dic 2

3 Power, Social Networks, and Organizational Deviance

Power Corrupts, and Absolute Power Corrupts Absolutely

Social Structure and Self-InterestSocial Structure and Self-Interest

Some people regularly act to feather their own nests instead of doing what is politically correct or morally just. Individuals may build up criminal capital in which they acquire knowledge and skills that allow them to commit crimes successfully (Loughran, Nguyen, Piquero, & Fagan, 2013). Some may head to shopping malls to steal things from department stores; others may embezzle funds from their employers, take automobiles that do not belong to them, or break into people’s homes or businesses; and still others may rob hapless strangers at gun- or knifepoint. The principal reason is the lure of getting other people’s money and other valuables in a quick and easy way. Other reasons are a sense of accomplishment, fun and excitement, and opportunities for control over people and the increased sense of power and potency that this can create (Tunnell, 1992). Sometimes taking other people’s money and valuables is an act of resistance to mainstream culture and the values it contains, especially those that encourage hard work, delayed gratification, job stability, and responsibility (Tunnell, 2006).

If people have power because of their organizational positions or interpersonal networks, it is easier for them to get what they want regardless of whom it hurts, and then to portray their actions as reasonable and necessary (Prechel & Morris, 2010). These efforts at legitimation, when successful, help to free these powerful individuals from the kind of blame and derision that would befall thieves of lesser means. Organizational men and women are more likely to commit acts of deviance and crime when they believe that these kinds of trespasses are widespread among their business associates (Tavits, 2010).

Opportunity structure is an important variable in understanding what kind of deviance occurs and why (J. W. Coleman, 1987, 2006; Merton, 1938). Only police can engage in police brutality, only politicians can engage in political corruption, and only members of corporations can commit corporate crime. Organizational and institutional dynamics powerfully affect the attitudes and behaviors of individuals who work within them

(Fullerton & Villemez, 2011). The existence of opportunities to commit deviance usually means that it will occur more often (Merton, 1938; Thio, 2010).

The simple and simplistic explanation that bad apples and bad barrels exist is useless when it comes to something as durable and complicated as organizational wrongdoing. Organizations can be both good and bad, just like the people in them. When organizational men and women make decisions about what to do and the legality or ethics of their plans, their decisions are often filled with confusion and contradictions; their decisions are based on information that is narrow and limited (Palmer, 2013). Even principled individuals can find that they are at risk of doing something illegal when they are in an organizational setting that encourages or overlooks any rule breaking that increases an organization’s wealth.

The worldwide financial crisis, called the Great Recession, that started in late 2007, and as of this writing continues to generate worldwide problems is well known but still poorly understood despite a large number of books and other publications about it (Grusky, Western, & Wimer, 2011). One thing is beyond dispute: A significant variable was the too-cozy relationship between policy makers and regulators on the one hand and the financial community on the other (Barak, 2012; Smith, 2010). The Financial Crisis Inquiry Commission (2011) concluded in its final report, issued in January 2011, that the principal cause of the financial meltdown of 2008 and 2009 was the failure of federal regulators to exercise sufficient oversight and control of Wall Street’s reckless profiteering. Problems with corporate governance and risk management were also cited. The report also strongly contradicted the claim (coming from Wall Street and parts of Washington) that the financial crisis could not have been predicted (Rooney, 2011).

The institutional drive in banking to make money—lots of it and as quickly as possible —created incredible financial growth, but it was almost entirely based on U.S. home mortgages. Home mortgages were increasingly based on predatory lending strategies that encouraged the emergence of a Darwinian social world in which it was the greediest, most ruthless, and least restrained who survived (Will, Handelman, & Brotherton, 2012).

But while everything seemed to be falling apart at the same time, there was a common source: the reckless lending of the financial sector, which had fed the housing bubble, which eventually burst. (Stiglitz, 2010, p. 27)

While private profits of some individuals and the wealth of banks increased, most everyone else was injured in one way or another (Sherman, 2013; Smith, 2010). The

declaration that the market is always rational was shown to be a mythical construction (Fox, 2009; Pacewicz, 2013; Werner, 2012).

Bankers acted recklessly and greedily because they had both opportunities and incentives to do so. Repeal of the Glass-Steagall Act (in 1999), a 1933 creation of the New Deal reform movement that had prohibited commercial banks, investment firms, and insurance companies from merging into one company, is one of the things that led to the economic meltdown. Its repeal made it possible for large banks to get even larger, reaching a point where they were in every sense of the term just too big to fail. This is a condition that Stiglitz (2010) labels ersatz capitalism, meaning fake or phony capitalism —an economic system that generates private gains without risk. Whatever losses occurred did not fall upon the individuals who were making the greatest profits. Executives could take whatever risks they wanted with other people’s money, confident that whatever happened would not affect their own personal fortunes. This provided the incentive or motive for unbridled risk taking (Posner, 2010). The opportunity surfaced due to an economic climate of deregulation and lax governmental oversight. Additional factors were a housing bubble in which too many houses were built and risky lending practices in which too much money was given out too easily (Harvey, 2010; Rugh & Massey, 2010).

Money handed out by the U.S. Treasury under TARP (Troubled Assets Recovery Program), which was supposed to be used to recapitalize and provide credit to those who needed it, was used instead to pay out huge corporate bonuses. It was as if the record losses were not losses at all and that it would be business as usual thanks to taxpayers’ generosity. Much of what was not used to pay bonuses was used to pay dividends to shareholders, a monetary way to share profits. In this case, however, no profits existed, only taxpayers’ handouts. In fact, nine lenders that had combined losses of almost $100 billion were given $175 billion in bailout money from the government. Of this, they paid almost $33 billion in bonuses (which included giving $1 million to each of almost 5,000 employees, a total of nearly 5,000 million dollars) (Stiglitz, 2010, p. 80).

