Week 10 SOC
White collar crime lecture notes
Edwin Sutherland 1949
His definition: “crime that is committed by a person of respectability and high social status in the course of his (sic) occupation”
Scientifically no one knows what high respectability really means
What do you measure?
Seems to be implying that business managers and executives
Excluding lower-level administration, clerical workers, bureaucrats, etc.
Eric goode 2015
His definition: “any and all illegal activity that is committed by persons with or middling occupational prestige within the context of their profession”
Individual vs. corporate white collar crime
Individual:
The offender acts on their own within their organization
Benefiting themselves
Not doing it to benefit the company as a whole
It must be done in the context of the job
Eg. pharmacists stealing drugs
When they’re caught the official and informal condemnation is on the individual
The company isn’t blamed
Corporate:
Usually starts at the top of the hierarchy
Coordinated actions by social networks
Hard to trace a single individual
Whos responsible for what
Illegal behavior on behalf of the organization
Benefits the company is the motivation
Eg. dumping chemicals into a stream
Characteristics of the corporate side
Comprises complex and technical actions
Hard to investigate because of the sophisticated nature
Hard to discern
Especially with big and tech companies
Diffuse victimization
Hard to pinpoint who the victims are
Many victims so the harm is spread out
Monetary sums are large (eg. billions)
Adds up over months, years or decades
More complexity
Rarely prosecuted
Arrests and convictions are rare
Penalties tend to by light
Financial applications
Doesn’t fit our stereotype of real crime
Not stigmatized as much
Not condemned as much as street crime
Limited media coverage
Blends with social construction of problems
It's too complex and not newsworthy
The story would be too long and not attention grabbing
Rarely see themselves as criminals
Alleviate and remove the guilt?
Admit to action but don't see it as criminal
Disconnect
Costs of white collar crime
Anderson (2012) estimates cost of street crime to be about $833 billion (USD)
Van Slyke et al. 2016
Fraud and occupational theft alone $800 billion (USD)
Total white collar victimization costs exceed $1.6 trillion (USD)
Example for individual:
Bernard madoff (1938-2021)
Top tier of american business
Ponzi scheme
Core idea: what you do is take money from someone and promise every month you will give them money in interest and they can get their money back if they want
Swindled 4800 clients out of 50-65 billion
Sentenced in 2009 for 150 years
Example for corporate
Classic ford pinto case, early 1970s
Intense competition to work with chinese imports
They make the pinto
Rear-end collision and exploding gas tank
Estimates vary: 25-500 people killed
Cost of repairs vs family lawsuits
Figured it out financial
It was cheaper to deal with lawsuits
Opted to leave the cars on the road
Late 70s Ford went on trial in a criminal case but was acquitted
Paid civil damages
About 100 million dollars
Recalled the vehicle
April 20 2010 BPs Deepwater Horizon rig blew up
Contaminated and killed wild life
BP paid a find of 18.7 billion fines
Safety failures
Several major maintenance issues for safety mechanisms
The issues were not fixed
A vital piece of safety equipment was five years past its replacement date
Federal regulator
Safety audit issues not flagged
They weren’t being supervised or regulated
Greatest environmental disaster in US history
Weak regulatory oversight, relentless pursuit of profit, and weakened safety protocols = disasters
The people who should have been regulating them were having sex with high up BP workers and doing cocaine with them
Individual level white collar offenders
Weisburd (1991) et al. examined a cross section of individuals convicted
Most in jail for fraud and embezzlement
Most didn’t occupy very high-status positions but weren’t blue collar workers either
Most had humble jobs and no college education
“Most white collar individual offenders are ordinary people who got into financial difficulty and who was their way out of it through illegal and fraudulent measures”
What about corporate white-collar offenders
We don’t know a lot
Tough to get data
Traditional research methodologies don’t work that well (ie. surveys and interviews
Crime is committed by shifting networks of people
Traditional theories of white-collar crime
Differential association (ie. sutherland)
Exposure to favorable definitions of crime increases likelihood of WCC
Knowledge skills and motives all matter
Frequency, duration, priority, and intensity, all matter
Learning relationships are still not enough
Goes slightly more macro
Importance of social disorganization
Anomie
you get anomie when there is a lack of standards
WCC is complex, technical and difficult to observe
The standards are ambiguous
Free market capitalism and reluctance to control white collar activity
Together, undermines a consensus about wrongfulness of WCC
Conflict of standards
Conflicting standards
Unlike government, labour unions and consumer groups, business contest regulation
The standards conflict
This tension prevents strong moral consensus
Merton’s Theory of anomie
recap: means/goals gap, anomic social system, modes of adaptation
seems more suited to lower class crime, what about te affluent?
the system promotes material success, but the means to success
People in white collar jobs work extremely hard and are not benefited equally
People adapt to the systematic problem
Emphasis on wealth in white collar jobs; cultural emphasis
Profit maximization
Market uncertainty and competition undermine legitimate means
Innovation: break the law to maximize profits
Other categories of adaptation are not as obvious
Ritualism: someone up in the corporate ladder whos given up on the profit success motive
Retreatism: somebody who gives up and watch the business die
Rebellion isn’t clear at all
Rational choice theory
Paternoster and simpson 1993
The proper way to understand this is to remember we are all self-interested
Debatable
cost/benefit analysis = all behaviour (conscious and unconscious)
Homoeconomics
WCC happens when net benefits of non-compliance outweigh net benefits of compliance
Very rational
Benefits and costs have subjective and objective dimensions
Subjective costs: eg. guilt or fear of apprehension (anxiety)
Subjective benefit: the thrill
Objective costs: formal punishment
Objective benefits: financial gains
Nine dimensions to rational choice model
Formal sanction threats (external legal systems)
Informal sanction threats (loss of status or position)
Moral inhibitions (is it wrong to price fix?)
Cost of rule compliance (decreased profitability and/or competitiveness)
Perceived legitimacy (perceived reasonableness of rules)
Benefits of noncompliance (personal benefits; corporate benefits such as improved competitiveness)
Loss of self-respect
Characteristics of the event (cultural conduciveness or environmental factors)
Prior offending (have you done this before)
Critiques:
Is it truly a model or simply a list of factors
Doesn’t present factors that predict, just says people consider these things
No map, just a list of possible things people think about
Does it overemphasize human rationality
Sometimes we are completely irrational
Piquero, Tibbetts and Blankenship (2005) “Examining the role of differential association…:”
Test differential association
133 MBA students
Asked them to read a story about a fake medication named panalba
Banned by the US for causing significant health effects
What would you do if it was your company?
How they believe other people in their business environment would react
Board of directors, CEO, professors
5-point scale
Measure the degree to which they are willing to sell the drug
Those who were more willing to sell the drug also indicated people close to them were willing to support or look the other way on the sales process
If the board directors and close co workers wanted to sell it they would
Anticipated reaction of friends or professors have little influence
Internal workplace influences have a big impact
Limitations
Only 133 people
Scenario was hypothetical
Tapping into their imagination