THEORIES OF WHITECOLLAR CRIME
The “Discovery” of White-Collar Crime
• Today, people are well aware of white-collar crime, and judges are
willing to impose harsh sentences on white-collar criminals
• However, this has not always been the case
• In the 1960s people were very indifferent to white-collar crime and even
sympathized with the offenders
• Seen as much less serious than street crime
• Edwin Sutherland changed the field when he published his essay
on white-collar criminality
• Argued that respectable executives, physicians, and politicians
frequently violated the public’s trust and committed crime
• At this time, white-collar crime was not recognized
• White-collar crime existed but was unseen; rather, the focus was on crime of
the lower-class
The “Discovery” of White-Collar Crime
•
Five factors coalesced to increase concern about white-collar
crime:
1. The turbulence of the 1960s and 1970s (Vietnam, Watergate,
Kent State) caused the public to mistrust those in power,
including the government and corporate officials
2. The Civil Rights Movement increased the salience of equality
before the law
3. Consumer and environmental movements disclosed how
corporations were defrauding consumers and polluting the
environment
4. Television shows regularly publicized how those in positions of
power abused the trust placed in them
5. Celebrated prosecutions of white-collar offenders were greeted
with praise by the public
The “Discovery” of White-Collar Crime
• Criminological attention in white-collar criminality
increased dramatically after the 1970s
• Rediscovered Sutherland’s work on white-collar crime
• White-collar crime now seen as a specialization in the field
Sutherland: “White-Collar Criminality”
• Sutherland worked for more than a decade collecting relevant
materials (since 1928) before setting up his concept of white-collar
crime or crime related to business
• Claimed criminality in business was expressed most frequently in the
form of misrepresentation in financial statements, manipulation of the
stock exchange, commercial bribery, bribery of public officials,
misrepresentation in advertising, embezzlement, etc.
• Presented his work at a meeting of sociologists and economists in
1939 and published it in 1940
• This work deemed him the father of white-collar crime
• Argued his intent was scientific in that traditional theories that
explain lower-class crime cannot explain business crime
• Claimed he had no intention of reforming the business world
Sutherland: “White-Collar Criminality”
• “White-collar” was the term used to describe
respected members of the community in trusted
occupational positions
• White-collar crime is defined as a crime committed by
a person of respectability and high social status in the
course of an occupation
• This definition is intentionally vague with
many scholars still debating what conduct
should be called white-collar crime
Sutherland: “White-Collar Criminality”
•
Sutherland offered two distinct criteria for whitecollar crime in his 1940 work:
1.
The crime had to occur in the course of the person’s
occupation
2.
The crime had to be committed by a person of
respectability and high social status
•
Sutherland wanted to focus on the crimes of the rich and
powerful
•
This criteria causes much difficulty because hard to
determine how much respectability a person must possess
for it to be white-collar crime
Sutherland: “White-Collar Criminality”
•
Argued the varied types of white-collar crime could be
reduced to two categories:
Misrepresentation of asset values
1.
•
Examples: fraud, swindling
Duplicity in the manipulation of power
2.
•
Example: double-cross
•
Offender holds two antagonistic positions
•
The trust of one position is violated in the interest of the other position
Sutherland: “White-Collar Criminality”
• Sutherland addressed what should be
considered white-collar crime
• Some argue that research should only focus on
those acts that have resulted in a conviction in a
criminal court
• Sutherland rejected this view
• Realized many harms perpetrated by companies were not treated as crimes
and they could escape criminal prosecution because they had the power to
shape the laws passed and how the statutes were enforced
Sutherland: “White-Collar Criminality”
• Sutherland addressed what should be considered white-collar
crime
• Argued convictability should be central to the decision on what
counts as white-collar crime
• Whether the white-collar offense could potentially be prosecuted
under criminal law or would have been if pressure were not placed
on the prosecuting agency
• Also recognized the impact of class bias in the courts
• Recognized other agencies besides the criminal court must be
included (e.g., administrative boards, etc.)
