E.H. Sutherland: White Collar Crime

What are some of the principal elements of E.H. Sutherlands contribution to the study of white collar crime? What are some of the limitations? What factors seem to have contributed to Sutherlands interest in white collar crime and to the relative disinterest of most other criminologists?

E.H. Sutherland is widely considered the most important contributor to American criminology in the nation’s history. Among his many contributions, Sutherland is credited with coining the term white collar crime, formulating the theory of differential association, and contributing extensively to the study and formulation of laws concerning sexual psychopaths (Friedrichs, 2007). Sutherland differentiated himself from other professionals of his time because rather than focusing his efforts on explaining lower-class criminality, he sought to offer guidance and understanding on the criminality of middle-and upper-class people.

Among Sutherland’s inspirations was the work of E.A. Ross (1907) Sin and Society: An Analysis of Latter Day Iniquity (Geis and Goff 1987).

“the criminaloid”: the businessman who committed exploitative, if not necessarily illegal, acts out of an uninhibited desire to maximize profit, all the while hiding behind a façade of respectability and piety. Ross regarded these criminaloids as guilty of moral insensibility and held them directly responsible for unnecessary deaths of consumers and workers.

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Building on the research of Ross and others in the criminology field, Sutherland formulated his theory of differential association. “He came to believe that his theory of differential association, which attributed criminality to a learning process, was precisely the type of general theory that could usefully explain both lower-class and upper-class crime” (Friedrichs, 2007).

The first recorded use of the term white collar crime was in Sutherland’s landmark book entitled, White Collar Crime (1939). The book brings to the forefront the prevalence of criminal activity in some of the largest companies in the country. White Collar Crime focuses on the 70 largest U.S. manufacturing, mining, and mercantile corporations with respect to the legal decisions against them and the pervasiveness of immoral and corrupt business practices in the corporations (Friedrichs, 2007). Sutherland’s research 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” (Friedrichs, 2007 p. 2). In his book, Sutherland noted that corporate officials felt contempt for the law, and 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 (Friedrichs, 2007).

Although Sutherland’s book and theories were seen as an important step in the right direction in terms of recognizing white collar crime and emphasizing the need for its enforcement, his theories did have some limitations. Among the shortcomings was his general label of “white collar crime” to all crimes concerning a corporation. Sutherland failed to differentiate between the crime done by white-collar employees against the corporation, and the crime done by the corporation acting as an individual company (Young, 1989). Friedrichs (2007) listed several other shortcomings:

Sutherland overemphasized an individualistic framework (and social-psychological factors) and largely ignored social structural factors (e.g., capitalism, profit rates, and business cycles). He failed to make clear-cut distinctions among white collar crimes, and he did not adequately appreciate the influence of corporations over the legislative and regulatory processes.

Which social developments may have contributed to a social movement against white collar crime, and which factors continue to act as constraints against any such movement?

There have been a number of factors in the last century which have contributed to a social movement against white collar crime. The stock market crash of 1929 marked the start of the Great Depression and a renewed assault on the illegal activities of corrupt businesses, corporations, and politicians around the country. During this time of great suffering and unemployment by millions, the horrid business practices of many corporations were seen as being unethical. Many of these corporations formed their business models that were centered on profit at the expense of the workers, customers, and the country. Awareness of WCC and the public movement against it really came to the forefront again during the nineteen-seventies. The seventies saw a decline in public confidence of elected officials and businesses alike because of events such as the Vietnam War, the Watergate crimes of the Nixon White House, and some high-profile cases of corporate misconduct (Friedrichs, 2007).

The biggest factor in my view, which has contributed to awareness and action against WCC, is the news media, and the Internet. I’m not necessarily speaking of the nightly news shows of the networks which were the norm in the seventies, eighties, & even into the mid-nineties. I’m talking about the explosion of cable news and the Internet which provides 24 hr sources of news and information to the public. The round the clock pursuit by people to gather information on important topics and beat another network to the story has led to the uncovering and release of more important stories and information to the public than ever before.

