly to the 2008 financial crisis, with politicaleconomic considerations directly preventing the administration of justice in cases of fraud perpetrated by elite banks (Barak, 2012; Pontell et al., 2014). Department of Justice (DOJ) Assistant
Attorney General Lanny Breuer argued that he could not bring criminal charges due to the lack
of evidence to achieve a conviction and worried openly about the potential economic impact of
prosecuting large financial institutions (PBS, 2013). Although he later backtracked, arguing that
the DOJ aggressively pursues corporate-financial crime, Attorney General Eric Holder remarked
before the Senate Judiciary Committee:
I am concerned that the size of some of these institutions becomes so large that it does
become difficult for us to prosecute them when we are hit with indications that if we do
prosecute – if you do bring a criminal charge – it will have a negative impact on the national
economy, perhaps world economy. . . . I think it has an inhibiting impact on our ability to
bring resolutions that I think would be more appropriate.
(C-SPAN, 2013)
The idea is that large banks are essential to the economy, and with the economy being stubbornly
fragile, prosecuting frauds would destabilize a weak recovery. These prevailing political-economic
attitudes of government officials and politicians allowed fraud to flourish in the name of stability,
but this perspective is fundamentally flawed, as control fraud theory demonstrates that unchecked
fraud erodes confidence in the financial system and inflates the bubble of the next financial crisis. These recent developments illustrate the unlearned lessons from Enron and persistent threats
from corporate-financial crime.
A common limitation of the existing framework is the reliance on regulators who often
have similar views to those they are supposed to be regulating. Regulators are often taken from
the industry they are responsible for regulating, creating an inherent conflict of interest. The
justification is that industry insiders are capable regulators due to their intimate knowledge of
industry inner workings. The give-and-take relationship between regulators and industries has
made regulatory systems increasingly complex and many ordinary individuals lack the capacity
for understanding these complications, thus supporting the insider-only preference. While the
SEC was first created due to Insull and related securities frauds of the 1920s/1930s, the SEC
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later proved to be an inadequate regulator, as it failed to uncover abuses both prior to and after
the passage of the Sarbanes-Oxley Act of 2002 (King et al., 2009). Part of the problem may be
attributed to an inadequate enforcement budget (Skeel, 2005), but also to an ideological perspective of many regulators favoring self-regulation as a more effective approach than command
and control.
Several ideas have been proposed to address regulator conflict of interest. One alternative is
to promote individuals from outside an industry to regulatory agencies. CFOs and CEOs could
be required to report to outside regulators in non-technical language. This would eliminate the
perceived need for industry insiders with intimate industry knowledge. This was one response to
the BP oil crisis, as the Minerals Management Service (MMS) had followed this pattern and the
agency was broken into several pieces with new leadership from outside the industry appointed
to restructure oversight of the oil and gas industry (Soraghan, 2010). This could be a step in the
right direction for reform, but relationships between industry and regulators should be given
greater attention. Another alternative is to require the assignment of independent auditors and
analysts to companies instead of allowing them to choose their own auditors. This idea was proposed during the 2010 financial regulatory reform discussions to address credit rating agencies
whose positive ratings on subprime mortgage-backed securities contributed to the 2008 financial
crisis. The proposal to create new conflict-of-interest rules for ratings companies by requiring
the random assignment of ratings agencies was dropped during final congressional negotiations
(Herszenhorn, 2010). While many other ideas have been discussed, regulatory failure is likely to
continue in the future. ­Political constraints continue to weaken reform efforts. Regulatory effectiveness depends heavily upon the political will to appoint effective external regulators, which is
not likely to be resolved without a reconsideration of the fundamental role of regulatory agencies
in overseeing the private sector.
Improved corporate citizenship is a necessary element in reducing corporate crime, but claims
by corporate offenders that they are best left to fix themselves should be treated with cautious
skepticism. The limits of self-regulation evident in Insull and Enron illustrate the dangers of
an entirely hands-off approach to corporate law enforcement. Creative methods of addressing ethical shortcomings should be assessed, implemented, and evaluated. One strategy involves
improved ethics training for business students and corporate leaders to promote awareness of the
damages caused by reckless, purely profit-focused decision making and the negative influences of
criminogenic corporate cultures. Enron brought increased focus to the previously obscure topic
of business ethics in MBA schools (McBarnet, 2006), as graduates were concerned only with
obtaining large profits by any means necessary (Grey and Clark, 2002). Further research on these
programs should be conducted to determine their effectiveness.
These problems lack clear and easy solutions. Potentially harmful relationships between government and corporations are well established and elites seem content with maintaining the
status quo. One basic solution may rest in simply raising public awareness that these exchanges
can result in large-scale social harm if unchecked. After Enron, despite claims by many that the
recent corporate crime waves only consisted of a few “bad apples,” there was a broader realization
that these problems are not limited to just a few corporations (McBarnet, 2006; Moohr, 2007).
However, public anger was largely directed toward individual corporate offenders instead of
targeting the criminogenic environment. Reform measures more often than not contain numerous loopholes later exploited while key provisions are watered down over time. Politicians alone
should not be relied upon to address problems they helped to create. The public must demand
accountability for government and corporate actors by becoming more aware of elite corporatefinancial crimes and pushing for balanced measures promoting stability and justice in the financial and justice systems.
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12
Corporate social responsibility,
corporate surveillance and
neutralizing corporate resistance
On the commodification of
risk-based policing
Hans Krause Hansen and Julie Uldam
Introduction
Multinational corporations (MNCs) are increasingly under fire and challenged by indigenous
peoples, local communities and others affected by the detrimental consequences of corporate
activity for their local environment and livelihoods. The oil industry in particular constitutes a
site of controversy, with civil society groups exposing companies’ misconduct to public scrutiny
(Du and Viera, 2012; Van den Hove et al., 2002). One of the most notorious events in the oil
industry is the Brent Spar case. In 1995, Shell’s plans to dump the Brent Spar oil storage platform
in the North Atlantic were blocked, as Greenpeace initiated a campaign that brought the plans
into the limelight (Livesey, 2001). The same year Shell was criticized for not making an effort
to intervene when the Nigerian military regime of Sani Abacha executed nine Ogoni activists
who had opposed Shell for exploiting their people and land in the Niger Delta (Livesey, 2001).
In 2010 BP was brought into the limelight when their Deepwater Horizon platform spilled
780,000 m3 of oil into the Gulf of Mexico (Du and Viera, 2012). Following BP’s attempt to
clean up the area, local communities are still experiencing oil surfacing in areas deemed ‘clean’
by BP, sickness from toxic exposure, and a collapse in fish stocks and local livelihoods (Platform,
2014). Following this, civil society groups – both local Gulf Coast communities and civil society
organizations in London where BP is headquartered – have raised questions about the oil company’s inadequate restoration initiatives in the wake of the oil spill (Bridge the Gulf, 2012; UK
Tar Sands Network, 2011).
A common response by oil companies has been to monitor the activities of their critics. When
considering the significance of corporate efforts in more detail, a number of important questions
emerge. These include not only how corporate surveillance (CS) is carried out in practice and
what its impact might be on the critics, but how it goes together with private forms of regulation,
including Corporate Social Responsibility (CSR) (O’Callaghan, 2007; Vogel, 2010; Scherer and
Palazzo, 2011; Gane, 2012). In this chapter we focus on these two types of corporate response to
resistance and their intersections – corporate surveillance of people critical of corporate conduct
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and CSR – and we theorize their significance for our understanding of the role of corporations
in governance processes.
Attempts to conceptualize this bricolage of corporate responses to public resistance already
exist in the literature. For instance, the concept of corporate counter-mobilization strategies (Kraemer
et al., 2013) suggests the existence of dynamic interactions between corporations’ CSR activities,
surveillance and social movement organizing. CSR activities typically revolve around two issues,
both of which may involve considerable public relations and marketing communications activity directed towards employees, investors, and specific communities. First, they address corporate
codes of conduct, transnational standards for transparency, and financial and socio-environmental
principles to be followed by corporations. Second, they emphasize the centrality of the so-called
‘business case’, including the financial benefits of being a ‘good corporate citizen’ involved in
local community projects that purportedly benefit community members at large (Carroll and
Shabana, 2010; Palazzo and Richter, 2005). Nonetheless, such CSR initiatives often generate
civil society criticism. Corporations are accused of window dressing and hiding the dangers and
shortcomings of corporate capitalism (e.g. Banerjee, 2008; Fleming and Jones, 2013). In particular, CSR activities may obscure the reason why MNCs expand their operations globally in the first
place, such as the search for profits, the economic incentives relating to lower taxes and salaries,
as well as lax host country regulation outside the West (Hilson, 2012). It is in response to this
deepening of criticism from various fronts, including activists and watchdogs capable of creating
sustained public attention to the consequences of corporate activity, that companies monitor the
activities of their critics so as to salvage the reputational benefits of their CSR initiatives. The
methods used include covert surveillance and infiltration to anticipate and contain the criticism
(Lubbers, 2012).
The chapter is structured as follows. The first section attempts an in medias res illustration of
corporate promotion of CSR alongside corporate surveillance of activists, building on our own
empirical studies and other recent research. Our focus is on MNCs in the extractive industry,
specifically oil, gas and mine companies. In relation to their extractive activities, MNCs combine
corporate social responsibility initiatives with surveillance of activists operating in the Global
North as well as in the South. We first turn our attention to Europe and specifically to the UK.
We focus on MNCs offering cultural sponsorships in the name of CSR while monitoring climate
justice activists who protest against these activities. We analyse files from BP and Shell on individual activists in the UK obtained through Subject Access Requests under the Data Protection
Act 1998 as well as press responses from the two oil companies.1 We then take a brief look at
CSR and corporate surveillance and intelligence practices by MNCs operating in communities
in the global south. The extractive industry has been chosen as our key analytical object because
it is characterized by social, economic and political conflicts and contestation ranging from the
very local to the regional and transnational. In particular, mine, oil or gas projects leave a large
environmental footprint, and their capacity to generate economic activity wields a huge influence on social, political and environmental dynamics within and across societies and regions
(Du and Viera, 2012).
This outline of the forces at work in corporate attempts to counter their critics paves the way
in the second section for a discussion of the theoretical implications of our analysis. On the basis
of a synthesis of recent literatures relating to policing and governance we argue that the contemporary bricolage of CSR and corporate surveillance may usefully be understood in relation
to wider social changes, including the proliferation of private and hybrid forms of policing to
protect new sites of private authority within global governance. While in various ways drawing
on intelligence gathering, these forms of policing both contribute to and thrive on the emergence of global information markets where information about various forms of risk is produced
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and commodified. Today, corporations are better equipped than ever to anticipate, respond to
and contain criticism.
Corporate counter-mobilization: corporate social responsibility
and corporate surveillance
CSR initiatives in the extractive industry target various publics, ranging from consumers and
citizens living at a distance from the extractive process, to the local communities affected directly
by it. Whereas in the Global North CSR activities typically seek to complement already existing
state regulations and initiatives in a variety of issue areas, in the Global South CSR activities are
played out in very different institutional contexts: extreme public sector resource scarcity, a much
weaker enforcement of legislation, a lack of governmental monitoring of corporate activity, as
well as widespread corruption (Matten and Moon, 2008). Governmental commitment to international conventions, most of them non-binding in the first place, are generally non-existent.
It is against this background that there is considerable room for corporate self-regulation,
giving way to assumptions that corporations are capable of filling ‘governance gaps’ as well as
‘policing themselves’ in the absence of strong state agencies (Börzel and Risse, 2010; Hilson,
2012). While in some regions such ‘gap-filling’ and ‘self-policing’ has involved the deployment
of private military forces and the cooptation or even killing of protesters, there has also generally
been a growing focus on CSR (Hilson, 2012). Nonetheless, many of the CSR activities in the
extractive sector are often questioned as attempts to divert attention away from corporate misconduct, including cooperation with suppressive military forces and reluctance to take responsibility for human and environmental assaults (Platform, 2014). In response, corporations monitor
the activities of their critics. Here, corporate uses of surveillance are not limited to communities
in the Global South, but are also evident in Western countries where activists seek to bring into
public limelight corporate misbehaviour in solidarity with indigenous peoples. In the following
we illustrate these dynamics with examples from the UK, Indonesia and Guatemala.
In the UK, CSR initiatives promoted by extractive MNCs have attracted various forms of criticism. Over the course of the past two decades BP and Shell have increased their sponsorships of
art and culture in the UK (Chong, 2012; Liberate Tate, 2012). BP has sponsored Tate, one of the
leading galleries in the UK, and the 2012 Olympics and the Cultural Olympiad, which included a
Shakespeare Festival. The sponsorship involved the appointment of BP as Sustainability Partner of
the Games. Shell has sponsored the Southbank Centre in London. This includes the Shell Classics
International, an annual series of classical music. In protesting against oil sponsorships of UK’s
cultural institutions, groups such as the Reclaim Shakespeare Company and Shell Out Sounds
have organized pop-up performances of Shakespeare-inspired scripts in Stratford and guerrilla
choir performances at the Southbank Centre. More generally, a wide variety of movements have
criticized corporations for using cultural sponsorships in the West to divert attention from their
activities in the Global South (Uldam, 2014). In response, extractive MNCs engage in the monitoring of these activists. This is illustrated in the following email with the subject line ‘Video of
Reclaim Shakespeare Company at British Museum’ in which BP identifies two members from a
civil society group that calls for the Royal Shakespeare Company to drop BP as a sponsor:
A video from Sunday’s British Exhibition [sic] ‘pop-up’ performance. http://vimeo.
com/46239547. The usual crowd were part of the action. James Anderson was once again
prominent and I think he, along with Sophie Harvey, are ones to keep an eye out for in
particular over the next few weeks.
(BP email, 24 July 2012, 13:08)
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What seems to be a systematic practice of identifying activists may be further illustrated in the
following email with the subject line ‘Tar Sands meeting (not in London)’. The email identifies
individuals and notes that the promotion of local alternatives to relying on tar sands as a resource
for energy may be expected to be taken up by the activists in question:
FYI – Tar Sands Network are holding a meeting in Oxford this Sunday http://tarfreetowns.
org/news/launching-tar-free-oxford/ in what appears to generate more members/increased
interest in their issue which means that in all likelihood our regular activists (Sophie Harvey,
possibly Alice Gordon and James Anderson) are likely going to engaged [sic] with that.
(BP email, 2 August 2012, 17:08).
The identification of named ‘regular’ individuals suggests that the monitoring of critics is a regular part of BP’s practices.
In some cases the practice of monitoring of activists also reveals that corporations seek to avoid
raising their own profile more than necessary by keeping silent about the substance of the criticism raised. This they do by simply abstaining from commenting on the issues raised by activists,
or by referring to general notions of freedom of expression and rule of law. Shell’s responses to
an employee of a non-profit organization, who had been criticizing the company for violating
human rights in Nigeria, provide an illustration of this tactic:
[David Butler] has written a piece or two recently [links to two articles] I don’t think we
should respond, but I will ask the web watchers to keep an eye on retweeting etc.
(Shell email, 3 March 2011, 09:38)
Responding to the criticism is only considered necessary if the criticism has potential to gain visibility among wider publics. This is further captured in a reply discussing the extent to which the
critical article has reached beyond the readership of the two platforms on which it was featured:
Agree that responding to this article in particular would raise the profile unnecessarily, especially as it was published in February 2010 and has apparently not generated much reaction:
I ran the article through [redacted] to check if any bloggers have linked through to it on
their blogs – there were no hits; and the comment section at the end of the article is empty.
(Shell email, 3 March 3 2011, 12:14)
In another case, however, Shell in fact responded in public to critiques by issuing a statement:
Shell respects the right of individuals and organisations to engage in a free and frank exchange
of views about our operations. Recognising the right of individuals to express their point
of view, we only ask that they do so within the law and with their safety and the safety of
others in mind.
(Quoted in the Guardian, 1 March 2013)
By making this public statement, Shell constructs an appearance of inclusivity, albeit without
engaging with the substance of the criticism, which questions the ethics of the company’s
operations.
Such corporate surveillance is often carried out by means of contracting with risk assessment
and PR agencies. One example that relates to the UK is the risk assessment agency Exclusive
Analysis (EA). EA produces analyses of socio-political environments so as to ‘forecast reputation
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risks’ for a variety of sectors, including the extractive industries. In May 2012 the Head of Indicators and Warning from EA contacted a freelance documentary photographer who had covered
political protest in the UK for news media, including the Guardian. In the email, he described
his job as ‘producing objective forecasts of civil unrest in the UK’. He explained that he had
been ‘analysing the actions of many of the groups that you have encountered over the years’,
just as he had ‘followed Climate Camp, Rising Tide, UK Tar Sands Network and UK Uncut
and others regularly on social media’ (email, 2 May 2012). While there is no specific mention
of oil companies, EA specializes in providing risk assessment to the energy sector. Several of the
groups that the agency monitors are concerned with issues of climate change, and with a history
of criticizing BP and Shell.
In her research on corporate spying on activists in Europe, Lubbers (2012) shows how former
intelligence officials (e.g. from police or military agencies) are hired by private companies to
conduct intelligence gathering, working exclusively for the interests of a company. This facilitates information flows between public authorities and private companies, as private security and
intelligence agents use their connections with former colleagues. Companies can thus access
information about the whereabouts of corporate critics known to the police as activists engaged
in civil disobedience (Lubbers, 2012). For BP, for example, monitoring the activities of activists
entails keeping up to date on the police’s handling of individual activists, as the following email
shows:
[Redacted] is keen to know what was the outcome of Brian Jones’s detention last week: was
he arrested & charged or released without charge?
(BP email, 17 April 2006, 17:04)
In all, BP’s and Shell’s monitoring of activists, with the intention to anticipate and contain
criticism, is closely connected to their efforts at constructing and protecting the image of being
socially responsible corporations. This dynamic is manifest in the Global North as well as in
the South. Extractive companies involved in the surveillance of activists in communities in the
Global South, often in conjunction with local elites, is a phenomenon widely documented in the
literature (e.g. Imai et al., 2007; Welker, 2009). For example, an environmental activist seeking to
document environmental damage to the quality of water close to a gold-mine in Guatemala run
by Canadian Goldcorp was subject to surveillance and threats, and ultimately had to leave the
community (Imai et al., 2007: 139). Companies also use local elites as the ‘first line of corporate
defence’ against activists. This is a strategy which is combined with community welfare projects
sponsored by companies and clearly relates to wider CSR commitments (Kraemer et al., 2013;
Welker, 2009). As Welker observes (2009: 143) with reference to the US-based Newmont Mining Corporation’s operation in Indonesia, local civilians are drawn ‘into the sphere of corporate
security through community development’. Corporate sponsorship of community development
is important to cultivate allies, gain access to territories, and to obtain detailed knowledge about
what is going on.
Optimistic studies on CSR have pointed to the disciplining effects of protests against oil and
mining companies’ operations, arguing that indigenous people and communities can push companies to adopt CSR policies (e.g. Kapelus, 2002). This has the potential to contribute to winwin scenarios. However, as the examples above show, while companies do respond by adopting
CSR policies, they also respond with a range of other counter-mobilization strategies, such as
surveillance and related intelligence practices.
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Theorizing the role of CSR and corporate surveillance
in global governance
The above observations raise a number of important issues that we address in the remainder of
this chapter. In particular, we discuss how we can theorize the role played by corporate surveillance and intelligence practices alongside CSR initiatives at a time when MNCs operate in a
wide variety of structurally different settings, facing multiple and generally critical publics. Here
we suggest that the contemporary nexus between CSR and corporate surveillance may be usefully understood in relation to the proliferation of hybrid forms of policing to protect new sites
of private authority. While ultimately aiming at the production of security and order (Kempa
et al., 1999), these forms of policing both contribute to and thrive on the emergence of global
information markets where intelligence about various forms of risk is produced and monetized.
This intelligence is valuable to corporations as they seek to protect the reputational benefits of
their CSR activities with efforts to anticipate and contain civil society criticism.
Traditionally, policing and its associated surveillance and intelligence practices have mainly been
associated with governmental authority, i.e. the state. However, in recent years researchers have begun
to investigate the role of non-state actors, including corporations in policing, surveillance and intelligence. For instance, business ethics scholars have examined intelligence-gathering among companies, with a particular focus on the thin line between legitimate corporate intelligence practices
vis-à-vis competitors and the questionable if not unethical and illegal industry of espionage proper
(e.g. Crane, 2005). While also focusing on the role of these practices in relation to issues pertaining
to market competition, management and communication scholars have started examining the ways
in which companies try to anticipate criticism, most recently on the basis of ‘big data’ and various
forms of sentiment analyses (Coombs and Holladay, 2007; Hearn, 2010; Jones et al., 2009). Scholars of political science, international relations, law and criminology have focused in more detail on
the growing corporate employment of risk management and military personnel to resolve various
security-related tasks (Gill and Phythian, 2012). What is particularly interesting in these strands of
literature is not only the recognition of the important role of surveillance and intelligence practice as
performed by private actors for issues relating directly to issues of market competition (business intelligence and spying), but also that governance functions conventionally undertaken by public authorities have become a matter for corporations to perform. Corporate policing has become increasingly
important. As Joh (2005: 615) has observed, many corporations ‘seek to safeguard property and the
lives of those on that property, to plan against risks of all kinds – street crime, riots, terrorism, natural
disasters, and so on – to be first-response problem solvers, and to maintain a public reputation’. In
corporations that span multiple legal jurisdictions, the workforce assigned to various forms of policing and security prevention and problem solving can be large. In Nigeria, for example, by the late
1990s, 20 per cent of Shell’s workforce was devoted to security tasks, with the company relying on
an extensive system of surveillance of protests and conflicts (Watts, 2005).
Part of this story is also the surge of private investigative and intelligence companies since the
end of the Cold War, firms that are staffed with former government employees and work largely
unchecked by law enforcement agencies. As a former government MI5 security agent comments:
The big change in recent years has been the huge growth in these companies. Where before
it was a handful of private detective agencies, now there are hundreds of multinational security organizations, which operate with less regulation than the spooks themselves.
(Armstrong, 2008: 2; see also Ruskin, 2013)
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Other research has also shown how former intelligence officials from police or military agencies
are hired by private companies to do intelligence gathering (Lubbers, 2012).
These intersections between public and private policing are unfolding in the face of a growing
role for non-state actors, especially corporations, in assuming tasks that (especially in the Western
world) were previously managed by governments and public agencies. Private authority, privatized regulation, political CSR, multi-stakeholder and civil regulation are among the concepts
that have been used in the literatures to depict these developments (e.g. Cutler et al 1999; Haufler,
2006; Scherer and Palazzo, 2011). These concepts in various ways point to important developments, but we have to include other literatures as well in order to understand not only how CSR
and corporate surveillance and the rationales that underpin them take shape, but also how these
practices, as we have observed above, in fact transcend established distinctions between public and
private forms of policing (Kempa et al, 1999; O’Reilly, 2010). Where is, for example, the exact
boundary between the public and private in the CSR and surveillance practices illuminated in
the above section? The following discussion provides suggestions for how we can conceive of
these issues.
One first point is that surveillance generally aims at getting intelligence for the purpose of
control, and as such it involves the gathering of information through acts of monitoring, and
subsequent analysis and evaluation of information (Lyon, 2007; Gill and Phythian, 2012: 43). In
a wider sense, as we can derive from our empirical observations in this chapter, intelligence is
about the production of strategic knowledge, which, following Rathmell (2002: 89), is ‘targeted
and actionable’, involving ‘predictive knowledge for specific consumers’. The production of
intelligence may involve secret methods and sources, as our examples from Shell and BP suggest,
but these are not defining for intelligence as such (Rathmell, 2002; Gill and Phythian, 2012: 31).
A second point relates to governmentality. Governmentality refers to the particular rationalities and technologies deployed in the conduct of conduct, and it is conventionally distinguished
from two other dimensions of governmental power: (1) the techniques and practices by which
human beings are made subjects to regular and predictable routines, also termed discipline, and
(2) sovereignty, which refers to the command of central authority over territory. Crucially, governmentality is not exclusive to the state and its institutions of government. It may also form part
of non-state institutions, ranging from state agencies to social movements and corporations. Thus,
governmentality dissolves the otherwise conventional boundaries between public and private,
state and civil society, national and international. However, this does not imply that the state is
abandoned as a locale from which ‘many “private” powers derive their support for their authority’ (Garland, 1997: 175).
