Theoretical Perspectives on White-Collar Crime

Theory Basics and Macro-Level Explanations

• Levels of explanation: micro, meso, macro.
• Macro-level explanations.
• Coloniality and the Colonial Matrix of Power (CMP).
• Theory of surplus value and hegemony (Marxism).

Micro- and Meso- Level Explanations

• Convenience theory.
• Crimes of obedience.
• Normalisation of deviance.
• Neutralisations (e.g., states of denial and justifications).

Required Readings

• Chan, F. & Gibbs, C. (2020). Integrated theories of white-collar and corporate crime. In M.L. Rorie (ed), The handbook of white-collar crime (Chapter 13, pp. 191-207). Hoboken: John Wiley & Sons.

Theory Basics

• Levels of explanation:
  • Micro-level: At the level of the individual (individual-level).
  • Meso-level: At the level of a group of people (group-level).
    • Organization/company (organizational-level).
    • Industry.
    • Profession.
  • Macro-level: Beyond group-level, large scale.
    • Society (societal-level).
    • Economy.
    • Government/state.
• The causes (and harms) of WCC can take place at multiple levels.

Explaining the multiple causes of the global financial crisis (GFC) in 2008

• Micro-level:
  • Individual-level
  • Kareem Serageldin (former CEO, Credit Suisse).
  • Penalties = 30 months imprisonment, US150,000 fines.
• Meso-level:
  • Organisational- and industry-level
  • Credit Suisse (investment bank).
  • Penalties = US204 billion in fines, plus settlements.
• Macro-level:
  • Economy- or societal-level
  • Capitalism Wall Street (US financial industry).
  • Penalties = US5.28 billion in fines, plus US495 million in settlements.

Macro-Level Explanations

• Coloniality
  • Colonial Matrix of Power (CMP) (Mignolo)
  • Colonial difference(s) (Mignolo)
• Marxism
  • Theory of Surplus Value (Marx)
  • Hegemony (Gramsci)

Coloniality

• coloniality ≠ colonialism
• colonialism = Western colonial/imperial expansion.
• coloniality =
  • “underlying logic” underpinning all forms of colonialism/ imperialism (Mignolo 2017).
  • “darker side” of modernity—i.e., Western civilization, the historical period beginning with the European renaissance (15th century) to today (Mignolo, 2011: 2-3).

Colonial Matrix of Power (CMP)

• The means through which coloniality is exercised (i.e., “the instrument of coloniality”).
• CMP is the interaction/control of:
  • Knowledge/understanding (coloniality of knowledge).
  • “Life” or what is human/humanity (coloniality of being).
  • Economy (economic coloniality).
  • Governance/legal authority (coloniality of governance or law).
• Colonial Matrix of Power (CMP)
  • Coloniality of Knowledge
  • Coloniality of Being (human/humanity)
  • Economic Coloniality
  • Coloniality of Governance/Law
  • Source: Mignolo (2021: 34-51)

Colonial difference(s)

• colonial differences = ways of knowing/understanding the world which do not exist/reflect actual reality, but prescribe reality.
• e.g., “race”, “gender”, etc. are social constructions/ classifications.
• Classifying people on such basis creates hierarchy (i.e., differences which dis/empower groups of people).
• The modern/colonial/capitalist/heteropatriarchal order, and its hierarchies (or categories), are the result of the creation of colonial differences.
• By defining humans/humanity in their likeness (as men/white/humans), the West set themselves apart from:
  • non-white men/humans (racism)
  • “past” and “traditional” civilizations (modernity)
  • women/humans (sexism, androcentrism)
  • non-Europeans (Eurocentrism)
  • nature (anthropocentrism)
  • non-Westerns (Western centrism)
  • Source: Mignolo (2018, pp. 186-87)
  • slavery = colonial (racial) difference between white/non-white humans

Colonial Matrix of Power - Uyghur genocide and forced labour (China)

• coloniality (control) of being
  • creation of colonial (racial, religious) difference through classifying them as “terrorists” (i.e., their dehumanisation, as lesser humans).
• coloniality of knowledge (control of knowing/understanding)
  • forced cultural/political assimilation through “re -education” facilities (e.g., control of language, dress, religious practices).
• coloniality of governance/law (governmental/legal control)
  • creation of laws/policies, such as “Strike Hard Campaign against Violent Terrorism” (厉打暴力恐怖活行 ), restricting their movement and legitimising mass electronic and in-person surveillance.
• economic coloniality (economic control)
  • state-sponsored forced labour/transfer program, called “Xinjiang Aid” (援疆). Involves forcible transfer from Xinjiang (i.e., “re- education” facilities) and forced to work in factories throughout China.
  • Uyghurs (or Uighurs, Uygurs or Uigurs) are a Turkic-speaking, mostly-Muslim ethnic group originating from Xinjiang (region in north-west China).