Power and InequalityPower and Inequality

We cannot separate our understanding of the relativity of deviance from our understanding of power—who has it, how much they have, and how it affects the ebb and flow of social life (Davis, 1980; Kendall, 2008; Sherwood, 2010). Power over others is based partly on an individual’s knowledge and skills—and in the case of a deviant, on his or her willingness to con or defraud others (Robbins, 2008). For example, in a game of three-card monte, a bettor must find the queen when it and two kings are thrown face

down on a table and all three cards are mixed. Sometimes, it is not a game of chance at all because the card tosser uses sleight of hand to manipulate the cards so it is practically impossible for a bettor to win (Scarne, 1974). It would improve a bettor’s chances if he or she did not even watch the cards being thrown and just randomly picked one. The card tosser, then, has power over bettors because the thief knows how to use sleight of hand to manipulate the cards. Some scams require greater skill and knowledge than others. It is more difficult, for example, to maintain one’s composure during a high- stakes poker game while cheating others—bottom-dealing, holding out cards, stacking a deck, undoing the cut—than it is to master the throw used in the game of three-card monte (Prus & Sharper, 1977).

A more enduring and important source of power comes from an individual’s social networks and opportunity structures that enable him or her to do things that affect the lives of others. Conan the Barbarian has a certain amount of power because he is big and strong; the chief executive officer (CEO) of General Motors (even in troubled economic times), however, has infinitely more power, even though the CEO may have small stature and be unable to lift a feather. When powerful people with interests in common unite to accomplish their objectives and establish ties to other powerful groups, they can move mountains. They can also use their power and resources in harmful or malicious ways.

[W]e live in a world in which hazards are produced as often by the action of complex organizations as by persons of flesh and blood, and where the scale of damage is often proportional to the size of the organizational actor. (Gray & Silbey, 2014, p. 132)

A fish rots from the head first, claims an ancient proverb (which originated in either China or Italy), reminding us to consider that it is those who have the most resources who are responsible for a substantial amount of deviance (Samuel, 2010).

We live in an asymmetric society in which the power of large organizations (e.g., corporations) far outweighs the power of the ordinary person (J. S. Coleman, 1982). Power, an important variable in the understanding of any kind of deviance, is particularly valuable in analyzing the organizational deviance that is regularly perpetrated by more privileged members of a society. Whether a company conforms to norms that demand lawful behaviors and socially responsible actions depends a lot on the expectations and examples set by its senior management (Dashwood, 2012).

A transnational class now exists, characterized by global interconnections. Just as

corporate influence and mass communications are no longer confined to just one country, so too, this transnational class scours the globe in search of the most hospitable climate for its economic interests to flourish (Fairbrother, 2014). The power of this class comes from the spread of consumerism, new information technology, and the international electronic economy. Globalization has made it more difficult for national governments to deal with problems within their borders, and governmental power has eroded (Carroll, 2010; Rothkopf, 2012). Big Business manipulates what it can to work one country against another (and one region against other regions in the same country) to obtain lower taxes; looser regulations; and an abundance of low-cost, uncomplaining laborers (Schwartzman, 2013). Foreign investment actually impedes economic growth in a country, leading to economic stagnation, especially if it happens too quickly (Curwin & Mahutga, 2014).

Some of the individuals in large organizations use their organizational positions to commit deviance, having both the opportunity to do so and the resources and interests to hide their deviance from others. They may experience a more intense sense of subjective or relative deprivation, increasing substantially their motivations to take what doesn’t belong to them. Differential opportunity and relative deprivation can coalesce to make it more likely that the powerful will engage in harmful acts of deviance more frequently than will the powerless (Thio, 2010). The powerful may deny that anyone was harmed by what they did, blame their deviance on some external factor over which they have no control, or convince themselves that they deserve the rewards that their deviance brought them (J. W. Coleman, 1987). They may use their resources to direct public attention to the deviances of others.

The powerful benefit from a shield of elitist invisibility (Simon, 2008, p. 38) or cloak of immunity (Box, 1983, p. 99), such that their rule breaking either is not uncovered or, if it is uncovered, it is accorded a milder penalty than it probably deserves. According to Box, “The process of law enforcement, in its broadest possible interpretation, operates in such a way as to conceal crimes of the powerful against the powerless, but to reveal and exaggerate crimes of the powerless against ‘everyone’” (p. 5). The ruin caused by powerful individuals in powerful organizations has a good chance of being peddled as an accident, as an isolated event (and therefore less harmful), or as the result of the antisocial behaviors of just a few “bad apples” (Poveda, 1994). The bad apple narrative, blaming individuals instead of organizations, protects the economy and the state apparatus from a more sweeping condemnation (Cavender, Gray, & Miller, 2010). A study of accounting scandals in the United States from 1999 to 2006 (Benediktsson, 2010) reports that corporate boards did all they could to sever all ties with law-breaking executives, making them stand trial alone. This diverted attention away from the organization itself.

The Deviant EliteThe Deviant Elite

Hightower (2003) declares the United States of the twenty-first century to be a kleptocrat nation, a nation ruled by thieves where money and power are consistently taken from the many to enrich the few. In this process, liberty, justice, political integrity, social equality, and opportunity for the many are continually threatened (Lobao, Adua, & Hooks, 2014; Lorenz, 2012). Little doubt exists that some economic elites are so prominent and powerful in the global economy that they are able to influence money flow, debt, and credit sufficiently that these core resources are manipulated to create private benefits and social costs (Lendman, 2011). Members of the elite class are able to successfully maintain relationships and occupy positions in organizations and voluntary associations that keep them in contact with one another while making it easier for them to control resources in a community (Cornwell & Dokshin, 2014).

Democracy and free markets are not inevitable traveling companions (Polillo, 2013). While they do at times play complementary roles, at other times they do not (Wherry, 2012). Markets have no morality, and they do not guarantee either social equality or individual well-being. Markets encourage whatever is the most profitable, which usually rewards size, and this generates a concentration of economic and political power in the hands of the relative few. Ultimately, this leads to an undermining of both democracy and free enterprise. Reining in the power of government is not always a victory for democracy and individual freedoms. What this may actually mean is that the most privileged and powerful among us find that their freedoms have indeed increased, enabling them to go practically anywhere and do practically anything they want to make the most money (Pollard, 2012).

