Dirty money : on financial dependency

289 Pages·2017·1.906 MB·English

by  Ruggiero, Vincenzo

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DIRTY MONEY
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CLARENDON STUDIES IN CRIMINOLOGY
Published under the auspices of the Institute of Criminology,
University of Cambridge; the Mannheim Centre, London School of
Economics; and the Centre for Criminology, University of Oxford.
General Editors: Jill Peay and Tim Newburn
(London School of Economics)
Editors: Loraine Gelsthorpe, Alison Liebling, Kyle Treiber
and Per- Olof Wikström
(University of Cambridge)
Coretta Phillips and Robert Reiner
(London School of Economics)
Mary Bosworth, Carolyn Hoyle, Ian Loader, and Lucia Zedner
(University of Oxford)
RECENT TITLES IN THIS SERIES:
Reinventing Punishment: A Comparative History of Criminology
and Penology in the Nineteenth and Twentieth Centuries
Pifferi
Taking Care of Business: Police Detectives, Drug
Law Enforcement and Proactive Investigation
Bacon
The Politics of Police Detention in Japan: Consensus of Convenience
Croydon
Dangerous Politics: Risk, Political Vulnerability, and Penal Policy
Annison
Punish and Expel: Border Control, Nationalism,
and the New Purpose of the Prison
Kaufman
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Dirty Money
On Financial Delinquency
VINCENZO RUGGIERO
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1
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© Vincenzo Ruggiero 2017
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First Edition published in 2017
Impression: 1
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v
General Editors’ Introduction
Clarendon Studies in Criminology aims to provide a forum for
outstanding empirical and theoretical work in all aspects of crim-
inology and criminal justice, broadly understood. The Editors
welcome submissions from established scholars, as well as excel-
lent PhD work. The Series was inaugurated in 1994, with Roger
Hood as its first General Editor, following discussions between
Oxford University Press and three criminology centres. It is edited
under the auspices of these three centres: the Cambridge Institute
of Criminology, the Mannheim Centre for Criminology at the
London School of Economics, and the Centre for Criminology at
the University of Oxford. Each supplies members of the Editorial
Board and, in turn, the Series Editor or Editors.
Vincenzo Ruggiero’s new volume, Dirty Money, is, as the
title implies, a study of how money is transformed via human
action into an instrument for the production of harm. Whilst
money might superficially be thought of as a ‘neutral tool’,
Ruggiero’s book details how, consistently across time, money has
perverted its neutrality. More specifically, the book focuses on
episodes of what Ruggiero refers to as ‘financial delinquency’.
It further examines the ways in which a very broad array of
observers—philosophers, theologians and criminologists—have
shaped our understanding of these episodes and their causes and
consequences.
In his opening chapter exploring the relationship between
money and salvation in Christian thought and doctrine, we
encounter many expected figures—from Dante and Bunyan to
Max Weber—but also some surprises, including George Bernard
Shaw, Wagner and Rabelais. Rabelais’s economic vision saw
debtors and lenders as interchangeable, and imagined a world
in which credit and debt were so widespread and interdependent
as to result in economic harmony. Ruggiero charts the gradual
transformation of economic thought over the centuries, to a point
where Walter Benjamin could suggest that capitalism had become
a religion and economics its theology. Economics, Ruggiero
argues, replaced ‘sin’ with ‘crisis’.
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vi General Editors’ Introduction
These crises—from the Dutch ‘tulip mania’ of the 1620s and
30s, to the bubbles that erupted in Paris and London late in the
century—were primarily interpreted as the result of the actions of
unscrupulous individuals. By and large early criminologists had
relatively little to say about such activity, the bulk of relevant
commentary appearing in economic rather than ‘criminological’
writing. Beccaria drew attention to the ways in which the wealthy
and powerful were protected by law, and distinguished between
productive and sterile forms of financial activity; with irregular
forms of conduct being attributed by Bentham to idiocy, calamity
or the abuse of trust.
From the utilitarians, we journey to the ‘century of railways,
robber barons and financial distress’. British capital was heav-
ily involved in the spread of the railways on both sides of the
Atlantic and the railroad builders bought political influence,
often through bribery, whilst both promoting the idea of mar-
ket freedom and relying on state support and intervention. Their
names—Vanderbilt, Carnegie, J.P. Morgan, Rockefeller, and
Russell Sage among others—continue to resonate. Misconduct
was rife and oversight was extraordinarily deficient. This was
also the period that saw the emergence of Quetelet and the begin-
