Lecture 5

corporate crime:
transpersonal ways to steal


T. R. Young

The Red Feather Institute

Jan.1989


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CRIME AND SOCIAL JUSTICE:
Theory and Policy for the
21st Century

RED FEATHER INSTITUTE

 

Did you ever expect a corporation to act
morally when it has no soul to be damned
and no body to be kicked??

Edward, First Baron Thurlow, Lord Chancellor of England.

INTRODUCTION Corporate crime is by far the most serious of all kinds of crime so we will begin Part II trying to understand why the richest, most powerful corporations in the world routinely, systematically violate the law.

Dangerous working conditions kill tens of thousands of workers annually. The Labor Department in its Annual Survey of Occupational Injuries and Illnesses reported 5.4 million work-related illnesses and injuries in 1984. This was an increase of 11.7 percent over 1983.

People work with dangerous chemicals, radioactive substances, coal dust, cotton dust, asbestos spicules, smoke, unsafe equipment, and are under pressures to increase production. Millions of workers have their lives shortened by 10, 20, 30 years after exposure to such dangerous substances.

Citizens by the tens of millions are exposed to the toxic wastes spilled forth into the air, waters, and earth. Cancer, miscarriage, heavy metal poisoning, and radioactive emissions from nuclear plants lower the life expectancy of these millions, increase spontaneous abortion rates as well as birth defects.

Consumers by the millions are subjected to dangerous food additives, unsafe toys, appliances and automobiles. The bodies of workers, consumers, and neighbors absorb the crimes of corporations on an hourly, daily, and annual basis.

Workers by the tens of millions are systematically disemployed by the logics of profit and private accumulation. Social institutions are starved by the practice of locating investment decisions in private hands; this pours vast resources into high profit lines of production and pass by essential social goods.

There are more structural crimes which emerge from the logics of capitalism and which impel owners, managers and workers to do things which cripple and kill; which rob and enrich; which distort and defeat the human project. These structural crimes must be weighed against the many positivities of capitalism if we are going to work out a way of life which minimizes the first and maximizes the second.

One of the effects of capitalism on the knowledge process is to promote theories of crime which exculpate the corporation and which blames the victims of corporate crime. You should know a bit about how corporate crime is studied...more accurately, how it is not studied in criminology courses.

CORPORATE CRIME STUDIES For years, corporate crime has been ignored and discounted by the criminology profession, by the law makers and the law enforcers. In 1949, E.H. Sutherland added a new dimension to criminology. He studied the criminal history of 70 of the biggest companies in America.

Sutherland found that criminal behavior of these corporations was 'normal,' that is to say, they all engaged in illegal labor practices, falsified advertizing, stole patents and copyrights from each other, defrauded their customers, and conspired to control the making and the marketing of goods and services.

He showed that 97% of the corporations were recidivists. That is, when they were caught and punished, they committed more crime. That compares to 50% or so of the individuals who commit new crime after being released from prison.

Sutherland also found that corporate officials felt contempt for the law. This means that they didn't want laws to be passed to control their harmful behavior; they didn't want the laws enforced and they didn't want to be punished personally if caught.

Sutherland found that corporations hired public relations people to polish the image of the company rather than change its criminal ways. Company officers donated to charity, sponsored patriotic events, gave token grants to colleges and to needy causes but did so to make a good impression with the public so they could do business as usual without obeying the law.

When Sutherland tried to publish his book, he found that he had to eliminate the names of the corporations which committed the crimes...a matter of public record...and he softened the impact by talking about the crimes of individuals [those who wore white collars] more than about corporations as a legal entity.

Sutherland brought corporate crime into the discipline but he gave it a misleading label, white collar crime. While recognition of corporate crime was a big step forward for criminology, Sutherland did not differentiate between the crime done by white collar employees against the corporation on the one hand, and the crime done by the corporation as an acting individual company on the other hand.

Corporations like criminologists to study, research and theorize about crimes done by their white collar employees who steal from the company by embezzling, by using company property for private purpose, by vandalizing company property, by stealing merchandise or by selling its secrets to the competition.

So we need a definition of corporate crime which helps us think about the harm corporations do to the human enterprize.

Definition of Corporate Crime Ron Kramer of Western Michigan University at Kalamazoo has one of the best definitions of corporate crime available. He says that corporate crime is:

"...illegal and/or socially harmful behaviors that result from deliberate decision making by corporate executives in accordance with the operative goals of their organizations."

Remember, it is not just violation of a legal specification which constitutes crime in this definition. It is any socially harmful behavior.

Rich and powerful interests control the lawmaking process. If we were to limit the idea of crime to just the behaviors prohibited by a legal specification, we would eliminate all the harmful behaviors that the rich and the powerful managed to keep out of the penal code.

A second important thing to remember about this definition is that it is the CORPORATE EXECUTIVES who are responsible...not Joseph Smith who happens to be a vice president. The focus is on the corporation and its officers and its goals...not on the individual who occupies the office or his/her psychological states such as intention or greed.

A third thing to focus on in Kramer's definition is that corporate crime is corporate crime because it achieves the goals of the corporation. Corporations have three generic goals: profit, growth, and control of their business environment.

CORPORATE CRIME ARISES FROM THE RATIONAL PURSUIT OF CORPORATE GOALS IN A CONFLICT RELATIONSHIP WITH CONSUMERS, WORKERS, AND THE PUBLIC INTEREST.

With this an explanation of crime, we can begin to speak of corporate crime. We can begin to think about why corporations (not individuals) commit crime. We can begin to get some good policy for reducing the harm done to the millions of workers; to the hundreds of millions of customers, and to the thousands of competitors of the criminal corporation.

Corporate crime is, above all, structural crime. Being structural, radical changes in the structures below are needed to reduce crime.

Corporate crime originates in the logics of the economic system. The emphasis on profit take first place over the interests of worker safety, community needs, consumer health or those who are exposed to hazardous wastes materials. It is simply cheaper to put people at risk than to protect them.

Remember the characteristics of structural crime:

1. No one person plans it

2. No one person commits all of it

3. No one person is the victim of it

4. Social institutions are distorted by it.

Remember, crime is structural when it is produced by individuals who have no particular motive for committing crime. Truck drivers who dump toxic wastes along country roads in Colorado have no motive to violate environmental laws...they have been instructed to do so by their bosses. Clerks working for Northrup have no particular motive for false billing the US government...they are instructed to do so by their bosses.

The people who work at Rocky Flats, a nuclear warhead facility, do not intend to cause children downwind to have leukemia or birth defects...that is part of the logics of the warfare state which polices the world capitalist system. They do not do it by themselves; some people drive the trucks which bring the radioactive material to Rocky Flats; other people unload it; others combine it with other chemicals; others clean up; others repair pipes; others give orders to increase or decease production. All this is tied to military policy of the USA; to changes in the cold war; to economic crises around the world.

One can identify structural crime by its statistical character. We don't know where they will happen, but we know that there will be a train accident every 10 days on average. We know, in statistical terms, that 350,000 people develop lung cancer each year from smoking even if we don't know who they are as individuals.

The farmers who raise the tobacco, the workers who process it, the clerks who sell it and the stock owners who profit from it have no personal motive for killing any given victim of cancer smoking, no body intends it, but the people are surely dead; predictably dead; inescapably dead, 100% dead. These crimes are structural; not personal.

So, let's agree corporate crime is different than white collar crime.

The hundreds of dollars taken in armed robbery is minuscule compared to the billions taken by oil company price fixing conspiracies or insurance company conspiracies to defraud automobile owners. The hundreds taken by burglars is small compared to the millions taken by one stock market swindle.

The hundreds of dollars in bad checks written by a single mother of three at Christmas time is little when compared to profits of U.S. corporations which steal more than $80 billion a year in underpayment to women for wages and salaries. N.O.W., the national women's organization calculates that companies cheat women of 40 cents of every dollar in wages compared to the wages of men. In 1983, N.O.W. estimated that women had lost over $80 billions in wages due to gender politics and gender economics.

 

One corporate price-fixing conspiracy criminally converted more money each year it continued than all of the hundreds of thousands of burglaries, larcenies, or thefts in the entire nation during those same years.

...Attn. General Ramsey Clark

TABLE I

ESTIMATES OF CRIME COSTS

Kind of Crime Lives Lost Dollar Loss

each year each year

様様様様様様様様様様様様様様様様様様様様様様様様様

Corporate Crime 300,000 200 Billion


Crime is a way of life in the corporate world. Honest corporations stagnate or go bankrupt. Dishonest corporations thrive, expand, diversify, become international conglomerates and subvert the political process at home and abroad. Yet little corporate crime is policed, seldom reported and still less punished.

