The Crimes of the Economy

A Criminological Analysis of Economic Thought

Vincenzo Ruggiero

• Publisher: Routledge
• Year: 2013
• Topic: Social Sciences
• eBook ISBN:
  9781135926922
• Subtopic: Sociology
• Index: Social Sciences

Economists have often paid visits to the field of criminology, examining the rational logic of offending. When economists examine criminal activity, they imply that offenders should be treated like any other social actor making rational choices.

In The Crimes of the Economy, Vincenzo Ruggiero turns the tables by examining a variety of economic schools of thought from a criminological perspective. Each one of these schools, he argues, justifies or even encourages harm produced by economic initiative. He investigates – among others – John Locke's notion of private property, Mercantilism, the Physiocrats and Malthus, and the arguments of Adam Smith, Marshall, Keynes and neoliberalism. In each of these, the author identifies the potential justification of different forms of 'crimes of the economy' and victimisation.

This book re-examines the history of economic thought, assessing it as the history of a discipline which, while attempting to gain scientific status, in reality seeks to make the social harm caused by economics acceptable. The book will be interesting and relevant to students and scholars of social theory, criminology, economics, philosophy and politics.

1 Introduction

 

 

 

Economics may be defined as the science which studies human behaviour facing scarcity (Robbins, 1935), or as the study of mankind engaged in the ordinary business of life (Marshall, 1961). According to an allegedly more precise definition, economics deals with the production, distribution and consumption of wealth and how these are organized in order to satisfy human wants (Backhouse, 2002). Political economy, in Adam Smith (1976: 123), possesses two distinct objects: first, to provide ‘a plentiful revenue of subsistence for the people’; second, to supply the state ‘with a revenue sufficient for the public services’. Political economy, therefore, aims at enriching ‘both the people and the sovereign’.

Scarcity and wants, to be sure, mobilize economic initiative, but may also be created or augmented by it. Some initiatives, for example, may reduce scarcity in one place and for some groups of people, while increasing it in others and for other groups. As for ‘want’, this does not seem to be the trigger of economic initiative which, by contrast, constantly generates new ‘wants’ while following the very logic of ‘development’ as commonly understood in conventional circles. This notwithstanding, the history of economics is also the history of its own efforts to be accepted in the sensibility of all, including those who are far from benefiting from its ventures. The victims of the economy, for example, will have to be persuaded that their predicament is transitory and that no better system of achieving wealth and wellbeing is available. The most ambitious and reckless ‘persuader’, in this respect, is economic thought itself, which contains precepts for human action, ideas of what constitutes merit, along with notions of deserved success and failure. It also, inevitably, encapsulates justifications for acts that, in determinate contexts, would be regarded as unorthodox or criminal.

This book is an analysis of economic thought and the ways in which it can be read criminologically, namely of how specific schools of thought interpret, explain or justify harm produced by economic initiative.

Economists have often paid visits to the field of criminology, examining the rational logic of offending. In a defence of his work on crime as choice, Nobel Prize winner Gary Becker remarked that one should not be repelled by the idea that an offender can be treated like any other homo oeconomicus, and reminded readers that two important contributors to criminology during the eighteenth and nineteenth centuries, Beccaria and Bentham, explicitly applied an economic calculus. This book returns the visit: it is an excursion into the realm of classical economic thought, and is meant to ascertain whether the traces of some familiar criminological concepts can be found there, left for us as a legacy by important, often neglected, ancestors.

The classics examined in this volume are perhaps the giant oeuvres shaping the logic, the rationale and the philosophy of economic initiative. Such oeuvres strive to rid the prevailing culture of the time of the traditional obstacles and the moral restrictions surrounding enterprise and its development. In brief, the works examined here provide a theoretical behavioural framework which was and remains inescapable for entrepreneurial activity, assigning to those involved predictable and mutually binding roles while encouraging, or prescribing, precise conduct to all. Such a framework contains boundaries which attempt to separate acceptable practices from unorthodox ones, thus indirectly formulating tentative definitions of crime and its control.