From this vantage point, an extended concept of policing may be developed. Policing has
become intrinsically related to risk rationalities and risk management technologies that draw
upon market logics (Ericson and Haggerty, 1997; see also Power, 2007). While the repressive,
punitive or deterrent measures to control have always been part of policing, the production of
knowledge of ‘risky’ sites, processes and populations has become of growing importance. As
such, risks are not first-order things but rather the product of social processes by which objects
become recognized and described as risk. When objects of concern are described in terms of
risk, ‘they are placed in a web of expectations about management and actor responsibility’ (Power,
2007: 6). ‘Risk-based policing’ is based on the gathering of information in order to prevent and
make predictions. Thus, policing becomes a matter of intervening before the event rather than
reacting to it (O’Malley, 2010).
It is in this light that we may think of corporations’ attempts to anticipate reputational risks
posed by activists through surveillance, and also the efforts to contain them through tactics of
silencing their critique, as a form of risk-based policing. Such risk-based policing not only targets
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specific named individuals, however, as our examples with Shell and BP suggest. Andrejevic’ s
(2014) distinction between targeted and generalized surveillance suggests that risk-based policing
combines different forms of surveillance and intelligence practices. Whereas the former monitors
particular named citizens, the latter refers to the monitoring of public opinion more broadly, relying on ‘increasingly ubiquitous and comprehensive forms of data collection’, popularly known
as big data (Andrejevic, 2014: 56).
Big data analysis is mostly in the hands of government and corporations, which use big data
to ‘nudge, persuade, to influence’ (Richards and King, 2013: 44). In this context, governments
and corporations are central players in an expanding information market where all sorts of data –
small and big – about risks is commodified. By commodification we mean the process through
which such information is incorporated into capitalist accumulation, to draw upon a Marxist
conception of commodification (Scholte, 2005: 161). Risk information becomes commodified
through its hardware (equipment such as computers), software (digital programs that process
information through the hardware), service (specialized IT consultancy companies) and content
(facilitated by telephone companies and satellites, online service providers and cable suppliers).
As Scholte remarks, ‘information and communications have become important to capitalism not
only as infrastructure to facilitate other processes of accumulation, but also as major objects of
accumulation themselves’ (Scholte, 2005: 171).
Hoogenboom (2006) has coined the term ‘grey intelligence’ to refer to the hybrid nature
of contemporary intelligence practices that rests on such risk information produced by a wide
range of actors in information markets. These include private entrepreneurs delivering informal
intelligence products, such as:
background information on (potential) employees; risk analyses of markets, competitors and
countries; fraud investigations into internal fraud, due diligence reports of potential merger
partners and for instance personal information (political interests, social behaviour, financial
position etc.) of employees.
(Hoogenboom, 2006: 380)
The rise of information markets where intelligence is commodified for risk management purposes reflects that ‘risk’ has produced new actors and networks engaged in a much wider ‘risk
industry’ (Ericson, 2007). More than a state-corporate symbiosis proper (O’Reilly, 2010), the risk
industry is an assemblage of governmental, commercial, non-governmental and hybrid actors
that supply powerful actors with managerial instruments, information about benchmarks for best
practice in ‘risky’ areas or zones, rankings and other devices.
Discussion and implications
Recent reporting suggests that MNCs’ surveillance of their critics is widespread (Lubbers, 2012;
Ruskin, 2013). This is reflected in our examples from the oil industry, where BP and Shell monitor individual citizens in order to anticipate reputational risks and contain criticism. We suggest
that in the context of a growing role for non-state actors, especially corporations, in assuming
tasks previously managed by governments, these practices may usefully be understood as riskbased policing that both produce and draw on ‘grey intelligence’ that spans public, private and
civil society domains, and is subject to commodification processes on information markets.
Grey intelligence resonates well with broader theoretical discussions about polycentric governance (Scholte, 2005), with Foucauldian studies of neoliberal governmentality and not least
with studies of policing (Haggerty and Ericson, 1997; Kempa et al., 1999; Joh, 2005; Williams,
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H. K. Hansen and J. Uldam
2005; Baer, 2008; O’Malley, 2010; Sklansky, 2011). It suggests forms of social control based on
organizational rationalities and technologies deployed by state as well as non-state actors, and it
implies the proliferation of market rationalities and procedures within policing (whether public
or private). Such tendencies are particularly clear in the extractive industries, where major extractive companies deploy knowledge, expertise and technologies delivered by private guards, risk
analysis bureaux and other commercial actors, such as the printed media. The supply of such ‘risk
management tools’ may facilitate the enrolment of corporations into the fighting of ‘bad things’,
conventionally thought to be the key task of state authority, while cultivating their competitiveness aspirations (Hansen, 2011).
In other words, rather than being simply exercised through a centralized bureaucratic apparatus such as the state, we need to also consider policing as a form of power that is exercised through
logics of problematization, calculation and intervention undertaken by a host of different actors.
The expansion of corporate surveillance comes at a time when corporations are promoting their
commitment to CSR more insistently than ever, in communities in the Global South as well as
in the North where global justice activists criticize CSR initiatives as ‘greenwashing’ (Hilson,
2012). In both of these contexts, corporate policing is impossible without information gathering
and intelligence, relying on the deployment of risk and surveillance technologies (Ericson, 2007;
Lyon, 2007; Andrejevic, 2014).
It is with these developments in mind that our analysis of extractive MNCs’ surveillance
of activists should be considered as a modest first step towards understanding the dynamics of
corporate surveillance and CSR today, and their broader significance for corporate power and
governance. We suggest that future research may usefully address two interrelated issues. The first
issue concerns the theorization of the different modes of surveillance and intelligence afforded
by neoliberal governmentalities and the particular forms of policing associated with them. There
is much to gain, we believe, by further refining the concepts of information markets and grey
intelligence, their underlying political economy, and importantly, the different ways in which
state, market and civil society actors deploy different surveillance models, ranging from panoptic to synoptic (Sadler and Lloyd, 2009; Gane, 2012). The second issue concerns the place of
corporations within regimes of surveillance from the perspective of ‘targeted’ and ‘generalized’
surveillance (Andrejevic, 2014). In this respect, the proliferation of monitoring technologies that
enable intelligence gathering on the basis of big data warrants particular attention. The power of
big data resides in its predictive capacity, and in particular, its power to enable pre-emption. (Kerr
and Earle, 2013: 67). Pre-emptive predictions do not adopt the perspective of individuals, but are
typically made from the perspective of a corporation or a state, which seeks to anticipate certain
types of action. Pre-emptive predictions raise new questions about responsibility. By combining
‘targeted’ and ‘generalized’ surveillance, corporations are now capable of predicting pre-emptively
the activities of their critics – in communities and in the north – and thus better contain them,
in much more encompassing ways than previously. This observation raises important concerns
about the boundaries of privacy, about who is privileged by these technologies and who is marginalized and, of course, about the wider rationales of corporations’ engagement with CSR, and
their policing of critics.
Note
1 All civil society individuals have been anonymized to protect their families. With a single exception (the
human rights non-governmental organization [NGO]), none of the groups have been anonymized. This
decision has been made with informed consent from the activists included in this study.
The Data Protection Act allows individuals to request copies of personal information that UK based
organizations hold on them http://www.legislation.gov.uk/ukpga/1998/29/contents.
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13
Walmart’s sustainability initiative
Greening capitalism as a form
of corporate irresponsibility
Steve Lang and Lloyd Klein
Introduction
As the world’s largest retailer, Walmart has reshaped the institutional structure of the global economy and the market for consumer goods because of its “market-making capacity” that enables it
to specify the rules of conduct and standards of performance for thousands of its global suppliers.
The Walmart protocol has emerged as a new template of twenty-first-century capitalism that
has shifted the balance of power and control from the manufacturer to the retailer, making “the
retailer the king and the manufacturer of his vassal.” Walmart is more than a company that buys
and sells products. As Nelson Lichtenstein has argued, “By its very existence and competitive
success, it rezones our cities, determines the real minimum wage, channels capital throughout
the world, and conducts a kind of international diplomacy with scores of nations.” In short, the
company’s management “legislates” for the rest of us key components of American social and
industrial policy (Lichtenstein, 2006: 5). The retail giant is also influencing environmental and
sustainability issues, policies and practices. Its mission to make consumption smarter and more
sustainable is exerting far-reaching and troubling impacts throughout the globe.
As we will demonstrate, Wamart’s sustainability agenda reflects and reinforces a disturbing
neoliberal trend in environmental governance that views environmental threats and problems as
marketable and profitable business opportunities. While, in the past, the inevitable harmful environmental and social costs associated with unbridled capitalism were denied or dismissed as irrelevant
externalities, they are increasingly coming to be viewed as assets that can be addressed and solved by
market-based solutions. The hegemonic triumph of market knows the best discourse reflected in
Walmart’s embrace of sustainability with its emphasis on greening consumption, deflects attention
away from regarding environmental problems as resulting from systemic and structural features of
unregulated capitalism, and in turn, naturalizes and legitimates a depoliticized, individualized and
highly commodified approach to solving them. While the environmental harm and devastation
caused by corporate generated consumption has been well documented, this chapter will focus on
how such notions have been buried and replaced by the delusionary and powerful notion that consumption can be a positive force for environmental betterment (Brisman and South, 2014; Bluhdorn
and Welch, 2007). As the world’s largest “cathedral of consumption” (Ritzer, 2011), Walmart has
become a leader of the growing religion of sustainable consumption with its proclamation that the
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purchasing power of individual consumers can solve the environmental crisis. By obscuring the fact
the power resides in the hands of corporations as opposed to individuals, such an ideology paves the
way for unsustainable environmental practices that harm people and the planet.
From the discourse of sustainability to the rise of green consumerism
The discourse of sustainability has become both ubiquitous and elusive in discussions about environmental problems. The term rose to prominence following the publication of a 1987 report by
the World Commission on Environment and Development entitled Our Common Future, where
it was defined as “development that meets the needs of the present without compromising the
ability of future generations to meet their own needs.” The stress on sustainability represented a
paradigm shift away from the prevalent view, which held that the economic logic of capitalism
was inherently environmentally destructive and that there might be limits to continuous economic growth and development. One of the major appeals of sustainability discourse was that it
replaced environmental pessimism focused on limits to growth with a more positive pro-growth
stance. At the core of sustainable development is the notion that economic growth, environmental protection, and social equity concerns are compatible. Instead of viewing economic growth
and development as an environmental negative, proponents of sustainability argued that it was
possible to strike a balance between economic growth, environmental protection, and social
equity. Advocates of sustainability constantly envision win-win scenarios where making profits
and protecting the environmental health of people and the planet go hand in hand. This win-win
discourse is commonly referred to as the three Es or the sustainability triad. The rise of sustainability as a political discourse is wrapped up in the wider process of neoliberalization, in which
market-led economic development is prioritized over ecological and social justice. For the most
part, existing forms of sustainability have actually downplayed, and sometimes entirely ignored,
the environment and equity side of the sustainability triad in favor of economic growth.
The discourse of sustainability has helped to bring about a shift in attitudes toward the harmful
environmental consequences of consumerism. Unbridled consumption had long been regarded
as a major source of the modern environmental crisis. During the first US Earth Day celebration
held in 1970, unlimited economic growth and the excessive consumption that accompanied it
were vilified as environmental evils. Environmental activists pointed out that our consumer culture created a culture of waste that used up resources and damaged the environment. According
to Majfud (2009), “Trying to reduce environmental pollution without reducing consumerism is
like combating drug trafficking without reducing the drug addiction.” In a relatively short period
of time, partly as a result of the emphasis on sustainable development, consumption went from
being an environmental sin to a positive virtuous activity that was viewed as beneficial for both
the economy and the environment. By the twentieth anniversary of Earth Day, instead of attacking the ethos of consumption, many environmental organizations and activists began to preach
the gospel of green consumerism and environmentally conscious shopping. Instead of damaging
the environment, many came to regard shopping as a way to save it. For advocates of sustainable
consumption, people’s buying power began to be viewed as a powerful force for change.
Walmart’s environmental moment and codifying
the sustainability of its suppliers
The gospel of green consumerism received a major boost in 2005 when Walmart launched its sustainability initiative which, according to Goleman (2009: 81), set off an “ecological earthquake”
that marked the dawning of the era of “radical transparency” in the ecological marketplace.
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Walmart’s sustainability initiative
Walmart began touting the discourse of sustainability in the aftermath of negative publicity
campaigns conducted by labor, community, and environmental organizations that portrayed the
company as a behemoth that exploited its workers, squeezed its suppliers, and devastated communities and the environment. What began as a purely defensive public relations strategy emerged as
a sound business strategy after the company realized that its various greening strategies were big
money savers. Its initial formulation had three goals: to be supplied totally by renewable energy,
to create zero waste, and to sell products that sustain our resources and the environment.
At a press conference in 2005 shortly after the Katrina disaster, former Walmart CEO Lee
Scott asked, “What if the very things many people criticize us for – our size and reach – became
a trusted friend and ally to all just as it did in Katrina?” (Walmart Sustainability Hub). At first he
admitted that “a Walmart environmental program sounded more like a public relations campaign
than substance” but soon came to realize that being a good steward of the environment and an
efficient and profitable business are not mutually exclusive. While one of its major sustainability
goals is “to sell products that sustain people and the environment,” Walmart is quite outspoken
about how going green and adopting sustainable practices is less about ecological enlightenment
and more about the ability to maximize profits. For Friedman, Walmart’s sustainability agenda is
not only good for the company; it represents a sustainability model that could save the ecological
health of the entire planet. What he refers to as the “Walmart environmental moment” starts as
a defensive public relations branding strategy and almost accidentally:
someone in the shipping department takes it seriously and comes up with a new way to
package the latest product and saves $100,000. This gets the attention of the C.E.O., who
turns to his P.R. adviser and says, “Well, isn’t that interesting? Get me a sustainability expert.
(Friedman, 2007)
As part of its broader mission to make the production and consumption of goods smarter, more
efficient, and transparent, Walmart developed a sustainability index to measure, monitor, and rate
the environmental footprint of the products it sells across the entire supply chain. As part of its
strategy to collect and index data on thousands of products and to measure their impacts upon
people and the planet, the company created a research consortium that would tap into a global
pool of experts from academia, environmental organizations, and the corporate world. Utilizing
life cycle analysis tools and concepts, these efforts by Walmart would codify and measure the
sustainability performance of its suppliers.
Walmart’s greening strategy as an exemplar of ecological modernization
Walmart’s shift toward sustainability is closely associated with the emergence of ecological modernization theory, which, much like the discourse of sustainability, views environmental degradation not as an impediment but as an impetus for economic growth. Eschewing notions based on
limits to growth and fear and distrust of technology, industrialization, and consumerism, the discourse of ecological modernization views “continued industrial development as offering the best
option for escaping the ecological crisis of the developed world” (Foster, 2012: 219). This starts
from the conviction that the ecological crisis can be overcome by technical and procedural innovation and calls for a new phase of industrialization organized around new technology, intensive
environmental reforms such as industrial ecology, environmentally conscious manufacturing,
and ecological design (Cohen, 2006). For ecological modernization proponents the “ecological
deficiency” of industrial society is the driving force for a new round of industrial innovation that
would enable firms to internalize the environmental externalities without disrupting their ability
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to make profits, with the result that improving the environmental bottom line and the economic
bottom line become one and the same (Foster, 2012: 219).
Instead of focusing on the downstream impacts of the industrial process and cleaning up
the damage and pollution that has already occurred, ecological modernization theory involves
a paradigm shift that calls for transforming the upstream side of the production process so that
pollution and environmental damage doesn’t occur in the first place. Closely related to this
are consumption chains or the strong emphasis on the consumption side of global production.
By using ideas of industrial ecology to focus on the entire life cycle of products, including the
processes of extraction, production, use, and eventual disposal, Walmart has adopted a core idea
of ecological modernization theory, becoming a particular form of American-style ecological
modernization (Schlosberg and Rinfret, 2008). By greening consumption and making it more
efficient, Walmart is putting into practice the long-standing motto of ecological modernization
discourse: “pollution prevention pays” (ibid.).
The greening of Walmart and neoliberal environmentalism
Walmart’s sustainability initiative has received both praise and ridicule. Numerous scholars and
environmentalists, many of them former critics of the retail giant, have argued that despite its
many faults, Walmart may be the only entity capable of making sustainable production and
consumption a reality. As the world’s largest employer with immense power and influence over
the manufacturing and production process, Walmart could finally bring about environmental changes that many had been fighting for but were unable to achieve. Former Sierra Club
President Adam Werbach exemplifies this attitudinal shift in favor of a more corporate-friendly
environmentalism. Despite once describing Walmart as “a new breed of toxin that could wreak
havoc on a town,” he began working with the retail giant on its sustainability agenda, which he
has hailed as a green revolution that could transform business and save the world (Sacks, 2007).
For Werbach and many other sustainability proponents of green capitalism, corporations are no
longer regarded as the enemy but as the friend of the environment. Such ideas have led some to
argue “that it is getting harder and harder to hate Walmart ”(Alter, 2006).
The notion that corporations can solve environmental problems better than government
reflects a growing acceptance of neoliberal market-knows-best strategies that promote privatization, free trade, deregulation, and global competitiveness. According to Peck and Tickell (2002),
neoliberalism consists of two phases: the ‘roll-back’ neoliberalism of the 1970s and 1980s in
which state regulation of the economy and cuts in social spending characteristic of welfare state
capitalism were progressively dismantled in order to unleash the free market, and a roll phase in
which assorted private–public partnership schemes and governance structures come to replace
the functions of the state in many spheres of society ranging from prisons to parks to schools,
and more. Walmart’s sustainability initiative combines aspects of both neoliberal tendencies. On
the one hand, Walmart funnels campaign cash to politicians who vote against environmental
regulation and protections to ward off and roll back unwanted government regulation that
might curtail its profit-making ability (Mitchell, 2014). On the other hand, it has developed
strategic partnerships with both major and small-scale environmental organizations, NGOs and
assorted non-profits that serve both ideological as well as economic functions. The Environmental Defense Fund touts working with Walmart as a win-win proposition because it is able “to
leverage what the retailer does best – creating efficient systems, driving change down through its
supply chain and accessing a huge customer base – in order to dramatically advance environmental progress.” According to Bloom, (2014: 8), “in working with public and non profits, Walmart
is able to outsource costs, risks and responsibilities of developing local supply chains.”
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Walmart’s emphasis on public–private partnerships reflects a troubling global environmental
governance trend that Dauvergne and Lister (2012) refer to as “big brand sustainability.” Increasingly, multinational corporations like Walmart are ing hailed as “global sustainability champions”
that in the absence of strong governmental regulatory mechanisms enables them to behave as
global environmental regulators. While these trends would suggest a need for stronger state
regulations and tougher international legal constraints, such ideas are losing out on the ideological front. Increasingly, the notion that large corporations like Walmart can voluntarily regulate
and police themselves more effectively than government is coming to be viewed as legitimate by
many in the environmental movement who have been frustrated by slow progress and small gains.
The tendency to place faith in the beneficence of corporate environmentalism is reflected in the
increased importance granted to the emerging field of life cycle analysis, which is, as we have seen, a
core component of Walmart’s sustainability indexing program. Unlike other fields such as medicine
and nutrition that companies might use to gain information and knowledge about products that
could bolster their brand image, the discipline of life cycle analysis is a corporate invention. The
field itself is a product of corporations with vested commercial interests who rely on life cycle analysis to create so-called objective and scientific environmental knowledge about products (Friedberg,
2014). Once again, this reflects the neoliberal tendency to embrace market-based solutions as the
means for solving environmental problems instead of relying on government regulation.
The celebration of corporate partnership models that are hailed as being more effective than
state-led governance represents a victory for corporations like Walmart who are able to boost
both their environmental reputation as well as their bottom line. More importantly, and far more
problematically, these practices represent the triumph of the ongoing neoliberalization of global
environmental governance and the legitimation and naturalization of the misguided notion that
corporations know what is best for people and the planet.
Enlisting citizen consumers to the Walmart Way
Walmart often claims that its sustainability initiative is a response to the purchasing power of
environmentally conscious consumers who are concerned about products manufactured under
conditions that exploit workers and degrade the environment. The gospel of sustainable consumption with its chorus of environmentally concerned citizens voting with their dollars is the
latest version of the consumer sovereignty ideology being used to mystify where power resides in
a capitalist economy. The consumer sovereign ideal suggests that not only do consumers benefit
by being able to choose from a variety of goods, but they possess the power to drive the economy
by suggesting what goods and services will be made available (Cabrera and Williams, 2014)
Such a notion abuses one of the key insights at the core of C.W. Mill’s “sociological imagination,” namely the ability to recognize how our “personal troubles” are connected to “public
issues” that transcend the individual. For example, the modern feminist movement was able to
reframe women’s psychological pain as a symptom of gender inequality and patriarchal oppression, insisting that “the personal is political.” In a similar vein, environmental social movements
have often reframed people’s personal or private misfortunes so that they are viewed as social
problems that are caused by social structural forces. In the case of environmental toxics and
environmental health, the movements reframed people’s personal experiences as public issues
by telling them that the miscarriages, birth defects, cancers, and high rates of asthma in their
communities were not private or personal tragedies but the result of irresponsible corporations
polluting their environment. In recent years, child obesity and its associated health problems has
recently undergone the transformation from a personal problem into a public issue about access
to healthy and nutritious food.
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The discourse of sustainable consumption with its mantra of citizens voting with their dollars
downplays social structural causes of environmental problems and shifts the focus to the individual consumer. It transforms a public environmental issue into private troubles, with the result
that people go from being citizens concerned with changing political and economic structures
and institutions into individual consumers concerned with protecting or enhancing their lifestyle. Maniates refers to individual responses to environmental problems as the “individualization
of responsibility” and the inability to think institutionally. He argues, “when responsibility for
environmental problems is individualized, there is little room to ponder institutions, the nature
and exercise of political power, or the ways of collectively changing the distribution of power and
influence in society” (Maniates, 2001: 36).
Consumption in a global capitalist economy is not an individual act performed by sovereign
consumers but rather a set of practices embedded in wider economic, social, and cultural systems.
While Walmart stores may seem like a consumer paradise where individuals exercise their freedom of choice, the emphasis on individual buying power obscures the degree to which choices
are “constrained, shaped and framed by institutions and political forces that can be remade only
through collective citizen action, as opposed to individual consumer behavior” (ibid.). The armies
of citizens who flock to Walmart aren’t changing the corporate structure as much as strengthening and legitimating its stranglehold (Johnson, 2008). As Guthman and DuPuis (2006: 443) write,
“we have all but abandoned notions of citizenship as participation in the public sphere for a more
individualist notion of self as the citizen consumer whose contribution to society is mainly to
purchase the products of global capitalism.” Likewise, Reich (2005) has argued that people have
split personalities when it comes to Walmart. They act as citizens who call for the company to
clean up its environmental act at the same time as they endlessly consume in search of bargains.
For Barber (2007), the notion of citizen consumer advocacy is quite limited and does not address
the structural inequality wrought by a capitalist system that seeks perpetual expansion through
the manufacture of wants and needs of well-heeled consumers. Meanwhile, the green citizen
consumer idea co-opts a more skeptical attitude toward the social and environmental impacts of
excessive consumption. It also reinforces and helps legitimate the neoliberal corporate-friendly
environmentalism championed by Walmart and its supporters that is severely limited because of
its reliance on the market to address environmental concerns. In other words, environmentally
concerned citizens are reduced to choosing from a wide variety of bottled waters rather than
choosing from a variety of options to fix the structural and systemic conditions that generate
unhealthy and unsafe water in the first place.
Another problem with the sustainable citizen consumer model is the ease with which it
lends itself to the co-optation and commodification of dissenting and alternative consumption
strategies. There is a long critical tradition which argues that counter cultural and oppositional
ideas to mainstream values are easily absorbed as another lifestyle and identity product for flexible neoliberal global capitalism which thrives on branding differences that ultimately reinforce
and strengthen consumption as a way of life. The illusion that these consumers are active agents
driving the turn toward sustainability meshes perfectly with Walmart’s business model, which has
perfected the art of co-opting counter-cultural or alternative practices and transforming them
into a marketable, commodified norm. Walmart’s sustainable food initiatives are a case in point.
Walmartization and the politics of sustainable food
Increasingly, sustainable food production and consumption practices have become a key component of Walmart’s wider sustainability initiative. As the largest food retailer in the world, it has
come to dominate the agricultural systems just as it did with manufacturing, with the result that
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there is a growing consolidation of every aspect of the food chain from farm to fork. In 2006
Walmart began marketing organic foods and in 2010 it launched its heritage agriculture initiative
which focuses on promoting and supporting local and regional farmers.
Walmart has also undermined ideas of the food justice movement that link personal actions
to larger social, political, and economic processes, and focuses attention by emphasizing that the
low cost of food is dependent, in part, on the unjust treatment of agricultural workers. The food
justice critique of industrialized agriculture also combines an analysis of racial and economic
injustice with practical support for environmentally sustainable alternatives that can provide
empowerment and access to healthy food for people in marginalized communities (Alcon and
Agyeman, 2011: 6). For Schlosser (2008), the movement for a just sustainable agriculture will
never be sustainable without including ordinary working people, the poor, and people of color,
and “without them it runs the risk of degenerating into a hedonistic narcissism of the few.”
