[Together with Andrew Bushnell this article originally appeared in IPA Review]
‘White collar crime’ didn’t exist until 1940. That was the year American sociologist Edwin Sutherland dreamt up the idea that the ‘suave and deceptive’ upper reaches of society, insulated by their class privilege, were getting away with untold criminality, and so he set out to draw attention to their offending. The link between crime and white collars was expressly designed to stigmatise the wealthy and the professional classes and raise the class consciousness of workers, whose own criminality was relatively overstated and over-punished.
Since the global financial crisis, the left has shown renewed determination to upend the principle of equality before the law and single-out white collar professionals. In the past year we have seen the bosses of Australia’s major banks paraded before Parliament, while the Greens mounted an unlikely tough-on-crime campaign against the financial industry, and a Senate inquiry was launched into white collar crime penalties culminating in the ridiculously-titled report Lifting the Fear and Suppressing the Greed.
This trend is exacerbated by the growing fascination with identity politics, which expands the notion of class privilege into other social categories supposedly defined by power disparities, such as race and gender. White collar crime is part of a movement that sees the equal administration of justice as a cruel hoax perpetrated by the privileged to maintain their social advantages.
John S. Baker Jr of the Heritage Foundation has argued that the idea of white collar crime is an attempt to ‘remake the very definition of crime’ based on ‘who the perpetrator (is), rather than what that person (has) done’. But why should we care? White collar crime hysteria is a symbol of a dangerous shift in our society’s conception of justice. In the battle over white collar crime, the concept of equality before the law is at stake.
WHAT IS WHITE COLLAR CRIME?
There is nothing special about the crimes committed by those in white collars, nor the people themselves. This has made defining white collar crime difficult. It is a term of art, not science. Reflecting its political origins, the most common definitions are tendentious and vague.
White collar crime is typically defined as crime committed by executives and staff in the course of their work at businesses and corporations. Money is usually the subject of or the motive for the crime. Commonly-cited examples of white collar crime include fraud, misappropriation and insider trading. Which is to say, white collar crime is usually a kind of theft.
The justification for treating white collar crime as a special type of offending is that white collar criminals supposedly wield disproportionate and unfair power in society. Without this special attention, these people would simply not have to heed the law. Indeed, Sutherland, with Donald Cressy, even went as far as arguing that ‘the people of the business world are probably more criminalistic than the people of the slums’.
Moreover, the common references to ‘greed’ made by politicians when discussing white collar crime give an indication of the moral grandstanding and distrust of material prosperity inherent in the concept. Drawing special attention to the crimes of professionals is simply an outlet for anti-market sentiment.
PUNISHING WHITE COLLAR CRIME
None of the above should be taken as a denial that white collar professionals commit crime. Rather, white collar criminals should be treated the same way as other non-violent offenders, particularly property crimes such as theft. Increasingly this means finding punishments other than prison.
The unique function of prison is to isolate dangerous individuals from the community. For violent criminals, prison is the only punishment that will keep the community safe.
Many non-violent criminals, however, can be punished outside prison through a combination of community service, home detention, fines and restitution orders. For so-called white collar criminals, disgorgement of ill-gotten gains and professional disqualification should also be imposed. These punishments avoid the high cost of prison, which runs to $110,000 per prisoner per year, and the known negative correlation between imprisonment and reoffending. This would also put the victim back at the centre of proceedings by emphasising the need for the offender to restore the victim and give back to the community.
Sentencing is bound by the principle of proportionality: the punishment must fit the crime. For non-violent, non-recidivist offenders, prison is a disproportionate punishment, often far more severe than the harm caused by the offence. Applying this logic to white collar criminals is not letting them ‘buy their way out of prison’, or giving them special treatment. It is merely to reassert the basic principle that like crimes should be treated alike.
WHAT ABOUT DETERRENCE?
Many campaigners against white collar crime concede the above principle and yet still argue for special treatment for white collar criminals. They claim that because they are usually affluent, white collar criminals will not feel those alternative punishments as harshly as other criminals. With their luxurious lifestyles, white collar criminals see home detention and fines as joke punishments and only respond to the threat of prison.
But punishment attaches to the crime, not the criminal. It is a response to the harm caused, especially in cases like theft where that harm is readily quantifiable. It does not matter to a victim whether his television was stolen by a rich person or a poor person; the effect is the same either way. Similarly, it does not matter whether it was a television that was stolen or information about an upcoming trade. The principle is the same.
Sentencing either seeks to achieve ‘specific’ or ‘general’ deterrence. Specific deterrence deters the offender from committing another crime. For white collar criminals, this can best be achieved by stripping them of their professional qualifications and restricting their ability to work in certain fields.
General deterrence, on the other hand, means imposing a severe punishment to signal to others. This is a weak and illiberal justification for stronger sentencing because it punishes the offender for the potential crimes of others.
If we open the door to choosing punishments based on the supposed level of privilege of the convicted criminal, the potential for abuse is endless. When class is relevant to punishment, then so too are race, gender, age, intelligence and every other human characteristic correlated in some way with advantage or disadvantage.
We can deter white collar crime without sacrificing our traditional conception of justice. As was noted by the Senate Committee’s report on white collar penalties, restitution and disgorgement remove the financial incentive for white collar crime. Professional disqualification and disgrace are strong disincentives for offending.
Restitution also has the benefit of placing the victim’s interests at the centre of proceedings. Existing sentencing discounts for pleading guilty should be extended to take into consideration good faith efforts to make victims whole. And, conversely, efforts by criminals to hide the proceeds of their crimes—say, in overseas accounts—should be considered aggravating and lead to harsher punishment.
The positive effect that seeing justice done has on victims should not be underestimated. For many victims of white collar crime, a prison sentence for the offender provides a strong sense of closure and a sense that society cares about the wrongs that were done to them. For this reason, non-prison punishments must be designed to be felt by criminals as punishments, and not merely as a slap on the wrist. This is not special treatment for white collar criminals. It’s questioning how we treat non-violent offending in general. Society’s right to exact retribution on criminals is limited by the principle of proportionality, even where we might find them particularly odious.
A QUESTION OF FAIRNESS
Equality before the law is fundamental to justice. It is unacceptable to punish someone differently for his race, gender or any other personal characteristic, and this includes his profession or purported membership of a particular class of society. The same principles that apply to sentencing theft and property crime should apply to white collar criminals.
The idea that white collar crime should be carved out as a special category within the criminal law because those crimes are fundamentally different is illiberal.
‘Creating a climate of fear,’ as was noted in the Greens’ additional comments on the recent white collar crime Senate inquiry, goes no way to achieving the fundamental aim of our criminal justice system: ensuring community safety.
The demand for harsher penalties for white collar crime is rooted in leftist class warfare. The definition of white collar crime and its modern incarnation of anti-banker rhetoric is nothing less than contempt for the free market and a disregard for equality. It is part of a broader attempt to bolster the arbitrary power of the administrative state at the expense of individual rights, and ought to be forcefully rejected.