Large businesses and some of the wealthiest individuals in U.S. society continue to prosper, but practically everyone else does not (Brady, 2009; Nau, 2013). Workers’ share of national incomes in capitalist democracies has decreased during the last 40 years or so, due principally to the deterioration in their bargaining power in relationship to their bosses (Kristal, 2010; Mouw & Kalleberg, 2010). Working Americans, with no other option available, embraced the market with the hopes that it would benefit them and their families. However, this is not what happened (Martin, 2008). Economic inequality in the United States has increased over time, and it is higher than that found in most other developed nations (Clark, 2013; Gornick & Jäntti, 2013; Reich, 2010). Poorer households saw their average real incomes decline substantially between 2010 and 2013 (Bricker et al., 2014). A strong case can be made that a positive relationship exists between the levels of inequality in a society, particularly economic and racial, and rates of deviance and crime (Bernard, Snipes, & Gerould, 2010). Greater social and economic equality makes for stronger, more robust societies (Flavin, Pacek, & Radcliff, 2014; Ono

& Lee, 2013; Stiglitz, 2012; Wilkenson & Pickett, 2010).

Collectivizing RiskCollectivizing Risk

Risk has been shifted to the backs and shoulders of members of the working class, and laborers have found to their dismay that even a good education, hard work, and strong family ties no longer provide the protection from economic ruination that they once did (Gosselin, 2009). U.S. workers are being expected to do more and more for less and less, leading to both worker alienation and exploitation (Juravich, 2009). U.S. workers, especially when compared to laborers in other Western democracies with a strong history of capitalism and workplace democracy (e.g., Germany), experience greater levels of domination by their bosses and have fewer opportunities to contract and unionize. It is the workers in this country, rather than their bosses or flaws in the workplace, that are blamed for whatever lack of job success or restricted mobility they may experience (Frege & Godard, 2014; Sharone, 2013).

The turn to the financial market has not only been generally unrewarding for most of the people who hoped to benefit from it, but it has had other unfortunate consequences as well:

Civic disengagement, health care and prisons for profit, the malling of suburban America, the epidemic of corporate advertising in public space, and the torrent of private money in public life all testify to a coarsening of American politics and culture. Competition to get the price right may be the hallmark of our economic system, but competition to put a price on everything produces a war of all against all. In this wartime condition, race and class tightly circumscribe communities, and the capacity to empathize with other people is fragile or nonexistent. (Blau, 1999, p. 4)

When what matters most is how much money some policy or practice produces for its corporate owners, many unsavory things can occur. Our collective and individual fears are manipulated by some individuals to get them what they want and to create the kind of society that they see as better for them and their economic interests.

Employees are “liquidated”—fired or let go—to increase the value of corporate stocks and market control (Ho, 2009). A heavier use of contingent or temporary workers, a cost-cutting and profit-increasing measure, threatens full-time employees’ sense of job security and well-being (Pedulla, 2013). An analysis of 185 large U.S. firms (from 1996

to 2005) indicates that top executives’ salaries and other compensations (e.g., bonuses, stock options, stock grants) are lower when the bargaining power of labor is greater. This suggests that workers’ power, measured by the percentage of unionized workers in the industry, directly reduces the pay gap between executives and everybody else (Shin, 2014).

Deindustrialization and the flight of industry to countries outside the United States make it harder and harder for U.S. workers to find jobs and, especially, to find good jobs (Kalleberg, 2011; Kollmeyer & Pichler, 2013). This means that more and more Americans are either unemployed or underemployed, being either without jobs or without jobs that pay a living wage (Prasad, 2012). Added to this are the high prices of practically everything (e.g., gas, food, health care, energy, education, entertainment). Some individuals’ problems are, of course, related in part to character and personality structure in that some people do have poor work ethics or possess skills in low demand. However, many of the problems we now face can be traced in one way or another to the effects of globalization, free trade agreements, tax incentives for companies to move production out of the United States, deregulation, and privatization of more and more services that governments once provided for citizens (Goldsmith & Blakely, 2010).

The Rich Get RicherThe Rich Get Richer

What we are seeing in the United States is the emergence of a corporatist society in which the principal feature is a huge transfer of public wealth to private hands and a widening gap between the superrich and everyone else (Carroll, 2010). Though the details and the data are at times quite complex, the central idea is not: The rich get richer because they can convert their wealth into long-term gains much faster than the rest of us who live on income, much of which goes every year to subsisting in a society. People who depend on income from their jobs for their daily bread will never be able to accumulate sufficient wealth to keep up with those who already have wealth and can generate increasingly greater returns on it. For this reason, inequality increases in a society unless workers are powerful enough to affect the kind of governmental policies (e.g., taxes on the wealthy) to hold inequality and the accumulation of wealth by elites in check (Piketty, 2014).

U.S. history during the last 50 years or so is not simply a reflection of failed policies due to political incompetence or self-serving behaviors of elected officials. It is also a result of policies that were designed and implemented to produce total corporate liberation from public accountability, along with the violence and totalitarianism that result from this (Jaffee, 2012). The wars being waged by the United States are described by the “talking heads” on the evening news as righteous struggles to bring freedom and

democracy to nations that lack them. This plays better with the public than describing them as what they also are: wars for the advancement of capitalism, unfettered by public interference or political oversight (Klein, 2007).

Though great fortunes should not be condemned on principle alone (Kahan, 2010), we also should not allow ourselves to be bamboozled by public relations campaigns that portray the superrich as those who deserve the very best due to their strong characters, principled behaviors, hard work, and boundless energy. A few businesspeople do embody these principles, but most do not. Great success in business is based mainly on making great deals in which much comes from little in a short period of time and with little or no risk. Economic elites are in the best position to set their own salaries and then to avoid paying taxes by taking advantage of tax shelters and other tax-avoidance strategies. This means they are able to keep an increasingly greater share of their earnings for themselves (Piketty, 2014).