As part of this healthy food initiative, Walmart has pledged to increase charitable nutrition
assistance programs and to use its enormous market power and highly efficient global logistics
system to make healthy organic food more affordable. This has become an important part of
its new urban strategy where it frames its ability to provide sustainable, healthy, and affordable
food to low-income neighborhoods experiencing “food deserts” as it gains access to communities traditionally opposed to big box retail stores. To help with these efforts, the company
has enlisted local politicians and community activists as well as notable public figures such as
Michelle Obama who on several occasions has praised the company’s efforts to sell healthier
and affordable food.
Walmart’s foray into sustainable food has both champions and critics. Proponents argue that
despite its many sins, Walmart can be a force for good. Walmart’s size and reach make it a game
changer because, “Being able to say to farmers in the Central Valley if you grow this we will buy
your stuff ” is very hard to resist (Rowe, 2011). In other words, Walmart’s emphasis on efficiency
and waste reduction applied across the food chain “can bring fruits and vegetables back to the
land where they once flourished and deliver them to the people who need them most” (Kummer 2010). Critics argue that when it comes to regional food and organic farming that there are
agricultural fundamentals for “Why Walmart can’t fix the food System” by compelling its suppliers to streamline their production process, is intrinsically damaging to the essence of the local
and organic food movement, which depends on small-scale production (Food and Water Watch,
2012), rather than on Walmart’s sustainable agriculture strategy that accelerates the growth and
concentration of a new type of factory farming which Pollan has referred to as “industrial local”
(Thompson and Gokcen, 2007). Perhaps the most troubling aspect of Walmartization is the ease
with which the company enlists potential enemies and transforms them into willing accomplishes in the “greening” of capitalism.
Partnering with or co-opting community?
While many in the food justice movement are calling for a return to small farms and local operated stores, such a strategy is facing many structural constraints imposed by subsidies to large-scale
agribusinesses, monopolistic pricing, and policies of global neoliberalism. Increasingly, as a result
of such constraints, many food activists, like other mainstream environmental organizations, are
contradictorily stressing the need to partner with jumbo corporations like Walmart as a means
of realizing some of their social justice aims. For those who support partnering, some reluctantly
embrace “working with the enemy” because it represents the only game in town, while others
have become cheerleaders for what has been referred to as “American style ecological modernization” (Schlosberg and Renfrit, 2008).
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A notable example of Walmart’s efforts to promote food justice is its pledge of support for
food justice activist Will Allen, founder of the non-profit organization Growing Power Inc.,
which links the personal consumption of food to larger issues of poverty, foodlessness, and joblessness. Growing Power seeks to help communities build sustainable food systems that are equitable,
ecological, and economically viable. For Allen, food activists can no longer afford not to invite
big corporations like Walmart to the table of the food justice movement. For him, such idealism would do more harm than good. In a response to waves of criticism from supporters for his
acceptance of a million-dollar grant from Walmart he issued the following statement:
Keeping groups that have the money and the power to be a significant part of the solution
away from the Good Food Revolution will not serve us . . . by accepting grants like these
we retain the power for how corporate money is spent, and the grassroots movement stays
grassroots.
(Allen, 2012)
Catering to people who care about fair trade and social justice issues on the part of Walmart is
just another example of a “good” business decision designed not only to hold on to or increase
market share, but also to win people over through public relations strategies that manufacture
mass consent (Lichtenstein, 2009; Massengill, 2013; Walker, 2014).
Walmart’s steady rise to power has not gone uncontested. Its efforts to expand have spawned
anti-Walmart movements acrossthe globe. One response on the part of Walmart to mounting
opposition and protest has been to engage in enhanced public relations. In 2005, for example,
after coming under attack from union-based web organizations like Wake-Up Walmart and
Wal-Mart Watch, Walmart hired Edelman Public Relations to improve its negative image as
a company that exploits its workers. Initially, Walmart’s attempts failed miserably because of
the discovery that a so-called grassroots community organization that appeared to represent a
groundswell of spontaneous support was in fact an organization founded by Walmart and its PR
consultants. Gradually, Walmart adopted a more sophisticated multi-pronged public relations
approach, already described herein as incorporating ideas associated with sustainability, corporate
responsibility, and food justice discourses as a means of reaching out to ordinary people and to
those community leaders who preach about these values. Sites (2011) has shown how in the case
of Chicago, Walmart’s victory to open a store despite opposition came about because it was able
to reach out to groups that had been historically excluded from many of the economic benefits of
redevelopment schemes and to incorporate them as junior partners in exchange for concessions
that were largely symbolic (Sites, 2011).
Walmart’s marketing of organic food taps into and reinforces the individualization of environmental problems that is also characteristic of many alternative food movements. For many people,
eating organic foods isn’t a political act as much as a way to improve their heath, a practice that
Szasz has called an “inverted form of quarantine” (Szasz, 2007). In a similar vein, Pollan (2001)
discusses two types of organic food consumers: health seekers who eat organic food for health
reasons, and “true organics” who view eating organically produced food as a political act, a way
of critiquing and resisting the industrialized food system.
In many cases, alternative food movements embrace a form of neoliberalism from below
that corporations like Walmart turn to their political and economic advantage. For example,
the locavore food movement’s skepticism about government intervention and its embrace of
small- scale market-based solutions and voting with one’s dollars to bring about social change is
very compatible with Walmart’s sustainable food marketing strategies. In promoting organic and
local agriculture and adding them to their growing list of green products, Walmart is helping
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to transform structural and systemic problems into individualized matters of consumer choice
(Busa and Garder, 2014). By partnering with community food activists and depoliticizing their
concerns, Walmart facilitates and transforms potential threats from industrializing the food system and “Monsanto-izing” its production, instead, into profitable opportunities, with the result
that “food enterprise trumps engagement with broader issues of food justice” (Henrichs, 2013:
15). Once again, these innovations in green marketing and the appropriation of the language of
sustainability, combined with Walmart’s vast economic power, creates the same kind of asymmetrical supply chain relations in the agricultural system that it has achieved in all of its other
business activities (Henrichs, 2013: 16.)
Conclusion: Walmart wars and the Walmartization of the planet
Walmart has become a symbolic target for those being harmed by the larger worldwide restructuring of the economy, and the term Walmartization has come to stand for the process that
negatively impacts the growing armies of service workers, their communities, and the larger
environment. Walmartization or the “Walmart Effect” is not unlike Ritzer’s notion of McDonaldization that not only refers to a particular company, but also to a new version of Weberian
rationalization and to a business template that is becoming hegemonic as another model of neoliberal and global capitalism.
Despite several successful anti-Walmart campaigns to prevent the retail behemoth from entering new communities, these struggles have not put a stop to Walmartization. For example, during
Walmart’s second failed attempt to open a store in New York City, local city council member
Charles Baron accused the company of trying to bribe the locale with a community benefits
agreement. While Baron attacked Walmart, he wasn’t against working with Target, another big
box retail, to establish a “better deal” for the community. In other words, the actions of the
council member did not deter the dominance of big box retail or the destruction of small (local)
businesses. On the contrary, forming a “community” partnership with Target whose labor and
environment record is basically no different than Walmart’s does nothing to ameliorate the negative effects on labor, the community, or the environment.
Walmart’s version of sustainability or the greening of capitalism is deceptively dishonest, as it
prioritizes profits over both workers and the environment. Its emphasis on “sustaining people” is
more about saving money for consumers to buy more products rather than protecting the health
and safety of people who produce and sell those products. Walmart’s emphasis on sustainability
represents an awareness of growing consumer trends as well as a business strategy to capture
market share. This strategy also helps the company to differentiate itself from its competition,
enabling Walmart to get better at what it does best: drive down costs to generate more profits
(Henrichs, 2013). Walmart’s greening strategy with its promise of making consumption more
sustainable has also reinforced an ideology of privatized and depoliticized “citizen consumerism” while at the same time helping to boost its tarnished image. Although the ideas of green
consumerism and sustainable consumption did not originate with Walmart, they have surely
helped to elevate them. Moreover, while Walmart’s attempts to make consumption smarter and
more efficient have helped raise awareness about the negative environmental and social costs of
consumption, the idea that endless consumption as a way of life might be destructive and unsustainable is never questioned.
Despite being laced with heavy doses of corporate responsibility and sustainability rhetoric,
Walmart’s initiatives on behalf of environmental concerns and better consumerism still take a
back seat to its concerns for economic growth and the bottom line. While Walmart talks about
applying the sustainability index across the supply chain, such efforts stop far short of providing
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many of its own workforce with a living wage and health benefits. Its efforts to make people
aware of the environmental footprint of the products that they buy don’t translate into any substantial changes to its business model. While Walmart claims that it takes its corporate responsibility seriously and incorporates the concerns ofits critics and workers alike, the company turns a
deaf ear to any kind of talk about the unionization because it is convinced that letting unions into
its stores would compromise its extraordinarily successful business model based on an unrelenting
push to cut costs to achieve narrow profit margins (Lichtenstein, 2009: 246). In closing, Walmart’s
sustainability paradox that embraces sustainability outside of its organization’s supply chain but
not inside its stores with respect to its workforce and their communities (Gordon, 2014) is not
surprising given its hegemonic acceptance of the unsustainable idea that unbridled neoliberal
consumer capitalism is somehow compatible with environmental health and social justice.
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Part IV
Environmental crimes
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14
Climate change, ecocide and
crimes of the powerful
Rob White
Introduction
Climate justice is ultimately a matter of addressing the systemic and organisational crimes of
the powerful that are destroying environments and contributing to global warming and climate
change. The race by the powerful to exploit increasingly scarce environmental resources is placing an incredible strain on vulnerable ecosystems worldwide. As well as directly and indirectly
contributing to global warming and climate change, these activities are also increasingly a source
of violent social conflict.
This chapter discusses the systemic and organisational crimes of the powerful in relation to
climate change. The concept of ecocide is drawn upon to frame and highlight the nature of these
crimes and to what is at stake for humans, animals, plants, ecosystems and planetary well-being.
Fundamentally, it is global capitalism and its key institutions that lie at the heart of global warming and the processes that sustain and extend rapid climate change.
Climate change and ecocide
Scientists in different disciplines have expressed concerns about global warming for many years.
Even though these concerns have been systematically denied and downplayed by contrarians,
many with friends in high places (Brisman, 2012; Kramer, 2013), climate change is accepted by
the majority of people today as a serious and urgent issue. This is because global warming is
transforming the biophysical world in ways that are radically and rapidly reshaping social and
ecological futures. The Intergovernmental Climate Change Panel (2013) reports the following:
•
•
•
Warming of the climate system is unequivocal, and since the 1950s, many of the observed
changes are unprecedented over decades to millennia. The atmosphere and ocean have
warmed, the amounts of snow and ice have diminished, sea level has risen, and the concentrations of greenhouse gases have increased.
Each of the past three decades has been successively warmer at the Earth’s surface than any
preceding decade since 1850.
Ocean warming dominates the increase in energy stored in the climate system, accounting
for more than 90 per cent of the energy accumulated between 1971 and 2010.
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R. White
•
•
Over the past two decades, the Greenland and Antarctic ice sheets have been losing mass,
glaciers have continued to shrink almost worldwide, and Arctic sea ice and Northern Hemisphere spring snow cover have continued to decrease in extent.
The rate of sea-level rise since the mid-nineteenth century has been larger than the mean
rate during the previous two millennia.
Climate change has been associated with varying types of ‘natural disaster’ which are projected
to increase in intensity and frequency in the foreseeable future. These include such phenomena
as floods, cyclones, extreme heat spells and cold snaps.
As discussed in this chapter, narrow sectoral interests embedded in present socio-economic
dynamics are driving global warming as well as responses to regulating or taxing the emissions
that contribute to it. Juxtaposed against and contrary to these specific interests are the collectivist
ideals of ‘universal human interests’ and ‘ecological citizenship’. The appeal of ecological citizenship as a concept stems in part from recognition of the universal interests that underpin the
relationship of human beings with the environment. Ecological citizenship allows for stepping
outside prescriptive patriotism (e.g. Australia first, America first, China first) when global ecological health and well-being demands a planetary response (e.g. Earth first). Ecological citizenship is also tied to the notion of ‘Earth Rights’ and the survival needs of all species and biospheres
on the planet (see Cullinan, 2003; White, 2013).
Yet, the reality is that those least responsible for, and least able to remedy the effects of, climate change are the worst affected by it (Shiva, 2008; Bulkeley and Newell, 2010). The specific
interests and rights of the poor, the disadvantaged and those who do not control their means of
production are basically overridden by the actions of the powerful – hegemonic nation-states
such as the United States and China, and transnational corporations propped up by global systems of finance and regulation. The world is dominated by a political economic system that is
inherently unequal and that is intrinsically protective of particular interests rather than universal
human and ecological interests.
The destruction of the environment in ways that differentially, unequally and universally affect
humans, ecosystems and nonhuman species may be conceptualised criminologically as a specific
type of crime. The concept of ecocide provides an example of this harm-defining process. Ecocide
has been defined as ‘the extensive damage, destruction to or loss of ecosystems of a given territory,
whether by human agency or by other causes, to such an extent that peaceful enjoyment by the
inhabitants of that territory has been severely diminished’ (Higgins, 2012: 3). Where this occurs as
a result of human agency, then it is purported that a crime against humanity has occurred.
The notion of ecocide has been canvassed at the international level since at least the 1960s
(Gray, 1996; Higgins et al., 2013). For example, there were major efforts to include it among the
crimes associated with the establishment of the International Criminal Court, although the final
document refers only to war and damage to the natural environment. Nonetheless, environmental activists and international lawyers have continued to call for the establishment of either
a specific crime of ‘ecocide’ and/or the incorporation of ecocide into existing criminal laws and
international instruments (Higgins, 2012). Recent efforts have sought to make ‘ecocide’ the fifth
International Crime against Peace (Higgins, 2010, 2012). The strategic urgency and ideological
impetus for this has been heightened by the woefully inadequate response to global warming
by governments, individually and collectively, around the world. Climate change is rapidly and
radically altering the basis of world ecology; yet very little substantive action is being taken by
states or corporations to rein in the worst contributors to the problem.
Establishment of the crime of ecocide is premised upon the idea of Earth stewardship. Paradigms
of trusteeship and stewardship are very different to those based on private property and individualised
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Climate change and ecocide
conceptions of ownership. As Walters (2011: 266) points out, ‘Ownership implies that you can use
land but don’t have responsibility to others to care for it’. Conversely, the Earth may be seen to be
‘held in trust’, with human beings responsible for providing the requisite stewardship. Threats to
Nature rights may be conceptualised, in essence, as a crime of ecocide, and thus open to sanction.
Why the push for ecocide as a crime, and why now? The obvious answer is that climate
change and the gross exploitation of natural resources are leading to the general demise of planetary well-being. The ‘choices’ ingrained in environmental exploitation (of human beings and
of the nonhuman world) stem from systemic imperatives to exploit the environment for the
production of commodities for human use. In other words, how human beings produce, consume and reproduce their life situations is socially patterned in ways that are dominated by global
corporate interests. The power of consumerist ideology and practice manifests itself in the manner in which certain forms of production and consumption become part of a taken-for-granted
common sense – the experiences and habits of everyday life.
The normal operations of capitalist enterprise, singularly and collectively based on production
of carbon emissions, in turn, contribute to global warming, as indicated by the Intergovernmental
Panel on Climate Change (2013):
•
•
•
The atmospheric concentrations of carbon dioxide, methane and nitrous oxide have increased
to levels unprecedented in at least the last 800,000 years.
Carbon dioxide concentrations have increased by 40 per cent since pre-industrial times,
primarily from fossil fuel emissions and secondarily from net land use change emissions.
Continued emissions of greenhouse gases will cause further warming and changes in all
components of the climate system. Limiting climate change will require substantial and
sustained reductions of greenhouse gas emissions.
In light of these worrying trends, why then does global warming continue apace? To answer this
we need to explore further the nature of contemporary global capitalism.
Global capitalism and transnational corporations
The systemic pressures associated with the global capitalist mode of production (CMP) inevitably lead to the exploitation of human beings, ecosystems and species, and the degradation of the
environment via pollution and waste, as well as global warming and climate change. The problem
is the dominant political economic system. Environmental ‘crimes’ are committed in the pursuit
of ‘normal’ business outcomes and which involve ‘normal’ business practices (see Roth and Friedrichs, 2015). This can be distilled down somewhat by reference to specific industries, such as the
‘dirty industries’ of coal and oil and how they engage in particularly damaging practices. But the
overarching imperative to expand and increase production and consumption nonetheless obtains
for all industries plugged into the global CMP.
The specific organisational form which global capitalism takes is that of the transnational corporation (TNC). These corporations act and operate across borders, and involve huge investments
of resources, personnel and finances. They are also amalgamating (via mergers and take-overs)
and expanding (via horizontal and vertical integration of business operations). Their ‘crimes’ are
occasionally explicit and legally acknowledged (as in the case of BP and the Gulf oil spill). More
often than not, the social and ecological harms associated with TNCs are not criminalised.
Some writers see the corporate form as intrinsically criminogenic (Glasbeek, 2004, 2003;
Bakan, 2004). In this view, the corporation has been designed precisely in order to, first, facilitate the gathering of investment capital for large-scale ventures through selling shares in the
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companies. Originally, investment was nearly always associated with the expansion of production.
Today, most investment is speculative (in futures, options and shares themselves). Second, the corporation allows the separation of the corporate identity from that of the shareholder. If the venture succeeds, the shareholder receives dividends and the shares tend to rise in value; if the venture
fails leaving large debts, this is nothing to do with the shareholder who has no responsibility.
From this viewpoint, the duty of company directors is to maximise the interests of shareholders (i.e. to increase their return on investment); they have no duty to advance, or even consider,
any other interest, economic or social. There may be talk of a triple bottom line in which
accounts seemingly balance the economic, the social and the environmental, but the reality is that
profit is the only meaningful measure of corporate success.
The first duty of the corporation, therefore, is to make money for shareholders, and thus for
executives and managers to always put their corporation’s best interests first. This makes them
ruthless and predatory, and always willing to externalise costs and harms, regardless of the lives
destroyed, the communities damaged, and the environments and species endangered (Bakan,
2004). Morality, in this context, is entirely contingent upon local social, economic and regulatory
conditions. Where corporations can ‘get away’ with immoral cost cutting, profitable activities
that are nonetheless harmful to others, and market advantage, they will. This impetus to place
profit before anything else is ingrained in the nature of global capitalist competition. As Robinson
(2000; cited in White, 2008a: 116) observes, this has worldwide consequences:
Many have noted that there is a direct relationship between the increasing globalisation of
the economy and environmental degradation of habitats and the living spaces for many of the
world’s peoples. In many places where Black, minority, poor or Indigenous peoples live, oil,
timber and minerals are extracted in such a way as to devastate eco-systems and destroy their
culture and livelihood. Waste from both high- and low-tech industries, much of it toxic, has
polluted groundwater, soil and the atmosphere. The globalization of the chemical industry is
increasing the levels of persistent organic pollutants, such as dioxin, in the environment. Further,
the mobility of corporations has made it possible for them to seek the greatest profit, the least
government and environmental regulations, and the best tax incentives, anywhere in the world.
There is thus an identifiable nexus between capitalism as a system, and environmental degradation and transformation.
In essence, the competition and pollution and waste associated with the capitalist mode of
production have a huge impact on the wider environment, on human beings and on nonhuman species (for example, in the form of pollution and toxicity levels in air, water and land).
One impact of unsustainable environmental practices is the pressure exerted on companies to
seek out new resources (natural and human) to exploit as existing reserves dwindle due to overexploitation and contamination from already produced wastes. At the heart of these processes
is a political culture which takes for granted, but rarely sees as problematic, the proposition that
continued expansion of material consumption is not only possible ad infinitum but will not
harm the biosphere in any fundamental way. Built into the logic and dynamics of capitalism is
the imperative to expand (Foster, 2002), a tendency that is reinforced and facilitated by neoliberal
ideologies and policies. Ecocidal destruction is thus ingrained in the present political economy.
Under capitalism there are constant pressures to increase productive forces and a tendency
towards cyclical crises (as witnessed by the Global Financial Crisis of 2008). Periodic crises lead
to system propensities towards commodification of all that is necessary in order to live and all that
really matters. The four elements – water, air, earth (land), sun (energy) – are, for example, ever
more subject to conversion into something that produces value for private interests. Capitalism
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Table 14.1 Commodification of nature
Production and nature
Consumption and nature
Exploitation of workers and of nature that
transforms each into a commodity
Circuits and processes of exchange that realize the
monetary value of exploitation
Surplus value as source of profit
[access to relevant labour pools]
Profit as realization of surplus value
[markets for commodities]
Scarcity as source of profit
[access to natural resources and exploitable
animals and plants]
Waste related to and as source of profit
[cost minimalization, recycling, externalization of
costs and harms]
is always searching for things that can be transformed from simple use-values (i.e. objects of
need) into exchange-values (i.e. commodities produced for exchange). This extends to ‘Nature’
as it does to other kinds of objects. For example, what may have been formerly ‘free’ (e.g. drinking water) is now sold back to the consumer for a price (e.g. bottled water or metered water).
Effectively, consumption has been put to the service of production in the sense that consumer
decisions and practices are embedded in what is actually produced and how it is produced (see
Table 14.1). Yet it is through consumption practices, and the cultural contexts for constantly
growing and changing the forms of consumption, that production realises its value.
Commodity production and consumption take place within a global system that is hierarchical and uneven. That is, sovereignty is historically and socially constructed through the prism
of colonialism and imperialism, with certain nation-states holding greater power and resources
(including military might) than others. The relationship between local, national, regional and
global interests is construed within diverse social and political formations (e.g. the United States,
European Union, Association of South-East Asian Nations, African Union), but these, in turn,
reflect the continuing legacy of a world divided into the ‘haves’ and ‘have-nots’. The contours of
this division are dictated by the strength of ownership and control over the means of production
exerted regionally and globally by particular nation-states in conjunction with and in the interests of particular corporations. At the top of the hierarchy of nation-states is the United States.
The appropriation of nature does not merely involve the turning of natural resources into commodities, and entrenching inequality via the global market, but also frequently involves capital actually remaking nature and its products biologically and physically. It has been observed, for instance,
that ‘A precapitalist nature is transformed into a specifically capitalist nature’ (O’Connor, 1994: 158)
in the form of genetic changes in food crops, the destroying of biological diversity through the
extensive use of plantation forestry, and so on. Indeed, the industrialisation of agriculture (incorporating the use of seed and other patents) is one of the greatest threats to biodiversity, since this is
one of the leading causes of erosion of plant genetic and species diversity. The basic means of life of
humans is being reconstituted and reorganised through global systems of production (Croall, 2007),
and in many cases the longer term effects of new developments in the food area are still not known.
The contours of global capitalism are crucial to any discussion of climate change insofar as
how, or whether, certain human activity is regulated and facilitated is still primarily a matter of
state intervention. The strategies that nation-states use to deal with environmental concerns are
contingent upon the class interests associated with political power. In most cases today the power
of TNCs finds purchase in the interface between the interests and preferred activities of the corporation and the specific protections and supports proffered by the nation-state. The latter may
be reliant upon or intimidated by particular industries and companies. Tax revenue and job creation, as well as media support and political donations, may hinge upon particular state-corporate
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synergies. This of course can undermine the basic tenants of democracy and collective deliberation over how best to interpret the public or national interest.
The structure and allocation of societal resources via the nation-state also has an impact upon
how environmental issues are socially constructed. Spending on welfare, health, transportation,
education and other forms of social infrastructure makes a major difference in people’s lives.
Recent fiscal crises (especially noticeable in European countries such as Greece, Ireland and Spain)
and the effects of the global economic crisis have had the global impact of making ordinary
workers extremely vulnerable economically. Under such conditions, there is even greater scope
to either reduce environmental protection, or to increase environmentally destructive activity for
short-term economic gain. In such circumstances, state legislation and company practices that
are seen to put fetters on the profit-making enterprise will be withdrawn or markedly reduced.
The lack of concerted global action on climate change is due in large measure to the actions of
large transnational corporations, especially those in the ‘old energy’ sectors such as coal-mining.
Given that the top private corporations are economically more powerful than many nation-states,
and given that they own and control great expanses of the world’s land, water and food resources,
these corporations are individually and collectively a formidable force. On occasion, as well,
business competitors may combine to use their collective muscle to influence world opinion or
global efforts to curtail their activities. For example, analysis of how big business has responded
to global warming reveals a multi-pronged strategy to slow things down (Bulkeley and Newell
2010). Some of these include the following:
•
•
•
•
•
•
Challenging the science behind climate change.