The FBI does not collect or issue statistics on corporate crime in its Uniform Crime Reports. Compared to street crime, corporate crime is greatly under-reported in the media. Until 1979, corporate crime was seldom mentioned at the annual meetings of the American Criminological Society.

Corporate officers instruct employees to lie, cheat, pollute, adulterate and endanger citizens and consumers alike. Yet, today there is no theory, no explanation, no understanding of this most serious of the forms of crime which beset the United States.

Selected Cases Corporations do great harm to the health and welfare of the United States in terms of physical health, the economic health and the political health of the people. At the same time, the Reagan administration deregulated corporate crime and eviscerated the agencies left to control corporate crime. Below are cases selected to give you an overall view of the kinds of harm done and amounts of money stolen by corporations.

*Eastern Airlines falsified thousands of documents about its safety conditions. The same company has replaced experienced pilots with cheaper, younger pilots. Eastern mechanics say the air crash in Panama which killed dozens should have been pulled out of service.

*Some 20 major military contractors are under investigation by the F.B.I. for fraud. Included are the biggest, most profitable companies in the USA: Unisys, United Technologies, Northrup Aircraft, Teledyne, Litton Data, Norden, McDonnell Douglas, and Armtec among others. Bribes, false billing, rigged bidding and industrial espionage increased profits for stockholders and officers of such corporations.

Senator Warner [R-Va.] said the fraud shook him to his shoes. Senator Grassley [R-Iowa] said the fraud was beyond imagination. Billions of dollars of military funds were involved; millions of dollars of bribes and hundreds of persons involved. It is corporate crime but news reports labeled it white collar crime. Corporations committed this crime; their stockholders benefited from it; their top executives received bonuses to engineer it.

*General Motors stole hundreds of dollars from each of thousands of customers by putting a cheaper engine in their more expensive cars. No body was arrested.

*Equity Life Insurance company officers stole over 2 billion dollars from its stockholders by creating false insurance policies, inflating annual reports and looting the cash reserves. The guilty officers were put on probation from 2 to 9 years depending on how many millions they each took.

*E. F. Hutton was charged with a money laundering scheme which helped organized crime figures and businessmen conceal income from the IRS. The scheme ran for two years between 1982 - 1984. E.F. Hutton said it would plead guilty and expects to pay a $1 million dollar fine.

*Wedtech is a Brooklyn corporation which bribed Congresspersons; hired presidential aides to help them secure contracts; overbilled the government and supported its officers and stock owners in quite a nice life style. When its crimes were discovered, it went bankrupt taking more than a 1000 workers off the payroll and putting many of them on the welfare roll. None of the stock owners went to jail for theft of the money.

*Captan is a fungicide similar in molecular structure to thalidomide. Thalidomide was sold to women in the '60s. It produced thousands of limbless, fingerless babies. The cancer rate for children in McFarlane, Texas is 10 times the national average. The grape corporations in McFarlane spray Captan to keep grapes from rotting in cold storage so they can be sold in the Spring. In 1987, 10 million boxes of grapes were sprayed with Captan and put in storage. These are on the shelves in Spring, 1988. They are advertized as a 'natural snack' for children.

*More than a thousand people were poisoned by eating watermelon sprayed with Aldicarb. It is illegal to use aldicarb to preserve fruits and vegetables. Corporations add such dangerous chemicals to foods in order to extend their 'shelf life.' The chemicals do extend the shelf life and thus, can be sold for profit rather than thrown away...but the same chemicals shorten the shelf life of the humans who, unknowingly, eat and store them in their bodies.

*Eight insurance companies were accused by the attorneys General of California, New York, Texas, Arizona, Alabama, Colorado, Massachusetts, Minnesota, West Virginia and Wisconsin accused eight of conspiring to fix the price of liability insurance. The price increased by a factor of from 3 to 10. Child care centers had to close; doctors stopped delivering babies; cities closed down playground programs; counties closed landfill operations.

*In March, 1988, a New Jersey judge forced the tobacco industry to turn over hundreds of documents which show a calculated effort by the tobacco industry to hide evidence of the link between smoking and cancer and heart disease. The memos included results from a 1961 study showing the link but suggesting ways companies could deny the scientific validity of such studies. Each year there are 1 million new cases of cancer. 1 death out of two from cancer is related to smoking. 80% of male impotency is related to smoking; if you smoke, you can plan on losing sexual ability after age 40.

*Johns-Manville corporate officers had, in 1965, a private study reporting that 44% of workers exposed to asbestos for 10-19 years suffer from Asbestosis, a form of cancer; 73% of those exposed for 20 to 29 years have the disease; 87% of those exposed 30 years of more contact the disease. The corporate officers were instructed to keep the report secret from employees and customers.

*The officers knew that asbestos caused cancer but still marketed products which will kill some 8 to 10,000 people a year in the next 30 to 40 years. Johns-Manville, a two billion dollar corporation, used the bankruptcy laws to evade payment of damages ordered by courts.

 

*Between 100,000 and 200,000 industrial companies pump their toxic wastes into city sewers. An 1988 EPA report says that 3 out of 4 sewage treatment plants cannot remove the toxic wastes. Only 23% of the companies studied do a good job removing the wastes as required by law. The toxins endanger most of the 200 million people who drink water from polluted rivers and underground aquifers.

350 corporations had spent 750 million dollars to bribe officials of foreign governments over the past 30 years according to a U. S. Senate hearing in 1978. These are not small gifts of friends doing business which are traditional in many societies; these corporate bribes are made to government officers selling their position of trust.

*Over 300 hundred corporations made illegal contributions to elect Richard Nixon in 1972. Neither Nixon or the officers of the corporations went to jail. These contributions tend to subvert the political process by enabling corporations to preselect candidates for political office.

We have said that corporate crime is far more serious than street crime. Corporations kill more and steal more than all the street criminals combined. Look at the data.

MURDER INCORPORATED There are about 1500 men and women on death row in 1988. They killed fewer than 2000 people. Corporate murderers had never been tried until 1978 when Ford Motor Company was acquitted of the deaths they engineered in order to save some $4 millions in the cost of protecting the gas tank on the Pinto. In 1985, the owners and manager of a Chicago company were found guilty of homicide. They were not executed.

Killing Customers Robert Sherill, Washington correspondent for the Nation magazine remarks, cynically, that those who want to get away with murder should use asbestos, pharmaceutical drugs, defective automobiles and toxic waste.

*Firestone sold millions of tires known to be defective. It is not part of the research process to collect data on how many people are killed by such crime.

*Eli Lilly Pharmaceutical Company was found guilty of on 15 counts relating to the marketing of oraflex, an arthritis drug which may have killed some 50 persons. The officers of the company knew and neglected to mention to the FDA that over 30 people in Europe had already died. The law requires such data be reported to the FDA.

*A. H. Robins (chapstick) sold more than 4.5 million dalkon shields for $4.35 (it cost 25 cents to make). After 20 deaths, thousands of babies with major defects, thousands of operations to remove punctured or damaged uteruses, and thousands of infections, the shield was removed from US markets...and promptly dumped in the 3rd world...this is both structural crime and personal crime.

*Northwest Airlines was accused of 139 violations in a two month period by the FAA. The company forced pilots to fly longer than the safety rules allowed. The company failed to make repairs to planes in timely fashion. Both kinds of violations endangered the lives of passengers and employees...all in the effort to lower costs and to increase profits.

*Eastern Airlines was fined $9.5 million for hundreds of safety violations in 1986. Pan Am was fined $1.95 million the same year.

*At least 47,000 people sought hospital treatment in 1987 for problems caused by cosmetics. Deaths are not recorded. Cancer, birth defects, neurological damage, skin and eye irritations, and asthma are triggered by this $17 billion industry. The Food and Drug Administration does test for safety nor require industry do so (Dan Sperling: USA Today: July 15, 1988).

Killing Workers The National Safe Workplace Institute in Chicago charges that the Federal government fails to prosecute companies which kill its workers. Joseph Kinney, the director of the Institute says that there are at least 100 solid cases of criminal neglect each year. The federal government has prosecuted two since 1980 (USA Today: 16 July, 1988:1).

There are some 60,700 workplace deaths each year. When a case is referred to the Justice Department, it is reviewed by 7 different offices before the Department will bring it to trial. The Justice Department tries to find reasons not to prosecute, according to Kinney. In such matters, the federal government is not a neutral referee. It serves owners in its conflict with workers.

*OSHA estimates that 1000 workers have been crushed to death and some 60,000 mangled in the past 9 years. A safety proposal requiring machines under repair be locked or 'tagged' has been held back by the Reagan administration. The proposal would protect some 39 million workers but would cost business $135 million, about $3.50 per worker.