To accumulate great wealth almost always requires being at the right place at the right time, coupled with a willingness to exploit others. Using other people’s ideas and talents to enrich oneself is at the heart of most personal fortunes, coupled with the interpersonal skills to keep these dishonorable activities as invisible as possible (Villette & Vuillermot, 2009). Advantage, deserved or not, once attained can lead to further advantage (called the Matthew effect) (Rigney, 2010). Though common sense might indicate that talent, hard work, and success all go together, the fact is that success comes from a complicated mix of social constraints, opportunities, individual choices, and plain old luck (Watts, 2011).

The “rugged individualism” and “frontier spirit” that are such a central part of U.S. culture are more an idealization of our history than an accurate reflection of it (Vela- McConnell, 1999). The West was tamed by people working together, not some lone gunslinger or high-kicking Texas Ranger (Charbeneau, 1992). Almost always, great success of the few only comes from group efforts and contributions of the many.

In most job settings … any individual’s performance—indeed, any individual’s apparent skill—depends subtly on communication and collaboration with co-workers, including supervisors. Great dancers need supportive partners; great journalists lean on skilled editors. (Tilly, 1998, p. 101)

Even great athletes or successful performers would not have gone very far without a supportive team or an adoring public. The rich and powerful maintain social inequality

because it benefits them in a number of ways (McCall, 2013), and wealthy parents are able to pass the benefits of privilege on to their kids (Duncan & Murnane, 2011).

Groysberg (2010) showed that successful financial analysts in any given Wall Street firm usually do not experience the same level of success when they move to a rival firm, unless they are able to take their crew or team with them. Apparently, talent and success are not entirely portable, and the claim that individual merit and success are closely and inevitably aligned is less fact than fancy (O’Flynn, 2009). The success of a corporate CEO is determined more often by factors extraneous to the organization, such as the overall success of the economy or the particular industry, than by any talents or skills of the CEO (Khurana, 2002). It practically goes without saying that what is valuable at one place and time may be valueless at some other. No matter what the distribution of wealth or other scarce resources might be in a society, this distribution always reflects a particular set of choices about what skills should be valued, what to tax or subsidize, and what rules to make and enforce (Watts, 2011).

The Carrier’s Case: Other People’s Belongings and the Crime of Theft Though it may seem natural to want to own things and to protect them from others, laws protecting property as we know them were nonexistent before the fifteenth century. Their creation had practically nothing to do with a belief in the right of all persons to be safe and secure in their possessions. The laws regarding theft, which transformed taking other people’s belongings into a crime, were established by powerful individuals for the purpose of furthering their own interests. Any benefit that these laws may have had for others was purely coincidental. This reminds us once again of the relativity of deviance in that certain kinds of taking are considered appropriate and in the public interest (e.g., taxation), while other kinds are labeled as criminal and steps are taken to punish the perpetrators. Whenever “deviance” is reconfigured as “crime,” an important social event has occurred. The perpetrator of the untoward act now has a different status—criminal— and what a criminal does can be formally and forcefully sanctioned with the full weight of government (Chambliss & Seidman, 1982).

The case that is responsible for the creation of the crime of theft occurred in England in 1473 and is known as the carrier’s case. A man was hired to carry bales of cloth to Southampton. Instead of completing the job, he broke the bales open and took off with their contents, intending them for his own use. He was eventually caught and taken into a court of law for magistrate review. The judges were in total agreement about what the carrier had done in terms of the details of his act, and they were also in total agreement

that what the carrier had done was entirely legal. Because the carrier had been given the bales lawfully by his employer, nothing that he did after he took possession violated any existing law. Theft at the time was defined in terms of illegal trespass, and nobody who had been given property by its owner could trespass against it. Legally, it was the owner who was at fault for not employing a more trustworthy carrier (Hall, 1952).

The judges were under great pressure, however, to craft the necessary legislation to transform what the carrier had done into something sinister and harmful. They decided that a crime had occurred after all. When the carrier broke open the bales, the judges figured, the property instantly reverted back to its owner. By absconding with the contents, the carrier was guilty of a form of trespass, and he could be treated as a criminal (Hall, 1952). Curiously enough, if the carrier had somehow known what the judges were going to do, he could simply have taken all of the bales without breaking them open (but then the law would probably have been crafted differently). The judges portrayed the new law and the new understandings of “crime” and “criminal” that it established as just one more example of the strict application of legal precedent.

Why would the judges in the carrier’s case invent a new law? It was not because they felt sorry for this particular owner or even because they wanted to encourage this particular carrier to walk the straight and narrow. Feudalism and its system of relationships based on sentiments of fidelity and obligation between serf and master were evaporating, being replaced by mercantilism and a middle class that owed its livelihood to commerce and trade. Any threat to the transportation of goods was a blow to this burgeoning economic system. King Edward IV, the ruling monarch at the time of the carrier’s case, was highly supportive of trade, and he assiduously courted business interests. The owner of the property that the carrier stole was an Italian merchant who had been assured of safe passage for his cargo by King Edward himself. The bales contained wool (or some other cloth), merchandise of great importance to England’s budding economy. The fact that the material was stolen while in transport to Southampton was even worse because it undermined business confidence in the security of a major English trading center and shipping port. As if that weren’t enough, the goods were stolen by a professional carrier. Merchants were finding it increasingly difficult to use their own servants to transport goods and were being forced to rely more often on carriers. If carriers could not be trusted to deliver safely the cargo they were given, trade would be adversely affected.