TV personalities and investigative shows such as Bill O’Reilly, Sean Hannity, Glenn Beck, Dateline, and 60 minutes, and others make it their mission to uncover blatant abuses of power and illegal activity that can affect citizens around the country. These private citizens with the backing of their networks often uncover information that leads to criminal action taken against individuals, corporations, and politicians. The bottom line is that when citizens are made aware of the corruption and other abuses by powerful people or businesses, they have the power to (and often does) speak out. When citizens speak out, their elected officials should take note as should law enforcement. This chain of events is often the primary factor leading to arrests and convictions for acts of white collar crime and other similar instances of fraud, waste, and abuse.

The advent of the Internet, cellular phones, and twenty-four hour cable news allows for instant access to information. People can talk, text, email, and fax information around the globe in an instant. The information flow allows us to search for nearly anything at anytime. This accessibility to information has made more people aware of the manner and frequency in which businesses, politicians, and others have abused their positions of trust and authority in order to gain financially at the expense of others. In the last decade alone the United States has seen some of the biggest companies come crashing down because of deceitful business practices designed to mislead the general public and help the company profit. Companies such as Enron, Adelphia, AOL/Time Warner, and WorldCom (to name a few) are prime examples of companies who have cooked their books to deceive consumers, investors, and the government (Patsuris, 2002).

Despite the many factors which work against white collar crime, there will always be those corrupt individuals and companies who will seek to profit illegally through lies, deceit, and trickery. These powerful individuals use their wealth and positions of power to influence public officials into looking the other way or passing laws to benefit their interests. This is the biggest hindrance to stamping out white collar crime. The ability of the rich and powerful to corrupt public officials has and will continue to be the driving force which allows this type of illegal behavior to continue.

Identify the principal agents who expose white collar crime in contemporary society. What factors motivate people to expose such crime, and what factors inhibit them from doing so? What specific policy measures can be adopted to encourage exposure of white collar crime?

In regards to high level or corporate white collar crime the most likely method of exposure will come from an informer or whistle-blower from within the business or institution itself. Outside sources can contribute to investigations by uncovering or suspecting wrong doing. Often, these sources will come from the media, consumers, or concerned citizens.

The informer will likely be an insider in the company who is involved in the criminal activity in some way. In return for their cooperation with law enforcement, the informer will likely seek compensation of one form or another, they may be given promises of leniency, immunity from prosecution, or a financial reward (Friedrichs, 2007). Another company insider who is a vital source of information to investigators is Whistle Blowers. These individuals are crucial sources of information needed for the detection, and ultimately the prosecution of many white collar crimes, especially when they are of the governmental and corporate varieties. Another common perpetrator of white collar crime and also important players in exposing it is through politicians and other elected officials. These officials are generally closely affiliated with business and community leaders who commit the majority of white collar crime, and as a result may be subject to the allure of money and power.

Other sources which can be of assistance in uncovering instances of white collar crime are from the media, particularly investigative journalists. Investigative journalism can be a pain staking, time consuming, and expensive process. Because of the expense and resources necessary to conduct an in-depth investigation, many smaller newspapers or local television stations are reluctant or unable to undertake them (Friedrichs, 2007). Bigger TV networks or newspapers with strong financial backing and high subscribership or viewers are now the most likely people to break these stories of white collar criminals, particularly when they involve elected officials.

There are a number of factors which ultimately govern a person’s decision to expose their employer’s activities, or in many cases deter them from doing so. Some come forward because of their need for self-preservation, or for other altruistic reasons. They may be afraid they will be harmed either financially or physically due to the illegal actions of the person or company, or they can feel a moral sense to do what is right. The same logic holds true for not coming forward, due to fear of reprisal and potential for lost income, job, or physical retaliation or intimidation (Friedrichs, 2007).

There can be a number of changes and improvements made to federal and state statutes in order to encourage people to come forward and expose acts of white collar crime. One of the most important and logical measures would be to provide financial protection for a person, because they will likely suffer greatly if they become an informant against their own company. They will likely have to quit their job or be let go. They will lose pay and put themselves and their family through a great deal of stress if the case is long and drawn out in court. I realize there are regulations in place that provide a whistleblower with a “reward” of a percentage of the judgment against a company or corporation (Friedrichs, 2007). These laws should be applied to many more cases and when possible the person providing the information should be subsidized during the trial to help them with their bills in return for their assistance. These are just a couple of the general ways in which people can be encouraged to come forward and expose white collar crime.