nings of statistical criminology, as well as Lombroso, Garofalo,
Ferri and the rise of the Positive School. None had a great deal
to say about ‘financial delinquency’, though Gabriel Tarde, with
his focus on both technical and motivational innovation, at least
offered ideas for analyzing and framing such conduct.
The early twentieth century saw the financial crash of the late
1920s underpinned by, among many other things, ‘a flood of cor-
porate larceny’. Moreover, the financial crisis led to widespread
attempts to defray losses via fraud. Such activities naturally drew
the attention of criminologists, notably the Chicago School and,
in particular, Edwin Sutherland. It was he who observed that the
‘law is like a cobweb; it’s made for flies and the smaller kinds of
insects, so to speak, but lets the big bumblebees break through’.
Of the 70 corporations he studied, 40 were found to have publicly
misrepresented their finances. Why then was it rarely accorded
the status of ‘criminality’? For Willem Bonger, it was simply
because it posed an insufficient challenge to the social order.
Intriguingly, what follows is something of a gap in public atten-
tion paid to financial crime; Ruggiero speculates this may have
been, at least in part, a consequence of changing media attention.
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General Editors’ Introduction vii
Financial delinquency, of course, continued unabated, with both
the New Deal and the Marshall Plan offering extraordinary pos-
sibilities for exploitation. Increasing evidence emerged of corrupt
relationships between politicians and the financial sector, as well
as those involving the police and others in nefarious financial
practices. The 1980s and 1990s saw the proliferation of finan-
cial delinquency and of initiatives to respond to it, together with
heightened attention paid to the victims of such activities. The
names read like a roll- call of shame: Milken, Savings and Loans,
Maxwell, BCCI, Leeson and Barings Bank. The seeming ubiq-
uity of malfeasance led to some shifts in criminological attention
seeking, on the one hand, to combine elements of strain, label-
ling, and control theories and, on the other, to a greater focus on
political economy and a critique of neoliberalism.
The financial crisis of 2008, and the regulatory response,
are the next steps in Ruggiero’s journey. New, unprecedented
and widespread ‘networks of greed’ emerged in an increasingly
deregulated environment, creating what Ruggiero refers to as a
‘generalised Ponzi culture’. The limited impact of the regulatory
reaction is depressing in the extreme, and Ruggiero offers consid-
erable evidence to suggest that many of the measures proposed to
prevent future crises were contested, amended, scrapped or neu-
tralized, and that the growing influence of ‘shadow banks’, and
the generalized failure of political control, has created a situation
where attempts to control the financial sector look remarkably
familiar to our doomed attempts to regulate illegal drugs mar-
kets. We live now, he argues, in a world of hidden wealth, where
mobility, hybridity and fuzziness are the key characteristics of
the fluid world of ‘viral’ money laundering. We inhabit a world in
which the unscrupulous traders of the seventeenth century have
been replaced by the transnational institutional vultures of the
twenty- first. The future looks bleak. It is perhaps this that under-
pins Ruggiero’s use of the term ‘financial delinquency’. Whilst
some might see a form essentialism in the use of such terminology,
his intention is to ‘draw attention to the harm these actors pro-
duce’ for ‘experience tells us that positive labelling and shaming
(or positive moral entrepreneurship) have contributed to turning
behaviours previously tolerated into unacceptable, revolting acts.’
Given the rapacious nature of many of the harms that Ruggiero
analyses, describing such activities, as delinquency seems almost
an act of kindness.
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viii General Editors’ Introduction
As Editors we commend Vincenzo Ruggiero’s book as making
significant contributions to both the fields of white collar and
corporate crime, and to the intellectual history of criminology.
Dirty Money is to be most warmly welcomed to the Clarendon
Studies in Criminology Series.
Tim Newburn and Jill Peay
London School of Economics
and Political Science
November 2016
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Contents
1. Introduction  1
2. Money and Salvation  9
From the Good Life to the Just Reward  10
Saints and Economists  13
Afterlife and Wealth  16
The Parable of the Debtors 17
Innocence and Idolatry  19
Rabelais and the Spirit of Capitalism  23
Economics and Religion  25
The Triumph of Plutus  30
3. Between Sin and Crisis  33
London and Paris Bubbles  36
John Law  38
Luxury, Usury, and Crime  39
From Utility to Happiness  44
Fin de Siècle  52
4. Bankers and Robber Barons  55
Railways and Crooks  55
Legendary Tycoons  58
Deviant Benefactors  62
Statistical and Logical Impossibility  64
Old and New Crimes  66
Passionate Interests  70
Charlatans and Thieves  72
Infinite Aspiration and Habit  75
Scrooge or Faust?  77