When the carrier stole the contents of the bales, he was doing more than depriving a foreign merchant of his goods. He was threatening—or that’s how it was conceptualized and understood by the court—the economic interests of the textile industry, one of the most powerful and important businesses in all of England. He was also challenging the

interests of the Crown, both personally and as a warrantor of the safety of economic transactions in the British state. King Edward exerted a great deal of influence over public officials, so the courts were likely to adopt any legislation that he wanted. What the new law of theft did, enforced by the courts, was to make taking property without consent of the owner a felony so that guilty parties were subject to severe penalties. During the centuries following the carrier’s case, laws of theft were expanded to the point that the taking of money or property by cashiers and clerks eventually became illegal (called embezzlement), as did the receiving of stolen property.

The law is a tool that powerful groups can use to give themselves superior moral as well as coercive power in their conflicts with others (Chambliss & Seidman, 1982; Norton, 2014). Law is symbolic: It sets the broad parameters of correct and incorrect ways of acting in a society. Whether the law is actually followed is less important than the fact that practically everybody knows it is supposed to be followed. Law is also instrumental: It encourages people to follow the rules under the threat of unpleasant penalties. The law of theft that was created in 1473 in Britain was a concession to powerful interests. It gave influential individuals who felt victimized a way to protect themselves from the trespasses of others. It also provided a new understanding about proper and improper ways of doing business. Merchants’ interests were protected and reinforced, while the interests and self-serving behaviors of the carriers were singled out for control and correction.

The carrier’s case suggests that anything could be made illegal—and the new rules and sanctions could be justified as customary and reasonable—if the groups that create and enforce laws want this to happen. A corollary is that nothing will be illegal unless groups of people with sufficient resources are willing to take the time and trouble to criminalize those things that they do not like. (At times, the poor or powerless can work together to advance their interests and influence what kind of laws and judicial routines are implemented [Routledge & Cumbers, 2009].) Social factors and cultural dynamics are the principal elements that account for what is defined as right and wrong, legal or illegal, at a given time and place. In this sense, rule creators are responsible for creating deviance and crime through the rules and laws that they make and enforce to advance their own social interests (Palmer, 2013).

White-Collar Crime and Elite Deviance

White-Collar Crime, Social Organization, and DifferentialWhite-Collar Crime, Social Organization, and Differential AssociationAssociation

The American Sociological Society (ASS) held its thirty-fourth annual meeting jointly with the American Economic Society’s (AES) fifty-second meeting in December 1939 in Philadelphia. The president of the AES, Jacob Viner (1940), addressed the audience first, talking about the relationship between public policy and economic doctrine. After he finished, Edwin Hardin Sutherland (1883–1950), the president-elect of the ASS, advanced to the podium and spoke about white-collar crime. (In 1959, the organization changed its name to the American Sociological Association, because it had become fashionable to use initialisms for professional organizations, and “ASA” seemed to its members to make a much better one.) Sutherland (1940) defined white-collar crime as any crime committed by a person or persons of respectability and high social status in the context of professional activities, occupations, or jobs. This included crooked practices in professions, businesses, corporations, and even politics. An “enduring legacy” of Sutherland is that he showed that organizational dynamics and culture in a legitimate company can create crime among its workers (Lilly, Cullen, & Ball, 2015).

Sutherland (1940) traced the causes of white-collar crime to the structure of a society. Differential social organization and differential association create a situation in which some people encounter group supports and the values, norms, motives, rationalizations, techniques, and definitions that make crime more likely. Sutherland believed that the demands of a business organization can create strong in-group loyalties that may lead to an indifference to the demands of legal or moral norms. This, in turn, can lead to an indifference to the interests or needs of outside groups, such as the public, customers, or other business organizations. A study of female involvement in white-collar crime indicates that women’s opportunities to commit crimes in the corporate world are different from men’s, which meant in this study that female executives played more of a subsidiary role in the commission of corporate crime. They were less responsible for planning the crimes and carrying them out, deriving fewer financial rewards from them than their male counterparts (Steffensmeier, Schwartz, & Roche, 2013).

The message of Sutherland’s address was clear to his audience: White-collar crime is real crime, it causes tremendous destruction, the perpetrators have a wanton disregard for the consequences of their actions, and the victims are unaware of the severity of the damage it has caused them. White-collar crime rips the fabric of society, Sutherland believed, and its perpetrators deserve both scorn and punishment. More than scientific interest prompted his concern with white-collar crime. He was outraged by the egregious acts of corporate representatives, and his sense of social decency was offended (Green, 1997). White-collar crimes almost always result from the perpetrators’ desire to increase their control of human events and reduce the economic uncertainties that they face (Schoepfer, Piquero, & Langton, 2014; Tittle, 1995).

Sutherland’s own experiences in getting his ideas published support much of what he believed about the benefits of privilege and power (Geis & Goff, 1983). He had amassed a great deal of incriminating information about the collective and individual harms caused by some of the largest and most powerful companies on Earth. His writings about the predatory activities of these organizations were filled with the names and histories of the offending companies. However, his editors at Dryden Press balked at Sutherland’s intention to describe the companies as criminal even though they had never been convicted of any crimes. The administrators at Indiana University in Bloomington, where Sutherland taught, were also made skittish by Sutherland’s plan to reveal in writing the names of offending corporations. They apparently feared that donations from these companies might stop. Sutherland (1949) succumbed to the pressure and allowed his work to be published without the names of the offending companies. It was not until 1983 that a different publisher, Yale University Press, came out with an uncut version of Sutherland’s book in which the names were finally revealed.

Many years after Sutherland’s presidential address, Clinard and Quinney (1973) discerned two distinct types of crime covered by Sutherland’s omnibus term: corporate and occupational. The crux of the distinction is who benefits from the antisocial activity. Corporate criminal behavior directly benefits an organization itself, even though agents of the corporation carry out the acts. Occupational criminal behavior is done by a person of respectability and high social status who is himself or herself the primary beneficiary. Even if the rule breaking takes place in a group setting, the deviant is acting primarily on his or her own to further his or her selfish interests. The organization is not responsible; in fact, the organization itself can be a victim (Belbot, 1995).