Creating business-funded environmental NGOs.
Emphasising the economic costs of tackling climate change.
Using double-edged diplomacy to create statemates in international negotiations.
Using domestic politics (particularly in the United States) to stall international progress.
Directly influencing the climate change negotiations through direct lobbying.
It is only continuous pressure from below (grassroots groups and global activists), and the occasional exercise of political will from enlightened politicians from above (as is evident in some
Latin American countries such as Bolivia), that moderates the exercise of this corporate power.
Climate change, ecocide and state-corporate crime
The perpetrators and responders to global warming tend to be one and the same: namely nationstates and transnational corporations. Globally, there is widespread state support for risky business that contributes to global warming. The oil and coal industries, the ‘dirty’ industries, are
still privileged, coal seam hydraulic fracturing continues to threaten prime agricultural land, and
natural resource extraction relies upon deep-drill oil exploration, mega-mines and mountaintop
destruction. It is the scale and pace of resource extraction that is of immediate and particular concern. Australia is an exemplar of this as it continues to disrupt outback regions and put the Great
Barrier Reef in jeopardy in order to take advantage of Chinese demand for its natural resources.
At a systems level, the treadmill of production embodies a tension or ‘metabolic rift’ between
economy and ecology (Foster, 2002, 2007; Stretesky et al., 2014; Lynch and Stretesky, 2014).
Pro-capitalist ideologies and practices ensure continued economic growth at the expense of ecological limits. Effective responses to climate change need to address the deep-seated inequalities
and trends within the treadmill of production that go to the heart of the ownership, control and
exploitation of resources.
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When it comes to climate change, corporate and state actors in interaction with each other
create harm in at least four significant ways (Kramer and Michalowski, 2012):
1
2
3
4
Denying that global warming is caused by human activity.
Blocking efforts to mitigate greenhouse gas emissions.
Excluding progressive, ecologically just adaptations to climate change from the political arena.
Responding to the social conflicts that arise from climate change by transforming themselves
into fortress societies that exclude the rest of the world.
The global status quo is protected under the guise of arguments about the ‘national interest’ and
the importance of ‘free trade’ that reflect specific sectoral business interests. Social need and universal human interests are not being addressed due to the resistance and contrarianism perpetrated
by powerful lobby groups and particular industries, including lobbying against global agreements
on carbon emissions and the use of carbon taxes.
Simultaneously, there is state and TNC agreement about desired (and profitable) changes in land
use, such as deforestation associated with cash crops, biofuels, mining, and intensive pastoral industries. Indeed, tropical deforestation is now responsible for some 20 per cent of global greenhouse
emissions (Boekhout van Solinge, 2010). Indonesia and Brazil have become respectively the third
and fourth CO2 emitting countries of the world, mainly as a result of the clearing of rainforest.
States have given permission and financial backing to those companies engaged in precisely what
will radically alter the world’s climate the most in the coming years: greenhouse gas emissions.
The exploitation of Canada’s Alberta tar sands provides another case of crimes of the powerful.
This massive industrial project involves the active collusion of provincial and federal governments
with big oil companies. The project is based on efforts to extract and refine naturally created
tar-bearing sand into exportable and consumable oil. It involves the destruction of vast swathes
of boreal forest, it contributes greatly to air pollution, and it is having negative health impacts on
aquatic life and animals, and for human beings who live nearby (see Smandych and Kueneman,
2010; Klare, 2012). Most importantly, it is the single largest contributor to the increase of global
warming pollution in Canada. Placed within the larger global context of climate change, the
scale and impact of the Alberta tar sands project fits neatly with the concept of ecocide (Higgins,
2013) as well as the concept of state-corporate crime (Kramer and Michalowski, 2012) . The
role of the federal and provincial governments has been crucial to the project, and in propelling
it forward, regardless of manifest negative environmental consequences.
The issue of state/corporate collusion can also be examined through the lens of the politics of
denial, involving various techniques of neutralisation (see Sykes and Matza, 1957; Cohen, 2001).
This refers to the ways in which business and state leaders attempt to prevent action being taken
on climate change while actively supporting specific sectoral interests. Typically, such techniques
involve the following kinds of denials:
•
•
•
•
•
Denial of responsibility (against anthropocentric or human causes as source of problem).
Denial of injury (‘natural’ disasters are ‘normal’).
Denial of the victim (failure to acknowledge differential victimisation, especially among the
poor and residents of the Global South).
Condemnation of the condemners (attacks on climate scientists).
Appeal to higher loyalties (economic interests should predominate over ecological concerns).
The net result is no action or inaction in addressing the key factors contributing to climate
change, such as carbon emissions.
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There is a close intersection, therefore, between global warming, government action or inaction, and corporate behaviour (Lynch and Stretesky, 2010; Lynch et al., 2010) and how these
contribute to the overall problem of climate change. Harm is perpetrated, for instance, by government subsidies for coal-fired power stations and government approval of dams that destroy
large swathes of rainforest. In the light of existing scientific evidence on global warming, continued support by governments for such activities represents intentional harm that is immoral
and destructive of collective public interest, in the same moment that particular industries and
companies benefit.
In Australia, for instance, Environment Minister Greg Hunt has proclaimed that he takes
climate change seriously. Nonetheless, in 2014 he approved a Queensland coal-mining project,
Australia’s largest ever, subject of course to ‘the absolute strictest of conditions’. Left out of these
‘conditions’ was any mention of the mine’s impact upon atmospheric carbon levels, as one commentator pointed out:
When Carmichael coal is exported to India and burned, it will release 100 million tonnes of
carbon dioxide each year for the mine’s lifetime of more than half a century. This is about
one-fifth of Australia’s annual total from all sources, way beyond any single enterprise in
our history.
(Boyer, 2014: 13)
As this incident further illustrates, not only is there state-corporate collusion in perpetrating
harm, but responsibility for such harm is frequently externalised as well. This externalisation
occurs both directly (‘we are selling the coal to India’) and indirectly (‘no one country can do
it alone’). Economy yet again trumps ecology, and is defended by those whose ostensible task is
precisely to protect the environment.
The problem with trying to tackle corporate harm is that virtually every act of the corporate sector is deemed, in some way or another, to be ‘good for the country’ (see White,
2008b). This ideology of corporate virtue, and the benefits of business for the common
good, is promulgated through extensive corporate advertising campaigns, capitalist blackmail
(vis-à-vis location of industry and firms) and aggressive lobbying of government and against
opponents. Anything which impedes or opposes business-as-usual is deemed to be unreasonable, faulty, bad for the economy, not the rightful domain of the state, will undermine private
property rights, and so on. In other words, the prevailing view among government and business is that, with few exceptions, the ‘market’ is the best referee when it comes to preventing
or stopping current and potential environmental harm. Powerful business interests (which,
among other things, provide major financial contributions to mainstream political parties)
demand a ‘light touch’ when it comes to surveillance of, and intervention in, their activities. In this framework, the state should not, therefore, play a major role in the regulation of
corporate activities beyond that of assisting in the maintenance of a general climate within
which business will flourish.
To address corporate harm, then, requires a political understanding of class power, and a rejection of formally legal criteria in assessing criminality and harm. It is therefore from beginning
to end a political process. As such, it implies conflict over definitions of conduct and activity
(e.g. as being good or bad, harmful or not so harmful, offensive or inoffensive), over legitimacy
of knowledge claims (e.g. media portrayals, expert opinion), and over the role and use of state
instruments and citizen participation in putting limits on corporate activity (e.g. via regulations,
public access to commercial information).
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Late capitalism, neo-liberalism and the battle for common sense
For critical criminology, class analysis means acknowledging that capitalism ipso facto equates
to a society that is necessarily divided by socio-economic interests, and that is ultimately transformed through struggle around these interests. Acknowledging the evils of global capitalism
also demands analysis of how and why it succeeds at an ideological as well as systemic level. This
requires that attention be given to the contours of the battles surrounding ‘common sense’. In
this regard, the concept of ‘hegemony’ continues to retain its specific analytical power.
Hegemony refers to processes of contestation in which social life is practically organised by specific and dominant meanings and values (Williams, 1977; Gramsci, 1971). Class-specific interests
are reflected in generalised notions that are incorporated into the everyday lives of individuals such
that they appear as natural, universal and neutral – ‘the national interest’, ‘community’, ‘liberty’,
‘freedom’, ‘individual responsibility’. Hegemony is a continuous process of socialisation in which
the influence and pervasiveness of ruling class thought is such that the social order, for most within
it, is largely taken as a ‘given’. It is through the major social institutions that the dominant cultural
values, norms and aspirations are transmitted, congealing into largely non-conscious routines; that
is, the norms and customs of everyday experience and knowledge (Swingewood, 1977).
The content of contemporary ruling class common sense may broadly be described as neoliberalism (see Harvey, 2005). Key ideas and sentiments include the individual as the basis of
social order, personal responsibility as the basis of accountability, and self-interest as the basis of
morality. These elements may be contrasted with those which emphasise the collective good,
communal responsibility and solidarity, and the importance of addressing the general welfare and
social needs. Contemporary notions of ‘human nature’ are construed in terms of competition,
self-interest and possessive individualism.
One of the signatures of the hegemonic process is that it allows for contradictory and fragmented notions to be combined at the level of lived experience. People may simultaneously reject
the message of climate science (in part due to the push-back by industry and other powerful
interest groups) and yet recognise that things are nonetheless changing. Commonsense experience is likewise also constituted through emotions, and ‘the affective’ is powerful in terms of both
driving climate change denial (people are frightened by the thought of confronting the consequences of global warming) and specific responses to the threats posed by climate change (the
emphasis on defending one’s own turf and interests at the expense of others). Thus, the rational
and the irrational are intertwined at the level of lived experience in ways that are paradoxical
and nonsensical, but which nonetheless are integral to constructions of neoliberal subjectivity.
Historical analysis demonstrates empirically that social inequality is intrinsic to the capitalist system (Piketty, 2014). This has been exacerbated and further entrenched over the past
three decades of aggressive neoliberalisation (Harvey, 2005). The key policies and practical trends
associated with this are familiar; including reduced trade protection, user-pays, privatisation and
deregulation. Institutionally the policies and ethics of neoliberalism are reflected in reliance upon
the market for the allocation of goods and services, the shrinking of the welfare state, assertion of
the role of the state as ‘night-watchman’ (albeit with little government oversight for those at the
top), and an emphasis on strong law and order and defence of private property (that includes strict
control over those at the bottom). The net result is impoverishment for many at the same time
that social privilege has skyrocketed for the few. Particularly in places like the United States, it is
indeed the case that the rich have gotten richer and the poor are getting prison (Reiman, 2007).
Not surprisingly, the core policies and practices of neoliberalism are implicated in the politics
surrounding climate change. In this instance, neoliberal hegemony rests upon the deployment of
a broad spectrum of strategies which, while each policy may appear as distinct and contradictory,
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are integrated in such a way as to produce the eventual capitulation to the free market (Abboud,
2013). They include denialism or contrarianism, construing carbon emission markets as the solution, and placing faith in geo-engineering projects like space reflectors. In the end, these will not
work (see Abboud, 2013; Brisman, 2015). These ‘solutions’ inevitably fashion responses to, rather
than resolutions of, the key contradictions of the present age – namely the preservation of the
capitalist growth economy versus a sustainable ecology. While contemporary contributions to
global warming happen by design, there is no grand plan. It is an outcome of a global system of
production and consumption that is fundamentally premised upon private profit and narrow selfinterest. The triumph of neoliberalism is simultaneously the death-knell of collective well-being.
The conjunction of economic polarisation and ecological calamity, fostered and propelled
by global capitalism under the rubric of the neoliberal agenda, is heightening social inequalities
and geographical disparities. It is an age of great uncertainties and insecurities. A major political problem for the Left is that ‘security’ is being materially constructed on the basis of ‘dog eat
dog’, and ‘protect what you have’. This is likewise part of the neoliberal moment, in that how
individuals are forced to fend for themselves has been elevated to the level of moral good – to fail
at getting a job, an income, suitable welfare and an education is construed as personal failure in
the marketplace, not a failure of the marketplace. Put bluntly, you deserve what you do not get,
and make sure you hold on tight to what you do get.
Such attitudes are also being reproduced in the commonsense response to climate change. It is
a recipe for the construction of ‘fortress Earth’ for each of us (White, 2014). The looming future
is one of securitisation and scarcity, and of major social conflicts over resources. In the face of
this, the tendency is to retreat into a fortress mentality that is protective of immediate perceived
personal and community interests. In the neoliberal universe it is the top dog that gets the reward
and there is little consideration given to the rest. Indifference and lack of interest and sympathy
are the social products of this era. The key message is to look after ourselves first and protect our
particular fortress (whatever form it takes), because no one else will. The role of corporate power
and neoliberal common sense in the demise of planetary well-being is thus assured.
Constructing an alternative
The task for the Left is to go beyond exposition of these wrongdoings and harms (at both system
and TNC levels) and to seriously consider matters of strategic intervention. It is easy to criticise
already existing environmental harms generated by global capitalism. Yet, rarely is an alternative
vision of ‘what ought to be’ part of the dialogue (Albert, 2014). At some stage, however, we need
to articulate not only what we are ‘against’, but also what we are ‘for’.
This can be as simple as describing certain ideals that provide a rough outline of the values
and visions underpinning a society worth striving towards. Such ideals may include, for example:
•
•
•
•
•
•
That wealth should be redistributed in equitable ways, and colonial harms and historical
disadvantages addressed, including by compensation.
Nationalisation of resources and industries, including banks and the finance sector, for the
public benefit of all.
Universal welfare, health and educational provision, for the benefit of all.
Collective bargaining rights, for the benefit of those who actually do the work.
Provision of public transportation, national parks, marine reserves, solar power, for the sake
of ecological health.
Control and containment of carbon emissions and dirty industries, for climate change
mitigation.
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These ideals are based firmly on the notion that society is more than a mere collection of
individuals, and that freedom from want is the platform for freedom to develop one’s capacities
to the fullest. It is to recognise that popular support exists and may be harnessed for measures
that benefit everyone (universal provision of health care, education, welfare, clean environments)
while, by contrast, selective provision undermines this sentiment and reinforces the targeting
of ‘at-risk’ populations, in ways which end up treating them as if they are the problem and a
social drain. In this alternative scenario, meeting social need and acknowledging the public good
implies solidarity, collective responsibility and shared input.
As this chapter has highlighted, the interests of the powerful are increasingly tied up with
the diminishment of Nature’s bounty in the pursuit of economic viability and growth for both
corporations and states. Yet human subsistence is based on the use of a combination of renewable (e.g. fresh water, forests, fertile soils) and non-renewable (e.g. oil and minerals) resources,
and the ability of the planet to provide a range of naturally sourced goods and services. In the
context of already visible threats from global warming and climate change there is a need to find
new ways to negotiate the fragile and contested landscape of economic, ecological and planetary
well-being.
The task ahead is twofold. On the one hand, it remains important to expose injustice. This
requires critical scrutiny of systems of production and consumption, and detailed analyses of
corporate activity and business practices. On the other hand, it demands fighting for justice,
through advocacy of radical egalitarianism (involving eco-justice for human beings, ecosystems
and nonhuman species), communal appropriation of ‘private’ property, and democratic control
over land, air, water and energy. Each area of endeavour needs to be directed at transformation
as well as challenging the status quo, at changing things as well as critiquing them. Otherwise
we are left with the stark realities generated by global capitalism, the most deadly of which is a
rapidly warming planet.
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Law and Social Change, pp.1–16.
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15
Privatization, pollution and power
A green criminological analysis of present
and future global water crises
Bill McClanahan, Avi Brisman and Nigel South
Introduction
Water pollution, whether from point sources (e.g., the Deepwater Horizon oil spill in the Gulf of
Mexico in April 2010) or non-point sources (e.g., quotidian stormwater runoff), exhibits local,
national, regional and global dimensions, and constitutes one of the most pervasive threats to
global ecological health (see Carrabine et al., 2009: 402–404; White and Heckenberg, 2014:158;
see generally Brisman, 2002). For example, freshwater animal species face an extinction rate five
times that of terrestrial animals because of the extent of water pollution and overfishing (Harwood, 2010). Inadequate access to safe and sanitary supplies of freshwater causes over 3 percent
of all human deaths worldwide and is the leading cause of death for children under 5 years old
(Prüss-Üstün et al., 2008). Although developing nations bear the brunt of insufficient access
to clean water (see, e.g., LaFraniere, 2006), problems of accessibility are less likely to impact the
developed and post-industrial world unless they affect agricultural production or recreation.
Thus, water pollution and access to clean water are often conceptualized as problems with different socioeconomics and geopolitics.
This chapter attempts to recast issues of water and harm – to redirect the streams of thought
on water-related issues – by exploring the ways in which the global spread of the privatizing and
commoditizing logics of neoliberalism has led to restricted and unequal access to clean water, created a regulatory atmosphere favorable to powerful corporate polluters, and pushed for the reconceptualization of water as a saleable commodity rather than as an element of the commons. More
specifically, we seek to contextualize access-restricting water privatization, corporate polluting
of oceans, rivers, streams, and estuaries, municipal water regulation schemes that criminalize –
or otherwise hinder – water reuse, and corporate profiteering from the bottling and selling of
water as events and movements detrimental to ecological health and sustainability, yet beneficial
to powerful corporate, economic, and political actors and institutions. We begin by explaining
some recent examples of pollution issues and events occurring in the Global North, followed
by some examples of access-reducing issues at play in the Global South. Next, we make a case
for merging these two problems, arguing that to conceptualize water issues in the Global North
as relating solely to issues of pollution, while imagining those in the Global South as pertaining
exclusively to matters of access, is to ignore the myriad ways that these issues and problems exist
and interact across the spatial lines of geopolitics and socioeconomics.
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Water pollution in the Global North
Within the spatial and social context of the developed and industrial Global North, crime and
harms relating to water are most readily understood as ones relating to water pollution. While
we find it appropriate and necessary, as noted above, to dismantle some of the binary lines commonly used to conceptualize water-related harms as issues of either access or pollution dependent
on geopolitical context, the visibility and ecological and social impact of two relatively recent
water pollution events in the Global North help to illustrate the impact that the crimes of powerful state-corporate actors have on water: the Deepwater Horizon oil spill in April 2010 and
the 4-methylcyclohexylmethanol (MCHM) spill in West Virginia’s Elk River in January 2014.
On April 20, 2010, a massive explosion rocked British Petroleum’s (BP) Deepwater Horizon
oil exploration rig, located in the Macondo Prospect, a large multi-rig exploration and extraction site off the coast of Louisiana.1 The explosion, which was caused by a variety of factors
including profit-driven time-saving measures enacted by engineers under pressure from BP to
increase productivity (Daly and Henry, 2010), took the lives of 11 workers on the rig. In the
wake of the explosion and collapse of the rig, the uncapped drilling site released a torrent of oil
into the marine ecosystem for 87 days, with US officials estimating the total extent of the spill at
roughly 4.9 million barrels. In addition to the workers who lost their lives in the explosion, the
resultant oil spill is estimated to have injured over 8000 marine mammals, birds, and sea turtles,
and adversely affected the delicate but robust marine ecosystem (Ocean Portal Team, 2010; see
also Brisman and South, 2014: 45, n.13). In addition to the ecological impacts of the disaster, the
spill brought about myriad social problems by compromising the water that gave local residents
their economic and social livelihood, causing the loss of up to one million jobs available to coastal
residents (Weisenthal, 2010) already working in a local economy devastated by Hurricane Katrina
in 2005 (see generally Adams, 2013).
On January 9, 2014, a container holding MCHM – a chemical used in the processing of
coal – spilled over 7000 gallons of its contents into the Elk River, a 172-mile-long tributary of the
Kanawha River running through central West Virginia. Residents of Charleston, West Virginia,
who noticed a “sweet licorice” smell in the air, first identified the spill and it was quickly traced
to the faulty and outdated storage containers owned and managed by Freedom Industries (Constantino, 2014; Gabriel, 2014).2 Freedom Industries’ tanks were located on the banks of the river,
directly upstream from the West Virginia American Water intake and treatment and distribution
center, which provides potable water to 16 percent of West Virginia’s population – 300,000
residents in nine of the state’s counties (Gabriel, 2014; Osnos, 2014; Pearce, 2014). Following the
spill, hundreds of residents who came into contact with the contaminated water – either from
the river directly, or from taps serviced by the American Water facility – fell ill, displaying a
range of symptoms including nausea, burned skin and eyes, vomiting, exhaustion, diarrhea, and
rashes (Atkin, 2014; Heyman and Fitzsimmons, 2014). Cleanup efforts did not begin immediately
following the detection of the spill, slowed, in part, by confusion over the extent and chemical
makeup of the leak (Palmer, 2014).
Both of the above incidents highlight instances of powerful corporate interests in the Global
North engaging in behaviors that result in massive ecological and social harm in the form of
water pollution. While the rules of the market would logically dictate that – to take the first
example – marine and coastal economies should be rigorously protected from pollution, and – to
take the second – the profitability of water companies is best served when water quality is good,
nonetheless there are occasions when corporate and state interests disrupt or ignore regulatory
systems and requirements for similar reasons of profit, and act in concert or collusion not to prevent or mitigate disastrous water pollution events but rather to allow them (see generally Davenport
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and Southall, 2014; Osnos, 2014). In the case of the Deepwater Horizon oil spill, the Deepwater
Horizon oil rig had been cited 18 times in the ten years prior to the disaster and had experienced
16 fires and other incidents worthy of inspection by the US Coast Guard; BP, however, routinely
disregarded these incidents and warnings from regulatory authorities without repercussions for
their drilling licenses (Jordans and Burke, 2010). Workers on the rig had also frequently expressed
consternation over the safety of the operation – concerns that were ultimately ignored by BP
and its partner companies Transocean Ltd. and Halliburton Company (Urbina, 2010). Not only
was the unsafe operation allowed to continue in the face of such concerns and incidents, but the
immediate response to the spill was marked by further regulatory failure, as information from
BP initially minimized the extent of the ecological damage and made efforts to manage the spill
an internal corporate matter rather than a spreading ecological disaster threatening hundreds of
miles of gulf coastline (Buchanan, 2013; see generally Brisman and South, 2014: 26).
Similarly, in the Elk River incident in West Virginia, state regulatory miscarriage marked not
only the conditions leading to the pollution event, but also the response. Such failure occurred
across multiple lines: Freedom Industries,3 the company that owned and operated the chemical
storage facility known as a “tank farm” (Osnos, 2014: 38), had only had their facility inspected
twice since 1991: once in 2010 in response to a neighbor’s complaint noting a licorice smell,
and a second, cursory check in 2012 to determine if Freedom Industries was in need of updated
permits, wherein inspectors determined that the company was currently compliant with their
permits. The containers themselves, furthermore, were highly substandard (Brodwin, 2014) – a
fact that may have been noticed had Freedom Industries not been exempt from West Virginia
Department of Environmental Protection inspections because the company does not produce the
chemicals it stores (Davenport and Southall, 2014; Farrington, 2014; Heyman and Fitzsimmons,
2014). Moreover, Freedom Industries did not really appreciate the risks to human and ecological
health presented by MCHM, the leaking chemical, and so did not understand – or did understand
but did not care about – the risky nature of storing the chemical on the banks of a major river
(see generally Karlin, 2014). Freedom Industries failed to report the spill after it had come to its
attention (Farrington, 2014; Kroh, 2014); instead, residents near the river reported the spill to
the state regulatory authorities (Gabriel and Davenport, 2014). The company also neglected to
put into place a protocol to alert the local water company in the event of a chemical incident.
In addition to the failures of Freedom Industries, West Virginia American Water – a company
with annual revenues nearing US$3 billion that has been publicly traded since its divestment from
a German parent corporation in 2008 – had no plan in place to stop the intake of water from the
Elk River in the event of a spill (Brodwin, 2014; Osnos, 2014). (Indeed, it took the water company
several days to develop a methodology to measure the level of contamination from the Freedom
Industries’ spill (Maher and Morath, 2014).) While Freedom Industries and West Virginia American Water did not display quite the same level of hubris of BP in ignoring regulatory warnings
made by agencies with little power to enforce regulation, they acted just as irresponsibly by failing
to take even the most basic steps to ensure the safety of their facilities and the neighboring ecology (Desvarieux, 2014). Instead, the two companies elected to knowingly operate risky facilities
in virtually total absence of regulatory oversight (Desvarieux, 2014; Osnos, 2014).
