II. Definition and Costs of White-Collar Crime
The phrase “white-collar crime” was coined by the eminent American sociologist Edwin H. Sutherland, in the late 1930s. At the time that Sutherland was writing, most criminologists thought that crime was concentrated among the urban poor and caused by the disadvantages and pathologies associated with poverty. Sutherland disagreed and argued strenuously that respectable people from the upper social classes committed a great deal of harmful criminal acts in the course of their occupations and in the furtherance of their economic and business interests. According to Sutherland (1949), upper-class criminality was ignored by the government and the general public because the perpetrators did not fit the common stereotype of the criminal. His work was aimed at reforming criminological theory by bringing this neglected form of criminality into the realm of scientific and public discourse.
There are two main approaches to defining white-collar crime: offender-based versus offense-based. Sutherland (1940) defined white-collar crime as a crime committed by a person of respectability and high social status in the course of his occupation. This definition is the most well-known and influential example of what has been called the offender-based approach to defining white-collar crime. Offender-based definitions emphasize as an essential characteristic of white-collar crime the high social status, power, and respectability of the actor. Another approach to defining white-collar crime focuses more on the characteristics of the offense rather than the actor. The most well-known offense-based definition was proposed by Herbert Edelhertz in 1970. Edelhertz defined white-collar crime as an illegal act or series of illegal acts committed by nonphysical means and by concealment or guile to obtain money or property, to avoid the payment or loss of money or property, or to obtain business or personal advantage. For offense-based definitions, what distinguishes white-collar crimes from other types of crime is the manner in which they are committed rather than the characteristics of the person who commits them.
Regardless of how it is defined, white-collar crime is widely acknowledged to cause tremendous financial, physical, and social harms. The amount of money lost to white-collar crime annually is impossible to establish with any precision, but it clearly exceeds the losses due to ordinary street crime. For example, according to the Federal Bureau of Investigation (FBI, 2007), in 2006 traditional property crimes such as larceny, burglary, auto theft, and robbery accounted for an estimated $17.6 billion in losses. By comparison, the FBI estimates annual losses due to white-collar crime at $300 billion.
Although typically thought of as a financial crime, certain types of white-collar crime can have physical effects as well. These include violations of workplace safety laws, the manufacture and distribution of unsafe consumer products, and violation of environmental laws and regulations. Between 1982 and 2002, over 2,000 American workers died as a result of willful violations of safety laws by employers. It is estimated that hundreds of thousands more are injured by such violations. The victims of occupationally related diseases also run into the hundreds of thousands annually. In addition, consumers suffer physically as a result of dangerous products, including most notably toys, food, pharmaceuticals, and medical equipment. The exact number of deaths and injuries caused by dangerous or defective products that can be attributed to lawbreaking by corporations is impossible to determine with any precision. Nevertheless, criminal cases involving some of the largest and most well-known corporations in the world occur regularly. In addition, the physical effects of white-collar crime extend beyond workers and consumers to society in general in the form of violations of environmental protection laws.
Like ordinary street crime, white-collar crime also has social or moral costs that extend beyond its affects on individual victims. Many scholars believe that white-collar crime damages the moral climate in society by undermining people’s faith in the legitimacy and fairness of business and government. White-collar crime is thought to create distrust and to undermine public confidence in the morality of big business. By disregarding the rules of free and open competition, business organizations that engage in white-collar crime gain unfair advantage over their law-abiding competitors. The ability of the market to reduce the costs of goods and services and to improve efficiency through competition is thereby threatened. Thus, white-collar criminal behavior harms the American economy and free enterprise system. The moral and social costs of white-collar crime may extend to political institutions. White-collar crime scholars from Sutherland on have speculated that publicity about white-collar crimes committed by big businesses can delegitimate the government, especially when it appears that corporations and their executives receive special treatment in the justice system. Finally, publicity about white-collar crime also may serve as a justification for other sorts of crime and deviance.