Organizational Crime, Corporate Skullduggery, andOrganizational Crime, Corporate Skullduggery, and Political RacketeeringPolitical Racketeering

White-collar crime is not the prerogative of the corporate sector—it can be found in politics, the military, labor unions, medicine, law, churches, universities, and so on—so it may be wise to replace the words corporate crime with organizational crime (J. W. Coleman, 2006). We must also remember that organizations themselves do not operate in a social vacuum, and many instances of white-collar crime or elite deviance are made possible by supportive linkages between representatives of the corporate world and state functionaries (Kramer, Michalowski, & Kauzlarich, 2002). For example, at the end of the twentieth century, in Detroit, Michigan, 465 acres were cleared by the city to make space for a General Motors automobile plant to be built. This required the removal and relocation of more than 4,200 residents from an area informally known as “Poletown” (most of its residents were of Polish descent), along with the destruction and removal of

the debris of 1,400 homes, 144 businesses, 2 schools, 1 hospital, and 16 churches. Without the linkages, both formal and informal, among the Detroit City Council, General Motors, the Roman Catholic Church, and the United Auto Workers, the plunder of Poletown would not have been possible (Wylie, 1989). Because the residents received no major institutional support, it was possible for their community to be taken from them.

In most of the white-collar crimes that have plagued us through the ages, the distinction between occupational and organizational crime has been irrelevant because both the organization and its employees have benefited from the ongoing deviances (Roy, 1997). These violations of norms help the organization and its employees compete in a system where survival is never guaranteed and where objective indicators of personal and professional success are few and far between. Large corporations have become both the sites of acts of major rule breaking and the instruments used to carry them out (Tillman & Pontell, 1995).

The text of Sutherland’s (1940) speech shows that he believed that politicians presented a lesser threat than representatives of the business world. Would he still think that way if he were alive today? It is hard to be at all familiar with political scandals and not have a suspicion that far too many politicians view the government as their own private cash cow that can be milked whenever the need arises. If there is a difference between political rackets and other kinds of trespass, it is to be found in opportunity structures, levels of accountability, and organizational supports, not in the greater morality or integrity of politicians as compared to other kinds of crooks. In 2014, Transparency International rated 175 countries’ or territories’ level of public corruption. The country ranked as least corrupt—rankings are like golf scores in that the lower the score, the cleaner and less corrupt the country is considered to be—was Denmark; the countries ranked as most corrupt were Somalia and North Korea. The United States was ranked at position 17. Public opinion about U.S. corruption registered a 20-point increase from 2006 to 2013: Results showed 59% of respondents in 2006 believed governmental corruption was “widespread,” which increased to 79% in 2013.

American political life is replete with corruption, duplicity, and excessive self-interest. An arrogance of power and a shield of elitist invisibility can work together to allow destructive acts to flourish, undefined and unchecked. (Gross, 1996; Rosoff, Pontell, & Tillman, 2004). The great irony in the study of deviance—no surprise to relativists—is that some individuals can cause great harm without being viewed as harmful individuals. The structure of relations in political organizations blurs responsibility, and it is difficult to know who did what. Top officials deny responsibility by claiming that they had no knowledge of how things were being implemented, and low-level

employees deny responsibility by claiming that they were following orders. If blame is assessed, it is usually placed on this individual or that, not on organizational structure (Cavender, Jurik, & Cohen, 1993).

Some politicians are guilty of campaign corruption and the illegal raising of funds to run them, lying, indifference to the needs of voters, conceit, cronyism, ignorance, and mismanagement of the governmental apparatus (Franken, 2003). Their greatest sins may be their waste of valuable resources and their taking and squandering (with the full protection of the law) of other people’s belongings. Almost every politician tries to reward certain constituents by throwing special projects their way (called “pork”). This practice is rampant and almost wholly unaccountable, an example of stealing without stigma. Politicians take our money from us, money we may very well not wish to give up, and they then use it in ways over which we have little to no control. How is this any different from the depredations of a garden-variety thief? If a difference can be found between pork and theft, it is primarily in who has the power to say what is legal and what is not.

Sutherland (1940) claimed in his presidential address that the “inventive geniuses” for many kinds of white-collar crime are attorneys (p. 11). If only he could see us now, he would realize how prophetic his words have turned out to be. Without the assistance of lawyers who know how to use legal procedures to benefit their clients, it is unlikely that the wealthy would have fared as well as they have (Lauderdale & Cruit, 1993). Attorneys make it possible for some people to take other people’s belongings with little or no accountability (Nader & Smith, 1996).

Sutherland (1945) concluded that white-collar crooks are not viewed as real criminals by the general public or even by themselves. They may have done something technically illegal, but they do not believe that they are real criminals (Conklin, 1977). Even if corporate representatives are charged with a crime, their resources make it easier for them to rebuke the charges against them (Sharkey, 2014). A study of defendants charged with bribery in Swedish courts showed that these individuals attempted to make themselves look less blameworthy by constructing narratives that claimed they were not culpable because everyone in their same situation was breaking the law too. They insisted that they were highly moral people despite their trespasses (Jacobsson, 2012). White-collar offenders both excuse and justify their crimes by offering accounts that portray themselves as more sinned against than sinning by too-powerful and unsympathetic politicians or economic competitors. They believe it was permissible for them to have broken the law because of what they saw as the treachery of others (Azarian & Alalehto, 2014). Unsurprisingly, corporate representatives who break the law do all they can to keep themselves free from punishment for their wrongdoings

(Sutherland, 1945).

Money, hype, and monotonous repetition are used to perpetuate a false image that corporations face a barrage of frivolous lawsuits and pay huge and undeserved fines. The truth is that corporations are not the target of a flood of lawsuits from consumers. If an increase in lawsuits against businesses does exist, it is due to businesses suing other businesses, a form of litigation that will undoubtedly continue. Juries are far from antibusiness, and they award punitive damages to an injured citizen only if it is clear that a corporation acted with glaring disregard for the consequences of its actions (Nader & Smith, 1996).