In the absence of effective environmental regulatory oversight (for a discussion, see Du Rées,
2001; South, 2013; South et al., 2014; Stretesky et al., 2013), powerful corporate and state actors
are left to answer only to the call of capital (see generally Barlow and Hauter, 2014; Corporate
Crime Reporter, 2014). It is, to be sure, the search for increased profits that contributes to many
of these highly visible environmental disasters (and many others that attract far less media attention (see Sheppard, 2014)). In privileging economic growth over ecological health and stability,
those in power – from regulatory actors and agencies bought and paid for by industry lobbyists,
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to corporate chiefs engaged in the socially and ecologically reckless search for profits – frequently
reflect a philosophy that cannot be understood as simply anthropocentric, as many of the victims
of the crimes of the powerful are human. In other words, these are not just instances of corporate
state entities valuing human life over nonhuman life and its ecosystems. Instead, the philosophy
guiding these powerful state and corporate actors is often one of pure econocentrism in that it prizes
economic growth over both human and nonhuman health and ecology (Ruggiero and South,
2013). The two highly visible and well-reported4 pollution events described above illustrate the
willingness of corporate offenders and ineffective regulators in the Global North to cut corners
and ignore concerns wherever doing so may increase profits or economic productivity, frequently
to the detriment of humans, nonhumans, and natural ecosystems.
Issues of water access in the Global South
In considering water issues in the Global South, one of the primary sources of problems of access,
inequality and conflict has been privatization schemes that replace local and municipal control
of water with corporate commoditization. Privatization, as it is commonly practiced, not only
turns the sale of water over to corporate interests, but also the regulation of water supplies (see
Barlow and Hauter, 2014). The result of many water privatization plans is not only an increase
in the price of water but also a decrease in regulatory checks to ensure water safety. With an
increasing number of developing countries moving to a neoliberal model that calls for privatized
water supply systems, those without economic and social capital are often left with harmfully
limited access to clean water. Given the global spread of the neoliberal logics and architectures of
privatization, commodity fetishism, and the prizing of consumer capitalism, it is likely that water
privatization will continue apace.
Water privatization is frequently made a requirement of IMF and World Bank loans and assistance given to countries in the Global South in what appears to be a bold concession to the water
privatizing corporate giants of the Global North, such as Suez, Nestlé, and Veolia (Barlow and
Clarke, 2004). In a noted example of the hubris of water privatizing corporate actors, captured
in the 2005 documentary film We Feed the World, Peter Brabeck-Letmathe, then CEO of Nestlé,
characterized viewing water as a “human right” as an “extreme view,” going on to share his
belief that “water is a foodstuff like any other, and should have a market value” (quoted in Union
Solidarity International, 2013). Although Brabeck-Letmathe has backtracked somewhat from his
dismissal of a right to water as an “absurd notion” (Murphy, 2014), the perspective presented
in the 2005 film encapsulates the familiar and pervasive logic of water privatization: under the
neoliberal model of privatization, water is to be seen as a commodity, not part of the commons,
and so access to water is to be “regulated” along economic lines (see Deutsch, 2006). Sadly, this
model has taken hold across great swathes of the Global South, although it is being met with
some resistance (McClanahan, 2014).
For example, in 1998, the government of Bolivia, under the supervision of the World Bank,
passed laws that effectively privatized the water supply system of Cochabamba, a region that over
one million Bolivians call home, 60 percent of them indigenous. Concessions to manage – and
profit from – the water system were granted to Bechtel, a multi-billion-dollar global engineering and construction corporation. Bechtel, upon taking control of the Cochabamba water supply, immediately tripled prices and cut off water services to those unable to pay, going so far as
to charge for rainwater gathered in homemade and traditional catchment systems. In response,
the Coalition in Defense of Life and Water was formed, quickly organizing a referendum that
demanded the cancellation of all Bolivian water contracts with Bechtel. When the Bolivian
authorities refused to back down, protestors took to the streets and were met with repressive
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violence from the state military, leaving dozens wounded and one 17-year-old protestor dead.
The Bolivian government eventually capitulated, severing all contracts with Bechtel (South, 2010:
242).
Prior to the 1998 agreement between Bechtel and the Bolivian state, the Bolivian authorities had granted water concessions to other international interests. In 1997, again under pressure
from the World Bank, the water supply system of La Paz, a major city and governmental hub
of more than two million residents, was sold off to multinational French water giant Suez. Suez
immediately violated their agreement with Bolivia, overcharging dramatically for water connections and use, providing selectively to the wealthy and urban residents of La Paz, and failing to
improve infrastructure and water quality. Throughout the El Alto region – the hilly landscape
surrounding metropolitan La Paz, and home to the bulk of the region’s indigenous peoples – a
fierce resistance to Suez’s control of water broke out. General strikes in January 2005 crippled the
cities of El Alto and ground business to a halt, leading eventually to the ousting of two presidents,
Gonzalo Sanchez de Lozada and Carlos Mesa. Their successor, Evo Morales, became the first
indigenous leader in Bolivia’s history. In January 2007, Morales and Bolivia celebrated the final
removal of Suez and the return of public water to El Alto and La Paz. Morales later described
Bolivian opposition to water privatization simply: “Water is life. Water is humanity. How could
it be part of private business?” (Rizvi, 2011).
The corporate capture of water supply systems in the name of neoliberal privatization constitutes, then, a significant blow to those wishing to ensure access to clean water. Not only does
water privatization raise consumer costs to outrageous levels that make adequate access difficult;
privatized water systems – particularly those in nations with still-developing infrastructure and
oversight – have a fairly abysmal track record when it comes to their provision of sanitary water,
attributable to profit motivations gaining primacy over water purity motivations (see Union
Solidarity International, 2013; cf. Murphy (2014), describing water privatization’s “checkered
history”). Through this lens, the activist response in those regions targeted for privatization is
concerned primarily with issues of access, and secondarily with issues of pollution.
The examples above illustrate the ease with which water issues are conceptualized along the
binary lines of access and pollution, as if never the twain shall meet. This tendency within public
and criminological imaginations to divert water issues into one of these two streams – to treat
issues of pollution as primarily affecting the first world nations of the Global North, while framing issues of access as primarily relevant to the developing nations of the Global South – has left
us blind to the increasing likelihood that, with the global adoption of neoliberal logics advocating
access-reducing water privatization schemes and the growing effects of climate change, those in
the Global North face increased water shortages, while those in the Global South face increased
pollution. With that in mind, we will now examine and explain the connections between, and
various responses to, issues of access and pollution.
Pollution and access: connecting the streams
Despite the tendency to conceptualize water issues in the Global North as relating to pollution,
there are major contemporary issues of drought affecting wide swathes of the United States (see
Prud’homme, 2011); recently, Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, and Washington have all experienced unseasonable and dangerous levels of drought
(see, e.g., Associated Press, 2014a, 2014c; Bostok and Quealy, 2014; Burke, 2014; Dwyer, 2014;
Murphy, 2014; Powell, 2014; Reid, 2014; Smith, 2014; Walker, 2014; Woody, 2014a, 2014b). These
droughts present myriad problems in the western United States, affecting not only everyday
home consumers of water (who may face use restrictions), but also agricultural and industrial
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users, as well as fire management departments and services; indeed, the 2014 wildfires in Washington were caused, in large part, by the unseasonable drought and lack of snowfall during the
previous winter (Payne, 2014).
While some drought-prone areas in the Global North now regularly enact legislation to
limit water use (see, e.g., Associated Press, 2014a, 2014b; Barnett, 2014; Powell, 2014; Steinmetz,
2014) – or attempt to curb water usage via emergency declaration (see, e.g., Hamilton, 2014) – the
majority of Americans still have giant conceptual hurdles to leap in understanding and responding to increasing water scarcity (Barnett, 2014). As Barlow and Hauter remark, (2014: 43), “[t]he
United States has one of the best public water supply systems in the world.”5 Similarly, Murphy
(2014) explains, “Most people view water as an infinite, inexhaustible resource, much like air.”
Thus, water scarcity, especially in the context of overflowing markets selling bottled water, seems
unfathomable to most Americans. But, as Murphy (2014) cautions, for most practical purposes,
water – especially clean, safe, drinking water – is “resolutely finite and exhaustible.” Water scarcity is likely to increase, Murphy (2014) continues, “as the global population hurtles toward the
9-billion mark, as agricultural and fuel extraction guzzle more and more water, and as climate
change adds growing stress to existing supplies.” Furthermore, it is likely that failing parts of the
Global North will face problems of sustainability in the future, as the case of the city of Detroit
demonstrated in summer 2014 (Clark, 2014).
The false perception of abundance and unfettered access fostered by the availability and ubiquity of bottled water, however, ultimately contributes to problematic practices relating to issues of
both access and pollution. As Brisman and South (2013, 2014; see also Kane and Brisman, 2014;
South and Walters 2014) have noted, the selling of bottled water involves the construction and
perpetuation of various myths relating to access to clean water. Consumers within the Global
North are encouraged, through the languages of marketing and conspicuous consumption, to
distrust the water that flows from their taps – water that costs a fraction, per liter, of bottled water
(see Editorial, 2008; Licon, 2014; Standage, 2005), and does not require the more than 1.5 million barrels of oil necessary to make the water bottles that Americans use each year (see Editorial,
2007; see generally Standage, 2005).6 Water sellers incorporate into their marketing imagery tailored to evoke traditional notions of water purity – the glacier, the mountain stream, the natural
aquifer – and promote the image of bottled water as an ethical, “green,” or health-conscious
alternative to tap water, while, through stringent testing standards, municipal tap water supply
systems maintain purity levels that are significantly higher than those of their bottled competitors
(Editorial, 2008; Standage, 2005).7 These myths touch the core of American water consciousness
in that they appeal to a public increasingly inundated with and concerned about events involving water pollution, such as the BP and Elk River spills described above, as well as the discovery
of large amounts of pharmaceutical compounds in public water supplies in 2008 (Donn et al.,
2008) and the 2013 rupture of an Exxon oil pipeline in Arkansas (Caplan-Bricker, 2013) – all
of which have each garnered significant media attention focused primarily on how these events
compromise water quality and the health of marine ecosystems. Indeed, the Exxon Valdez spill in
1989 still occupies a place in the public imagination and vernacular as a truly catastrophic event,
over 25 years later. The willingness – even eagerness – of the public to seriously consider these
harmful events further illustrates the tendency, within the Global North, to consider pollution
the most pressing issue relating to water.
Although we do not wish to diminish the importance of water pollution, the propensity
within the developed world to give primacy to this issue over other water-related concerns highlights what we may be missing by failing to consider equally important issues of water access.
Indeed, the reality that water sellers try so stringently to obfuscate is that issues of water access
and water pollution are quickly becoming inextricably linked. The catchment, manufacture,
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transportation, and sale of bottled water – those energy-intensive processes that ultimately
coalesce to give the developed world such a mistaken perception of water abundance and easy
access – is a significant contributor to the global degradation of water quality. Furthermore, as
global warming continues apace, it is likely that some regions already affected by drought will be
hit even harder, while others may find themselves water-rich (Lee, 2009: 11; see also Barringer,
2011; Bostok and Quealy, 2014).
Similarly, the rise in hydraulic fracturing (commonly known as “fracking”) – the horizontal
drilling technique which uses huge volumes of chemicals, fine sand, and water to crack open
shale formations to unlock oil and gas reserves – is likely to blur the boundaries between access
and pollution. Fracking operations consume a precious and scarce resource (water) at the same
time that they frequently contaminate the well water of those living nearby, thereby replacing
our need for energy with a need for water, as well as causing issues of access by way of issues of
pollution (see Barlow and Hauter, 2014; Burke, 2013; Editorial, 2011; see generally Kane and
Brisman, 2014). The constantly shifting geographies of water wealth and drought, combined
with the increased likelihood of water pollution made possible by the opening of Arctic seas for
shipping and oil exploration (see Brisman, 2013), the ascendancy of fracking, and the continuation of harmful consumptive practices all make it increasingly likely that the conceptual and
spatial boundaries between access and pollution will further disintegrate. This erosion will make
the exchange of technologies, methods, and logics developed to reduce pollution and combat
privatization an imperative for those wishing to ensure access to clean water, as well as those
wishing to reduce non-point source pollution.
Conclusion
In this chapter, we have tried to illustrate how water pollution and access to clean water are not
discrete issues peculiar to different geographies: they are problems that share the same powerful
corporate state source. Fracking can create problems of access to clean water as a result of pollution; the consumption of bottled water causes pollution due to excessive waste, as a result of
disingenuous marketing and misguided consumer behaviors; water companies sacrifice maintenance programs to buttress shareholder returns.
Currently, 884 million people worldwide have no access to safe water and 2.6 billion have poor
and unsafe sanitation (Pretty, 2013: 477). Unfortunately, “global demand for water is expected to
increase by two-thirds by 2025, and the United Nations fears a ‘looming water crisis.’ To forestall
a drought emergency, we must redefine how we think of water, value it, and use it” (Prud’homme,
2011: SR3). This point has not been lost on corporations, entrepreneurs, financial profiteers, and
investors. As Deutsch (2006: C1) reports, “Everyone knows there is a lot of money to be made in
oil. But a fresh group of big businesses is discovering there may be even greater profit in a more
prosaic liquid: water.” To further distill this point, William S. Brennan Sr., portfolio manager for
the Praetor Global Water Fund in Paris, asserts, “Whenever you flush a toilet, take a shower, drink
a glass of water, someone is making money” (quoted in Deutsch, 2006: C5).
It need not be this way. As Barlow and Hauter (2014: 45) point out, water is essential to life and
vital to human dignity: “Water is the lifeblood of our communities. It is essential for health and
well-being. Its substance is beyond value and transcends the physical – it’s sacred.” While we should
be cherishing and protecting this precious resource, we have not done so. The United Nations, as
well as many individual countries, have recognized access to safe, clean water and to sanitation as a
basic human right but, at the same time, increased privatization of water resources and operations
has frustrated the realization of this right. Barlow and Hauter (2014: 45) argue that it is incumbent
upon consumer groups, civil society, and faith communities to block corporate takeovers of public
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water systems that were established for the common good in order to ensure universal access to
safe water, and they call for measures such as establishing forms of trust funds to provide dedicated
money for water and sewer systems, banning fracking, and enshrining the right to water in national
and regional or local law. Without responsible public provision of water and sewer services, suffering from the lack of safe, clean water and sanitation will continue. As with deteriorating air quality
and limits to food sustainability, the issues of water purity and scarcity present challenges we are
failing to properly acknowledge and respond to. Unless we begin to do so, a worrying forecast
from the United Nations Population Fund will likely come true: in 2025, more than 60 percent
of the world’s population will live in areas where safe water is scarce (Deutsch, 2005).
Notes
1 The “Deepwater Horizon oil spill” is also referred to as the “BP oil spill,” “the Gulf of Mexico oil spill,”
“the BP oil disaster,” or “the Macondo blowout.” (The Macondo Prospect (Mississippi Canyon Block
252, abbreviated to MC252) is an oil field about 40 miles (60km) southeast of the Louisiana coast and the
location for the drilling rig explosion in April 2010 that led to the major oil spill in the region – hence
the name, “the Macondo blowout” (Brisman and South, 2014: 43, n.3).)
2 Freedom Industries later revealed that a second coal-processing compound, a mixture of polyglycol
ethers known as PPH, had leaked and contaminated Charleston’s water system (Barrett, 2014; Osnos, 2014: 40).
3 Here, we find Freedom Industry’s chosen name to be of particular interest: Scott (2010: 31) writes of the
discursive establishment of “patriotic sacrifice zones” in the social and spatial context of Appalachian coal
extraction, wherein the harms to human and natural ecologies are justified or celebrated by linking those
harms with a nationalist patriotism. Efforts by Freedom Industries and other corporate interests to link
themselves with a patriotic spirit – and the potential of that link to minimize criticism of the corporate
pollution and ecological harm driven by extractive industrial actors – is something we will explore further
in future work.
4 A cursory search of The New York Times archive suggests that over 1000 articles relating directly to the
Deepwater Horizon oil spill have appeared in that publication alone between April 2010 and July 2014.
Similarly, a search for terms relating to the Elk River chemical spill shows over 100 articles published in
The New York Times alone in the seven months between the disaster and this writing. Note, however, that
some residents of Charleston have indicated that the Elk River chemical spill did not receive sufficient
media attention. Osnos (2014: 47) reports: “In Charleston, people told me that their ordeal had received
less national coverage than the latest virus on a cruise liner.” For an analysis of media coverage of the
Deepwater Horizon oil spill, see Paulson et al. (in press).
5 While the United States may have a very good public water supply system, its treatment plants and
pipes are in need of serious and costly repair if Americans are to continue to enjoy safe drinking water
(see, e.g., Koba, 2013).
6 To be fair, the United States is not the world’s top consumer of bottled water. According to Licon (2014),
that honor goes to Mexico: “Mexicans consume 69 gallons (260 liters) of bottled water per capita each
year, mostly from 5-gallon (20-liter) jugs delivered by trucks to restaurants and homes. The number in the
U.S. is 31 gallons (116 liters).” As Licon (2014) explains, in Mexico City, the nation’s capital, 95 percent
of the drinking water is clean; the water leaves treatment plants in drinkable form, but travels through old
underground pipes and dirty roof-top water tanks to consumers who, rightly so, distrust the water flowing
from their taps.
7 According to Licon (2014), “[h]igh consumption of bottled water does not translate to healthier lifestyles.” In Mexico, which, as noted above, is the world’s top consumer of bottled water, “[s]even out of
ten Mexicans are overweight and the country has surpassed the U.S. in obesity rates” (Licon, 2014).
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16
Unfettered fracking
A critical examination of hydraulic
fracturing in the United States
Jacquelynn Doyon and Elizabeth A. Bradshaw
Introduction
Faced with declining global oil reserves, the government and oil and gas industry have touted
hydraulic fracturing as the solution to increased domestic oil production and energy independence. Although government and industry representatives have continuously asserted that the
process is safe, evidence has linked hydraulic fracturing to problems such as contaminated water,
the uncontrolled release of methane gas, and even tectonic impacts resulting in earthquakes. Currently, the regulation of fracking is minimal, especially at the federal level as a result of the Energy
Policy Act of 2005 and the “Halliburton Loophole.” Creating an unfettered environment for
natural gas extraction, the Halliburton Loophole exempts oil and gas companies from key environmental protection laws such as the Clean Water Act and the Safe Drinking Water Act, among
others. Lacking a comprehensive regulatory framework at the national level, myriad policies have
developed that vary widely between (and even within) states. At the local level, citizens have
turned to grassroots organizing to regulate – and in some cases ban– hydraulic fracturing and its
harmful effects. This chapter seeks to examine the human health and environmental effects of
fracking and efforts to regulate the practice at the federal, state and local levels.
Problem overview
Hydraulic fracturing (or “fracking”) is a process used to extract natural gas and oil from shale
formations deep underground. In order to extricate these fossil fuels, an exorbitant amount of
highly pressurized, chemical-laden water is injected into wells below the surface. Fissures and
fractures within the shale bed develop as a result, emitting previously unreachable (or economically unattainable) oil or natural gas. Although fracking has been implemented commercially for
over half a century, it has only recently been used for “unconventional” drilling (in shale or coal
beds) and at extreme depths, ranging from around 2,000 to 10,000 feet below the surface. In
addition, the technique of horizontal (as opposed to strictly vertical) fracking has been developed
over the past few decades, where after extending vertically a well then turns horizontally to reach
additional reserves, stretching sometimes over a mile.
As many politicians and industry representatives have argued, the process of fracking has presented benefits to the United States over the past several years, including a drop in the price of
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J. Doyon and E.A. Bradshaw
natural gas, a decline in US dependence on foreign energy and some job creation (Graham 2012).
Despite these professed benefits, hydraulic fracturing poses numerous environmental and human
health risks. Across the US and abroad, concerns have been raised over the amount of water
needed per well, the toxic chemicals used in the process, the contamination of local groundwater near fracking wells, and increased seismic activity (e.g., earthquakes) linked to high-pressure
injection wells.
In order to successfully fracture the shale bed, oil and gas companies have developed complicated mixtures of water, sand and chemicals, many of which are toxic and undisclosed to the
public. This blend is then highly pressurized, injected into the well and used to break up the shale
bed. Natural gas then escapes from these small fissures (typically less than 1.0mm wide) which
are held open by proppants such as sand or aluminum oxide, and flows back up the well pipe
(International Energy Agency 2012). Much of the debate over fracking centers around the lack
of disclosure of each chemical composition used in these “frack fluid” mixtures, as well as their
retrieval and disposal (King 2012). Although the industry stresses that chemicals make up only
0.5 to 2.0 percent of the fracking fluid, this percentage is significant considering that millions
of gallons of water are used to frack each well (Earthworks 2014). If, for example, five million
gallons of water were used for a particular well, that mixture would include 25,000 to 100,000
gallons of potentially harmful chemicals.
Typically, hydraulic fracturing fluid is roughly 90 percent water, about 9 percent sand and 1
percent chemical additives (Coman 2012). Throughout the industry, 944 products containing
632 different chemicals have been identified in the various frack fluid compositions (Colborn
et al. 2011). Examples of some of the chemicals found in that “1 percent” commonly include
hydrochloric acid, ethylene glycol, ammonium persulfate, citric acid, potassium chloride, potassium carbonate, and isopropanol (Coman 2012). In some instances, frack fluids have also been
found to include benzene, diesel fuel, and even arsenic (Coman 2012) and formaldehyde (McFeeley 2012). Research indicates that:
[m]ore than 75 percent of the chemicals could affect the skin, eyes, and other sensory organs,
and the respiratory and gastrointestinal systems. Approximately 40–50 percent could affect
the brain/nervous system, immune and cardiovascular systems, and the kidneys; 37 percent
could affect the endocrine system; and 25 percent could cause cancer and mutations.
(Colborn et al. 2011: 1039)
Although it varies greatly depending on the specific well site, only 15 to 80 percent of the frack
fluid is recovered after use, while the rest remains underground (Coman 2012). Due to the threats
posed to human and environmental health, many public, private and governmental organizations
have called for the disclosure of chemical additives in fracking fluids.
Most companies and corporations that participate in hydraulic fracturing are reluctant to
release the chemical composition of their particular fracking fluid, arguing that full disclosure
would disclose “trade secrets.” After much resistance from the industry, a nationwide chemical
registry called FracFocus was established in 2011 to provide public disclosure of chemicals used
by each company using hydraulic fracturing. FracFocus is managed by the Ground Water Protection Council and the Interstate Oil and Gas Commission (FracFocus 2014). The objective of
this database was to offer individuals and organizations public access to chemicals used in wells
specifically in their area, but also around the nation (the registry currently contains information
on over 77,000 wells around the United States) (FracFocus 2014). It should be noted, however,
that while fracking is active in 29 states, currently only 14 states require corporations to publicly
disclose their chemical compositions (McFeeley 2012).
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Hydraulic fracturing in the US
In 2014, the Secretary of Energy Advisory Board formed a Task Force to specifically analyze
the effectiveness of FracFocus 2.0 (U.S. Department of Energy 2014). Although the report
acknowledges that FracFocus has improved public disclosure, it also “recommends a number of
actions that will further improve the effectiveness of the FracFocus disclosure of chemical additives and improve transparency for regulators, operating companies, and the public” (U.S. DoE
2014: 2). Some of the primary issues the Task Force identified were the need to eliminate the use
of “exemptions,” which allows companies to exclude chemicals based on the grounds that full
disclosure will reveal trade secrets (U.S. DoE 2014). Currently, 84 percent of registered wells on
FracFocus have invoked a trade secret exemption (U.S. DoE 2014). The Task Force recommends:
[a] “systems approach” that reports the chemicals added separately from the additive names
and product names that contain them, [which] generally should provide adequate protection of trade secrets. The Task Force further calls for state and federal regulators to adopt
standards for making a trade secret claim and establish an accompanying compliance process
and a challenge mechanism.
(U.S. DoE 2014: 2)
In addition to full disclosure, the Task Force also calls for increased accuracy in reporting, improved
quality of the data on the registry, and an independent audit to assess accuracy and compliance
(U.S. DoE 2014).
Case study: hydraulic fracturing in the US
Water use and well contamination
The process of fracking entails exorbitant amounts of water, requiring anywhere from 50,000
to eight million gallons per well (Coman 2012; Graham 2012). Water used for this method of
extraction is generally fresh water taken from wells, lakes or rivers (U.S. DoE 2014). Since not all
of it can be reclaimed, fracking results in the permanent removal of billions of gallons of water
from the global hydrologic cycle every year (Graham 2012; Kerns 2011). The industry often
highlights that only about 1 percent of the total water use in the United States is used for fracking, yet what those opposed to fracking stress is that all other water use (home use, agriculture,
etc.) returns to the water cycle (Graham 2012). Thus, significant hydrologic effects result from
the permanent removal of water from the cycle, especially in more arid regions in the Western
part of the US (Graham 2012).