*Doctors diagnosed bladder cancer for George Hight in 1981. They told him that the cancer developed as a result of his exposure to chemicals and dyes at his factory job in Bluffton, Ohio. William Ailiff, of Garrettsville, Ohio, got the same explanation for his dizziness and breathing problems. He worked at a plastics factory in Geauga County, Ohio.

Neither had been told by their employers that there were health hazards in their work. Congress has yet to pass a law requiring such notification. Today, the drive for profits can lead to the endangerment of employees. To notify them of health hazards would require the payment of higher wages and the installation of safety equipment, both of which would eat into profits.

According to Howard Metzenbaum, Democratic senator from Ohio, between 50,000 and 100,000 American workers die each year as a result of exposure to toxic chemicals, wastes, fumes, dust, or industrial processes. An additional 390,000 workers become seriously ill (Coloradoan, 17 May, 1987: A4). Metzenbaum has sponsored such a bill to require notification. Metzenbaum is independently wealthy and does not need to ask corporations for political donations.

The National Association of Manufacturers with 13,500 members who profits from low costs of production (who also donate to political campaigns) is opposed to the bill. The 'Coalition on Occupational Disease Notification,' made up of 200 business associations and companies is also opposed to the bill...they support structural crime.

They are concerned that the bill would make it possible for endangered workers to more easily sue for damages. 171 former employees of Synalloy sued the company for 335 million dollars after being notified that the health problems may have come from exposure to BNA, a chemical used in one of the plants of the company.

Tobacco and Asbestos. By the time he was 40, Milton Wheeler was too short of breath to play with his kids. He spent his last months tethered to an oxygen tank. It took him an 1/2 hour to get to the bathroom. He died at age 50 of asbestosis.

*Dr. James Talcott, a cancer specialist in Boston and other medical researchers traced 36 men who worked with Wheeler making filters for Kent cigarettes. The filters were a blend of 30 % asbestos and 70% cotton and acetate.

160 men worked for the company which produced the asbestos cigarette filters. Of the 36 men located, 29 were dead, 29 from asbestos related diseases including lung cancer and mesothelioma, a particularly virulent cancer.

Of the 7 alive, some of them were suffering from asbestosis. A death rate of over 50% at an early age is the price the workers paid in order that a cigarette company could increase its share of the cigarette market.

The asbestos companies knew of the link between asbestos and cancer in the 1930's but suppressed the information. Medical journal articles reported the link widely in the 1950's...before Kent started using the asbestos filters for its cigarettes.

Killing Innocent Bystanders The Hooker Chemical Company dumped more than 20,000 tons of poisonous wastes in the Love canal in New York over a ten year period. Hundreds of residents were affected by death and disease. Unnumbered miscarriages and deformed children resulted from the crime. Homes became worthless. Hooker Chemical improved its profits by millions of dollars. No one went to jail.

*Hundreds of people in Utah were exposed to radioactive poisoning by weapons tests in the 40s, 50s, and 60s. The birth defects and aborted pregnancies were immediately visible. The US government denied the connection. Deaths from leukemia and other cancers began years later. Residents there paid a high price for nuclear research.

*The folks who live along the Mississippi River are treated to some 3000 chemicals poured into the river by industries from Minnesota to Louisiana. People who live in Michigan were treated to a diet of cancer causing chemicals in their milk when a company mixed up the poison with a food additive for cattle.

*People who live on Lake Superior are well nourished on asbestos fibers, iron ore, and copper tailings, as well as assorted chemicals. People who live in California are freely saturated with insecticides from crop dusting and vegetable dressings.

All in all, industrial corporations kill hundreds of times more people than street thugs. They cripple millions more than are crippled in automobile accidents. They engineer the birth defects of more babies than does any natural disease.

Destroying Communities Many US corporations pick up and move to the South where laws protect them against unions and where labor is cheap. They move factories to other countries where governments permit them to dump poisons in the air; in the sea; and in the ground. They close plants rather than invest in the technology to compete.

In all of this, jobs are lost, small businesses close, and towns are abandoned. After generations of building the assets of a corporation by workers and town officials, the corporation will destroy the town on a moment's notice if profits can be increased elsewhere. In steel, auto, electronic, kitchen appliance, sports, and other industries, whole communities already have been destroyed.

The US steel industry invested its profits in land, oil, banking, and other places rather than in modern equipment. When the US lost control of the steel market, American steel companies closed 400 outdated plants and reduced employment by 3/4s in the past ten years. Today there are more American steel workers working in plants owned by Japanese than by American capital.

The story is repeated in hundreds of American communities in the USA and Canada as capitalism deserts workers and communities in America for low priced labor in the 3rd world. While there may be a larger good in the transformation of the national economic system into an international system, a wise course should include discussion of this together with a plan to bill the costs of social change to those who benefit from it.

Destroying Competitors There are more corporate spies in the US and other countries there are spies who engage in political espionage. Companies try to destroy competition, control the market, find out what employees are thinking; they try to get information about contracts with governments, try to identify psychological needs and anxieties of customers as well as to investigate critics such as Ralph Nader.

A 1986 survey of 75 companies in the Fortune 500 revealed growth in intelligence gathering budgets over the past five years. Leonard Fuld, a Cambridge, Mass. specialist, said budgets for commercial espionage now range from $50,000 to $1.5 millions.

Among the companies in industrial espionage are:

Xerox Hewlett-Packard Westinghouse

Kraft General Foods Digital Equipment

Celanese Wang Computers Ford Motor

IBM Union Carbide the Chicago Tribune

The long range result of this espionage is concentration of control over the economy by fewer and fewer corporations which get larger and larger.

The internationalization of production and distribution has lead to the internationalization of corporate crime. Outgrowing the nation-state, corporations have become too big to police; to punish; or to regulate.

. There are several levels of causality which work together to produce corporate crime. The three levels are:

1. The Social Psychological level (the personality structure of corporate officers and employees)

2. The Organizational level (How the company is organized)

3. The Macro-structural level (How the whole system works)

We will concentrate our attention in this book on the macro-structural factors because these factors determine, in the final analysis, the factors at the two lower levels.

Social Psychological Sources A comprehensive theory of corporate crime needs to include the personal attributes of the corporate officer. The self-selection, the hiring, the retention and promotion, the socialization and the rewarding of corporate crime is variable.

Yet, the character structure of corporate officers varies between corporations and affects the probability of crime and the kind of crime a corporation will commit.

Some people will do the dirty work of the capitalist corporation, some won't. We must think about the capacity of the individual to resist, to keep honest, to report on corporate crime even in the face of pressure to follow orders if we are to develop a fully articulated theory of corporate crime.

WHEN GOOD PEOPLE DO BAD THINGS

Even good people in high-paying jobs will make the move from pro-social to anti-social behavior.

A host of studies in social psychology demonstrate the degree to which compliance to authority shapes behavior in stratified groups. From the moving light experiment of the Sherifs at the University of Oklahoma to the Electro-shock experiments of Milgram at Yale, these studies tend to prove that people do what they are told to do. Studies of foremen, soldiers, prison guards, middle managers and many other groups attest to the fact that most people are all to willing to 'just' follow orders. Social power trumps morality.

Mass societies have little in the way of social anchorage for the self system and have few stable social identities with which to mediate personal behavior. False needs, wants, urges, impulses and other psychological motives often mediate behavior when social relationships are absent.

The USA is among the most massified societies in the world. Small groups are, increasingly, displaced by large scale organizations. At work, in school, and in church, bureaucratic institutions have replaced people centered groups. Hospitals, prisons, welfare bureaucracies, universities, and armies alike become total institutions. Orders, rules, and policies displace moral wisdom and humanitarian considerations.

Still most people in America have principles and values which mediate behavior and which could be activated were there protections for them against retaliation by corporate officers.

Ralph Nader has encouraged corporate employees to 'blow the whistle' by calling or writing to his research group in Washington, D.C. The US Congress has passed laws protecting federal employees from punishment for reporting crime and unethical behavior of defense contractors, military branches, federal regulatory agencies and other government units. You have permission from Nader to blow whistles, too.

Herbert Marcuse, late philosophy professor at University of California in San Diego, urged students to make the Great Refusal...simply say No to corporate crime, to political crime and to white collar crime...refuse to follow orders, refuse to be drafted, refuse to destroy the environment, refuse to be part of a faceless mass lead by amoral elites. You have permission to refuse to cooperate with structural crime.  And it will take all the courage and all the support you can get from friends and family.

ORGANIZATIONAL SOURCES: The micro-structural analysis of daily

Micro-structure operation of the corporations helps us understand why some corporations commit more crime than other corporations. The hierarchy of authority, the division of labor, the reward structure, the internal policing system and the diffusion of responsibility all vary between corporations.

These structures affect the rate and degree of criminal activity of the corporation. Organizations have rules, goals, policies and a life of their own which transcends the individual employee yet it is only through human agency that corporations exist, produce, commit crime and/or prosper.