As Nader and Smith (1996) tell it, in 1992, Stella Liebeck, age 79, was a front-seat passenger in her grandson’s car when they pulled into a McDonald’s drive-up window in Albuquerque, New Mexico, so that Ms. Liebeck could order coffee. Once it was served, she tried to remove the lid from the cup to add cream and sugar—the vehicle was motionless—and the entire contents spilled on her lap. She experienced third-degree burns on her thighs, groin, and buttocks, and she was permanently scarred on 16% of her body. These injuries were serious, and it took more than 2 years for her to recover fully. Ms. Liebeck wanted some compensation for her emotional ordeal, some help with her medical bills, and some recognition by McDonald’s of the dangers lurking in those cups of coffee for other unsuspecting customers. However, when she appealed to restaurant executives for help, they were unmoved by her pain and suffering. They refused to pay anything close to what her operations had cost (about $20,000). All they did was offer Ms. Liebeck $800. In desperation, she hired a lawyer, and a lawsuit was filed.

At the trial, at least initially, Ms. Liebeck faced a skeptical jury. Its members believed that a lawsuit over a cup of coffee was a waste of their time, being both frivolous and malicious. They certainly had no discernible animosity toward McDonald’s. However, as the details of the case unfolded in the week-long trial, McDonald’s reputation was tarnished. Testimony was introduced that corporate headquarters required the temperature of the coffee to be maintained at between 180 and 190 degrees Fahrenheit to make it taste better for longer periods. (Many other restaurants keep the temperature of their coffee at 160 degrees.) At this high temperature, severe burning and tissue destruction occur within seconds in the case of a spill. Making matters worse was the quality of the McDonald’s cup. It has exceptional insulating properties, so coffee drinkers are unable to appreciate just how hot their coffee really is until they start drinking it (or spill it on themselves or on someone else). The jury concluded that McDonald’s did keep the temperature of the coffee much too high for human consumption and that customers were given insufficient warnings about the potential dangers. The jury settled on compensatory damages of $200,000, which it then reduced

to $160,000 because it believed Ms. Liebeck had to bear some of the responsibility for spilling the coffee on herself.

The jury awarded an additional $2.7 million in punitive damages to Ms. Liebeck. Why? The answer is simple: McDonald’s had shown a wanton disregard for the well-being of its customers. It came to light that 700 other people had experienced a fate similar to Ms. Liebeck’s between 1982 and 1992; this included some children who had been severely burned in accidents involving the too-hot coffee when adults accidentally knocked cups over or dropped them, and the contents spilled on the youngsters. Executives of the restaurant chain believed that no compelling reason existed to turn down the heat because, considering all the coffee that their restaurant chain served, 700 burns were insignificant to them. The jury concluded that

overwhelming and incontrovertible. The report faulted the CIA—its operatives and contractors—for a litany of abuses and mistakes, as well as for lies galore about what was done to prisoners and for exaggerations of the benefits for national security that came from these practices. The principal conclusion of the report was that not only were the techniques excessive and inhumane, but they also were an ineffective way to get accurate information and cooperation from the detainees. When a carrot might have been far more effective, a rather large and painful stick was used. In some instances, the wrong people had been detained and subjected to horrific treatments to extract information that they never could have provided because, quite simply, they did not know it. Interrogators and torturers used a variety of techniques to extract information such as verbal abuse, beatings, sleep deprivation, physical duress (chaining prisoners to walls in stress positions), waterboardings, dousings in frigid water, walling (being thrown against a flexible wall), and rectal rehydration (where pureed food was rectally administered to inmates).

The war on terror, now a permanent feature of the global landscape, has cemented the alliances between the private sector and the public war-making apparatus of the United States (Rothe, 2009). Companies (such as Halliburton) have used the war in Iraq as an opportunity for systematic and significant overcharging for services and supplies. Under rules instituted by the George W. Bush administration, Halliburton was able to obtain no-bid contracts, even when it had a history of violating environmental, labor relation, and trade laws (p. 441). This allowed monumental war profiteering. The over-costs, overcharges, failure to provide goods and services that were charged and paid for, and kickback profits resulted principally from the cozy relationship between a handful of politicians and corporate boosters. This created the opportunity for private corporations to amass substantial profits in a war-torn nation. Amid all the death, injury, misery, stupidity, and waste found in the U.S. war with Iraq, Halliburton was still able to make a tidy profit. By the end of 2006, this energy giant had earned $20 billion in revenues since the war’s start (Klein, 2007). A report in 2013 asserted that KBR (Kellogg, Brown, and Root), a subsidiary of Halliburton, made $39.5 billion from 2003 to 2013 from the war in Iraq (Fifield, 2013).

Privilege, Power, and Penalties Sutherland’s (1940, 1945, 1949, 1983) study of white-collar crime showed that its perpetrators were able to avoid the stigma and punishment accorded lesser offenders. The legal status of white-collar crime is ambiguous, and laws may be difficult to apply to the wrongdoings of the powerful (Gerber & Weeks, 1992). Irrespective of its moral or ethical status, behavior is illegal only if laws exist to criminalize it. Laws are crafted by

lawmakers, and lawmakers can be influenced in all kinds of ways by powerful people who do what they can to control the content of law and how it applies to them (Livingston, 1996).

The arrogance of power can easily prompt individuals to believe that laws are inapplicable to them. This heightened sense of importance and invincibility can motivate and rationalize many disreputable activities. Richard Nixon, forced from the office of President of the United States for his role in the Watergate scandal, claimed—and probably believed—that whatever the president did, no matter how unsavory, was not against the law. Key players in the Iran–Contra scandal of the Reagan era—in which arms were sold to Iran, and monies from the sale were used to aid the Contras in Nicaragua—assumed that everything they did was legal.

