26/01/18
Steve Tombs in a recent tweet notes that ‘crime is routine and ubiquitous in neo-liberal capitalism’. This article which aims to focus on corporate crime intends to take Tombs’ observation one step further using the work of Joel Bakan (embodied in his book and documentary film ‘The Corporation’) and to argue that the harms to people and the environment caused by corporations and the crimes they frequently commit are paradoxically the result of a legal system that empowers corporations to relentlessly pursue profit and wealth regardless of the consequences.
Bakan points out that over the last 150 years the corporation has risen from relative obscurity to become the world’s dominant economic institution. He observes that ‘today corporations govern our lives. They determine what we eat, what we watch, what we wear, where we work and what we do. We are inescapably surrounded by their culture, iconography, and ideology. And, like the church and monarchy in other times, they posture as infallible and omnipotent, glorifying themselves in imposing buildings and elaborate displays. Increasingly, corporations dictate the decisions of their supposed overseers in government and control domains of society once firmly embedded within the public sphere’(page 5).
A key premise of Bakan’s argument is that corporations are created by law and that the law sets out their primary purpose which is to pursue relentlessly and without exception, its own self-interest regardless of the often harmful consequences it might cause to others. The law dictates what their directors and managers can do, what they cannot do and what they must do. It compels executives to prioritize the interests of their companies above all other considerations – to increase the wealth of shareholders by maximising profit and therefore share value - and shields shareholders from taking any responsibility – moral or financial – for the decisions taken by corporate executives . The law also forbids corporate actions which promote social responsibility whether it is to assist workers, improve the environment or to help consumers to save money. This corporate logic means that certain values get emphasised whilst others get de-emphasised. Consequently moral concerns are at best marginal. Corporations and the culture they create do more than just stifle good deeds- they nurture, and often demand bad ones.
Bakan argues that as a result of these legal demands, the corporation is a pathological institution. Greed and moral indifference define the culture of the corporate world whereas maximising profit using any means has become the religion of most transnational corporations
The late Anita Roddick, founder of The Body Shop observed that corporate culture forces decent people who work for corporations to do indecent things. The quest to maximise profits means that everything is legitimate in pursuit of that goal, for example, using child labour, setting up sweatshops, bribing government officials, despoiling the environment and evading tax. Roddick argued that corporate culture often stops executives, managers and directors from having a sense of empathy with the human condition. Bakan too observes that many of the attitudes and actions adopted by directors and senior executives of corporations can be classed as psychopathic because they are aimed at destroying the competition or to beat them in any way possible. Using psychologal criteria Bakan argues that corporations often exhibit seven key features of the psychopathic personality. Firstly, corporations are singularly self-interested and unable to feel genuine concern for others in any context. Secondly, the corporation is irresponsible- in the attempt to satisfy the corporate goal, everybody else is put at risk. Thirdly, corporations attempt to manipulate society’s opinion of them through the use of public relations, advertising and branding. Fourthly, corporations are grandiose always insisting that ‘we’re number one, the best’. Fifthly, corporations demonstrate lack of empathy and anti-social tendencies – they do not concern themselves with their victims. Sixthly, they often refuse to accept responsibility for their actions and are unable to feel remorse – if they get caught, they pay big fines which are often trivial compared with the profits they make. Finally , they hardly ever feel any obligation to the society from which they originate. Their increasingly global role means that transnational corporations rarely consider the interests of the societies that they operate in.