Criminological analysis may immensely benefit from an excavation into other disciplines, particularly economics, for its concern about the creation and acquisition of wealth, individual and collective behaviour in the marketplace, the legitimacy of certain conducts as opposed to others, and ultimately the circumstances under which competition and enterprise may cause human and social harm. As a premise, this book explains why conventional categories of what constitutes crime are insufficient to deal with the subject matter. As Sutherland realized, research on the crimes of the powerful (and of the economy) is difficult without a willingness to expand one's sample well beyond the legal definitions of crime. Social harm, in this book, is caused by a series of interlaced conducts that are bad in themselves and that are bad because they are prohibited by law, namely they are mala in se and mala prohibita at the same time.

While appealing to the law of nature, economics, in fact, seems to imply that there is no such law. Is there an objective distinction between acceptable and unacceptable conduct which is universally valid and able to tell us, in all epochs and societies, that one behaviour is appropriate and another is not? In general, the existence of these moral chromosomes in homo sapiens is described as natural or rational morality. This implies that those who are unable to recognize a natural and rational law are led to live against nature and against reason. This book examines how economic thought encourages behaviours against nature and against reason. As Pascal argued, we would all endorse the notion that justice resides in natural laws, if we could find at least one such law which is universal. The study of economic thought shows how economics, while purportedly attempting to identify universal laws of human conduct, combines interpretation with justification, thus rationalizing or neutralizing the social harm it causes. In the following chapters it will be suggested that each economic school of thought justifies or even encourages the production of social harm, here also described as ‘crimes of the economy’.

As will be explained throughout the book, the crimes of the economy include all those conducts causing harm and generating victims which belie the notion of economic initiative as a human and social effort devoted to the collective wellbeing. Harms and victims of the economy may be regarded as ‘externalities’, a form of collateral damage caused by production and exchange. In Aristotle, however, they constitute the central curse of ‘chrema-tistic’, namely the activities which transcend the satisfaction of primary needs. How did we come to supersede Aristotle's concerns?

Stripping the enemy's humanity through the use of subhuman categories is an important precondition for invasions and subjugations of territories, as well as for the annihilation of the peoples inhabiting them. Chapter 2 (‘Humans and venison’) focuses on how colonial racism was hampered by religious and philosophical constraints, and by the nascent humanist thought that could have impeded the whole colonization project. Only a new field of knowledge could establish a distance between universal morality and private conduct, a new discipline closed on its own reasoning, auto-referential, aloof from religious and ethical preoccupations. The inhabitants of the new lands had to be transformed into offenders or outright enemies in a war they never declared. The ‘science’ of economics had yet to take shape, however, the key concept of ‘property’ had already been formulated, with John Locke interpreting the role of harbinger in inscribing the rules of economic behaviour within the laws of nature and God. This chapter links Locke's thought to the genocide perpetrated in the Americas.

Contemporary corporations differ substantially from those originally established in seventeenth-century England. While the former, in the view of Bakan (2004), display a pathological pursuit for private profit and power, the latter were conceived as public institution whose purpose was to serve national interests and advance the public good. Initially, they were formed for public purposes such as building canals and transporting water. The Hudson's Bay Company and the East India Company, however, were chartered by the crown to run state monopolies in the colonies. The brief history of the East India Company provided in Chapter 3 (‘Victims of progress’) is followed by the economic reasoning of the school of thought known as Mercantilism, which made its exploits acceptable and the victimization provoked justifiable.

The Physiocrats adopted the self-definition of ‘the economists’, implying that their thought incorporated all there was to know about economics as an area of knowledge. Their tables resembled astronomical almanacs which predicted the movement of wealth rather than that of celestial bodies. Chapter 4 (‘Rural philosophy and natural law’) discusses the contribution of Physiocracy to the enclosure of public land and its justification of the concentration of rural property. The specific crimes of the economy enjoying the rationalization of the Physiocrats victimized independent farmers who were suddenly deprived of customary rights and, therefore, of their means of subsistence. Physiocracy, while perfecting the artificial creation of the ‘science’ of economics, de-humanized human activity, turning harm into the inevitable outcome of development.