What are some of the specific challenges in studying white collar crime relative to the study of conventional crime? Can white collar crime be studied scientifically, or does it require a different approach?

White collar crime is much more difficult to study and investigate than traditional or conventional crime. WCC is generally not openly “blatant” like most conventional criminal activity. An officer can walk into a crime scene, see a badly beaten body and know with near certainty that a crime occurred. The same does not hold true if that same officer walks into an office and sees a man in a suit sitting at a desk typing on a computer. The effort necessary (in most cases) to discover then investigate instances of WCC are far greater than most traditional crimes.

Among the many difficulties in studying WCC, is the most basic question: What exactly is white collar crime? WCC can include such a wide spectrum of actions and activities, encompassing different people, businesses, and physical areas that it is very difficult to define and uncover. Scholars studying WCC may choose to focus on one single aspect much like they would in a conventional crime; i.e. homicide investigator, vice, etc… This approach can lead to confusion and difficulty when attempting to study WCC.

Another challenge in studying WCC is the access to research subjects, statistics, and support. Companies will likely be hesitant to allow a research project to be carried out on their company, unless the researcher can show them that it specifically benefits them and their organization. Statistics on WCC are difficult to come by because as Friedrichs (2007) stated “there is no real white collar crime equivalent to uniform crime report data, which exist for conventional crime” (p. 33). Researchers must obtain data from a number of sources and agencies then group it so the data can be studied. Finally, it will likely be difficult for a researcher to obtain support from their organization to conduct the WCC research. Large corporate structures and bureaucracies will likely feel that the study will hit “too close to home” and have some uneasiness when their support is requested (Friedrichs, 2007). Many of these groups are hesitant to lend their support because they feel the researcher will bend the data gathered to support their own preconceived notion and bias.

“The experiment, a method of exemplifying a positivistic or scientific approach, has to date seldom been used in the study of white collar crime” (Friedrichs, 2007 p. 36). The classical experiments of setting specific variables vs. a control group do not necessarily apply when studying white collar crime. Experiments of “free will” and the effects of pressure from superiors or authority figures on a person or group in controlling their actions may have some usefulness in studying WCC.

Critically evaluate the traditional, common claim that the general public perceives white collar crime to be less serious than conventional crime. What specific methodological questions can be raised about research on this question? Which specific factors have contributed to a growth in the perception that white collar crime is relatively serious?

I feel that historically the general public at large views white collar crime as less serious because it is not as “in your face” as conventional crime. People have a fear of being robbed, assaulted, raped, or their children being kidnapped because these crimes are something tangible, they can see, feel, and be scared of. Most people do not wake up in the morning or walk down the street thinking; “God please don’t let a bad man manipulate his company’s finances so they appear to have made billions more than they actually did.” Most people do not think about the hidden harmful effects that “respectable” and powerful people can have on them and their lives.

I do feel that the current reality is that white collar crime is as serious and can inflict as much if not more damage to all of us than conventional criminal activity. Each of us in our everyday lives feels the harmful effects of WCC, although many of us do not even realize we are suffering the results of these crimes. The impact of these crime are everywhere and they affect each of us, this reality is being felt now, perhaps more so than any time in our recent history. WCC has resulted in higher insurance premiums, extra money spent on security in the financial sector, bank fees, lost jobs, companies going bankrupt, higher prices of goods and services, etc…

Over the years people have come to better understand the direct effects that all aspects of white collar crime have on them and their loved ones. People’s lives can be turned upside down simply by a man in a shirt and tie taking a bribe then putting a check in a box to say a product is safe, when in reality it is not. I am 28 years old, in my lifetime I have seen numerous stories about recalls of defective or potentially dangerous products ranging from toys, cars, supplements, clothes, to laundry detergent. Many of these recalls are the results of people ignoring simple safety inspections and reports. Bernie Madoff stole billions of dollars from investors who thought they were investing with a respectable business man. Enron overstated their companies worth by more than $1.5 billion. They ultimately went bankrupt with many of their executives in prison and thousands of employees and investors losing their life savings (Net Industries, 2010). Cases such as these are prime examples of why the American public now view white collar crime as serious if not more so than conventional crime.