Bakan observes that human psychopaths are notorious for their ability to use charm as a mask to hide their dangerous self-obsessed personalities. He argues that corporations’ version of this ‘charm’ is to present themselves as socially responsible, as compassionate and concerned about others when, in practice, they lack the ability to care about anyone or anything except themselves. Bakan argues that as a psychopathic creature the corporation can neither recognise nor act upon moral reasons to refrain from harming others. Nothing in its legal make-up limits what it can do to others in pursuit of its selfish ends. Only pragmatic concern for its own interests and too rarely, the laws of the land, constrain the corporation’s predatory instincts and often that is not enough to stop it from destroying lives, damaging communities and endangering the planet as a whole. Far less exceptional in the world of the corporation are the routine and regular harms caused to others –workers, consumers, communities, the environment - by the psychopathic tendencies of corporations. These ‘harms’ are often written off by corporations as inevitable and acceptable ‘externalities’ (the negative effect of a corporate action which is likely to result in an additional cost). Bakan argues that corporations often approach most of their activities using a form of cost-benefit analysis. For example, if a corporate activity results in the breaking of a local law and a fine, corporate executives using cost-benefit analysis may decide that the profit to be made far outweighs the cost of their action in terms of the levied fine. Similarly corporate action that results in the death of consumers is approached in the same way as executives may decide that the insurance pay-outs to the relatives of the deceased may be less costly than fixing the problem that killed them. The following case study is a rather disturbing example of ‘externalities’ and cost-benefit analysis in practice;
In 1993 Patricia Anderson was coming home from midnight mass with her 4 children in the backseat of her Chevrolet Malibu car, the youngest six years old and the eldest fifteen. She stopped at a red light and as she waited for it to change, a car slammed into the back of her car causing it to burst into flames. Anderson and her children suffered horrible and disfiguring second- and third- degree burns (the driver of the other car, who was drunk at the time, got away with minor injuries). Three of the children were burned over sixty per cent of their bodies and one of them had to have her hand amputated. Anderson sued General Motors (GM) blaming the company for the explosion because the fuel tank had been insufficiently protected from the impact of the collision.
After a lengthy trial the jury found that GM had dangerously positioned the fuel tank to save costs. The judge concluded that ‘the court finds that clear and convincing evidence demonstrated that the defendant’s fuel tank was placed behind the axle of the Malibu in order to maximise profits and in disregard of public safety. The fuel tank on Patricia Anderson’s vehicle was eleven inches from the rear bumper whereas the fuel tank on the previous Malibu model had been twenty inches from the rear bumper. A 1969 GM company directive had recommended that fuel tanks be positioned at least seventeen inches from the rear bumper and that a metal brace should separate the fuel tank from the rear of the car.
The evidence showed that GM been aware of the possibility of fuel-fed fires when it had designed the Malibu and other models. When GM started planning the model of Malibu driven by Patricia Anderson, it had asked an engineer to analyse fuel-fed fires in GM vehicles. He submitted a report titled’ Value Analysis of Auto Fuel Fed Fire Related Fatalities’ which concluded that the cost to GM of ensuring that fuel tanks did not explode in crashes was $8.59 per automobile whilst the cost of a legal damages awarded to victims of such explosions would only cost GM $2.40 per automobile. In other words, it was cheaper for GM to let people die and be burned than it was to recall every vehicle back to the factory so the problem could be fixed.
Both the judge and jury indicated that GM’s behaviour, especially the cost-benefit analysis the corporation had carried out, was morally reprehensible and against applicable laws because it had put profit before public safety. It awarded compensatory damages to Anderson and her children of $4.8 billion, although this was later reduced to $1.2 billion on appeal. However, this still worked out cheaper for GM than calling back all models of the Malibu to the factory in order to make them structurally safe for all who had bought them.
The corporation as psychopathic personality is programmed to exploit others for profit. Consequently, corporations regard workers across the globe who work in dreadful conditions for shocking wages as not human beings so much as human resources. To the morally blind corporation they are tools to generate as much profit as possible – a tool to be treated just as any other resource – to be used and thrown away. Bakan and Naomi Klein argue that the corporation dehumanises workers. Like the psychopath it resembles, the corporation feels no moral obligation to obey the law. Only people have moral obligations. Corporations only obey the law if it is cost-effective. Often it is more profitable to pay the fines levied if they are found guilty of breaking the law. Fines are regarded as ‘additional costs’ and do not act as deterrents. The corporation once convicted and fined will simply learn how to cover its tracks better in the future.

Corporations as institutional psychopaths do not allow obstacles to get in the way of profit. They often use political donations and bribes to get around laws and regulations. Furthermore, there is evidence that corporations have manipulated governments, particularly the US government, to use the military on their behalf. General Smedley Butler, who was a United States Marine Corps Major-General openly admitted this relationship between corporations and goverments when he said;
‘I spent 33 years…being a high class muscle man for Big Business and the bankers. In short, I was a racketeer for capitalism. I helped purify Nicaragua for the international bankers, the Brown Brothers in 1909-12. I helped Mexico to be safe for American oil interests in 1916. I brought light to the Dominican Republic for American sugar interests in 1916. I helped make Haiti and Cuba a decent place for American bankers to collect revenue in. I helped in the rape of half-a-dozen Central American republics for the benefit of Wall Street. In China I helped to see to it that Standard Oil was unmolested. I had a swell racket. I was rewarded with honours, medals , promotions. I might have given Al Capone a few hints. The best he could do was to operate a racket in three cities. The Marines operated on three continents’.