Theory of Surplus Value (Marxism)

• surplus value is the value created by the worker through their labour (i.e., labour power) surplus to/in excess of the cost(s) of their labour (i.e., wage) during the production process.
• wage + surplus value (profit)
• Sources: Lasslett (2018), Lynch, et al. (1994).

Theory of Surplus Value (Marxism)

• “[The capitalist] pay[s] the value of labor-power, which is set … by the value of the commodities needed to reproduce the laborer at a given standard of living. The laborer sells the commodity labor-power, gets money, then goes and gets that bundle of commodities needed to live. But is will only take a certain number of hours each day for the laborer to reproduce the equivalent of the value of labor-power. Therefore, “the daily cost of maintaining labour-power” and its daily creation of value are two totally different things.”
• “There is a key distinction between what labor gets and what labor creates. … Laborers, in short, are paid the value of labor-power, and that is that. The capitalist then puts them to work in such a way that not only do they reproduce the value of their own labor-power, they also produce surplus value.”
• Source: Harvey (2010, pp. 123-24)

How the creation of surplus value is harmful

• According to Marx/Marxists:
  • It’s essentially unpaid labour (i.e., a form of exploitation or theft ).
  • It not only facilitates profit accumulation, but centralises it in (and increases the power of) the capitalist/dominant class.
  • this position of power (empowerment) can increase workers’ risk of further exploitation.

How to increase surplus value beyond the usual rate of exploitation/theft under capitalism

• absolute surplus value: increase length of workday, week, month, or year but keep the value of labour-power (i.e., wages) the same (e.g., unpaid overtime).
• relative surplus value: increase productivity (e.g., using machinery/other technology in place of labour-power, increasing division of labour, etc.).
• additional surplus value (or super-exploitation): decrease the value of labour- power (i.e., wages) .
• theft of labour time (e.g., under-measuring no. of hours, zero-hour contracts).
• theft of base wages (e.g., under- or non-paying wages, penalty rates, pension, overtime, commissions, and leave entitlements, having workers repay their wages, and/or unauthorised deductions from workers’ wages).
• theft of variable wages (e.g., paying piece rates, withholding tips, etc.).
• capital expansion: shifting labour-power and the means of production to countries where the cost of production (labour + means) is lower.
• Sources: Ciocchini & Greener (2022), Cole et al. (2022), Lynch et al. (1994), Marx (2010, 60-92).

Uyghur forced labour and theft of base wages Xinjiang Aid (援疆)

• “With the support of the government, we have already recruited more than 600 people. We have generated more than US6 million in sales. We plan to reach 1,000 workers by the end of this year.”
• Wage = 600 RMB (US100)*, per month plus 1.4 cents per pair of gloves.
• *< half the minimum wage (China).
• Wage Deductions = US$$50 for food and other expenses
• < 20% of the minimum wage (China).

Hegemony

• Gramsci (1971, 1995, 2010):
• Hegemony: the cultural and ideological means through which the dominant class establishes and maintains its dominance over less-dominant class(es).
  • Hegemony is disseminated through creating a hegemonic project—i.e., by articulating ideas (e.g., policy) as being in the “common interest” when in it actually serves the long- term interests of the dominant class.
  • Hegemony is achieved by progressively neutralising or eliminating opposition (or counter-hegemony).

How to create hegemonic projects (and neutralise and/or eliminate counter-hegemonic projects)

• Bandiera (2021: 176):
  • Taking the interests of the less-dominant class into consideration.
  • Compromising in favour of some of the interests of the less-dominant class, but without sacrificing the interests of the dominant class, to maintain the former’s support.
  • Incorporating the interests of the less-dominant class into the interests of the dominant class by framing them as being in the common interest.
  • Have the less-dominant class assist in the implementation of the project.
  • The less-dominant class assist in/consent to its implementation because of its framing as being in the common interest.
  • Hegemonic projects neutralise/eliminate the formation of counter-hegemonic projects through privileging only those interests compatible with it, while derogating those interests incompatible with it.

Greenwashing (Green) Capitalism as a hegemonic project Hegemony (in action)

1. Taking the less-dominant interest into account.
   • “Corporate greening” (i.e., public concerned about climate change, want to “go green”).
2. Compromise without sacrificing the dominant interest.
   • Offer to offset carbon emissions.
3. Frame it as the common interest and 4. have the less- dominant class assist in the implementation.
   • Have consumers pay for the carbon offsetting.

Convenience Theory

• Gottschalk (2017: 605):
• (Financial) crime by an individual or organisation is a result of convenience or “the perceived savings in time and effort to find and to facilitate the use of a solution to a problem or to exploit favourable circumstances.”
• Three dimensions (all of which must be present):
  • Economic: there is “a financial motive for illegal profit”, and “illegal financial gain” is perceived “a convenient option [for the decision-maker]… to cover needs.”
  • Organisational: there is “an organizational opportunity to commit and conceal [financial] crime”, for example, “convenient ability to hide illegal transactions among legal transactions.”
  • Behavioural: there is “convenient justification” (e.g., neutralisations, see Slide 27).
  • Note: convenience explains “the choice of action”, but not why such convenience(s) arise in the first place (this requires the use of a second or third theory).

