sociology of law

Topic: White Collar Crime

Young, Jock. 2013. “Bernie Madoff, Finance Capital, and the Anomic Society,” in How They Got Away with It: White Collar Criminals and the Financial Meltdown. Columbia

University Press.

Read pages: Page 69 – 71, 72 (middle) -75 (top)

Outline

• Rational choice theory or “mainstream criminology”

• Strain theory

• Applying strain theory to white collar crime

• Implications for mainstream criminology and criminal justice studies

• Connection to Polanyi?

• Class activity

Rational choice theory or “mainstream criminology” • Rational choice = a cost/benefit calculation about whether or not to

commit a crime • What are “benefits” vs what are “costs”? • Costs = “deterrence”

• What would be rational choice theory’s approach to white collar crime, for example, mortgage fraud?

• Mortgage fraud = a mortgage originator lies about the mortgage recipients income or other conditions impacting the loan

• What does this explanation not include?

Strain theory

“As you are aware my crime had nothing to do with causing the Financial Crisis. It was however a direct reflection of the culture of Wall Street and the banking system and hedge funds. It was easy to put a face on the Crisis, which was mine.”

• —Bernie Madoff, personal interview

Strain theory

“As you are aware my crime had nothing to do with causing the Financial Crisis. It was however a direct reflection of the culture of Wall Street and the banking system and hedge funds. It was easy to put a face on the Crisis, which was mine.”

• —Bernie Madoff, personal interview

Strain theory

• Merton, Robert. 1945. “Social Structure and Anomie.” American Sociological Review, 3(5): 672-682.

“Social Structure and Anomie,” written by sociologist Robert K. Merton in 1938 -a theoretical framework for criminal behavior in the U.S.

The most cited work in sociology

Strain theory

• American culture places great emphasis on “certain success goal without equivalent emphasis on institutional means”

• What is the “success goal”? • What is the American dream? • money and monetary accumulation • success has no limits, no arrival point, and the definition of success moves

incessantly forward

• What is “institutional means”? • Simultaneously, American culture did not place corresponding emphasis upon legitimate avenues

to achieve the goal of wealth and power

• Americans individualized this strain by adapting in various ways, characterized in 5 typologies: conformity, innovation, ritualism, retreatism, and rebellion

Strain theory

Applying strain theory to white collar crime Innovators = the criminological category, why?

Two kinds of innovators

1. “lower class innovators” = innovation due to blocked opportunities for social mobility

Examples:

https://www.youtube.com/watch?v=Z-WPOySrrfA

at 1:09

https://www.youtube.com/watch?v=fuWkcKbBQkg

2. “middle/upper class innovators” = innovation due to monetary success goal “moving incessantly forward,” i.e. no arrival point

Example -Fraud and white collar crime

https://www.youtube.com/watch?v=CE5wjEuWk_A

Applying strain theory to white collar crime • How does Merton’s theory of social structure and anomie compare

and contrast with rational choice theory?

Implications for mainstream criminology and criminal justice studies Two points

1. Madoff was the norm

2. If anomie is the norm (point 1), then regulation is necessary

Implications for mainstream criminology and criminal justice studies 1. Madoff was the norm

“The overwhelming shift in emphasis from the means to ends produces a breakdown in the regulatory structure.”

• In markets, including financial markets, what does it mean that cultural emphasis has shifted from means to ends?

Two consequences: 1) tendency to fraud and 2) unpredictability of the financial system

Why 1 and 2?

Implications for mainstream criminology and criminal justice studies 1. Madoff was the norm

“The overwhelming shift in emphasis from the means to ends produces a breakdown in the regulatory structure.”

• In markets, including financial markets, what does it mean that cultural emphasis has shifted from means to ends?

Two consequences: 1) tendency to fraud and 2) unpredictability of the financial system

Why 1 and 2?

Implications for mainstream criminology and criminal justice studies 2. If anomie is the norm (point 1), then regulation is necessary

• Free market economics = deregulation leads to efficient outcomes

• Towards a new criminology = quote on page 74-5

• If I am a grocery store and I have meat that is close to its expiration date, according to free market economics, the price will drop until someone will buy it.

• But what if the grocery store manager simply switched the expiration date on the meat? Then the store can still sell it at a higher price.

• Jock Young’s point: free market economics needs to incorporate strain theory to explain bad market actors

• From this perspective, why is market regulation necessary?

In class activity

As you are aware my crime had nothing to do with causing the Financial Crisis. It was however a direct reflection of the culture of Wall Street and the banking system and hedge funds. It was easy to put a face on the Crisis, which was mine.

—Bernie Madoff, personal interview

https://www.youtube.com/watch?v=s68FR1MXT8Q

• Watch the clip above. Why does Bernie Madoff fit the innovator category? What is the role of culture in his criminality? 150 words, upload to blackboard