• Contended people who are accessories to the crime must also be
included when counting white-collar crime
Sutherland: “White-Collar Criminality”
• Claimed crimes of the lower-class and white-collar crimes
differ principally in the implementation of the criminal laws
that apply to them
• Lower-class crime handled by the CJS with penal sanctions, while
white-collar crimes often result in no official action or are dealt with
as civil cases or by regulatory boards
• The difference in the implementation of the criminal law between
lower-class crime and white-collar crime is due principally to the
difference in the social positions of the two types of offenders
• Powerful, white-collar offenders are able to influence the law and
often bypass it
• Also, white-collar victims are often unorganized, lack technical
knowledge, and cannot protect themselves, thus allowing the whitecollar offender to better defend himself/herself
Sutherland: “White-Collar Criminality” and The
Importance of Studying White-Collar Crime
•
In his 1940 piece, Sutherland identified why it was important to
study white-collar crime
1.
The public’s ignorance about the costs of these white-collar
offenses
•
A single scandal can costs millions with the financial cost of
white-collar crime probably several times as great as the
financial cost of all the crimes which are customarily regarded
as the “crime problem”
2.
White-collar crime has “social costs”
•
White-collar crime lowers morale and produces “social
disorganization on a large scale”
•
Creates distrust that damages social relations
•
Lowers confidence in central institutions
Sutherland: “White-Collar Criminality” and
The Importance of Studying White-Collar Crime
White-collar crime does take lives and hurts people
3.
There are “physical costs” where people die, are
injured, and are made ill
•
•
Examples: defective products, unsafe working conditions
Sutherland: “White-Collar Criminality” and
The Importance of Studying White-Collar Crime
4.
White-collar crime calls into question almost all
theories of crime
•
Many theories unable to explain this type of crime
•
•
Many traditional theories focus on the role of poverty, and most
white-collar offenders are not in poverty
Need to develop general theories of crime that can explain all
varieties of illegal conduct—or—
Create theories specific to white-collar crime—or—
Develop general theories that use the same core variables to
explain all types of crime but argue that the content of those
variables differs across offense types
•
•
•
Sutherland did this with differential association theory arguing whitecollar crime, like all crime, is learned
Sutherland: “White-Collar Criminality” and
the Importance of Studying White-Collar Crime
• Corporations have such a large impact because they
touch everyday American life through employment and
products we consume
• Therefore, we need to study the crime committed by these
agencies
Sutherland: “White-Collar Criminality”
•
Overall, Sutherland made three important contributions
to the field:
1.
Introduced the concept of white-collar crime and noted what
kinds of actions fell under this umbrella
2.
Put to rest that crimes by respectable members of society did
little damage
3.
Challenged the existing criminological theories of crime
Sutherland’s Book: White Collar Crime
• In 1949, Sutherland presented the results of his
analysis of 70 of the largest industrial and
commercial corporations over the course of their
lifetime
• Found every company had at least one adverse legal
decision, and they averaged 14 violations
• 98% had two or more transgressions
• Counted criminal convictions and civil court decisions
• Even when restricted to criminal convictions only, 60 percent
of the corporations had convictions, with an average of four
convictions each
• Thus, most corporations were recidivists
Theories of White-Collar Crime
•
Tend to incorporate one or more of four central factors:
1.
Exposure to a criminal culture
2.
Life in a competitive financial system
3.
Unique illegitimate opportunities produced by a legitimate work
setting
4.
The decision to break the law by respectable people
Theories of White-Collar Crime
• Exposure to a criminal culture
• Sutherland argued in differential association theory that
people offend because they are exposed to definitions
favorable to crime and to the techniques needed to commit
any given criminal act
• Crime is learned by interacting with others who are already
involved in criminal pursuits
• Applied this theory to crime in disorganized inner-city areas
• Also applied this to white-collar crime
Theories of White-Collar Crime
• Exposure to a criminal culture
• Proposed many sectors in the legitimate work world were
socially disorganized and more organized for crime than
against it
• White-collar crime had similar causes as street crime
• Criminal cultures flourish in many white-collar sectors creating
a “normalization of deviance”
• When under pressure to create results, criminal values can arise
• When dangerous risks arise, there is a tendency to define them as
technical issues that can be safely ignored or solved