Gas is a wonderful resource. . . . Water is as well. And to discount the importance of water
in the short term, to assume without an scientific knowledge that water will be protected or
it’s not at risk, makes the country . . . vulnerable to having made a great mistake and possibly
regretting not implementing . . . simple steps . . . in the first place.
(Lustgarten, quoted in Graham 2012)
In addition to the loss of water, fracking has been linked to contamination of local water resources.
According to non-profit organization ProPublica, over 1,000 cases of underground contamination had been documented across the US by 2008, one of which led to the explosion of a home
when methane seeped from fracking fissures into a residential water supply (Lustgarten 2008).
Researchers at the University of Texas at Arlington examined 100 private drinking wells within
3 kilometers of a well site on the Barnett Shale in north Texas and found arsenic, selenium and
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strontium exceeding the Drinking Water Maximum Contaminant Limit (MCL) of the Environmental Protection Agency (Fontenot et al. 2013). Lower levels of these same contaminants
were found even beyond 3 kilometers from well sites, and almost one-third of the samples also
contained methanol and ethanol (Fontenot et al. 2013). In Pennsylvania and New York, methane contamination rose sharply in 68 private drinking wells near fracking well sites; the closer
the water well was to an active drilling site, the greater the likelihood of thermogenic methane
(Holzman 2011). Additional contamination has occurred on the surface, leaking from tanks or
wastewater pits (where frack fluids are stored once retrieved from the well), or from trucks when
transported. These chemicals then leach into local groundwater supplies, causing myriad issues.
Contamination has also been blamed on poor gas well construction. In many instances, failure
to adequately seal well pipes or cement casings, or to use well casings of proper thickness, has led
to the accidental release of gas, frack fluid and other substances (Davis 2012; Holloway and Rudd
2013). Occasionally, fracked wells will experience an uncontrolled release of fluids, known as a
“blowout” (Holloway and Rudd 2013). Blowouts may occur at the surface or below the surface,
and are often due to well casing or cement failure (Holloway and Rudd 2013).
Investigations into groundwater contamination
Despite the growing number of academic and journalistic studies documenting the effects of
fracking, research by the federal government has been limited. However, the Environmental Protection Agency has investigated claims of well contamination due to fracking in Pavillion, WY,
Dimock, PA and Parker County, TX. Although the EPA has acknowledged the potential for contamination of groundwater, the agency has failed to implement policies to regulate the practice.
Furthermore, the agency’s actions seem to reflect an overarching policy in which investigations
into groundwater contamination are neglected, abandoned or ignored.
In 2004 the EPA released its conclusions from a study assessing the potential for contamination of underground sources of drinking water due to the injection of hydraulic fracking fluids
into coal bed methane reserves (CMR). Although CMRs are different from shale gas, hydraulic
fracturing is used to extract both resources. The first phase of the study was limited to gathering
existing information on hydraulic fracturing, requesting public comment to identify and review
incidences of groundwater contamination that had not previously been reported, and to make
a determination regarding whether a second phase of investigation is needed (U.S. EPA 2004:
ES16). Despite the possibility that fracking may release “potentially hazardous chemicals into”
drinking water, the study concluded that the drilling process poses “little or no threat” and “does
not justify additional study at this time” (U.S. EPA 2004).
Recognizing that the diesel fuel used during normal fracturing process introduces benzene,
toluene, ethylbenzene and xylenes (BTEX) into the groundwater, the EPA entered into a voluntary
agreement with three major service companies to no longer use diesel fuel as a hydraulic fracture
fluid additive without a permit under the Safe Drinking Water Act. Nonetheless, a recent report
by the Environmental Integrity Project (2014) revealed that between 2010 and July 2014 at least
351 wells were fracked using diesel fuels without a permit by 33 different companies. Furthermore,
little is being done by the EPA to further enforce the ban on using diesel in the fracking process.
Safe Drinking Water Act and the ‘Halliburton Loophole’
Following its release, the report was used by politicians and the oil and gas industry as a justification to expand fracking across the US. Most significantly, the EPA’s report was cited by
Congress as support for the passage of the Energy Policy Act of 2005 which exempted hydraulic
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fracturing under the Safe Drinking Water Act’s underground injection control regulatory program as well as key requirements in the Clean Water Act of 1972. Specifically, the Act allows for
“the underground injection of natural gas for purposes of storage” as well as “the underground
injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities” (U.S. EPA 2004). These
exemptions became known as the “Halliburton Loophole” after Vice President Dick Cheney’s
former company which is credited with inventing the technique of hydraulic fracturing in the
1940s. However, Ben Grumbles, the former assistant EPA administrator under the George W.
Bush administration, has publicly criticized the misuse of the EPA’s report by industry, arguing
that the EPA “never intended for the report to be interpreted as a perpetual clean bill of health
for fracking or to justify a broad stator exemption from any future regulation under the Safe
Drinking Water Act” (Grumbles 2011).
In 2011, the EPA released a report entitled Plan to Study the Potential Impacts of Hydraulic
Fracturing on Drinking Water Resources which claimed that fracking was responsible for aquifer
contamination in the town of Pavillion, Wyoming; the first report based on scientific evidence to
support such a claim. Working in coordination with the state of Wyoming, Encana (the owner
of the well) and the local community, the EPA began investigating quality concerns in private
drinking water wells in 2008. The draft report revealed that groundwater in the aquifer below
Pavillion contained compounds associated with gas production practices such as hydraulic fracturing. After releasing the report for public comment with the initial intention of submitting
the findings to an independent scientific review panel, the agency turned over responsibility
for concluding the study to the state of Wyoming in 2013 whose research will be funded by
Encana – the company at fault for the contamination (Mead 2013).
Data provided to the agency by residents, the Pennsylvania Department of Environmental
Protection, and Cabot Oil and Gas Exploration prompted an EPA inquiry into elevated levels of
water contaminants in wells in Dimock, PA. Claiming that the levels of contamination uncovered
were below federal safety levels, the agency closed its investigation into groundwater contamination in Dimock, concluding that no further action was needed (U.S. EPA 2012). After drilling
resumed in Dimock, reports of methane leaks continued to surface. Published by the National
Academy of Sciences, a May 2011 report by Duke University researchers (known as the “Duke
Study”) established a link between methane contamination and hydraulically fractured gas wells
in Dimock as well as aquifers overlying the Marcellus and Utica Shale formations of northeastern
Pennsylvania and upstate New York (Osborn et al. 2011). As the authors conclude, “Based on
our groundwater results and the litigious nature of shale-gas extraction, we believe that longterm, coordinated sampling and monitoring of industry and private homeowners is needed”
(2011: 8175). The EPA, however, has been unable to fulfill such a role.
In Parker County, Texas, the EPA publicly accused Range Resources of causing natural gas to
migrate into water wells as a result of hydraulic fracturing in December 2010 and subsequently
imposed an emergency order mandating that the company had to correct the problem. Based on
sampling of wells completed by Range, the EPA concluded that there was no widespread methane
contamination at actionable levels. However, lacking quality assurance information for Range’s
sampling program, many questions about contamination remained (U.S. EPA 2013). The EPA
then withdrew an administrative order which alleged that Range had polluted drinking water
wells and dropped a lawsuit filed against the company.
It was later revealed that the agency had withheld scientific evidence against the driller and
decided not to take action after Range threatened not to participate in a national study on fracking (Plushnick-Masti 2013). As a report by the Inspector General at the EPA found, the agency
was justified in taking action against Range based on evidence collected by independent geologist
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Geoffrey Thyne which revealed that the water and gas samples collected from residential wells did
in fact contain methane, benzene and other contaminants. Moreover, test results indicated that it
was possible for methane levels to accumulate in affected homes, potentially causing an explosion
(U.S. EPA 2013: 7). Nonetheless, the agency decided to withdraw from litigation, citing multiple
reasons such as the costs and legal risks of the ongoing court cases, the belief that the homeowners were no longer in danger since they had ceased using their well, and Range Resources agreed
to participate in a national study on fracking and water contamination (U.S. EPA 2013: 16). As
Earthworks (2013) posited, “EPA’s withdrawal from Parker County appears to be part of a larger
pattern, in which the Obama administration has blocked or abandoned investigations of whether
drilling or hydraulic fracturing polluted drinking water.”
Led by Democratic Representative Matt Cartwright (PA), eight members of Congress have
written to Gina McCarthy, head of the EPA, asking her to investigate and address the issue of
water contamination in Pavillion, WY, Dimock, PA and Parker County, TX (Cartwright 2014).
As the letter highlights,
a patchwork of state regulations, exemptions from many of our federal environment laws
and a lack of enforcement have forced communities living in and near to heavily drilled
areas to pay the price for this boom. Water contamination is just one of the impacts felt by
communities across the country.
(Cartwright 2014)
Nonetheless, at this point the EPA has neglected to undertake further investigation into groundwater contamination resulting from fracking operations in Pavillion, Dimock or Parker County.
Injection wells and earthquakes
Although the process of hydraulic fracturing in general has been loosely linked to seismic activity, the disposal of the wastewater from fracking has been scientifically linked to earthquakes.
When not stored in wastewater pits or in transit for treatment, flowback water that returns to the
surface through the well (which can be anywhere from 20 to 80 percent of the water mixture
used) is often subsequently released into deep injection wells (Holloway and Rudd 2013). Deep
injection wells are regulated differently across the US but most are monitored by the EPA under
the Underground Injection Control Program (U.S. EPA n.d.). The pumping of fluids below the
earth’s surface has been documented since the 1960s to cause seismic events (Frohlich 2012),
which are referred to as “induced seismic events” (Holloway and Rudd 2013: 96). Disposal of
fracking fluids into these injection wells has shown a marked increase in seismic activity near
active shale beds in several states across the nation. In one survey conducted over a period of two
years on the Barnett Shale in Texas, over 67 earthquakes with a magnitude of 1.5 or larger were
recorded (Frohlich 2012). The study found that “all 24 of the most reliably located epicenters . . .
occurred within 3.2 km of one or more injection wells” (Frohlich 2012: 1). It should be stated
that deep injection wells themselves have not been shown to be a solitary cause of earthquakes, but
instead that these wells are increasing the probability that earthquakes will occur (Frohlich 2012).
Under EPA’s UIC Class II program and approved state Class II programs, injection wells are
subject to regulation in an effort to protect drinking water sources. The UIC Class II program
oversees and enforces fluid injection into wells used for oil and gas production. In a recent report,
the Government Accountability Office (GAO) (2014) found that both the state and federal programs were inadequately addressing developing risks such as: seismic activity, excessively high
pressure in geologic formations resulting in surface outbreaks of fluids, and the use of diesel fuels.
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According to the report, the EPA is not conducting two key oversight and enforcement activities,
including annual on-site state program evaluations, as well as approving and incorporating state
program requirements into federal regulations (GAO 2014: 39). Furthermore, while the EPA
collects a large amount of data on each state’s Class II program, the data are neither complete
nor comparable to provide a national level report. Currently, the agency is working to create
a national database of UIC results though the data will not be available for two to three years
(GAO 2014: 1). All of these inadequacies have weakened the EPA’s ability to effectively oversee
hydraulic fracturing injection wells.
At present, the EPA is conducting a national study that considers the impacts of five stages of
the hydraulic fracturing water cycle, including water acquisition, chemical mixing, well injection,
flowback and produced water, and wastewater treatment and waste disposal. Although the report
is expected to undergo peer review in late 2014, the results will not be available to the public
until 2016 (U.S. EPA 2012).
Occupational hazards of hydraulic fracturing
Compared to the oil and gas industry at large, workers involved in hydraulic fracturing are at a
greater risk for occupational hazards. According to a recent report by Food and Water Watch
(2014a: 1):
Fracking sites, where many laborers work, operate 24 hours a day and are densely packed
with personnel, equipment and machinery. . . . While on the job, workers can be exposed
to countless hazardous materials, radioactive toxins, temperature extremes and airborne pollutants and respiratory irritants such as diesel particulate matter and silica.
As preliminary findings from the Center for Disease Control and Prevention found, workers
gauging flowback tanks can be exposed to higher than recommended levels of benzene (Esswein
et al. 2014). Moreover, the Occupational Safety and Health Administration (OSHA) and the
National Institute for Occupational Safety and Health (NIOSH) have also identified exposure
to airborne silica (or sand used as a propping agent) as a health hazard for workers involved in
certain hydraulic fracturing operations (OSHA 2014). In addition to silica hazards, NIOSH also
identifies other safety hazards faced by those working at oil and gas drilling sites including being
hit by moving equipment, poor lighting, being caught in pinch points, falling from heights, being
struck by high-pressure lines or unexpected releases of pressure, fires or explosions from flowback
fluids containing ignitable materials, and working in confined spaces (such as sand storage tanks,
frac tanks and sand movers) without taking the proper precautions (OSHA 2014). All of these
hazards contribute to a higher than average worker fatality rate for those involved in hydraulic
fracturing operations. Between 2003 and 2012, the fatality rate for oil and gas sector workers on
the whole was 6.5 times the fatality rate of all US workers. For workers involved in the especially
dangerous job of drilling oil and gas wells, the fatality rate was 12 times the average job in the
US (Food and Water Watch 2014a: 2).
Implications
By passing legislation such as the Halliburton Loophole and failing to fully investigate instances
of water contamination, seismic activity and workplace safety, the federal government has relegated the duty of regulation of hydraulic fracturing to the states. As a result, states are given
great latitude in implementing environmental protections which vary widely across the nation.
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As Warner and Shapiro (2012: 488–489) note, “The 2005 Energy Act created an unusual situation in which Congress (as directed by the White House) willingly gave up considerable power
over fracking by handing off its authority to the states. A hodgepodge of policies has resulted.”
For example, in 2008 towns in New York placed a moratorium on the practice pending further
review and the state has had a ban on fracking since 2010 when former Governor David Paterson
issued an executive order instituting a six-month moratorium that was contingent upon a review
of the environmental impacts of fracking, which has yet to be completed (Sadasivam 2014). In
contrast, some states such as Pennsylvania have been supportive of the industry and have even
passed legislation preventing local communities from passing ordinances limiting fracking (Community Environmental Legal Defense Fund 2012). At the local level, communities have taken
a variety of different types of actions to restrict oil and gas development, including protesting,
passing ordinances asserting the right to self-govern, creating laws regulating local land use, and
enacting moratoria and bans on fracking. These methods have had varied success in the US and
across the globe.
The 2010 documentary Gasland by director Josh Fox and its proliferation across the internet
helped spawn the emergence of the global anti-fracking movement. Through grassroots participation and political influence by mainstream environmental groups, the global anti-fracking
movement has been successful in shaping emerging regulatory frameworks (Wood 2012: 6). The
global and strategic risks accounting firm Control Management performed an analysis of the
global anti-fracking movement on behalf of the oil and gas industry, and identified four broad
camps of the movement:
those desiring a better deal from the gas industry; those advocating further study into the
environmental and economic impacts of unconventional gas development; those demanding
a complete ban on hydraulic fracturing; and – in the majority – those demanding tighter
regulation of gas development.
(Wood 2012: 3)
Communities in the US and across the world are exercising increased local control of the
fracking industry through the use of local regulations, especially moratoriums (which are temporary) and bans (which are more permanent).
The Community Environmental Legal Defense Fund (CELDF) is a non-profit organization
working with local communities to pass self-governance ordinances. Community rights ordinances explicitly assert the right to local self-governance which recognizes the ability of local
communities to resist threats to their health and safety. Working with CELDF, Pittsburgh became
the first community to ban fracking by adopting a Community Bill of Rights ordinance prohibiting the practice. Similarly, communities in Pennsylvania, New York, Maryland, Ohio and New
Mexico have also adopted “rights-based” ordinances banning fracking (CELDF 2014).
Armstrong (2013: 381), however, cautions that local governments should be hesitant to follow
the untested path of community rights and instead should pursue the legally recognized authority
over land use within their jurisdiction to restrict fracking. While local communities are unable
to expressly prohibit fracking outright due to conflicts with state and federal law, restrictions on
land use such as siting, aesthetics, noise levels and hours of operation can limit the practice (Armstrong 2013: 364). However, many communities adopting this approach have been confronted
with lawsuits (CEDLF 2014). As Armstrong (2013: 369–370) stresses, communities across the US
which seek to control fracking through land use ordinances must recognize its limitations. First,
land use regulations may have limited application depending on landownership, such as public
lands owned by the state which are excluded from local zoning. Second, state and federal law
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pre-empts inconsistent local law. Third, communities must consider the potential for regulatory
takings liability, meaning that they must evaluate whether the regulation equates to government
appropriation of private property without just compensation. Thus, in developing land use regulations, local communities must carefully structure ordinances so as to not to conflict with state
and local law to avoid legal challenges.
After Dryden and Middlefield (two small towns in upstate New York) passed fracking bans
in 2011, they faced lawsuits from companies and landowners arguing that they did not have
the authority to impose limits on drilling activity. While the lawsuits were initially dismissed,
intermediate-level courts as well as the state Court of Appeals have upheld the decision upon
appeal. The ruling grants towns the authority to decide whether to permit and how to regulate
fracking within its borders. Even if states decide to permit fracking, cities and towns still have the
option to impose local ordinances that restrict the practice (Sadasivam 2014).
Other states and municipalities in the US have also taken action to halt fracking. California
has seen movement towards banning fracking, with Beverly Hills, Santa Cruz County, California
City and Los Angeles County all enacting prohibitions in 2014. During the state’s recent record
draught, farmers have begun relying on groundwater to nourish their crops. Amidst concerns
that wastewater from fracking may have been injected underground and contaminated the water
source, California officials ordered an emergency shutdown of 11 injection disposal well sites
(Gusher 2014). In contrast, Colorado’s Governor John Hickenlooper, who is a strong supporter
of the industry, publicly announced that he will sue any city or town in the state that bans oil
and gas drilling in their borders (CBS Denver 2013). Nonetheless, three out of the four cities
with fracking bans on the ballot in 2013 (including Boulder, Fort Collins and Lafayette) passed
the initiatives (Sreeja 2013).
As of July 8, 2014, within New York state, there are currently a total of 79 municipal bans,
99 moratoria and 87 movements for prohibitions (either bans or moratoria) (FracTracker 2014).
Nationwide, as of August 26, 2014 there were 432 measures passed that prohibited fracking across
23 states and the District of Colombia (for a detailed inventory of local actions against fracking
see Food and Water Watch 2014b). National moratoriums have also been established in France
and Bulgaria, and municipal bans have been passed in numerous countries across the globe,
including Australia, Canada, Spain, Switzerland and New Zealand (Keep Tap Water Safe 2014).
As the growing number of towns enacting prohibitions shows, citizens are increasingly turning to local government as a means of restricting fracking. In the absence of federal and state
oversight, local communities have begun to take matters into their own hands to protect themselves from the dangers of fracking, yet these measures differ greatly within and between states.
Despite these movements, more uniform regulation of the oil and gas industry is desperately
needed to provide sufficient health, safety and environmental oversight.
Conclusions
Hydraulic fracturing is not a new phenomenon, but the methods now employed during the
process (such as horizontal drilling) have brought national attention to what was previously a
relatively unknown practice. Human and environmental health concerns have propelled fracking
into the spotlight and spawned a national debate, largely within the past five years. Early – and
now outdated – research by the EPA prompted an exemption of fracking from regulation under
the Safe Drinking Water Act (known as the Halliburton Loophole), allowing for unencumbered
drilling. Compounding this, contemporary research on the impacts of fracking is often not conducted by independent entities, but is instead sponsored by the fracking companies themselves (as
in the case of Encana in Pavillion, Wyoming), raising questions about its impartiality.
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Public pressure from grassroots organizations has prompted action on the local, state and
federal levels, as new research and analysis of the practice has been put into motion over the past
decade. These grassroots organizations have also given a voice to otherwise marginalized groups
impacted by fracking, such as private landowners and others whose water supply comes from
wells in affected areas. Calls for transparency of the chemicals contained in frack fluid have led
to a national registry, FracFocus. While this is certainly a step in the right direction, protection of
“trade secrets” has led to additional loopholes for major corporations, as 84 percent of registered
wells claim exemptions. Thus, FracFocus is not comprehensive and does little to publicly disclose
the toxic chemicals used in hydraulic fracturing. Further jeopardizing the safety of local water
supplies, fracking has also been linked to increased seismic activity. Moreover, the toxic hazards
of working in the fracking industry have also put workers at a greater risk for fatal and nonfatal
injuries on the job. Due to the human health and safety and environmental effects of hydraulic
fracturing, greater oversight is needed.
The lack of federal regulation over fracking has resulted in a “hodgepodge” of policies across
the nation (Warner and Shapiro 2012). Left unfettered, this process has led to a range of social and
environmental consequences that are not fully understood. When powerful corporations provide
funding for research into the effects of fracking (which has direct implications for state and federal
regulation), the results of such studies must be viewed with skepticism. Further impeding regulation are the exemptions from the Clean Water and Safe Drinking Water Acts enjoyed by the oil
and gas industry under the Halliburton Loophole. Without repealing this legislation, little progress
can be made in regulating the harmful effects of fracking. Although substantial progress has been
made by the local organizations that fight for moratoriums on fracking, it is no secret that money
buys power in this country – as evidenced by lawsuits filed by the industry, and threatened by
governors. Unless uniform legislation based on independent scientific research is put in place, the
“economic logic” of hydraulic fracturing will only continue to fuel its progression.
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Osborn, S., Avner, V., Warner, N. and Jackson, R. (2011) “Methane Contamination of Drinking Water
Accompanying Gas-well Drilling and Hydraulic Fracturing.” Proceedings of the National Academy of Sciences, 108(20): 8172–8176. Available at: http://www.pnas.org/content/early/2011/05/02/1100682108.
full.pdf+html.
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at: http://www.propublica.org/article/new-york-state-of-fracking-a-propublica-explainer.
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in Broomfield by 194 Votes.” International Business Times, November 6. Available at: http://www.ibtimes.
com/three-colorado-cities-vote-favor-anti-fracking-measures-while-initiative-fails-broomfield194-votes.
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——. (2004) Evaluation of Impacts to Underground Water Sources of Drinking Water by Hydraulic Fracturing of
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Sources from Injection of Fluids from Oil and Gas Production Needs Improvement. Available at: http://www.
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17
The international impact of
electronic waste
A case study of Western Africa
Jacquelynn Doyon
Introduction
The burgeoning business of personal electronics has created profitable markets not only in production and consumption, but also in disposal. A lack of uniform regulation coupled with lax
enforcement of what legislation does exist permits the transboundary shipment of often illegal
electronic waste (or e-waste). For decades, this waste has been routinely shipped from industrialized nations to developing nations, which lack the resources to properly manage and dispose of
electronic waste. Nations in the Asian Pacific such as China and India have historically received
the bulk of this waste, but as regulation and restrictions increase in this region, e-waste is frequently rerouted. The western coast of Africa has recently become a destination for waste, with
the ports of Lagos, Nigeria and Accra, Ghana, for example, now receiving between them more
than 750,000 tons of e-waste annually. This has led to already marginalized populations having
to bear the burden of physical and environmental harms associated with the improper disposal
of electronic waste. In addition, a lack of awareness of theses harms in both developed and
developing nations has only exacerbated the problem. Although well intentioned, national and
international regulation has proven to be relatively ineffective at curtailing the illegal shipment of
e-waste. Focusing specifically on the transport of e-waste from industrialized nations to the ports
of Accra and Lagos, this case study will seek to illuminate not only the central issues, but also the
larger implications of continued electronic consumption and improper disposal.
Problem overview
Electronic waste
The evolution and increased market of personal electronics has led to the annual generation
of an excessive amount of hazardous electronic waste. E-waste consists of electronic products
(computers, televisions, VCRs, cell phones, MP3 players, etc.) that have reached the end of their
useful life (as decided by the consumer) and must be discarded. Most of these products could
be reused, refurbished or recycled, but many end up in the toxic electronic waste stream that
circles the globe. E-waste is an international concern as certain components of the products
contain hazardous materials, depending on their condition and density. For example, cathode
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ray tubes (CRTs) that were used in older model televisions and computer monitors can contain
several pounds of lead each, and are very difficult to dismantle and dispose of safely. In addition,
other e-waste products contain cadmium, beryllium or brominated flame retardants (BFRs), all
of which present considerable risks to human and environmental health. Proper recycling and
disposal methods are imperative in order to protect surrounding populations and habitats.