Studies almost always show that democratically organized work groups have higher productivity, better quality control, higher morale, less absenteeism and less labor turnover than bureaucratically organized companies.

Bureaucracies survive because this hierarchical form of organization concentrates authority in the hands of the few...and maximizes the flow of profit to the top. Democratically organized groups would more evenly share out surplus value and might not produce dangerous...but high profit...goods.

In authoritarian organizations, the orders from the top push managers to depersonalize the routines with which employees and customers are treated. Expectations of profits from the top tend to push middle management to commit all the kinds of corporate crime listed above. Decisions from the top determine who is to be fired and who is to be promoted. Such social and economic power tends to absolve employees from responsibility and feelings of guilt when they follow company policy.

THE MACRO-STRUCTURAL LEVEL The macro-structural level of operations of corporations lead them to commit crime. It is the most fruitful level upon which to work to understand why so many people die needlessly; why so much money is stolen from the pockets of workers and customers.

A macro-structural analysis of corporate crime includes several topics which we will find embedded in all the Lectures in this series. We will list them for you so you will know what to look for and how to fit this material into the larger theoretical understanding of crime.

There are several interrelated characteristics of capitalism as a system, which in spite of its many positive features, tend to produce corporate crime. The same structures tend to promote street crime and political crime as well so take enough time to commit them to memory. It will save you time later on.

Crime inducing factors include:

1) profit motives...and the tendency for the rate of profit to fall.

2) the tendency to periodic crises.

[There are three kinds: short term waves from 2 to 5 years; 10-15 year cycles and long term waves from 30 to 50 years in length. The long waves are called Kondratieff waves. The 15 year cycles are called Kutznet waves; short term cycles can be called minicycles].

3)the tendency for costs to be transferred to workers, customers or to third world countries.

4)unregulated competition means that everything is fair in the marketplace.

5)and the concentration of wealth. The concentration of wealth into the stock of fewer and fewer firms means that monopolies can fix prices while great wealth means that the selection and pre-selection of political candidates can better be co-ordinated .

These tendencies, taken together, provide the basis of a structural theory of corporate crime. They provide an explanation to the four basic problematics in a theory of corporate crime:

a) why private capital corporations commit crime in the first place;

b)why corporate crime increases or decreases over time in the second place; and

c)why people rebel and resist governments which support corporate crime; and

d)why, in the fourth place, the efforts of the capitalist state to police corporate crime are so casual and ineffective most of the time.z

and why, e) good people with lots of income, well respected in their community, regular in their church attendance, un-labeled by the criminal justice system and well removed from street gangs and organized crime still steal more, kill more and ruin more lives than all the street thugs in all the prisons in all the world.

More interestingly, these tendencies of capitalist systems helps us understand why:

e)the capitalist state deregulates corporate crime just as corporate crime increases.

Let's begin to study the most radical theory of corporate crime in American criminology.

FALLING PROFITS AND CRIME. If the capitalist corporation is to survive, it must maintain profits. In today's money market, profit rates of 5, 6, or 7 % will not attract large amounts of investment capital money.

Money magazine and U. S. Today both list profit and loss statements of all domestic and major foreign firms for investors to compare and to decide how investments will be made. Most investors will invest in 8% profits rather than 6,7, or 7.5% rates of return.

In today's money market, a few institutional investors move hundreds of millions of dollars around instantaneously by computerized investment. Today, billions of dollars move around the world each hour on satellite communications systems.

Corporate officers in firms with lower profits have great pressures on them to generate profits even 1/2 percent higher...by whatever means come to hand. If they don't, they will be replaced.

Corporations which do not maintain the profit structure have many problems. Let's look at a few of the more important:

1. They are less able to compete for investment capital.

2.They are less able to compete with other firms for raw materials.

3.They are less able to do research and development of new products.

4.They are less able to compete for well trained employees.

5.They are less able to hire staff to prevent white collar crime, to spy on competitors, to defend against law suits, and to advertize for national and international markets.

6.They are less able to buy goodwill from politicians at election time to get contracts from the government or to influence a senator, congressperson or presidential aide to intervene with one of the regulatory agencies when they are caught violating laws.

The firm unable to do these things will stagnate or go broke.

But the fall of profits continue. This profit squeeze is largely outside the control of the corporate manager. Average profits have fallen from 15% in 1940 to 6.6% average in 1988 (USA Today: 14 June, 1988)

Why do profits tend to fall? One can look at the structural features of capitalism today, outside the control of management, which tend to reduce profits and to put ever greater pressure on the corporate structure to turn to crime for survival.

In brief, there are several factors which tend to increase costs and to drive profits down...and motivate management to turn to many forms of crime:

--labor struggles for higher wages

--women's movements and Civil Rights activism

--consumer movements for better quality and safer goods

--producer cartels in the 3rd world

--loss of markets to other capitalist countries

--loss of markets to 3rd world liberation movements

--increased costs of buying the political process

--competition with emerging capitalist countries

--environmental protection movements to clean up waste

--inflation

Corporate Crime and Falling Profit There are few ways for the capitalist firm to solve the problem of falling profits. Corporations could cut prices but that would lower profits. Capitalists don't know for certain who will win a price war so they avoid them. Crime is more certain. Capitalists could increase quality but that takes a lot of costly research and development...crime is faster and cheaper.

So capitalist corporations violate a wide range of laws designed to protect workers, consumers, the environment and their competitors when profits fall. Some corporations commit crime just to keep profits increasing each year.

ECONOMIC CRISES AND CRIME. Since the capitalist class does not pay the workers, as a class, 100% of the value they produce, workers cannot, as a class, purchase back 100% and still give ownership its "profit."

Inside such a system, the portion unsold to the working class piles up in stores, shops, warehouses, parking lots, and, in the case of grain, on the streets of the farming towns. As this unsold production accumulates, the firm must cut back on production, lay workers off, and finally apply for bankruptcy.

The result of "surplus" production is the economic decline we call a depression. In a depression, the capitalist class stops production, lives on accumulated profit, and waits a few years for demand to increase. Then the cycle repeats itself every 3-5 years in minicycles or every 30-50 years in Kondratieff cycles.

There are other temporary solutions to the problem of profit:

Temporary Solutions: The richest capitalist firms simply wait out the depression. Capitalists, as a class, prefer other solutions since no one knows which corporation will survive the intense competition of a depression. Other solutions to economic cycles of boom and bust include:

1.War renews demand.

When all the bombs and killing stop, people rebuild roads, schools, homes, factories and other parts of the infrastructure destroyed in war.

2.New inventions inspire demand and put workers back to work. Then workers can buy part of the existing surplus of other goods.

The automobile, the radio, the refrigerator, the washing machine, the sewing machine, television and color television and now, computers, have fueled demand and put people back to work.

3.Planned obsolescence creates demand.

When there is little competition, companies design machines and goods which wear out in a few months or years so consumers will have to buy some of the surplus.

4.Keynesian policies stimulate demand.

The state can borrow money, loan or give it away and thus increase demand for the surplus during depressions; take money out of the economy during good times to pay back the money it borrowed. That is called Keynesian economics after John Maynard Keynes, a British economist who tried to save capitalism from cycles of boom and bust.

5.The capture of foreign markets from other capitalists can help domestic firms survive and prosper.

But this solution takes markets away from foreign firms and increases the problems above for them. It also leads to war.

6. Advertizing can generate false needs on the part of those with discretionary income to buy more of what they already have.

Advertizing cannot generate more demand than the workers, as a class, can buy...but ads can persuade consumers to buy this automobile instead of that one. Ads can persuade people to buy cars instead of homes of health insurance.

7.Farmers and factories have been known to destroy food and unsold items in order to keep profits up.

Farmers have dumped milk, soaked potatoes with kerosene, shot and buried cattle, plowed under crops and have sold below cost to try to stay in farming.

8.The welfare state buys necessities and gives them away.

In the USA, the state collects taxes from those who have extra money and buys necessities for those who can't enter the demand cycle. But this reduces the capacity of tax payers to consume so there is little net improvement in the economy...unless the state engages in deficit spending.

9.Credit can stimulate demand.

Consumer debt is at an all time high as people spend more than they are paid. At some time the credit system will break down as the bills come due. Credit is a temporary reprieve for the capitalist system.

10. Corporate officers can bribe the purchasing officers in the military, the private sector, in foreign governments, or in other state agencies to buy from them instead of other companies.

11. Street crime, white collar crime, corporate crime and organized crime can renew demand.

Street crimes such as burglary, theft, robbery require those with discretionary income or with insurance to buy another item to replace the stolen one.