Global corporations are now so powerful that they can dictate the economic policies of governments. In fact, governments often compete with each other to persuade corporations that they have the most business-friendly policies and taxes. Furthermore global corporations have great influence over non-government trade organisations such as the World Trade Organisation (WTO) which has sought to deregulate and remove trade restrictions such as tariffs. Corporate power is so complete today that the WTO now demands that nations change or repeal laws designed to protect environmental, consumer or other public interests. Moreover, corporations have become sufficiently powerful to pose a threat to governments and certainly have funded the military overthrow of democratically elected regimes, for example, the Allende government of Chile in 1974.
Bakan concludes that corporations now govern society perhaps more than governments do but the corporation is now starting to attract mistrust, fear and demands for accountability from an increasingly anxious public as seen in the anti-globalisation movement, UK Uncut actions against corporate tax evaders such as Vodaphone and Starbucks and the Occupy movement which campaigns against social and economic inequality and the lack of "real democracy" around the world, and especially the disproportionate influence of the banking corporations. However Bakan is not optimistic about the possibility of controlling the activities of corporations and thereby reducing the harms they do or the crimes they commit. Bakan notes that ultimately we cannot rely on governments or the media to tell corporations what to do. Instead he argues that consumers need to be persuaded to make their decisions to consume particular corporate brands with social, moral and environmental concerns in mind but he is not too hopeful about the success of this strategy because most of the world’s population is too poor to participate in the consumer economy.
Bakan concludes that the power of corporations, the harms they do to the world’s environment and the vast array of crimes they commit are likely to continue to increase as we see the increasing normalisation and acceptance of commercialisation in virtually every area of social life. Increasingly we are told commercial potential is the measure of all value and that corporations should be free to exploit anything and anybody for profit. In a world where anything and anyone can be manipulated and exploited for profit, everything and everyone eventually will be.

Whilst writing this article I put together a list of corporate crimes which, whether you are a teacher or a student are worth investigating using the internet. The South Sea Company bubble scandal of 1720 was probably the first recorded instance of corporate fraud. In the 20th century, the following are worth investigating; the 1911 Triangle Shirtwaist Factory, New York disaster; the 1960s thalidomide scandal; the sinking of the oil tanker ‘Torrey Canyon’ off the coast of Cornwall in 1971; the overthrow of the Allende government in Chile in 1974; the 1970s scandal in which Nestle were accused of harming the health of babies and infants in developing countries by aggressively marketing their baby-milk formula; the Bhopal chemical plant leak disaster of 1984; the deaths of 193 passengers and crew as a result of the sinking of the cross-Channel ferry, ‘The Herald of Free Enterprise’ in 1987; the ‘Piper Alpha’ oil platform fire disaster of 1988; the ‘Exxon Valdez’ oil spill in 1989; the Enron shares and accounting scandal of 2001; the 2001 Nike exploitation of child labour in Central American sweatshops; the BP Prudhoe Bay, Canada, oil spill of 2006; in 2007 British Aerospace Systems paid bribes totalling £1 billion to a Saudi prince to ensure an arms contract with Saudi Arabia; the 2008 sub-prime banking crisis; the explosion and subsequent oil spill from BP’s DeepWater Horizon oil rig in the Gulf of Mexico in 2010; the Rana Plaza Factory, Bangladesh disaster of 2013; the RBS/Nat West money-laundering scandal of 2014; the Volkswagen emissions scandal of 2015; the Panama Papers (2016) and the Paradise Papers (2017) were leaked documents that showed widespread tax evasion by corporations and wealthy individuals; the collapse of Carillion in 2018.
I also recommend the following books – McMafia and Dark Market by Misha Glenny and The Shadow World: Inside the Global Arms Trade by Andrew Feinstein. The following films too are worth watching; The Corporation, Inside Job, Enron; The Smartest Guys in the Room, Capitalism; A Love Story, Wall Street, The Insider and The Wolf of Wall Street.