Electronic waste is an excellent example of perceived product obsolescence that has permeated both consumer and waste markets, as relatively new devices are routinely discarded and
replaced with the most recent model. This continued stream of cast-off electronics has created
the opportunity for a market in e-waste, which flows from developed nations to developing
nations. Although China and India receive a bulk of both legally and illegally transported electronic waste, the western coast of Africa has also become a notable recipient. This is particularly
disconcerting, since this region is the least equipped to properly manage and dispose of hazardous
e-waste. While this market exists either through export or import in nearly every nation in the
world, a lack of awareness of the life cycle of refuse among the general public is perhaps its most
valuable supplier. In addition, national and international legislation governing the transboundary shipment of electronic waste does little to slow the movement of these potentially hazardous
products. The (often illegal) market of toxic trade has turned even the disposal of waste into a
criminal enterprise, which has in turn garnered the attention of criminologists.
Perceived obsolescence and profitability
Technological advancement in the personal electronics marketplace has led to an increase in consumption that has concurrently decreased the lifespan of products. Much of this may be attributed
to the concept of perceived obsolescence, where consumers are led to believe that their product
has become obsolete in light of a more recent, updated version. According to the Consumer
Electronics Association (CEA) (2014), United States consumers are expected to spend an industry
record of $208 billion on personal electronic devices in 2014, despite a recent downturn in the
US economy. Mobile internet devices (such as smart phones and tablets) are the most popular,
with 138 million and 77 million units sold respectively in 2013 (CEA 2014). Worldwide, over
211 million TVs were sold in 2009, with roughly 35 million being purchased in the US alone.
In 2010, US consumers bought 3.3 million HD TVs specifically for the Superbowl, up from 2.6
million in 2009 (Electronics TakeBack Coalition n. d.). In addition to the most popular devices,
industry analysts also predict increases in sales for high-quality headphones, soundbars, bluetooth
wireless speakers, automotive electronics, electronic gaming, etc. (CEA 2014). Although these
devices are entertaining and in many instances useful, they only continue to contribute to the
global e-waste problem.
In 2000, the United States generated 1.9 million tons of electronic waste; by 2012, this number
had jumped to over 3.4 million tons (U.S. EPA 2014). This rapid increase in e-waste is due in
large part to perceived obsolescence. Cell phones, for example, have an average lifespan of only
one year in the United States (Slade 2007), consumers generally keep laptops for two years, and
LCD television for five years (Onteng-Ababio 2014). But what is also important to note is that
there are always new electronic products to buy. For example, there are now MP3 players for
music, Kindles and other devices for reading, and iPads and other tablets for all of the above. Any
individual consumer may have several personal electronic gadgets, and may update one (or all)
of them on a regular basis.
Although the vast majority of electronics are simply “thrown away” – upward of 70 percent in
the United States – an increasing percentage is being recycled each year (U.S. EPA 2014). When a
product is recycled via an electronics recycling company in a developed country, the consumer is
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generally charged a fee. Depending on the size, weight and complexity of the product, consumer
electronics can be free to recycle, or can cost upward of $40. On average, it costs the consumer
between $10 and $50 to recycle a desktop computer or CRT television. It then costs the recycler
around $20 to properly dismantle and recycle that product, which leaves little room for profit.
Because most consumers (especially in the US) are not accustomed to “paying” someone to take
their unwanted goods, and because they can often “donate” them to resale shops for free, most
electronics recycling firms in the US are operating at less than half of their capacity (Frontline
2009), again leaving little room for profit. This has led many firms to export their electronic
waste instead.
From a business perspective, the decision to transfer electronic waste to an unregulated nation
is perfectly cogent; not only does the shipping company avoid the costly recycling process in
their home nation, but they also stand to make an additional profit through the sale of their used
electronics. Instead of absorbing the cost to properly dismantle a product, the recycler could
instead sell the computer to a buyer in an undeveloped nation and earn about $15 for the unit,
netting a profit of approximately $35 for one unit (Gibbs et al. 2010). Considering that recyclers
ship entire containers filled with used electronics, the profit is considerable.
While there are some benefits to transferring end-of-life (EOL) electronics to developing
nations (i.e., providing consumers with products they may not otherwise have had access to),
most impacts are negative. Because most recipient nations of e-waste do not have the infrastructure to properly recycle irreparable goods, these products left in open-air dumps are broken
down, often by women and children. Harsh chemicals (such as sulfuric acid) are frequently used
during the dismantling and extraction processes, and heavy metals (such as lead, chromium, mercury and cadmium) are released into the air, soil and/or water supply (Eugster et al. 2008). This
happens on a daily basis, with little to no oversight or regulation (Eugster et al. 2008).
Western African nations (such as Nigeria and Ghana) have an established informal recycling
sector with limited formal recycling abilities. In the e-waste industries of these nations, both the
second-hand import and the increasing volume of domestic e-waste trigger these informal disposal practices (Schluep 2010). Although it should be noted that this waste stream does generate
both jobs and income for residents in receiving nations, the “employment” is less than desirable.
Working conditions include the handling of toxic materials and exposure to dangerous vapors in
both formal and informal sectors. Increased national and international regulation of electronic
waste is urgently needed.
E-waste regulation and legislation
International regulation of e-waste
In 1989, the Basel Convention on the Control of Transboundary Movements of Hazardous
Waste was adopted in Basel, Switzerland in response to the egregious toxic dumping occurring
during the 1980s in African nations. These waste sites garnered international attention when
it was revealed that the hazardous substances had been imported from developed nations. Rising environmental awareness and legislation in the industrialized world had led contractors and
other entities to seek cheaper disposal options for their toxic materials, which led them to Africa.
The Basel Convention was designed to monitor the “Toxic Trade” in order to protect human
and environmental health (Basel Convention). The primary objectives of the Convention are
to (1) reduce hazardous waste generation and promote environmentally safe disposal, (2) restrict
the transboundary movement of hazardous waste if it cannot be safely managed in the receiving
nation, and (3) develop and maintain a regulatory system to monitor transboundary shipments of
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hazardous waste when permissible (Basel Convention). Only three nations have not ratified the
Convention since it entered into force in 1992: Afghanistan, Haiti and the United States.
In the years following the adoption of the Basel Convention, critics claimed that it did more to
legitimize the shipment of hazardous waste than it did to actually hamper it. The regulatory system permitted the transference of waste, so long as the exporting nation had notified and received
permission from the receiving nation. Unfortunately, as there was still money to be saved and
money to be made from each party respectively, hazardous waste was still routinely transferred to
nations that were unable to properly manage it. Concerned parties (consisting primarily of developing nations and Greenpeace) met and developed the Decision II/12, also known as the “Basel
Ban,” which is designed to ban the shipment of hazardous wastes from OECD (Organization for
Economic Co-operation and Development) nations to non-OECD nations. Several nations were
very much in opposition to this, including Australia, Canada, Germany, Japan, South Korea, the
United Kingdom and the United States (BAN 1998).
Many African nations favored a complete ban on importing waste to the continent altogether,
in order to end transboundary pollution into already disadvantaged regions. Even though current
regulations are much less stringent than originally intended, those involved in the e-waste trade
have found ways to circumvent international regulation (Clapp 1994a). One loophole under the
Basel Convention is that it is designed to prevent the illegal shipment of hazardous and toxic waste
destined for final disposal; but it does not prevent the transboundary movement of items that are
listed as “recyclable.” This unfortunately leads to irreparable electronics mixed in with working
electronics which are then transferred under the guise of recycling. Estimates suggest that only
somewhere between 25 – and 50 percent of shipments labeled for recycling actually contain reusable products; the rest is irreparable “junk” (Ladou and Lovegrove 2008; Liddick 2011; Schmidt
2006). When these products cannot be used, they are often burned (releasing dangerous substances
into the air), improperly buried or dumped into bodies of water (allowing dangerous substances to
leach into the ground and water supply), stacked in empty lots, or stored in dilapidated warehouses.
Regulation of e-waste in the United States
Since it is not a ratified party of the Basel Convention, the United States lacks comprehensive
e-waste legislation. Many wastes listed as hazardous under the Basel Convention are classified as
non-hazardous or as non-waste in the US and are therefore not covered under environmental
regulation, such as the Resource Conservation Recovery Act (RCRA) or the Toxic Substances
Control Act (TSCA) (Liddick 2011). It should be noted that while there is not yet national
e-waste legislation, some states, including California, Maine, Washington and Minnesota, have
implemented mandatory e-waste recycling initiatives (U.S. House of Representatives 2009).
Limited regulation of harmful electronic waste in the United States falls under the Resource
Conservation and Recovery Act (RCRA) by way of the “CRT Rule,” which specifically manages
the recycling and disposal of cathode ray tubes (CRTs). There are stringent rules that require
corporations to have approval from the EPA to both dispose of and/or export CRTs (U.S. EPA
2006). Disappointingly, a 2008 report by the Government Accountability Office (GAO) found
rampant illegal export of CRTs from the United States to developing nations (primarily China)
(GAO 2008). The summation of the report calls for the expansion of the list of products that
are considered “hazardous” in the US, increased enforcement of the CRT rule, and the ratification of the Basel Convention (GAO 2008). What is promising is that there is some movement
in the US towards national legislation. In June 2011, the Responsible Electronics Recycling Act
(H.R. 2284) was introduced in the House of Representatives. Had it passed, the bill would have
established policies banning the export of electronic waste from the United States, and enacted
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criminal penalties for violation (112th Congress, 2011). After facing much opposition (quite
possibly as a result of lobbying) the bill died in Congress, but it does represent the potential for
future e-waste legislation in the United States.
Hazardous waste in Africa
Africa is of particular importance when discussing hazardous waste because it was the first developing region to resist toxic dumping from industrialized nations (while other regions, particularly
China, were still ambivalent). Several African governments, along with NGOs and IGOs, worked
to protect their nations from toxic waste during the framing of the Basel Convention.
[Some] wanted the waste trade across borders to continue to be legal. Waste dealers and
waste producing firms that were reaping large profits on such deals obviously wanted to
have no restrictions on their activities. . . . The less industrialized recipient states . . . were
strongly in favor of an outright global ban of the trade.
(Clapp 1994a: 24)
Following what many in Africa saw as the failure of the Basel Convention to protect them from
industrialized waste dumping, some African nations worked with non-governmental organizations (NGOs) to implement a complete waste import ban, separate from the Convention (Clapp
1994a). This effort to stop the import of toxic waste into Africa has been supported by NGOs
since the 1990s (Clapp 1994a) and is even stronger in response to the growing trend of e-waste.
The intention of the ban was to halt the shipment of waste from OECD nations to non-OECD
nations. The ban, however, is more symbolic than effective, as there is no legislation or regulation to bolster it. Both local and international environmental groups have supported and assisted
African nations in their efforts – despite this, African nations (particularly on the western coast)
are attractive destinations for e-waste.
As the market for illegally transferred electronic waste continues to expand, several entities
are taking advantage of the infirmity of current legislation. Smaller electronics recycling firms
circumvent (via the “recycling loophole”), or in some instances, blatantly violate national and
international law in order to increase profits. Small-time buyers in importing nations stand to also
make a moderate profit, which is tempting enough to persuade them to engage in illegal importation, often by bribing customs officials (Schoenberger 2002). Large corporations and even international organizations have recognized the economic benefits of exporting waste. Former chief
economist of the World Bank, Larry Summers, stated that Africa is vastly under-polluted and that
“the economic logic of dumping a load of toxic waste in the least wage country is impeccable” (as
quoted in Clapp 1994a: 19). For decades, the economic logic has indeed been sound; continued
exportation of e-waste allows for the continued import of new electronic goods, which concurrently stimulates national and international capitalist economies.
What should be noted regarding e-waste regulation and legislation in the United States and
abroad is that there is significant political involvement from not just electronic recyclers, but
also producers of personal electronics. For example, a recent Basel Convention meeting in 2013,
lobbyists for the Information Technology Industry Council (ITI) (which includes such industry
manufacturers as Dell, HP, Sony, Samsung, LG, and Apple) pressured legislators “for exemptions
from established controls on the export of electronic waste . . . proposed exemptions would
allow untested or non-functional electronic waste . . . to be considered non-waste and subject
to free-trade” as long as the items were “repairable” (BAN 2013). This is particularly incongruous with the “corporate persona” of these companies, as many of them project “green” images
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denouncing e-waste export altogether (BAN 2013). An exemption such as this, coupled with the
recycling loophole, could effectively cripple what limited power the Basel directive currently has.
Lobbyist organizations in the United States have largely prevented national electronic manufacturer “take back” policies which would remove a vast majority of these harmful products from
the e-waste cycle to begin with (Atasu and Van Wassenhove 2012; Bennion 2011). Rick Goss, a
member of a powerful “tech industry” lobbying group (the Information Technology Industry
Council), felt it was unlikely that any federal law on e-waste would pass.
[Rick Goss] told the electronics trade association IPC in February [2011] that there is little
accord between computer and electronics companies or retailers and recyclers about how to
shape legislation. “Members of Congress are clear that they don‘t have the appetite or the
time to try to negotiate an outcome” Goss said.
(Bennion 2011)
In total, records indicate that over $630,000 was spent to lobby against the Responsible Electronics Recycling Act (H.R. 2284) in 2011 (Resource Recycling 2012). It is likely due to lobbying
practices that the United States is behind in e-waste legislation compared to other industrialized
nations; it appears that the industry is willing to “spend now” in order to avoid regulation that
will impact upon them financially in the future.
Case study: electronic waste in western Africa
The increase in the traffic of electronic waste to the western coast of Africa is of particular concern, as most African nations lack the infrastructure for recycling electronics, and most products
entering these nations are irreparable and therefore become waste within a few months of shipment (BAN 2005). Indeed, most of Africa lacks waste management programs, e-waste collection
capabilities, and even public awareness of the issue (BAN 2005). As would never be tolerated
in the United States and other industrialized countries, developing nations routinely accept
imported waste that they cannot manage.
Nigeria
As the leading dumping ground for electronic waste in Africa, and the most populous nation on
the continent, Nigeria is an obvious focal point in e-waste research. Already burdened with poor
social indicators, Nigerians also face poor environmental conditions in their major cities and ports,
as well as in rural areas. In addition to e-waste pollution, the nation suffers from deforestation,
desertification, oil pollution (from numerous oil spills), water pollution, coastal erosion, floods, urban
decay, and industrial pollution (CIA World Factbook: Nigeria 2013). Nigeria was the first country
in Africa to sign the Basel Convention and maintained considerable influence over the text of the
document as well (Odubela et al. 1996). In spite of this, it cannot be ignored that Nigerian ports are
some of the most active and lucrative in the e-waste industry; it is estimated that close to half a million second-hand computers are dumped in Nigeria every month (Consumers International 2008).
Internet usage in Nigeria has increased from just over 100,000 users in 2000, to over 45 million users in 2012 (Nigerian Communications Commission 2012), making Nigeria eleventh
in world internet usage. Clearly, the increase in the demand for electronic products has made
the nation (and, most notably, the port of Lagos) an important player in the trade of e-waste.
Lagos is a trade port not just for Nigeria, but also for much of Western Africa. An estimated
500 containers of second-hand computer-related electronics enter through the port each month,
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with each container holding approximately 800 monitors, equating to about 400,000 secondhand or scrap units per month, and over five million units annually (BAN 2005; Nnorom and
Osibanjo 2008). In total, Lagos is importing somewhere between “15,000–45,000 tons of scrap
recyclable electronic components, which may contain as much as 1,000–3,600 tons of lead” each
year (Nnorom and Osibanjo 2008: 1475), a figure that is only increasing. For example, estimates
suggest that over 540,000 tons of e-waste is filtered through Lagos annually, with over 100,000
tons entering illegally (Ogungbuyi et al. 2012). Significant quantities of these products are either
beyond repair, or beyond economically sound repair, and about 75 percent is so outdated or
damaged that it is discarded or dumped (often indefinitely) before any form of reuse can take
place (BAN 2005). As for origin, assessments indicate that around 45 percent of imports were
from European nations, another 45 percent from the United States, and approximately 10 percent
from nations such as Japan and Israel (BAN 2005; Nnorom and Osibanjo 2008). These nations
are legally required to test their exports to determine if the products were subject to national
or international regulations (or both) of transboundary movements of hazardous and electronic
waste. Failure to do so violates provisions of both the Basel Convention and OECD regulations,
of which the aforementioned nations are all a party to at least one (if not both).
Unlike these developed nations, e-waste is a major problem for Nigeria. With virtually no
material recovery operations, these units are instead disposed of in local open-air dumps (Nnorom and Osibanjo 2008). In 2005, the Basel Action Network (BAN), a non-profit NGO that
seeks to uphold the Basel Convention, coordinated a study on e-waste in Nigeria and found
mounds of irreparable electronic waste. There were stacks of thousands of obsolete, second-hand
electronics (i.e., computers, printers, monitors, scanners, copy machines) which were too old for
use “even for Africa” (BAN 2005: 15). Usable materials are quickly sold or transported to other
major electronics markets throughout Lagos, such as the Ikeja Computer Village or the Alaba
market on the outskirts of the city (BAN 2005), but non-functioning products quickly become
a burden on the environment, as well as the population.
A lack of regulation of e-waste disposal has led to much of the waste landing in standard dump
sites, which are unlined, unmonitored, and lack leachate recovery systems of any kind (BAN
2005). These dump sites, which are at least government established, are a step up from informal
dumps that exist randomly throughout the area. According to BAN (2005), it is a very common
practice to adopt an unused patch of ground or wetlands for use as a dump site. Due to the high
water table, this quickly becomes a major issue in Lagos, as the waste and toxic contaminants
leach into the local water supply. Compounding this is the practice of burning piles of e-waste
in order to reduce volume, which occurs in both formal and informal dump sites. This leads
to the releasing of dangerous and toxic chemicals into the air (BAN 2005). Despite knowledge
of the harmful environmental and human impacts of burning e-waste (i.e., the production of
brominated and chlorinated dioxins, polycyclic aromatic hydrocarbons, and heavy metal emissions), government officials have been unable to regulate dump site managers, who claim that the
e-waste dumps “catch fire spontaneously” (BAN 2005: 22).
A lack of government involvement and monitoring is evidenced by the piles of dumped
waste on the sides of roads, in area swamps, between homes and buildings, and encroaching on
environments of wildlife. Even domesticated animals are found grazing amidst the mounds of
burning e-waste, leading to ingestion of harmful materials that may then be passed on to humans
who may consume these cows, chickens, goats, etc. and/or their by-products. These dumps are
reportedly filled with “toxic ash, broken CRT glass, dead animals, medical wastes, used chemical containers, food scraps, etc., all mingled together” (BAN 2005: 23). To exacerbate the issue,
foragers of these dump sites include not only livestock, but also children who play and work
amidst the toxic trash (BAN 2005). In one dump, old computers and monitors are being routinely
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pushed into a swamp in order to create a bridge over what is quickly becoming a pile of burning debris (BAN 2005). Visual images such as these demonstrate the urgency of this issue in the
developing world.
Toxic waste legislation in Nigeria
Following a scandal of illegally dumped toxic and radioactive wastes imported from Italy in
1987 (also known as the “Koko Incident”), the Nigerian government promulgated the Harmful
Wastes Decree which provides the legal framework for the control of the disposal of hazardous and toxic wastes in the nation (Echefu and Akpofure 1998). Under the “Special Criminal
Provisions” of this Act, it is a criminal offense for any person to “carry, deposit, dump, or be in
possession, for the purpose of carrying, depositing or dumping, any harmful waste anywhere
on Nigerian soil, inland waters or seas” (Harmful Wastes Decree 1988; Kalu 2006). It is also
a criminal act to: transport or cause to be transported, or be in possession for the purpose of
transporting harmful waste; or to import or cause to be imported or negotiate for the purpose of
importing any harmful waste; or to sell, offer for sale, buy or otherwise deal in any harmful waste
(Harmful Wastes Decree 1988). Immediately following the Decree, Nigeria passed the Federal
Environmental Protection Agency Act in 1988 which established the first Federal Environmental
Protection Agency for the nation (Federal Environmental Protection Agency Act) (FEPA 1988),
as well as a National Policy on the Environment (NPE), which became the working document
for environmental protection and preservation in Nigeria.
Unfortunately, even with significant legislation governing the general protection of the environment as well as the regulation of harmful and hazardous waste, there is no specific legislation
governing the handling of electronic waste, and most legislation available is outdated, poorly
enforced, or both (Nnorom and Osibanjo 2008: 1475). Limited funding is another major impediment to the effective management of toxic wastes in nations like Nigeria. While the awareness
of the need for environmental protection is growing worldwide, environmental concern has yet
to sway the distribution of government funding priorities in many nations, including Nigeria.
Ghana
Approximately one-third of the size of Nigeria, Ghana is still a significant player in the electronic
waste trade. With a population of about 25.7 million, Ghana constitutes a small portion of the
population for the continent (CIA World Factbook: Ghana 2013), yet it is an increasingly popular destination for much of the waste intended for Africa. Akin to Nigeria, the nation suffers
from deforestation, frequent droughts, soil erosion, and water pollution, as well as overgrazing,
poaching and habitat destruction, and inadequate supplies of potable water (CIA World Factbook: Ghana 2013). Agbogbloshie, a popular dump site in Accra (Ghana’s capital), is an excellent
example of the growing e-waste trade in Ghana. Although dumping has only been occurring in
the region for about seven years, it is already receiving hundreds of thousands of tons of e-waste
annually (Frontline 2009), most notably from the US and European nations.
We are talking about several tons of obsolete discarded computers, monitors, etc. We don’t have
the mechanism or the system in place in this country to recycle these wastes. Some of these
items come in under the guise of donations, but when you examine the items they don’t work.
(Mike Anane, Director of the League of Environmental Journalists in Ghana,
cited in Consumers International 2008: 2)
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An assessment of e-waste in Ghana by the Secretariat of the Basel Convention calculated
that annual imports to the country would double by 2020 (Secretariat of the Basel Convention
2011). While a significant portion of these shipments is waste, there are some usable pieces
that are quickly absorbed by Ghanaians, such as cell phones. The rate of cell phone subscribers
has increased by more than five times the rate in 2000 (UN Data 2012), with approximately
79 percent of the population now subscribing to cell phones services (Pew Research 2014).
As recently as 2002, cell phones were so valuable in Ghana that they could be traded for land
(Farrar 2008). The increase in demand for cell phones led to importation of the devices from
industrialized nations, often through the electronic waste stream. Up from around 200,000 in
2000, there are now over 24 million cell phones in the nation (CIA Factbook: Ghana 2013).
The accessibility of the port of Accra is a likely explanation for the expanding availability of
the product in Ghana.
Aside from cellular phones, numerous other electronics are transported into Ghana via the
port of Accra. Lumped in with televisions, fax machines, refrigerators, MP3 players, air conditioners, etc. are another popular commodity – personal computers. The Agbogbloshie dumpsite in Accra is a modern “computer graveyard” (Ross 2008: 1), though “graveyard” may be
an overstatement ,as it implies that these discarded devices are being buried. On the contrary,
they are disposed of in the same way in Agbogbloshie as in many other e-waste dumpsites –
simply abandoned in piles, often on the side of the road (Kuper and Hosjik 2008). Journalists
found Ibrahim Adams, a 15-year-old resident of Accra, as he was picking through one of these
dumpsites.
“My headmaster sent me home last week because I hadn’t paid the school fees. I’m looking
in the computers for copper and iron which I can sell to pay the [school] fees,” [he says].
(Ross 2008: 1)
Residents such as Ibrahim are receiving a seemingly endless supply of e-waste, as Ghana reportedly imports an estimated 215,000 tons of electronics each year, with a majority of this tonnage
containing computers and monitors (Amoyaw-Osei et al. 2011). It is estimated that only around
25 percent of the shipments received in Ghana contain working electronic products that can be
resold to local communities (Kone 2010). When searching through these piles of broken and
discarded computers, one National Geographic reporter found a monitor with a price tag from a
chain of Goodwill stores in Frederick, Maryland, suggesting that even well-intentioned consumers’ products can end up across the ocean (Carroll 2008).
Not dissimilar to other ports receiving e-waste, a vast majority of these shipments contain
products that are no longer workable or repairable. While usable products are quickly absorbed
into the consumer market, broken electronics even more quickly fill the waste sites. Women
and children are frequently found “working” in the waste sites, retrieving valuable metals from
circuit boards. “All these old mother boards and other types of circuit boards are being cooked
day in and day out, mostly by women, sitting there, breathing the lead tin solders. It’s just quite
devastating” (Frontline 2009: 2). Surrounding these women are piles of waste either pushed into
the nearby wetlands, or burning in open areas. One National Geographic reporter offers a vivid
description of his encounter with Karim, a 15-year-old boy tending fires in the e-waste dumps
near Accra.