White collar crime gives lawyers, doctors, brokers, bankers, and auto repair persons discretionary income to purchase bikes, C.D.s, second homes, third cars, fourth T.V. sets and fifth radios. It gives them the income to repurchase the items stolen by street criminals.

Corporate crime, overall, usually depresses demand but some kinds can increase it...dumping toxic substances increases demand for medical care. Surplus profits help stock owners buy whatever they fancy.

Organized crime puts tens of thousands to work and enables them to enter the marketplace for housing, food, clothing, automobiles, and more.

Street, white collar and organized crime are pretheoretical forms of demand-side economics while corporate crime is a pretheoretical form of supply-side economics.

With crime, corporations simply supply themselves with capital from the pocketbooks of the families of their victims. That kind of crime is supposed to stimulate the economy by giving corporations the funds to invest in more productive capacity to put more people to work and enlarge both market and wealth. That happens if the stolen money is invested in labor intensive goods and services. If the money is invested in luxury homes or in other countries or in capital intensive production, it tends to depress the economy.

All these practices, themselves related to other forms of crime, work to absorb some of the surplus production and help the firm realize profit. But capitalism, as a system, cannot prevent profits from falling, so the economic crises continue and profits continue to decline across the system as a whole.

Depressions, Crime and Deregulation. Steven Box, Kent University, England, has explained the dynamics of class struggle and state politics which show how depressions tend to promote crime while subverting the regulatory efforts of the state.

The story is simple enough. When profits fall, corporations try to squeeze customers, workers, and suppliers to keep profits up. Not all corporations succeed in satisfying stockholders. Some company officers turn to crime. When that happens, state agencies catch and prosecute some of them. The connections of corporate officers and large stockholders to law-makers is used to increase pressure for decriminalization; for calling off the regulatory agencies; and for dropping or delaying cases already on track.

EXTERNALIZING COSTS No economic system can generate profits. All economic systems produce goods and services as a net loss to the environment in which they are found. The second law of thermodynamics has not been repealed by the laws of capitalism. As a system, capitalism produces more entropy per person...and thus more damage to its environment...than any other economic system.

Hunting and gathering societies transfer the costs of their economic activity to the animal and plant populations through which they pass. These populations can repair themselves if the damage is not irreversible.

Slave systems transfer the costs of producing and renewing labor costs to the slave group by treating that group as external to the society for which it provides wealth.

Feudal systems treat several conquered communities as external environment and reap surplus value from the labor of feudal serfs.

Bureaucratic socialist systems accumulate wealth by forcing peasants and workers to overproduce at subsistence levels. This is done:

1) to build the infra-structure neglected by feudality or capitalism;

2) to provide comforts for the bureaucratic elite.

3) the People's Republic of China and the U.S.S.R. also extracted excess value from workers and farmers in order to finance wars of socialist liberation abroad.

Capitalist firms treat most workers and all customers as part of the external environment to be controlled and exploited. They transfer their costs of production to workers and customers...or to the 3rd world. The bodies of workers and customers absorb the cost cutting practices of management.

In capitalism, some portion of the income from production is artificially defined as profit and distributed to support a leisure class.

The externalization of costs is a structural crime when it reduces the ability of the external groups to provide to its members the essential goods and services for the creation of culture. In the discussion of human rights and obligations, you learned that the capacity of all members of a human group to participate in the production of culture was essential to the human process.

 

COMPETITION AND CRIME There are several connections to crime in the tendency of competition to concentrate ownership of the means of production in fewer and fewer firms and owners. When capitalism is really competitive, many firms fail and the market is left to the fewer and fewer remaining firms. If the system is not competitive, then all the firms in a given line of production must agree on pricing...and thus transfer the costs of production and the costs of profits to workers and customers.

Since 1950, the USA has had increasing competition for market share in the World Capitalist System. Germany, Japan, Brazil, Taiwan, Hong Kong and many other capitalist nations have added great competitive pressure on US firms.

There are several crimes a firm can commit to forestall failure:

*It can bribe purchasing officers of other firms and state agencies.

*It can violate wage laws

*It can cheat customers.

*It can violate sales tax laws

*It can violate worker safety laws.

*It can retain social security contributions of workers.

*It can default on sales contracts.

*It can claim insurance damages [arson is a big item].

The few really large corporations can avoid policing and punishment by a number of tactics. Capitalist owners put a great deal of pressure on Congress to eliminate regulatory agencies. Capitalist firms also move out of the country to escape the laws.

IN THE USA There are about 850,000 officers in the USA used to police street crime. There are over 1,100,000 million private security guards to police crimes against the corporation. Most public and private policing is on behalf of corporations rather than on behalf of workers, customers or competitors.

Federal, state, and local agencies set up to police business crime are severely understaffed. There are probably fewer than 200,000 inspectors, field agents, auditors or investigators monitoring corporate crime.

Although corporate crime is far more dangerous to the health and pockets of Americans, it is far less policed than any other kind of crime.

Corporations insist that it is an intrusion into the freedom of the marketplace for the state to police it. Corporations spend much time and talent as well as money to resist policing and punishment.

Avoidance of Policing When a firm is large enough, it can escape the consequences of its illegal activities. Either it is too big and too important to the economy of a nation to be punished...or it can finds ways to avoid detection, prosecution, and\or punishment.

Means to avoid detection include:

*claiming privacy for records and communications

*hiring its own private security police force

*creating false bookkeeping and accounting records

*moving its head office (and records) to 'friendly' countries

Tactics to avoid prosecution include:

*buying influence with politicians

*hiring the best lawyers available

*bribing prosecuting attorneys

*threatening employees who could testify

*advertizing to win public support

*moving to other states or countries

Tactics used to escape punishment include:

*paying small fines [a $50,000 fine for a multibillion dollar corporation is a pittance]

*delaying for years by appealing for trial after trial

*buying political influence

*threatening to move

*filing for bankruptcy

*selling to another company or

*starting a new corporation with a new name

The very size of a multinational corporation defeats the criminal justice process. It can move operations to a more 'friendly' nation, it can make a case that it is essential to 'National Defense', it can point out that if it fails, communities will be without its services or it can simply install a new government which makes it's criminal behavior legal in technical terms.

Deregulation of Corporate Crime In the past 15 years a great deal of the capitalist economy in the U.S. has been deregulated in order for the capitalist firms to cut costs and to improve profits. We are now on the downside of a Kondratieff wave which forces deregulation.

Were the firms not deregulated, market share for the more influential corporations would be lost, profits would be lowered, bankruptcy rates higher.

Politicians have a great deal of pressure put on them by their constituents at home to 'get government out of our hair.' Small business is squeezed by big business. Very few small business owners call for the regulation of big business...instead they call for the deregulation of all business.

Corporations don't want to obey labor laws, environmental protection laws, affirmative action laws or consumer protection laws. And they don't want to be charged with illegal activity...so they demand the laws be abolished.

Laws regulating pricing and laws requiring the corporation to serve low profit sectors of the nation are especially hard on profits. Some of this regulation makes eminently good sense in any economic system. Trucks driving empty one way, enormous paper work, privileged status for a few giants in the industry all argue for deregulation.

But the benefits of state control are lost as well. Small towns are without mass transit, energy corporations claim a larger share of resources as other needed services deteriorate, capital disinvests in the U.S. and reinvests in Third World countries whose labor force is controlled by the totalitarian state... and more people are disemployed. The communal and collective needs of a society are sacrificed to the accumulation needs of a shrinking capitalist class. It is in the logics of capitalism that this is so.

At the same time the Congress deregulates, the executive branch of government sets up a climate in which agency heads understand that corporate crime is not to be policed with rigor, thoroughness and impartiality.

The capitalist state regulates corporate crime when times are good and deregulates corporate crime when the capitalist class is faced with problems of capital accumulation.

CONCLUSION The American economy cannot support workers in affluence; treat its waste products; honor its guarantees; police the world capitalist system; provide programs of social justice for the poor; the ill, the elderly and the disemployed left behind by the capitalist system ... and at the same time pay a 5, 10, 15 percent royalty to the capitalist class.

Crime is cheaper than providing for worker safety, consumer interests, repairing the environment or paying fair prices for raw materials in the 3rd world. There is a longer answer.

The capitalist state has a legitimacy problem to which, in the democratic state, the political system must respond. The laws enacted in the long years of worker struggles over wages, unemployment insurance, workplace safety, pollution control, corporation taxes, pension plans as well as product safety cannot easily be set aside. The capitalist state cannot repeal the laws.

At the same time, there is inexorable owner pressure on corporate officers to show profits, increase market share and to increase corporate worth. The capitalist class cannot pressure the state to change the law but it can and does pressure management to increase profits or else. Managers use a variety of illegal activities to cut costs and increase profits.