Nick Leeson and the Barings Bank collapse (1995)

• Derivatives trader who made unauthorised, high- risk trades which lost his employer £827 million (2 x its total trading capital).
  1. Economic: didn’t steal money but received salary increases and bonuses for profitable trades.
  2. Organisational:
     • Access to the bank’s error accounts to hide loses.
     • Not supervised (i.e., managed error accounts).
  3. Behavioural:
     • “We were all driven to make profits, profits, and more profits … [and] I was the rising star.”
     • Maintaining reputation as a “trading genius”.”.

Crimes of Obedience

• Kelman & Hamilton (1989: 307):
• Crime is a “response to orders or directions from authority.”
• There is:
  • Authorisation: the act is ordered or tacitly approved by those in authority (∴ the duty to obey takes precedent over the morality of the act).
  • Routinisation: the act is routine, common practice (∴ an act takes place in a clinical, detached manner).
  • Dehumanisation: the victims are dehumanised.
• Adolf Eichmann “The Banality of Evil” Arendt (1964)
• Holocaust (WW2)
• Genocide of European Jews

Normalisation of Deviance

• Vaughan (1996): when deviant decision-making is progressively “normalised”/embedded in organisational culture.
• The normalisation of deviance is an outcome of:
  • The production of culture: the embedding of deviant decision making into organisational culture.
  • The culture of production: the organisational culture, in turn, shapes deviant patterns of decision making (i.e., it becomes institutionalised).
  • Structural secrecy: information patterns (e.g., how information is disseminated, interpreted, etc.), in combination with the organisational structure, and the legal/regulatory structure in which the organisation operates, shapes patterns of decision making (i.e., “undermines attempts to know”).

Challenger space shuttle explosion (1986)

Why did NASA launch a shuttle with known defects?

• The production of culture: risks were re-defined/accepted (i.e., ↑ levels of erosion of O-rings), technical deviations were normalised.
• The culture of production: test launches despite known defects were normalised due to the “pressure” to produce (i.e., compromises on cost, schedule, safety, etc.).
• Structural secrecy: everyone knew about the O-rings, but:
  • warnings were mixed (e.g., a launch resulted in damage, engineers “fixed” it, several launches resulting in no damage implied all was OK), weak (e.g., damage was “fixed” and implied it was unlikely to recur), and became routine/repetitive (e.g., despite frequency, their importance was diminished).
  • mixed/weak/routine warnings concealed its seriousness, inhibiting intervention (e.g., if not labelled a problem, it was not brought to safety regulators’ attention).
  • organisational structure (e.g., division of labour, multiple people/organisations involved, etc.) created a culture of information dependence.

Neutralisations

• Cohen (2001:7-9):
• States of Denial: the negation of fact(s) (i.e., “assertions that something did not happen, does not exist, is not true, or is not known about”).
  • Literal (“factual” or “blatant”) denial: Where “the fact or knowledge of the fact is denied.”
  • Interpretive denial: Where the fact or knowledge of the fact is not denied, but “they are given a different meaning from what seems apparent to others.”
  • Implicatory denial: Where neither the fact (i.e., knowledge of) or its interpretation are denied, but there is a “denial of its significance or implications.”
• Ruggiero (2020:7-9):
• Justifications: the rejection of responsibility based on:
  • official accounts, interpretations, and/or reactions (Manifest justifications). e.g., rejecting that an act is harmful (or “crime”) because it is permitted by law.
  • a shared set of principles and/or beliefs (Latent (“implicit”) justifications).

Israel’s killing of Shireen Abu Akleh

• Literal Denial
• Interpretive Denial “hit by shots fired by Palestinian gunmen” (Khoury, 2022).
• Implicatory Denial?

Nick Leeson and the Barings Bank collapse (1995)

• Derivatives trader who made unauthorised, high- risk trades which lost his employer £827 million (2 x its total trading capital).
• Economic: didn’t steal money but received salary increases and bonuses for profitable trades.
• Organisational:
  • Access to the bank’s error accounts to hide loses.
  • Not supervised (i.e., managed error accounts).
• Behavioural [latent (“implicit”) justifications]:
  • “We were all driven to make profits, profits, and more profits … [and] I was the rising star.”
  • Maintaining reputation as a “trading genius”.”.

Lecture Summary (Parts 1 & 2)

• WCC and its causes can be explained from multiple levels—i.e., a micro-, meso-, and macro-level.
• Explanations are usually (but not always) drawn from existing criminological theory/ies.
• Explaining WCC and its causes usually requires use of multiple theories (i.e., to explain how the causes of crime/harm occur at a micro-, meso-, and macro-level).
• e.g., micro- and meso-level causes are often the result of macro-level causes (i.e., colonialism/imperialism, capitalism).