Malthus described the notions of universal justice advocated by Paine in ‘Rights of Man’ as the cause of ‘great mischief among the lower and middling classes of people in the country’ (Paine 2000: 37). Paine's tax proposals were deemed not only ruinous, but conducive to tyranny, aided by a mob composed of the ‘redundant population’ – of all monsters the most fatal to freedom. Rights? Madness! Chapter 5 (‘From “a modest proposal” to eugenics’) analyses the connection between Malthus' thought and the victimization of ‘redundant populations’, an analysis complemented with a discussion of eugenics and the concept of the underclass. This concept, as initially postulated by Malthus, chimed with the sarcastic ‘modest proposal’ put forward by Jonathan Swift, who suggested solving the problem of poverty and malnutrition in Ireland through the use of children as foodstuff.

Adam Smith dealt directly with notions such as transgression, deviance, conventional criminality, as well as crimes committed by the elite. Chapter 6 (‘Invisible hand and visible injury’) addresses his thought around free trade, perfect and imperfect rights, enterprise and state intervention. His theory that self-interest ultimately serves the public good is unravelled and shown to provide an unwitting justification for a variety of white-collar offences. His warning that ‘infant industries’ should be aided by the state is seen as clashing with the philosophy of free enterprise, a philosophy all too often discarded even by those who officially profess their faith in it. ‘Freedom’ of enterprise, in this respect, is described as ‘freedom’ to use the state to one's advantage. Finally, his suggestion that unemployment caused by economic development is eventually destined to be neutralized by new ascending productive sectors is juxtaposed to the individual and social injuries caused by inactivity.

David Ricardo, in one of his frequently debated arguments, wrote that wages are ‘that price which is necessary to enable the labourers, one with another, to subsist and to perpetuate their race, without either increase or diminution’ (Ricardo 1992: 58). This thought was to enter into a history extending far beyond formal economics; it established that those who worked were meant to be poor and were not to be rescued from their poverty by a compassionate state or employer, or through trade unions or by other action of their own. Chapter 7 (‘Value, risk and deviant innovation’) reads Ricardo 's thought criminologically, examining the harm it continues to cause, particularly his theory of the decline of the rate of profit. The latter, it is argued, may be interpreted as an incitement to entrepreneurs to find new, unorthodox ways of reversing that decline. Examples are provided, while his views on risk and innovation are compared with similar notions developed in the sociology of deviance and in the work of Max Weber. Examples and case studies will show that we are faced with ambiguous concepts allowing for the analysis of both ‘economic development’ and ‘crime’ as discrete spheres of human activity.

Marshall's marginal utility theory lends itself to interesting interpretations in terms of the illegality it rationalizes. His idea of rareté is, in this respect, crucial. A good, he submitted, must not only be useful but also scarce. This, in his view, is the role of marginal, not general, utility. It is not the total satisfaction from the possession and use of a product (or service) that gives its value; it is the satisfaction or enjoyment – the utility – from the last and least wanted addition to one's consumption that so serves. The last available scrap of food in a famine is exceedingly valuable and would command a worthy price. Similarly, the utility of any good or service diminishes, all else equal, with increasing availability. Applying this principle to wages, Marshall states that these correspond to the money that the last, marginal worker, would accept. Chapter 8 (‘Marginal utility and the hidden economy’) links these ideas to the harm generated by the hidden economy, which hits clandestine workers and trafficked human beings.

Say's law held that out of the production of goods came an effective (that is to say, actually expended) aggregate of demand sufficient to purchase the total supply of goods. No more, no less. This law survived in triumph until the Great Depression. Then it was repealed by John Maynard Keynes, who held and influentially argued that there could be (and that there then was) a shortage of demand: prices might not adjust to the reduced flow of demand, goods generally would go unsold, and those who made them would be unemployed. Corrective action could and should be taken by the government through borrowing and spending to supplement the flow of demand. Chapter 9 (‘Socialism for the rich’) examines deviant behaviour by entrepreneurs and corporations who operate in the logic of ‘reversed Keynesism’, appropriating public resources that should help demand for their own personal accumulation or for yet further increases in supply.