• Norms arise to minimize or normalize the risks
Theories of White-Collar Crime
• Exposure to a criminal culture
• People learn certain unethical and illegal business practices
are normal
• Efforts made to teach newcomers criminal values and skills
• Resistance is seen as not being a team player
• Companies provide strong differential associations that favor
and reward legal violations
• Learn the techniques and definitions of crime while
developing an ideology that accepts criminal violations
• Variations in illegalities are linked to the degree to which corporate
cultures support criminal practices
Theories of White-Collar Crime
• Competitive financial world
• Some argue money is the root of all evil
• People may commit crime to solve financial problems
• Donald R. Cressey argued embezzlement was a response to
a “non-sharable problem” when the person is in a position of
trust and can rationalize the feelings of guilt
• Example: gambling debts, excessive family expenses
• Others argue white-collar crime is nurtured by the ever-
present profit motivation
• Maximization of profits supersedes concerns for the wellbeing of workers, customers, or the community
• Any means necessary used to make money
Theories of White-Collar Crime—
Shover and Hochstetler: “Choosing White-Collar
Crime”
• Opportunities to offend
• Work is filled with both legitimate and illegitimate
opportunities
• Shover and Hochstetler use the concept of lure to describe
the presence of attractive targets for offending
• Lure is arrangements or situations that turn heads
• However, the chance to offend is not a full-fledged opportunity
unless credible oversight is lacking
• Thus, lure is not a criminal opportunity unless there is a lack of
oversight
• Lure makes the criminally predisposed and tempted
sensitive to whether their actions are being monitored
and how oversight can be defeated
Theories of White-Collar Crime—
Shover and Hochstetler: “Choosing White-Collar
Crime”
• Opportunities to offend
• A criminal opportunity is an arrangement that offers potential for
criminal rewards with little apparent risk for detection
• Lure is a key determinant of the supply of opportunities for white-collar
crime
• People and organizations can be predisposed to exploit lure
• The middle-class and upper-class backgrounds of white-collar criminals
can lead to a predisposition to exploit lure
Theories of White-Collar Crime—
Shover and Hochstetler: “Choosing White-Collar
Crime”
• Opportunities to offend
• Middle-class family and community life may be a “generative world”
• Socialized to exert social power in relationships, take risks, and be
competitive
• May become arrogant and uncaring toward others or have a sense of
entitlement
• Develop linguistic skills to help them neutralize constraints and deny guilt
Theories of White-Collar Crime—
Shover and Hochstetler: “Choosing White-Collar
Crime”
• Opportunities to offend
• Many white-collar jobs involve trust with little oversight
• The regulatory and criminal justice systems often provide no or
ineffective oversight of powerful lures in white-collar settings
• Often place corporate economic interests above the interests of workers or
consumers
• Lure becomes opportunity in the absence of credible oversight
Theories of White-Collar Crime—
Shover and Hochstetler: “Choosing White-Collar
Crime”
• Opportunities to offend
• Self-restraint is the first line of defense against criminal
decision-making
• Lure is a criminal opportunity when offenders are indifferent to
the tug of conscience, reputation, or concern for family and
peers
• State oversight is external to the individual
• Not very effective
• Can be direct observation by individuals or impersonal
monitoring via periodic audits, television cameras, or
computer programs
Theories of White-Collar Crime
•
Opportunities to offend
•
Benson and Moore argue three properties characterize whitecollar offenses:
1.
The offender has legitimate access to the location in which the
crime is committed
2.
The offender is spatially separated from the victim
3.
The offender’s actions have a superficial appearance of legitimacy
•
The above conditions provide ample opportunities to deceive others
and to conceal conspiracies to offend
Theories of White-Collar Crime
• Decision-making by respectable offenders
• Must deal with the cognitive dissonance of a being a good person
doing a bad thing
• Use the techniques of neutralization (Sykes and Matza)
• People have to invoke beliefs that would neutralize normative controls
• Makes breaking the law permissible
Theories of White-Collar Crime—
Benson: “Denying a Guilty Mind”
•
Decision-making by respectable offenders
Benson calls this “denying the guilty mind” or denying
criminal intent
•
•
Do not deny behavior, but deny that their actions were motivated by a
guilty mind
•
Develops the concept of “accounts” or the justifications white-collar
offenders use to permit them to neutralize feelings of guilt before and
following criminal behavior
•
Two varieties of accounts:
1.
Prior to the criminal act or during an ongoing criminal enterprise that might
last months or years
•
2.