[Karim] hoists a tangle of copper wire off the old tire he’s been using for fuel and douses the
hissing mass in a puddle. With the flame retardant insulation burned away – a process that
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has released a bouquet of carcinogens and other toxics – the wire may fetch a dollar from
a scrap-metal buyer,
(Carroll 2008: 1)
Repeated accounts describe these areas as covered in waste, with images of women, young children, and even livestock perusing the remnants of western electronics (BAN 2005; Carroll 2008;
Kuper and Hojsik 2008) In addition, a recent study completed in 2008 by Greenpeace found
numerous hazardous chemicals and very high levels of toxicity in soil and water samples taken in
Accra, Ghana (Kuper and Hojsik 2008; Ross 2008). Most toxic substances found in the samples
either come from the electronic goods themselves, or are formed when hazardous materials in
the products are burned. In some cases certain metals were present at concentrations over 100
times higher than typical background levels for soils, including the highly toxic metal lead. Contamination with other toxic metals, such as cadmium and antimony, was also detected (Kuper
and Hojsik 2008: 8).
In addition, the study identified two plastic softeners (phthalates) that are toxic to the reproductive system, as they often interfere with sexual development in mammals, particularly in
males (Kuper and Hojsik 2008). The phthalates are released into the environment when PVC
wire covers and cables are burned in order for individuals to gain access to the valuable copper
inside. In addition, there was widespread presence of PBDEs, which are found in chemicals
used as flame retardants. Some of the chemicals found in Accra are now banned in Europe
and the United States because of their ability to bio-accumulate in ecosystems, and their link
to slowed brain development in mammals (Kuper and Hojsik 2008). Other samples taken in
Accra contained chlorinated dioxins (which are toxic chemicals known to cause cancer) at
levels “just below the threshold defined as being ‘indicative of serious contamination’” (Kuper
and Hojsik 2008: 8).
Severe contamination such as this is of particular concern because residents of Accra, especially
children, frequent these dump sites. While in Ghana, Greenpeace documented dump site workers
at the Agbogbloshie scrap market as primarily children between the ages of 11 and 18, but some
were as young as 5. A majority of the young workers were male and had been sent to the dumps
by their parents to earn money for the household (Kuper and Hojsik 2008). The Agbogbloshie
market and surrounding areas are even more vulnerable to environmental degradation because
of the location of the dump sites: the market is on flat ground by the Densu River and frequently
floods after heavy rainfall. The flooding then carries the contaminated surface dusts and soils into
surrounding lagoons and back into the Densu River itself, which supplies half the drinking water
to the capital city of Accra (Kuper and Hojsik 2008).
The products which are polluting the soils, waters, and air in Accra and surrounding areas are
from US, Japanese, and European brands such as Phillips, Sony, Microsoft, Nokia, Dell, Canon,
and Siemens. Labels retrieved by one Greenpeace mission traced discarded electronics back to the
Danish Royal Guard and (ironically) the United States Environmental Protection Agency (Kuper
and Hojsik 2008). While in Ghana, Greenpeace noted shipping containers filled with e-waste
coming from Germany, Korea, Switzerland, and the Netherlands arriving in Tema Harbor, the
largest port in Ghana (Kuper and Hojsik 2008). Again, all of these nations have standing policies
under the Basel Convention, the EU, and the OECD (or some combination thereof) to prohibit
the shipment of e-waste to peripheral nations. These policies are often circumvented under the
pretense of recycling “reusable” goods to developing nations. For example, the EU allows the
export of “second-hand goods” so long as they are tested for use, properly packed, and labeled
for resale. However, a EU Commission official estimates that up to 75 percent of these secondhand goods labeled for reuse are broken and inoperative (Kuper and Hojsik 2008). Mike Anane,
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a Ghanaian and an environmental campaigner, told Greenpeace, “[p]eople in developed countries
bring [electronic equipment] here ostensibly to bridge the digital gap; but in actual fact they are
creating a digital dump” (Kuper and Hojsik 2008: 10).
Toxic waste legislation in Ghana
The ports of Ghana are perhaps more attractive to e-waste brokers than those of Nigeria, as the
nation has even more lax environmental regulation. Even the Ghanaian EPA agrees that national
guidelines are needed in order to regulate the importation of used electronics into the country,
along with additional controls monitoring the safe recycling of e-waste (Kuper and Hojsik
2008). Current regulations in Ghana date back to 1992, when the most recent Constitution of
the Republic of Ghana was drafted. The National Environmental Action Plan (NEAP) was first
developed in Ghana in 1991 under the National Environmental Policy. The goal of this policy
is to improve environmental surroundings and living conditions for citizens. Although Ghana
has numerous laws and regulations that have some relevance to the control and management
of hazardous wastes, these statutes fail to address the hazards presented by such waste to human
beings and the environment (Anoyaw-Osei et al. 2011).
Section 10 of the EPA Act establishes the Hazardous Chemicals Committee that is required
to monitor the use of hazardous chemicals by collecting information on the importation, exportation, manufacture, distribution, sale, use, and disposal of such chemicals (Amoyaw-Osei et al.
2011: 22). Again, there is no specific regulation of reference to e-waste, but certainly these regulations would be applicable. Ghana does have a Chemicals Control and Management Center
(CCMC) under the EPA that is designed to manage the disposal or destruction of unwanted
or obsolete hazardous and toxic wastes, but this has proved a great challenge for the nation.
The landfill sites where much of the dumping is carried out are not designed to hold toxic and
hazardous waste, and incinerators for the disposal of particular wastes are simply not available in
the nation (Amoyaw-Osei et al. 2011). Although good intentions exist behind the regulatory
framework of hazardous substances in Ghana, it is an understatement to say that these policies are
ineffective. A lack of legislation governing e-waste specifically is of concern, but it is likely that
even if such legislation were to be established, it would go without enforcement, as do so many
other environmental regulations in Ghana. Furthermore, the infrastructure of proper recycling
and disposal for hazardous and toxic materials is more or less non-existent in the state, which
presents perhaps the largest problem. Ghana, much like Nigeria, cannot effectively manage the
electronic waste flow that is flooding its borders.
Implications and conclusion
It is irrefutable that as the market for personal electronics expands, so too will the market for
electronic waste. For decades, industrialized nations have been shipping their unwanted waste
(hazardous, toxic, and now electronic) to developing nations where there are fewer restrictions
and higher profits to be made. This process has illuminated several problems which are inherent
within the consumer electronics industry, including the issue that increased legislation banning
the illegal disposal of e-waste in core nations inevitably promotes the transfer of this waste to
other (usually developing) nations. The need for cheap electronics in these regions has created
an industry of affordable second-hand goods that are imported by countries which are the least
equipped to properly dispose of them.
Many have argued that the largest contributors to the e-waste stream are the consumers themselves through both perceived obsolescence and a lack of consumer awareness. Although it is unlikely
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that the personal electronics industry will stop advertising their new products, there are several ways
to increase consumer knowledge about electronic waste. Although multiple NGOs have attempted
to raise awareness (Basel Action Network, Greenpeace, etc.) they are limited in their reach; an intergovernmental campaign may be needed to effectively reach consumers. In addition, manufacturers
may include information pertaining to proper recycling and disposal within the packaging of their
products. Some industrialized nations and some states within the US have implemented Take Back
policies, which require the manufacturer to “take back” the product and properly recycle or refurbish
it. An expansion of these programs around the globe would also be beneficial.
Furthermore, there needs to be increased international regulation of electronic waste flow.
Even within nations that have comprehensive e-waste legislation (i.e., nations in the EU), a
majority of electronic products end up in landfills due to lack of consumer awareness and
spotty enforcement. In nations like the United States (which are in the process of establishing
more effective regulation), only 30 percent of e-waste is still actually spared from landfills and
recycled. However, as enforcement and consumer responsibility increase, so will the flow of
e-waste to developing nations. This suggests that effective policy on one side of the world can
lead to structural and environmental issues on the other. In order to ameliorate the situation,
all exporting and importing nations of e-waste must ratify and adhere to the directives of the
Basel Convention, and work in collaboration to ensure fair importing and exporting practices.
Exporting and importing nations need to devote greater resources to enforcement, as well as
to customs and border regulation. Greater regulation and financial restriction of national and
international lobbying groups is also necessary in order to manage outside influence on policy.
Provisions of the Basel Convention should be strengthened rather than revised; industry loopholes that permit the transport of “recyclable” or “repairable” products should be revisited
and perhaps removed. Without these steps, importing nations will remain abysmally vulnerable
to the hegemonic nations and corporations that dominate the multi-billion-dollar electronic
waste industry.
Just as developed nations have a vested interest in exporting e-waste, so do developing
nations have an interest in importing it. The exchange of consumer electronics brings products
to populations that would otherwise not have access to them. That being said, it should not
(and cannot) be expected of these economically disadvantaged nations to have the capacity and
infrastructure to manage the end-of-life (EOL) cycle for these items. Proper checking, tracking, and management of exports of e-waste can reduce the shipment of unusable products to
nations that are unable to properly dispose of them. Increased enforcement of all legislation
pertaining to e-waste can help to manage legal transport, and intercept illegal transport. The
informal and formal dump sites in both Nigeria and Ghana cause injury and destruction to
both human and environmental health. It cannot be ignored that though both sides may be
argued to be “benefitting” from the exchange, the developing world (and, more specifically,
the personal electronics and e-waste industries) are procuring profit at the expense of already
marginalized populations.
What has not even been addressed is the concern that many of these developing nations
bear the burden of not only the disposal of these products, but also the environmental harms
generated during production. Components needed for each product (such as precious metals)
are mined in developing nations, assembly and packaging (which generates high levels of pollution) occurs primarily in developing nations, and consumption is enjoyed by consumers in
the industrialized world. The life cycle of electronic products has been engineered in such a
way to benefit (through low wages, high profits, and consumer consumption) wealthier nations,
corporations, and individuals, through the exploitation of already disadvantaged nations and
peoples. If existing conditions continue uninterrupted – if Western consumers and corporations
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continue to enjoy the benefits of their products and profits and bear no burden of their costs –
the developing world, including Ghana and Nigeria, will continue to import, burn, and bury
the consequences.
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Part V
Financial crimes
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18
Bad banks
Recurrent criminogenic conditions in the US
commercial banking industry
Robert Tillman
In the shadow of the financial crisis that began in 2008, another disturbing trend may be found:
a surge in failures among US banks. Between the beginning of 2008 and the end of 2011, 355
commercial banks were declared insolvent and closed by federal authorities. These failures will
ultimately cost the federal insurance fund that guarantees deposits at an estimated US$57 billion.
If the 57 thrift institutions and savings banks that also failed during this period are included, those
losses increase to nearly US$90 billion (Federal Deposit Insurance Corporation (FDIC, 2011).
While this wave of insolvencies began at about the same time as the larger financial crisis that
was triggered by the collapse and near-collapse of Wall Street investment banks, its causes were
very different. These were primarily small, local institutions – often referred to as community
banks1 – that largely did not invest in the exotic financial instruments that threatened the investment banks. Rather, their demise was typically connected to risky loans made in the local and
regional markets, often involving commercial real estate whose value dropped precipitously as the
US economy sharply declined in the late 2000s.
One of the striking aspects of this wave of insolvencies is how closely it resembles, in form,
the epidemic of failures in the 1980s that led to the closing of over 2000 savings and loan institutions and commercial banks. Analyses of failed institutions in both eras found that they tended
to be young (recently chartered), experienced very rapid growth usually funded by “hot money”
(brokered) deposits,2 had loan portfolios that were heavily concentrated in commercial real estate,
and were located in regions that had experienced “booms and busts” in their real estate markets
(FDIC, 1997; National Commission, 1993; U.S. Department of Treasury, Office of the Comptroller, 2006). Cole and White have characterized the current crisis as “déjà vu all over again” and
have argued that “the parallels of the causes of the two crises, taking place twice within 20 years,
makes [sic] it highly implausible to argue that the recent commercial real estate bust was a ‘black
swan’ that could not have rationally been anticipated” (2012, p. 27).
A number of economists have proposed that financial crises of this sort are not anomalies or
rare occurrences in otherwise stable economies, but are inherent and cyclical features of advanced
economies (Minsky, 2008; Palley, 2010; Roubini and Minh, 2010). Economists, however, have
had less to say about the role that fraud and corruption have played in these crises. Sociologists
and criminologists have had more to say about this and have linked systemic financial crises to
white-collar crime with the concept of criminogenic markets. Studies in a variety of institutional
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contexts have described the ways in which changes in markets and regulatory systems have created
both widespread instability in those markets and pervasive opportunities for fraud and abuse. Analyses of financial institution fraud have focused on the roles that deregulation, political corruption
and financialization have played in creating systemic incentives for insiders to loot their institutions
(Akerlof and Romer, 1993; Calavita, Pontell and Tillman, 1997; Tillman and Indergaard, 2005).
A phenomenon largely unexplored is the possibility that these criminogenic markets may
emerge, decline, and then re-emerge. These markets may display a pattern of development in
which they emerge, capture the public’s attention, become the subject of enforcement actions and
policy changes, recede as policy makers and the public become complacent, and then re-emerge
possibly in a different form or in a different place. The fact that criminogenic markets don’t just
disappear despite often vigorous campaigns to eliminate them suggests that they are connected
to larger social institutions and ideologies. The broader question, then, concerns the underlying
conditions and processes that create and re-create criminogenic markets over time and make
them resistant to reform.
The analysis that follows will proceed by first providing a brief history of the crises in the
banking and thrift industries during the 1980s and the legislative efforts to reform those industries in the early 1990s. In the next section, the conditions that led up to the more recent banking crisis and the dimensions of the epidemic of bank failures in the period 2008 to 2011 are
described. Then the forms of fraud and corruption found at a subset of failed banks whose directors and officers were accused of misconduct are described and linked to changes in the market
and regulatory policies. Finally, these events are placed in a broader theoretical context provided
by economic theories of financial crises and instability.
Problem overview
The recent crisis in the US banking industry offers a good example of recurring criminogenic
markets involving small to medium-sized commercial banks and other lending institutions. This
chapter will describe how the criminogenic environment that surrounded the banking industry
in the 1980s was re-created in the 2000s, albeit on a smaller scale, when lawmakers and regulators,
guided by the view that “this time is different” (Reinhart and Rogoff, 2009), ignored the lessons of the recent past and implemented policies that loosened restrictions on these institutions.
Corrupt bankers took advantage of this relaxed regulatory environment and regional economic
booms, particularly in commercial real estate, to engage in a variety of reckless and corrupt
practices, leading their banks to insolvency and collapse. How this could have happened provides
considerable insights into the nexus of financial crises, financial crimes, and politics.
The 1980s and early 1990s witnessed a severe crisis among US lending institutions. Between
1985 and 1992, over 2100 savings institutions and commercial banks failed, the largest number
since the Great Depression (FDIC, 2011). Hardest hit was the savings and loan industry which
was rescued from total collapse only with a US$125 billion, taxpayer-funded bailout (Curry and
Shibut, 2000, pp. 26–35). Analyses of the causes of the S&L debacle concluded that the major
causes included: deregulatory laws and policies which allowed thrifts to engage in much riskier
activities than had previously been allowed; a failure, indeed a corruption, of congressional and
regulatory oversight; widespread fraud and abuse by thrift insiders and their cronies outside the
institutions; and a collapse in real estate values in certain high-growth regions of the country
(Calavita et al., 1997). Similar factors were behind the wave of bank insolvencies. Although many
of the more sweeping deregulatory policies enacted in the 1980s were directed at thrifts, many
commercial banks were forced to engage in risky and speculative behavior as a result of competitive pressures from savings and loans (FDIC, 1997).
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At both banks and thrifts failure was most common among recently chartered institutions
and institutions that departed from the traditional activities of home mortgage and small business
loans to engage in highly speculative activities, many of which were facilitated by deregulatory
laws and policies. These included fueling rapid growth in assets with brokered deposits that paid
high interest rates and committing significant proportions of the institutions’ loan portfolios to
commercial real estate loans, particularly what are known as acquisition, development and construction (ADC) loans used to fund a wide variety of real estate ventures (National Commission,
1993; FDIC, 1997). Calavita and Pontell singled out these two factors as key ingredients in the
S&L debacle. The increased availability of brokered deposits made possible by deregulation created a situation in which:
Overnight, ailing savings and loans could obtain huge amounts of cash staving off their
impending insolvency. . . . Like a narcotic, the more these institutions took in brokered
deposits, the more they depended on them, and the more they were willing to, and had to,
pay more to get them.
(Calavita and Pontell,1990, p. 317)
For “go-go” S&Ls of the 1980s this new cash was most often used to fund acquisition, development, and construction (ADC) loans, often made to cronies who used the money to build
shopping centers, apartment complexes, hotels, and to invest in other risky ventures (Calavita and
Pontell, 1990, p. 318). For developers these were low-risk loans, since they were not personally
liable in the event of default and nor were bank executives, since the deposits were federally
insured. Thrifts handed out multi-million-dollar loans for projects with no marketability studies
and which were doomed to failure from the start.
Failure at both banks and thrifts was also highest at young institutions, many of which had
been chartered just several years before they collapsed under policies that encouraged new
entrants into the market. By 1983/1984, over 225 new banks were being chartered every
year. So many new banks were being created in Texas that one Houston banker quipped,
“Everyone who has two nickels to rub together is opening a bank or trying to” (FDIC, 1997,
pp. 107–108).
These three factors – the ability to easily charter a bank or thrift institution, the ability to
pump up an institution’s funds with federally insured brokered deposits, and the ability to use
those deposits to make large loans on highly speculative commercial real estate ventures (often to
cronies and business associates) – made thrifts and commercial banks ideal vehicles for generating
huge, short-term profits. Of course, these same factors greatly threatened the long-term survival
of the institution. But then many of the insiders were not concerned about the long-term survival of their institutions because they were simply using them to enrich themselves.
Not only were many of the practices at failed institutions in this era speculative and risky, they
were also fraudulent. Almost all studies of the banking crisis of the era have concluded that fraud
and abuse were prominent causal factors. Estimates of the proportion of bank failures in which
fraud and abuse played a role vary from 24 to 50 percent (FDIC, 1997, p. 34). Studies of the role
of fraud in thrift failures generally find the proportion to be higher. A study by Calavita et al.
found evidence of serious criminal violations at 66 percent of a sample of 686 failed savings and
loan institutions (Calavita et al., 1997, p. 31).
Public outrage over the S&L scandals prompted Congress to pass several pieces of legislation
aimed at reforming the thrift and banking industries, the two most significant of which were
the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA, 1989),
which covered thrifts, and the Federal Deposit Insurance Corporation Improvement Act of 1991
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(FDICIA, 1991), which covered primarily banks. Both laws attempted to reregulate lending institutions, countering many of the deregulatory policies enacted in the 1980s.
Both laws, as well as regulatory policies, tightened up the requirements for obtaining a charter
for a bank or thrift, making it harder for individuals to open new banks with little experience
and little capital (FDIC, 1997, p. 110). Both laws also placed more stringent restrictions on institutions’ access to brokered deposits. The FDICI Act required that only commercial banks that
were “well capitalized” could accept brokered deposits. However, it also provided a mechanism
for institutions to apply for a waiver to the rule if they were “adequately capitalized.” Institutions
that were “under-capitalized” could not apply for a waiver (FDICIA, 1991). The FDICI Act also
imposed uniform standards on real estate lending by commercial banks. Finally, the 1991 law
dealt with a problem that has been cited as a causal factor in the wave of thrift and bank failures
in the 1980s: infrequent on-site examinations by regulators (FDIC, 1997, pp. 426–432; National
Commission, 1993, p. 50). During the early 1980s regulators moved away from the traditional
12-month examination schedule and the time between examinations increased dramatically, particularly in regions of the country with large numbers of bank and thrift failures. At the same
time, the number of bank examiners employed by state and federal agencies declined significantly
(FDIC, 1997, pp. 426–432). The 1991 FDICI Act sought to reverse this trend by requiring that all
but the most highly capitalized banks with relatively small assets be examined every 12 months.
By the mid-1990s the feeling in Congress and among regulators was that the banking crises
of the 1980s were over, the deregulatory excesses that contributed to them had been reversed, and
the banking industry had been stabilized. However, as the FDIC noted in a retrospective survey
of regulatory reform in the early 1990s, “deregulation had never left the legislative and policy
agenda, even when the thrift and banking industries were in greatest difficulty. Not surprisingly,
this held true as times grew better”(FDIC, 1997, p. 126). Written in 1997, this statement turned
out to be more accurate than the report’s authors may have realized.
Case study
The regulators’ optimism would seem to have been justified by a dramatic decline in the number
of bank failures. As the data in Figure 18.1 display, after reaching a peak of over 200 in 1989, the
number of commercial banks that failed annually was in the single digits during the mid-1990s.
And the trend continued until 2008. Indeed, in 2005 and 2006 there were no commercial bank
failures.
But things began to change rapidly in 2008, a year in which 19 banks failed. The next two
years saw failure rates that were reminiscent of the 1980s, with 120 banks failing in 2009 and
132 in 2010. In 2011, the number declined to 84 but was still significantly higher than it had
been prior to 2008. While the number of failed commercial banks was higher in the crisis of
the late 1980s than in the more recent period, the losses per institution were considerably higher
in the latter period. In 1989, at the peak of the earlier crisis, the median loss per institution was
US$9.9 million (in 2011 dollars). In 2010, when failures peaked at 132, the median loss per institution was more than seven times greater, at US$69.2 million (in 2011 dollars). Not included in
these figures is IndyMac Bank, which when it failed in 2008 was technically a savings and loan
institution and not a commercial bank and whose losses were estimated at the time to total over
US$12.75 billion. Expressed in 2011 dollars, the losses at IndyMac were greater than twice the
costs of bailing out Lincoln Savings and Loan, the infamous S&L that was the poster child for
fraud and corruption in the savings and loan industry during the 1980s.
What happened to cause this sudden spike in failed lending institutions? Certainly it was
connected to the general downturn in the economy and the financial crisis that began in the fall
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The US commercial banking industry
250
120000
No. of failures
200
100000
150
80000
100
60000
40000
50
20000
Median loss
(in thousands of 2011 dollars)
140000
0
0
Year of failure
No. of Failures
Median Loss
Figure 18.1 Bank failures and median loss, by year of failure, 1980 to 2011
of 2008. One explanation, popular with executives at failed banks, is that many small banks that
eventually went under would have remained solvent, despite the economic recession, had they
had access to the same government funds (TARP) that large banks did (U.S. Congress, 2010).
Another, related explanation holds that overzealous regulators moved too fast to shut down the
banks and had they allowed them to stay open they could have worked their way out of their
problems (Independent Community Bankers of America, 2010). In both explanations the sudden
rise in bank failures was caused by events external to the banks themselves.
This argument, however, is belied by analyses which have concluded that most failures were
caused by specific conditions and practices within the institutions. An analysis of failed banks by
the FDIC’s Office of the Inspector General found that those institutions tended to be those that:
(1) were recently chartered; (2) were dominated by a single official; (3) relied heavily on brokered deposits; (4) experienced rapid asset growth; (5) had heavy concentrations of Commercial
Real Estate (CRE) and ADC loans in their loan portfolios; and (6) had compensation arrangements that rewarded loan officers for the quantity not the quality of the loans they made (2009,
pp. 11–13). In other words, failed banks were not the victims of unforeseen economic events, but
were instead the victims of recklessness and greed on the part of the insiders who managed them.
Yet, at the same time, state and federal regulators monitored banks in the US relatively closely
as compared to companies in other countries. Therefore, bankers at failed institutions could not
have engaged in these practices without the tacit consent, or at least benign neglect, of regulators. To understand how this happened we have to look more closely at the changed regulatory
environment of the early 2000s.
The “golden age of banking”
In the summer of 2003, the heads of the two most important banking regulatory agencies,
the FDIC and the Office of Thrift Supervision (OTS), posed for a photo-op with representatives from the banking industry who held chainsaws and garden shears over a stack of papers
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wrapped in red tape. In case the point was not obvious, the screen behind them announced:
“Cutting Red Tape” (Appelbaum and Nakashima, 2008). This event aptly symbolized the new
attitude among banking regulators in Washington under the Bush administration who sought
a return to more “relaxed regulation” and “cooperative” relationships with those they oversaw
in the industry. The following year the new head of the FDIC, Donald Powell, a former bank
executive from Texas, told a meeting of the American Bankers Association that they were living
in the “golden age of banking,” an era of long-term prosperity in the banking industry that
could only continue if “regulatory burdens,” particularly those imposed upon small banks, were
reduced (FDIC, 2004).
Putting their words into actions, Powell and other federal regulators implemented a series of
changes in their agencies’ policies that would have a significant impact upon the banking industry. These changes took place in three critical areas. The first