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SOC 1500 Nov 15 2011 Lecture Note (F11)

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University of Guelph
SOC 1500
Alexander Shvarts

Hackler: Corporate CNeutralization theory – Chapter 9, Critical theory – Chapter 10Vo1k: Rational Choice theory – Chapter 5, SOC 1500 Tuesday, November 15, 2011 Lecture 8: Corporate Crime and White-Collar Crime Critical Theory (Hackler, Ch.9 – pp.139-140,142-143) • Instrumental Marxism (Chambliss, 1975; Quinney, 1973; Krisberg, 1975; Taylor et al., 1973): Institutions within the state, including police, courts, prison are the tools of the capitalists. Some claim that capitalists are immune from legal sanctions (Quinney 1975; Chambliss 1975). The capitalists not only make the law but control those who enforce it. Dominant elite use the state’s law and criminal justice system to criminalize those threatening or challenging their position in the social order. • Criticism: Laws are often passed that restrict the interests of the capitalist class, such as anticombines legislation. Powerful individuals have advantages, but the law does not serve the Critical Theory (Hackler, Ch.9 – pp.139-140,142-143) • Structural Marxism (Spitzer, 1975; Greenberg, 1981; Chambliss and Seidman, 1982, Young, 1981; Nicos Poulantzas, 1973): state acts on behalf of capital to ensure the long-term interests of capital. Thus, laws that favor workers, such as the length of the working day and health and safety regulation, also protect the long-term interest of capitalistic enterprise. > Governments institute laws that are not for the benefit of corporations • Smandych (1985) notes, for example, that Canadian anticombines legislation arose in the late 19th century to mediate the conflicts between large capitalistic forces, which were attempting to limit competition, and small businesses, which were trying to maintain competition. • The police, courts, and other systems of the state need to maintain the appearance of neutrality in order to win acceptance of the dominated classes. The state and laws protect capitalism. It is the behavior of those threatening the overall system of capitalism that is criminalized. Social Learning Theory and Social Control Theory (Hackler, Ch.7 - pp.98, 101- 102) • Sutherland’s social learning/differential association theory: Corporate leaders commit crime as a result of learning from others techniques of violating the law. Powerful members of the economic and political elite learn their behavior in interaction with others who favor “bending” certain rules. > Meet someone who teaches/encourages you how to do it and get away with it; if you are not taught how, you won’t do it • John Hagan’s (1981, 1995) social control theory: Economic and political elites are free of the ties that restrain most of us from criminal behavior; they feel that they are above the law; they have fewer ties to ordinary individuals. Inner restraints, such as morality seem to be lacking, and external control mechanisms seem to be weak because they perceive clear rewards and low Hackler: Corporate CrNeutralization theory – Chapter 9, Critical theory – Chapter 10olk: 2ational Choice theory – Chapter 5, risk.> Rich people commit crime because inner restraints such as morality seems to be lacking; believe external control methods are weak (cost benefit analysis) Government Practices That Increase Corporate Crime • Governments can make a difference in pollution levels: Under the NDP, Ontario’s Ministry of the Environment was one of the most effective agencies in Canada. After the PC took office, annual charges decreased, prosecutions and fines dropped. Reduction of these inspections came to light after the water pollution disaster in Walkerton, Ontario, where in May 2000 contaminated water killed six people and injured hundreds more. • Governments often argue that they must reduce environmental enforcement to save costs. In the long run, however, contaminated rivers, air, and soil lead to greater costs, such as those related to health. • Government neglect increases corporate crime. > Can’t regulate corporations don’t have enough $$ to begin with > Cause of cancer = environmental – exactly what corporations are doing to our environment The Abuse of Power: Occupational Versus Organizational (Corporate) Crime **** Know differences between white collar crimes (occupational, organizational, white collar) • Occupational crimes: White-collar crime committed by an individual or groups of individuals exclusively for personal gain. > For your own benefit • Organizational crimes (corporate crimes): White-collar crimes committed with the support and encouragement of organization and intended to advance the goals of that organization as well as those individuals involved. > Usually more people involved; doing it to boost profits in corporation • White-collar crime: Involves people who are in a position of power or trust and includes both occupational and organizational crime. > Includes both occupational and organizational crime • Corporations create pressures on executives and managers to “cut corners” to achieve organizational goals for which they will be rewarded. Often, middle managers feel that they have few options. There is an absence of cultural beliefs to discourage corporate criminality and too few controlling mechanisms. > Managers say they are following orders; organizational environment cause them to do it • Clinard and Yeager (1980): Oil, auto, and pharmaceutical industries violate the law more frequently than do other industries. > Organizations that violate laws the most Examples of Corporate Crimes > Biggest corporal scandals in the last few decades 1. America’s Accounting Scandals – Enron: • 7TH largest US company • Primarily involved in trading gas and electricity • Investors lost $63 billion • Used illegal accounting methods to make it appear that profits increasing • Culture of greed within Enron: Executives took large payouts while company was failing Hackler: Corporate CrNeutralization theory – Chapter 9, Critical theory – Chapter 10olk:3Rational Choice theory – Chapter 5, • Arthur Anderson Accounting Firm: Ignored violations because it wanted Enron’s consulting contracts > Figured out how to manipulate numbers to make it look as if they were making a profit • Several Canadian banks financed Enron > CIBC was one of the biggest supporters Examples of Corporate Crimes 2. America’s Accounting Scandals - Worldcom: • Largest U.S. long distance phone company – investors lost $175 billion • Inflated profits by delaying the writing off of expenses • Arthur Anderson were again the accountants: Went out of business after the scandals > Arthur Anderson – declared bankruptcy and changed their names Examples of Corporate Crimes 3. Canadian Scandal - 1992 Westray Mine Explosion: • 26 killed in Nova Scotia mine explosion • Inquiry conclusion: Not an accident but the result of managerial incompetence and negligence •
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