Relieves feelings of guilt and allows the conduct to continue
Rationalization occurring after the act
•
Allows the offender to cope with the stigma of being
publicly defined as criminal
•
Furnishes an excuse for their conduct
Theories of White-Collar Crime—
Benson: “Denying a Guilty Mind”
• Decision-making by respectable offenders
• Benson argues these people break the law but deny they are a
“true criminal”
• Do not have a past arrest record
• Accounts explain why crime is not really serious and why the
offender is not really blameworthy
• Accounts are tied to the offender’s social situation
• In a capitalist society, offenders are likely to explain criminality by
arguing illegal practices were necessary to make profits for
shareholders and to keep the firm afloat
• In a bureaucracy, offenders can argue they were just following orders or
did not have the decision-making power because of the diffusion of
responsibility
Theories of White-Collar Crime—
Benson: “Denying a Guilty Mind”
•
Decision-making by respectable offenders
•
Accounts are also shaped by the specific criminal
enterprises in which they are engaged
•
Antitrust violators
•
Focused on the everyday character and historical continuity of
their offenses and argued they were following established and
necessary industry practices
•
Need to make profit to survive
•
Their actions were blameless and a harmless business practice
•
Were very critical of the motives and tactics of prosecutors
•
Compared their crimes to the crimes of street criminals
Theories of White-Collar Crime—
Benson: “Denying a Guilty Mind”
• Decision-making by respectable offenders
• Accounts are also shaped by the specific criminal enterprises
in which they are engaged
• Tax violators
• Claim everyone cheats somehow on their taxes
• See self as getting an unlucky break
• Argue they did not know due to the complexity of the tax laws
• Simple errors resulting from ignorance
• Poor recordkeeping
• Argue they have altruistic motives
• Compare self to street criminals
Theories of White-Collar Crime—
Benson: “Denying a Guilty Mind”
• Decision-making by respectable offenders
• Accounts are also shaped by the specific criminal enterprises in
which they are engaged
• Violations of financial trust (embezzlement)
• Unlike the other offenders, admitted responsibility
• Argued they were under extraordinary circumstances and the offense was an
aberration in their life history
• Argued they had some restraint because they did not take more money
• “Was not himself” during the crime
Theories of White-Collar Crime—
Benson: “Denying a Guilty Mind”
• To effectively deny the guilty mind, the offender must:
1.Minimize the seriousness of their criminal act
• Argue they may be helping others
• Contend everyone was doing it, so it was normal
• Lack of identifiable victims
2.Convince others their blameworthiness was slight
• Argue the complexity of the laws and regulations are to blame
• Crimes due to ignorance or inattention—accidental
• Contend there were extenuating circumstances
• The decision to offend is shaped by the offender’s location in the
life course, in a particular society, and in a specific occupation
Theories of White-Collar Crime— Shover and
Hochstetler: “Choosing White-Collar Crime”
• Decision-making by respectable offenders
• Shover and Hochstetler argue that white-collar crime is a reasoned
choice
• Assert that it is rational to the extent that offenders
weigh the costs and benefits of the crime
• But, like street criminals, offenders weigh
payoffs of crime more heavily
• Individual propensities shape what offenders
choose
the potential
than the estimated risks
weigh and
Theories of White-Collar Crime— Shover and
Hochstetler: “Choosing White-Collar Crime”
• Decision-making by respectable offenders
• This rational choice is also placed within the social context of the
offender
• White-collar settings are filled with lure and little oversight
• Individuals respond differently to opportunities (lure) depending on their
internal self-restraints and their criminal predispositions
• Thus, the choice to offend is a product of lure,
oversight, and the internal restraints and motivation of
the offender
• White-collar offenders often pay more attention to the profits from
their schemes than to the risk of being detected
• Benefits are easily seen as large, with little state oversight
• White-collar crime is committed when people estimate the payoff as
greater than the risks or consequences of being caught
Theories of White-Collar Crime— Shover and
Hochstetler: “Choosing White-Collar Crime”
• Decision-making by respectable offenders
• The key in lowering white-collar crime is to use public policy to
constrain individual decision-making so that those who consider
crime do not find it to be a profitable option
• To determine the effectiveness of deterrence of white-collar crime, one
needs to examine the subsequent, short-term effects of increased
sanctions on specific types of white-collar offending
• The results are mixed
Summary
• Sutherland introduced the concept and study of white-collar crime
• Many theorists since Sutherland have tried to explain why white-
collar crime occurs
• Some argued that exposure to a criminal culture in a work setting
was the cause (Sutherland)
• Others focused on the competitiveness of the corporate world
• Still others examined the opportunities for and lure of white-collar
crime (Shover and Hochstetler)
• And finally, others explained white-collar crime by the decisions of
offenders and their ability to rationalize the behavior or deny their
guilt (Benson, Shover, and Hochstetler)