Macro-Criminology There are four major factors which drive the corporate officers to commit crime:

1. stock holder pressure for profits

2. Position on a Kondratieff wave

3. Social movements for economic justice

4. Position in the World Capitalist System

WHAT IS TO BE DONE Bourgeois liberalism has created the most productive, most flexible, most creative economic system in history. It has tended to destroy all the ancient structures of domination under which people have been subjected for centuries: slavery, feudality, racial and nation pride, as well as gender discrimination and now, warfare.

These are not small accomplishments. At the same time, laissez faire capitalism tends to disemploy workers, exploit consumers, concentrate wealth, replace government with private decision making and abandon essential lines of production. These are crimes against the human process.

Humanist liberals argue that the state must interfere in the marketplace in order to make the marketplace respond to the needs of workers and consumers.

Humanist liberals insist on laws, police, courts, sanctions and other controls to end the worst crimes of corporations.

Humanist liberals argue for private ownership within the framework of public law. This means that the corporation must be treated as a culpable individual...watched, indicted, tried, convicted and sanctioned...just as individuals are in a mass society.

Humanist liberalism tends to look at economic activity from below and try to make laws which help those at the lower levels of economic power, social power, and physical power. In so doing, humanistic liberalism is informed by a praiseworthy moral power.

Kip Schlegel of Indiana University has made a systematic study of how to assess corporate responsibility for criminal behavior. The ideas below are adapted from a paper Schlegel gave at the 1988 meetings of the Midwest Sociological Society in Minneapolis:

--Attribute mens rea to the corporation.

That is, treat it as if it had a mind and could do harm deliberately, intentionally.

--Attribute actions to the corporation.

Instead of saying employees did so and so, one says that the corporation did so and so.

--Attribute liability to the corporation.

Instead of saying employees are to be responsible for any harm done, the corporation as a corporation is liable.

--Hold Corporations blameworthy.

Determine whether the company could have done something else but didn't because of its operating policies.

Determine whether the decision to do something conformed with the power structure of the company.

Determine whether the actions helped achieve company goals.

--Punish the corporation in terms of its degree of blame.

If companies have specific programs to harm workers or customers, their blame is maximum. If the company has precautions which try to protect workers and customers, then blame is minimal.

--Consider what steps the company takes after the harmful act.

If the company takes corrective steps, then punishment is minimal. If they continue to put people in jeopardy, then punishment is maximal.

--Consider the prior record of the company.

If the company has a long record of criminal acts, then act accordingly. If not, give the company a chance to repair the damage.

All these ideas are useful if...if the basic conflict between the profit oriented corporation and others is to continue. The radical solution is to end the conflict by means of democratic socialism as you will see below.

Democratic Socialism One will find several radical democratic solutions to corporate crime inside the USA presented in the final Lecture. These solutions all depend upon a transformation of the USA from state supported capitalism toward democratic socialism.

In brief, radical solutions require:

--Production for need; not profit

--Democratic worker self management

--enforcement of pollution laws

--strong democracy

--Social Justice

Production for Need would tend to reduce the motives for many crimes against workers, consumers, taxpayers and competitors.

Democratic Self Management would tend to reduce theft by employees, dangerous working conditions, unnecessary plant closings, low quality standards and many other crimes motivated by conflict between owners and workers.

Enforcement of Pollution Laws would still be necessary since wages and costs would be lower if the costs of cleaning up after production processes were charged to the firm. Workers in a firm might decide to let someone else pay to clean up their mess just as do other owners.

The Strong Democracy of Bernard Barber would tend to reduce purchase of the political process by corporations since many decisions would be made in the public opinion policy process rather than in a Congress or Legislature. State officials would be charged with implementing policy rather than making it. They would have less to sell to the corporation if they didn't make policy.

Social Justice programs would eliminate the abuse of pension funds by corporate executives, the graft in letting contracts for insurance and medical services, the practice of firing people just before retirement age and many other sharp, unethical practices.

Now you will want to look at the place the USA has in the world capitalist system and discover what kinds of corporate crime American corporations are committing in the World Capitalist System. After that, we can talk about what is to be done about corporate crime.

The location of corporate crime has shifted radically over the past 50 years. As production and distribution of goods became internationalized after WWII, the sources of corporate crime in the USA and in the 3rd world became internationalized as well.

Today, one cannot understand the dynamics of corporate crime in India unless one knows what is happening in the USA. One cannot understand the dynamics of corporate crime in California without knowing what is going on in the four dragons: Taiwan, Korea, Japan, and Hong Kong.

Tomorrow, one will have to learn about the transformations in the socialist bloc in order to understand why corporations violate labor laws, environmental laws, consumer protection laws or tax laws in the USA. The socialist bloc will, by 2000, be as active in the international economy as it is in the international polity today.

THE UNITED STATES WILL
NOT SUBMIT ITSELF TO THE
RULINGS OF THE WORLD COURT.
            ...Ronald Reagan

The world capitalist system is run by some 3000 mega-corporations based in the 20 countries called the 1st world [of development]. They extract food, goods, raw materials and profits from the 120 poor capitalist countries...the 3rd world. This is the basic division of the World Capitalist System (WCS).

500 hundred Transnational Corporations (TNCs) dominate the WCS; 300 of these are based in the USA. These corporations have branches in almost every 3rd world country. Oil companies, automobile companies, chemicals, advertizing companies, electronic firms, banking conglomerates, food and grain corporations as well as communication and publishing companies constitute the corporate structure of the WCS.

Astride all this huge and growing economic system is the USA. The USA polices the world capitalist system on behalf of the 1000 private corporations which run the WCS. It is an expensive policing task. It costs the USA more than $1 trillion dollars to do it in 1988. By the 21st Century, the costs will TRIPLE for the USA.

By using cheap labor after WWII, both Japan and Germany gained economic power. Japan, Korea, Taiwan, and Hong Kong developed their economies during the Korean and Vietnamese war as the USA bought billions of dollars of war related goods and services from them. Today Japan is the financial Center of the WCS. Of the top ten banks in the world, eight now are in Japan. The USA is becoming an economic colony of the four 'dragons': Japan, Korea, Taiwan, and Hong Kong.

Outside the World Capitalist system sits the 20 or so socialist countries. By the 21st century, they will be integrated into the WCS...or they will replace it. Since 1920, the Socialist bloc of countries have been trying to destroy capitalism while building their own economies; now they have made an uneasy peace with capitalism.

CRIME IN THE WORLD CAPITALIST SYSTEM Ray Michalowski of the University of North Carolina at Charlotte and Ron Kramer, Western Michigan University have identified many of the major crimes committed by Transnational corporations as they seek to increase profits in the world capital system (1987).

In the 20 years between 1960 and 1980, the golden years of American capitalism, the income of TNCs grew 10 fold...from 199 billions in 1960 to 2.155 trillion dollars in 1980. US stock holders are the primary beneficiary of corporate crime in the 3rd world. TNCs from the USA accounted for about half of that growth and take about half of the profits. In 1983, the profits were over 130 billions.

Among the profit centered crimes committed by TNCs which produced those mega-profits discussed by Michalowski and Kramer are:

*working conditions less safe than in the USA

*environmental pollution

*dumping of unsafe products on overseas consumers

*corruption of local politics by bribes and violence

*destabilization of workers' movements for social justice

*avoidance of taxes at home and abroad

*destruction of local industry and business

*continued increase in the gap between rich and poor countries.

Kramer and Michalowski point out that there is no law nor law enforcement agency to regulate the crimes of TNCs. When governments in the third world try to regulate corporate crime of TNCs based in the USA, the US government takes action to pressure or to eliminate that government.

Most corporate crime is structural, that is, it grows out of the logics of the structure of capitalism; out of the tendencies of capitalism which are set forth in Lectures 3 and 4. Any economic system which puts profits before human rights and the obligations acts in ways harmful to the human project. It is a system which promotes crimes against people, against the economic health of a society, and against communities of human beings.

Corporate crime exists since there are built-in conflicts in economic relations between multinational corporations in the 3rd world and:

1) its workers

2) its customers

3) its competitors

4) the public welfare

and there is conflict between workers in the 3rd world with people in the 1st world who benefit from the wealth extracted by multinational corporations and shipped back to the 1st world so workers, consumers, owners and managers may enjoy their life style.

Workers Workers in the 3rd world are especially vulnerable to corporate crime: high disemployment, extreme poverty, large families to feed, governments friendly to foreign capital, an indifferent church, nasty police practices, aspirations to better material standards, passivity, and a work ethic all converge to make it easy to exploit, endanger, and discard workers: men, women and children alike.