Organizations have their own versions of events and respond to accusations of deviance with accusations and assertions of their own. In the exchange of claims and counterclaims, whether an organizational action actually comes to be seen as deviant is fundamentally a matter of definition. (Ermann & Lundman, 2002, p. 27)

The confusion created by disputes over the legal status of this act or that act has great benefits for white-collar offenders, who capitalize on the ambiguity and turn it to their own ends. In this project, they are often able to take advantage of organizational resources to create and disseminate ideas that are the most beneficial to them and their interests.

On August 9, 2014, in the township of Ferguson, Missouri, on a section of Canfield Drive, Michael Brown, an unarmed African American teenager (Brown was 18), was shot dead by a white police officer named Darren Wilson. Some individuals concluded the officer was the aggressor; others concluded that the teenager had been both threatening and sufficiently defiant to the officer’s commands that Brown was the one ultimately responsible for the officer’s use of lethal violence. One question was whether the police officer racially profiled the suspect, a fundamental but controversial practice in police agencies in much of the country (Barkan & Bryjak, 2014). The FBI found no evidence that the officer had broken any criminal laws or was guilty of any civil rights violations, and the officer was neither indicted by a grand jury nor charged with any crimes by the U.S. Attorney General.

The killing and its aftermath, along with all the official investigations and conclusions about the killing of Brown, show that how deviance is to be understood and dealt with

cannot be separated from organizational resources and interests. Supporters and critics of any particular police officer, any particular police action, or any particular police force hold different views of how “policeable” (i.e., amenable to successful police intervention and control) some event actually is (Roussell & Gascón, 2014). If Michael Brown had killed the officer or if Brown had been slain in a shoot-out with police or by a random drive-by shooting, the social construction of this event would have been very different. Interests and resources work together in systems of group conflict to decide what happened, what kind of penalties ought to be assessed, to whom they should be assessed, and exactly who ought to be responsible for assessing them. (Wilson no longer works as a police officer. He submitted a letter of resignation shortly after his grand jury testimony. He insists that he believes he acted properly in the events surrounding the killing of Brown.)

It is more difficult to apply sanctions to deviants who have organizational resources at their disposal that they can use to challenge others’ definitions of them, making the rules seem less clear than they might otherwise be and negative sanctions less warranted. Unlike physicians, college professors, accountants, librarians, and most other occupational groups that never have to use force in their working lives, police officers must use it all the time. “Few people question the need for police to use necessary force in the performance of their duty, as many individuals they encounter will resist arrest, run from the officers, attack them, and on occasion, attempt to kill them” (Barkan & Bryjak, 2014, p. 222). Thus, the question is not whether force should be used by police but when, how much, and for what reasons. If force is necessary, was the minimum amount used to accomplish the job? Did more peaceful ways exist to accomplish the same ends? Some police violence is justified and justifiable, and some is not (e.g., the beating of Rodney King in 1991).

The fact that police must use force, sometimes of the lethal kind, on their jobs, coupled with their access to organizational resources and cultural legitimations, means that police can usually justify and explain away much of the violence they use. This usually works unless the violence is excessive and evidence exists that the officer (or officers) used force disproportionate to the situation at hand. This seems to be what happened in 2015 when Officer Michael Slager, of North Charleston, South Carolina, gunned down Walter Scott during what started as a routine traffic stop. As Scott tried to flee the officer, Slager shot him several times in the back. One of the main reasons for police violence is contempt of cop, where suspects show disrespect for both the badge and the officer(s) and are violently “corrected” for their insolence (Chevigny, 1995). (This does not seem to have been the motive for the killing of Scott, as a video taken by a concerned citizen shows. It looks less like contempt of cop than a contemptible killing by a cop.) It is rare for official investigations to find no justification for the use of force

by police officers, and police officers usually receive the benefit of the doubt, fairly or not, when their dealings with citizens erupt in violence, and citizens are injured or killed. (As of this writing, Slager has been indicted, but the case has not yet been resolved.)

Even when laws are firmly in place and no dispute exists that they were broken, it may still be difficult to detect white-collar crimes, arrest and convict white-collar criminals, and then hold the organizations for which they work accountable. Because victims may be unaware that they have been intentionally hurt by some misdeed, or because an offending corporation has neither a body to kick nor a soul to damn, it is more difficult to apply to white-collar misdeeds the same legal procedures and penalties that were invented to cover one-on-one harms of individuals (Belbot, 1995). The nature of law, the size and power of the corporation, the privileged status of white-collar offenders, and the diffuse nature of white-collar victimizations all mean that penalties for white-collar crime are likely to be relatively painless and ineffective (Sutherland, 1945). What seem to be huge fines of corporations for misdeeds are seldom large enough to deter their illegal behavior (J. W. Coleman, 2006). A fine of $3 million to a company like McDonald’s, even if it had been paid, would have been little more than a slap on the wrist.

It would be an error to conclude that privileged and powerful people always fare better in a court of law than do the less powerful or prosperous. What is true, however, is that legal penalties are relative, being responsive to factors other than the degree of injury produced by some untoward act. This relativity can produce an inconsistency in how sanctions are dispensed, which can benefit high-status offenders and major organizations. Sometimes, high-status individuals are treated preferentially, receiving greater leniency than individuals of lower rank who are guilty of far less. At other times, however, they are treated more harshly (Rosoff et al., 2004).

What is important to remember about white-collar crime is not simply that high-status deviants can receive preferential treatment. We must also remember that some privileged and powerful individuals, usually acting through the organizations for which they work, do a great deal of harm to a society, not only in terms of the taking of other people’s belongings, but also in terms of the number of people killed or injured by white-collar activities. These predatory acts generate both public resentment and political outrage, mostly because they are done by persons in positions of responsibility and trust in political and economic institutions. The fact that these people who are responsible for so much wanton injury receive any leniency in a court of law is a bitter pill to swallow.