Neoliberal ideology posits that a 2–3 point growth per year is indispensable, even for societies which have reached a satisfying degree of wellbeing, to continue to enjoy such wellbeing. A corresponding increase in consumption, inevitably, has to be stimulated. Whether permanent growth manifests dysfunctional aspects, for humans and their environment, should not concern us, because, so go other axioms: a) markets are perfectly able to self-regulate; b) capital flows without hesitation where its utility is maximum; c) risks are always calculable. As for the enormous mismatch between technological and economic potentials and the actual life conditions of the population of the earth, the ‘trickle down’ principle will soon display its healing capacity. Little attention is given to the growing signs that the use of natural resources implied by an economic model based on infinite development is unsustainable, and that the time left to change it is shrinking dramatically. Chapter 10 (‘Neoliberalism and ecocide’) links neoliberal economic thought with a series of social and environmental harms.

In a statement made by Klaus von Clausewitz, war may well be compared to art, but more accurately should be equated to commerce, which is also a ruthless conflict of human interests. The difference is that in business there is no peace treaty and its calendar knows no Armistice Day. Management manuals and business schools imitate the language of war, with their educational jargon drawing on mottos and concepts derived from von Clausewitz and Sun Tzu: a manager is required to be like a samurai, small firms are advised to wage guerrilla marketing, business is urged to take inspiration from NATO's definition of command. Chapter 11 (‘Business, war and crime’) discusses the similarities between business and war, not so much in metaphorical terms, but as human activities adopting the same conceptual framework and typology of thought. The philosophical proximity of business schools and military academies could not be more manifest in recent international violent conflicts, which are chosen as case studies to corroborate this apparently audacious comparison.

In a retrospective overview, questions are posed as to how and under what material and ideological circumstances economic thought managed to ‘evolve’ from Aristotle's chrematistic to an oblique appreciation of business as bellicose activity. The questions revolve around the stages observed by the history of money, the trajectory followed by the concept of freedom and other fantasies underpinning the justifications of social injustice and harm generated by the ‘science’ of economics. In the ‘Conclusion’ an attempt will be made to answer these questions.

2 Humans and venison

When Kurtz arrives at some place with a farcical name, he witnesses the spectacle of men and women engaged in a merry dance of death, in a still and earthy atmosphere as of an overheated catacomb. Death streams in and out of rivers, ‘whose banks were rotting into mud, whose waters, thickened into slime, invaded the contorted mangroves, that seemed to writhe at us in the extremity of an impotent despair’ (Conrad, 1999: 25). Heart of Darkness is replete with nightmares, with black shapes crouched in all the attitudes of abandonment and pain. These shapes are dying slowly: they are not enemies or criminals, but just black shadows of disease and starvation.

The oppressive wonder felt by Kurtz returns each time we look at the spread of ‘civilisation’, and at how ‘the colonisation of Africa, Asia and the New World incited some of the worst genocides of the eighteenth to late twentieth centuries’ (Scheper-Hughes and Bourgois, 2004: 8). A couple of decades after Columbus's first landing in the Caribbean, nearly eight million people – those Columbus chose to call Indians – had been killed by violence, disease or both. ‘Within no more than a handful of generations following their first encounters with Europeans, the vast majority of the Western Hemisphere's native peoples had been exterminated’ (Stannard, 1992: x). The ‘discovery’ of the Americas brought a depopulation rate between 90 and 98 per cent.

W...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• 1 Introduction
• 2 Humans and venison
• 3 Victims of progress
• 4 Rural philosophy and natural law
• 5 From a ‘modest proposal’ to eugenics
• 6 Invisible hand and visible injury
• 7 Value, risk and deviant innovation
• 8 Marginal utility and the hidden economy
• 9 Socialism for the rich
• 10 Neoliberalism and ecocide
• 11 Business, war and crime
• 12 Conclusion
• Reference
• Index