The impetus for profits puts the firm into conflict its workers in the 3rd world on a number of points. Profit making corporations need to lower costs. They can do that by exploiting workers; by displacing workers; by unsafe working conditions and by restricting health, vacation, and retirement benefits. TNCs can move production to another country if the workers go on strike. TNCs based in the USA often seek help from the C.I.A. to destabilize labor movements. Sometimes death squads from the local militia threaten or murder labor leaders.

1st World Corporations hire workers in the 3rd world, use their labor power and then discard them when they are ill or no longer needed. The local economy is expected to produce workers, educate them, then take care of them when they are injured or diseased by working conditions. Thus the corporation engineers a parasitic relationship between workers in the 3rd world on the one hand and stock holders, consumers and retail workers in the 1st world...structural crime.

The other side of this picture is that 3rd world workers generally get better wages than those who work for local capitalists, some health care, some low level training, and some small chance for their children. Such workers also get a vision of a better life which leads them into politics. The politics may be pretheoretical in that such people join to exploit others in the 3rd world or it may be theoretically informed by moving toward democratic socialism.

Customers The impetus for profits drives a wedge between the corporation and its customers. Profits can be increased by fraud, misleading advertizing, cartels, planned obsolescence, price-fixing, default on guarantees, false labeling, and a thousand other practices designed to increase profits at the expense of customers. TNCs sell products banned as dangerous in the 1st world.

Consumers in the 3rd world are much more likely to be endangered and exploited than those in the 1st world. They have to face closed monopolies in almost every line of production. They cannot turn to their government for protection since these officials are often on the take in one way or another. They are denied information about ingredients, comparative costs and quality, side effects and other information which is available in the 1st world as a result of many consumer demands for legal protection over the last 100 years.

Competitors Profit pushes company officials to try to destroy the competition. This can be done by industrial espionage, price wars, price-fixing, bribing purchasing officers, bribing law-makers, bribing state inspectors, hiring employees away from other companies, 'fair' trade laws and many, many other practices.

In the 3rd world, small business must compete with the huge TNCs which have wealth and power to dominate the mass media, the political process, and the supply of raw materials. TNCs can play one nation off another to gain subsidies that local businesses can not obtain.

The Public Weal Transnational corporations, driven by bottom line profit reports, commit many crimes against the common good in the 3rd world. They pollute the environment, exhaust natural resources, abandon essential low-profit lines of production, avoid their share of taxes, establish monopolies, and use dangerous additives.

TNCs subvert local cultures and distort the self system of its 3rd world employees and customers. It displaces human needs with false needs for owning and having. It produces a pathological individualism which is hostile to community and to cherished social relations. Capitalism produces a psychological mind-set in which competition and winning underwrites human relationships rather than cooperation and mutuality.

Against the many positivities of free enterprize, one must set the tendency of capitalist corporations to commit a wide variety of crimes in pursuit of profit. You will hear that capitalism helps develop the economies of 3rd world countries and that is true. The larger truth however, is that inequality, poverty, crime and disease is increasing since this 'development' is for the benefit of the managers, workers, and owners of multinational corporations rather than for the society as a whole.

Now capitalism is an integrated world system. In the past 50 years, TNCs have displaced the nation-state as the main actor in world affairs...apart from the USA and the USSR. Now the world capitalist system enters the downside of a Kondratieff cycle...and corporate crime walks abroad in the 3rd world.

The crimes of American corporations in the 3rd world exceed those at home by several magnitudes. The foreign policy of the USA government has been and continues to give support this corporate crime in so far as it is able.

The support of the USA for corporate crime around the world has eroded the vast goodwill earned by the USA when it helped rebuild nations devastated by WWII. The USA had earned the respect and admiration of nations by its Constitution, by its generosity in times of famine, flood or earthquake; by its hospitality to foreign guests and by its immigration policies.

Now the USA is among the more despised nations in the world by many young people in Europe and the 3rd world.

The cases below explain such animosity against the USA:

*Depo-Provera, a contraceptive was banned in the USA when it was found to produce tumors and cancer in animals. Upjohn company, its makers, sells it in 70 3rd world countries subsidized by the US sponsored population control programs.

*After Tris, a fire retardant was found to cause cancer, it was banned in the USA. The corporation using the fabric sold millions of garments overseas. No one knows how many 3rd world children died of cancer.

*A. H. Robins (chapstick) sold more than 4.5 million dalkon shields for $4.35 (it cost 25 cents to make). After 20 deaths, thousands of babies with major defects, thousands of hysterectomies to remove punctured or damaged uteruses, and thousands of infections, the shield was removed from US markets...and promptly dumped in the 3rd world.

*People who live in Canada receive acid rain from the steel mills in Illinois, Michigan, Ohio, and Pennsylvania. People who live in Mexico are receive fertilizer salts with their drinking water from the US farms along the Colorado River.

*In Columbia, South America, Container Corporation of America used thousands of prisoners for cheap labor. The free market wage was $1.33 per day. Prisoners worked for less. Most prisoners did not have benefit of trial.

*American airplane manufacturers have bribed government officials in Luxembourg, Japan, Italy, and many other countries to buy their planes...costing taxpayers in those countries billions of dollars.

*Coca Cola representatives bribed government officials in the USSR in the effort to break the monopoly of Pepsi Cola...which had bribed Soviet officials earlier to get the monopoly.

*Mobil, Goodyear, 3M, Colgate-Palmolive, Union Carbide, and Johnson & Johnson are among the 151 major American corporations which earn super profits from the low wages paid Blacks in the Union of South Africa. The US government, in violation of a U.N. resolution, supplies South Africa with the arms and electronics needed to keep 22 million Blacks under control.

*Union Carbide moved its operations to Bhopal, India in order to evade the environmental protection laws in the USA...and to take advantage of cheap labor [$1.50 per day]. Hundreds were killed when cyanamid gas flooded nearby homes.

*American and European companies produce 100 tons of fluoride aerosol products each year. When sprayed on hair, arms, insects and unpainted objects, the fluoride is released into the atmosphere and destroys the ozone layer. Skin cancer rates increase without the protective layer.

*American and Japanese firms cut or buy timber from Brazil and the Philippines. 1/3 of their forests have been cut. Thin forest soils erode, shore life is covered with silt, rain patterns are altered, oxygen is depleted and carbon dioxide accumulates in the atmosphere to raise the average temperature of it. Glaciers melts, port cities are flooded by sea water and new deserts expand....structural crime of vast dimensions grows to plague and cost future generations.

*A Norwegian company dumped 15000 tons of toxic waste from Philadelphia on an island off East Africa. The trees died; the fish died, the people died.

*The US, Netherlands, Belgium, West Germany and Italy now dump toxic and nuclear waste in Guinea, Benin, Nigeria, Ethiopia and the Congo. Once again the health and welfare of rich capitalist countries is bought at the expense of the health and welfare of residents in the 2nd world.

*American, Israel, French, Czech, USSR, and Chinese firms produce guns for criminal gangs to use in the 3rd world. The government of many nations murder, exploit, extort, imprison and torture their own countrymen...and the US munitions industry prospers. 3rd world countries spend more for arms than for health, education, housing, and roads combined. Many people in the 3rd world resent this practice but are unable to replace their government short of armed insurrection.

*Norman Girvan is the director of the Caribbean Center for Corporate Research. He has studied the crimes of American corporations in getting raw materials from Central and South American countries. Among the corporate crimes he reports are:

--Anaconda and Kennecott companies appealed to the US government for help in restoring its high profits from copper in Chile. The US sponsored a violent and bloody coup in which an elected president was murdered in Chile.

--Richard Reynolds, Arthur Davis and members of the Mellon family became very, very rich off the bauxite deposits in Jamaica. Alcoa, Kaiser, Revere and other US corporations also profit from C.I.A. activity. The C.I.A. pumped millions into the Jamaican election in order to help elect a right wing president to replace Michael Manley...Manley tried to increase the taxes of Alcoa, Alcan, Reynolds, and Revere.

Malnutrition is endemic, housing is indecent, incomes average $10 per week. And now Jamaicans are entering the US by the thousands to escape the poverty there...and bringing the drug trade as well.

These are but a small fraction of the many corporate crimes committed by US firms and federal agencies overseas. American citizens and students are only dimly aware of the price paid in the 3rd world for the affluence and the many freedoms found in the 1st world. These practices fuel rebellion and revolution.

POWER TOOLS of TNCs When corporate interests are threatened by labor movements, consumer movements or environmental movements in the 3rd world, their interests become the vital interests of the American government and it uses three power tools to safeguard these interests:

*the CIA

*the secret police of other countries

*the International Monetary Fund, the World Bank, the Agency for International Development as well as other financial agencies.

*The US Marines and other military forces.

The USA used the United Nations as a political tool to protect its vital interests of its multinational corporations for profits, markets, and raw materials in the 3rd world until the UN members started voting on behalf of the interests of people and companies in the third world. The USA has failed to pay its share of the UN budget for the past 8 years and has withdrawn from UN agencies which has policies it dislikes...including UNESCO.

The USA tries to obstruct international efforts to police its TNCs. The UN prepared a code of conduct for international businesses in 1982. The US, Germany, Britain and other developed countries have resisted the adoption of a code...one without police powers. The Reagan Administration and Jean Kirkpatrick, US Ambassador to the UN vociferously denounce UN efforts to control corporate crime of TNCs.

OUTSIDE THE LAW IN THE WCS The control of crime in the world capitalist system is beyond the power of any given nation. Since corporate crime in the 3rd world benefits capitalists, workers, consumers, and governments in the 1st world, no combination of countries in the 3rd world can control international corporate crime.

Jeffrey Given, at the University of Tennessee, has made a compelling case that corporate crime cannot be controlled by any given capitalist state. The rich capitalist states do not want to give their own capitalists a handicap and the poor capitalist states are too weak to control corporations. Often the budgets of TNCs are greater than that of the 3rd world country trying to regulate corporate crime of those TNCs.

Given points out that poor capitalist states must attract capital. Private corporations won't invest in those countries which pass laws and enforce them. Some countries advertize that it will permit foreign companies to pollute. Mexico, for instance, ran this ad:

'RELAX. WE'VE ALREADY PREPARED THE GROUND FOR YOU. If you are thinking of fleeing because of the new laws for control of environmental pollution, you can count on us.'

The United Nations have drafts of codes controlling corporate crime. The USA and other European nations along with Japan have banded to block its passage or weaken its proposals.

Some poor, small capitalist countries have banded together in the Unaligned Nations movement to create some means to control international corporate crime. The USA and other core capitalist countries would not accept such control of its corporations. Profits would decline and prosperity fade.

Avoiding Control and Punishment International regulatory bodies are unable to control corporate crime in the WCS since those who agree to trade agreements can always withdraw from the treaty which established them...as the USA often does. Such crime control agencies have no physical, economic or social power to enforce their rulings...they have only moral power. Moral power runs thin and weak between nations.

Private profit seeking companies appropriate the various media...including the university...to its ideological needs. Capitalism uses the media to create false needs; to give itself false legitimacy; to turn children into walking commercials and to install its own representatives in the political sphere.

Multinational corporations enlist the aid of friendly Congresspersons in the USA to intervene on their behalf. Such Congresspersons put pressure on the various government agencies. The State Department, the Pentagon [which supplies foreign governments with weapons], the various international lending agencies over which the USA has control, or in extremis, the CIA take action on behalf of the TNC.

If local governments insist upon controlling corporate crime of the multinationals, the TNC will simply pull out and move to another 3rd world country which will not police it. There are too many cleavages between 3rd world countries for them to act together.

TNCs in the world capitalist system now commit corporate crime on a scale that beggars the imagination. TNCs distort the economies of whole continents; they subvert the politics of whole countries. They export pollution and toxic plants to 3rd world countries; they poison the rivers, earth and atmosphere of the world; they drain the brains and the wealth of the poorest countries in the world along with the food from the hungriest.

One can expect much more corporate crime in the USA in the first part of the 21st century...and much more effort to regulate corporate crime. There are two reasons to expect more corporate crime and more effort to control corporate crime in the world capitalist system:

1) as the system is integrated there will be more competition, less profit and more pressure to violate laws.

2) as the corporation violates more laws, citizens of the democratic states will make more effort to reregulate corporate crime. Citizens of undemocratic capitalist states will commit more political crime in resistance and rebellion.

CORPORATE CRIME AND FALLING PROFITS Just as domestic factors in the USA contribute to falling profits, several events in the past 50 years have changed the character of the World Capitalist System and contributed to the fall in the rate of profit of the U.S. based corporation...and increasing corporate crime abroad.

These events had the effect of increasing costs for raw materials, for labor and diminishing markets--all inimical to the profit structure of first world corporations, most the largest of which are American. All push up corporate crime rates.

These events included the:

a) increased competition within the 10-12 more industrialized capitalist nations.

The U.S. lost markets at home and abroad to its "allies" in the free market world. Japan and Germany are worth special mention.

b) import substitution by local manufacture in order to create jobs in the Third World and to solve the "balance of payments" problems.

Some industrial capacity developed in the Third World as political leaders sought to maintain legitimacy in the face of rising political dissent. This took markets away from the First World.

c) producer cartels. In coffee, sugar, bauxite, copper, cotton, diamonds, gold, tin, chromium, and other essential metals, Third World nations convened to fix prices and to control production.

The World Capitalist System, led by the U.S., managed to destroy or destabilize most of these cartels. The Oil Cartel was a notable exception. The success of OPEC in 1973 triggered a great depression in the world capitalist camp from which only the U.S. is recovering (and that, in part, through unprecedented deficit spending).

The World depression in the capitalist camp depressed demands as it increased costs. This put more pressure on the corporation to illegal activities in the effort to stay in business.

d) Wars of socialist liberation. In China, parts of Europe, Africa and Southeast Asia, socialist regimes were victorious or were installed by the Soviet Army since 1945.

These areas were never integral to the World Capitalist System as either a market, a source of raw materials or as cheap labor. India, Africa, South America were and are.

Given these developments and more, the World Capitalist System is now on the downside of a Kondratieff wave. It is the position of a capitalist economic system as the various points of a Kondratieff wave which produce, in large part, the variations in crime committed by Transnational corporations.

As the capitalist system becomes integrated on a world wide scale, the kondratieff depressions become integrated. When the USA enters a depression, it triggers depressions elsewhere since the USA is such a large market for foreign goods, services and raw materials. Many 3rd world nations depend upon US tourists.

THE 21st CENTURY There are several conditions which are developing to force societies to go beyond crime and punishment as a way of life. These factors include:

1) the amount of corporate crime is committed in the 3rd world by some 3000 TNCS. Higher levels of corporate crime tend to discredit capitalism and promote rebellion.

2) the amount of success workers in the 3rd world have in getting decent wages, working conditions, housing, health care, education and good politics. Worker success in the 3rd world will reduce overseas profits in the 1st world...and discredit capitalism in the 1st world.

3) the amount of success eurocommunism has in building democratic socialism. Democratic socialism would legitimize socialism in Europe and could provide a model for American citizens to emulate.

4) how successful new, more democratic economics becomes in the old soviet bloc.

The transformation from bureaucratic socialism to democratic socialism in the 2nd world [of socialism] will legitimate socialism in the 3rd world.

5) changing rates of crime in the three worlds of development are most important.

High crime rates in any country tends to lead to more fascism as the state tries, in vain, to control a growing and criminal lumpenproletariat. There comes a time when the costs of policing and imprisoning ever growing numbers of people force social transformations.

WHAT IS TO BE DONE? The radical solution to corporate crime at home is democratic socialism. The radical solution to international corporate crime is an international economic system in which the 3rd world countries keep profits and wealth at home to build up the basic infrastructure of health, housing, religion, education, transport, recreation and child care.

The consolidation of democratic socialism in the 2nd world and in the 3rd world would consolidate the social and economic power with which to secure social justice in the whole world. Without 3rd world countries to exploit, social justice in the 1st world becomes more important. Without the bureaucratic and authoritarian models of the Communist Bloc to use for invidious comparisons, 1st world countries will have to do much better to maintain political legitimacy with their own citizens.

The central answer to the problem of corporate crime in the 3rd world lies in the political sphere. There is a vast amount of power arrayed against social justice in the 3rd world...at home and in such powerful nations as the USA, England, France, Italy, South Africa and Israel.

The genius of the human race is now dedicated to war and the weapons of war. One third of all scientists are now in the employ of the military. Some of that genius must be used to create democratic and socially responsible economic systems.

Revolution must occur if justice is to come to the 3rd world. The only interesting question then becomes which tactics will be used. The political tactics which will be used vary from terrorism to peaceful resistance. In some countries, more than one might expect, peaceful resistance will work. Moral power sometimes moves mountains and military dictatorships from on top of the people. Authority falls when people withdraw political legitimacy and support.

In some countries, physical power must be joined to moral power in order to secure democratic socialism and social justice; the best solutions to crime. In the Union of South Africa, pressure to embarrass Transnational corporations and to force them to disinvest might just work to prevent the oceans of blood that otherwise might be necessary to eliminate Apartheid.

Until revolution comes in the 3rd world, you can expect a variable rate of corporate crime...higher in bad times and somewhat lower in good times. You can expect a changing battle between those who profit from corporate crime and those who are its victims. In good times, the victims will find help from the capitalist state. In bad times, the state will deregulate corporations and give them a free hand to transfer costs to workers, consumers, competitors and, especially to the 3rd world.