Business crime is sometimes known as white collar crime. This is a term developed by the criminal justice theorist, Edwin Sutherland. I strongly disagree with it. While I can see its theoretical strength in terms of analysis, I think it allows people to put business crime in a different box with different rules. Business crime, white collar crime, is crime. A businessman that takes a life is no different than a murderer on the street who kills for a wallet. A businessman who steals from the government is no different from a bank robber. A businessman who behaves unethically has no right to think of himself as any better than all other poor sinners who have failed the moral test.

Who are the victims of “white collar” crime? Who are the ones damaged by corporate crime? It is simple and accurate to say that those that have lost money such as investors. We could add institutional losers like pension funds, even endowment funds at universities and colleges have been victimized. But that would be too short a list. What if we added those whose careers had been blighted by having worked at a firm like Enron that simply ceased to exist? Their losses would include losing their job, having damage to their professional reputation by having worked at such a place and we could add the loss of pension funds and stock sharing arrangements.

What if we stop thinking about it in terms of direct losses? This isn’t a bank robbery which might net as much as $6,000 dollars. In the case of Enron we are discussing stock losses in the range of $50 billion dollars(This is just the stock losses not all those other pesky losses, just the stock losses). Let’s put this in perspective. The operating budget of Arkansas, a state of 2,855,290 citizens, is 21.3 billion dollars (2008). Enron’s stock losses alone could have paid for more than two years of all Arkansas state expenditures.

Now that we have an idea about the amount of money, let’s discuss the ramifications of that amount of money. Let us assume a particular citizen makes $30K a year. That citizen loses his job. His lack of income is a loss to the community, his state, and nation. He does not produce value and because he earns no money he cannot make purchases or invest. His unemployment damages the country although in a small way.

Let’s take a giant multinational corporation earning billions of dollars a year (at least on paper) and take it out of circulation. Does this affect the corporation’s community, state and nation? Yes. However, when you remove such a large economic unit you have somewhat wider effects. Not only is the corporation destroyed but it usually takes out a number of its suppliers and customers, thus destroying a number of other companies. Its workers join the ranks of the unemployed. Its bill will not be payed causing serious economic problems for scores of individuals and companies.

This is a much larger effect than the individual worker we discussed earlier. But there is more. Such a huge economic loss has long term effects as well. Investment in that part of the country is damaged. That means less money for business startups, business expansion, innovation or opportunity. Many workers become unemployed. This means they take jobs that would have been available to others and while unemployed cost the state resources that could have been used for many other things. For those that lose their pensions and investments, it can mean a total change in expectation and life style. For the country at large, it causes a growth of cynicism and a lack of trust. It damages the ties that bind society together.

And there is more. How will you feel the pain? You might say that you owned no shares, you did not work for the company, and they didn’t owe you any money as a supplier or anything else. Therefore, you did not suffer.

But you would be wrong.

You lose opportunity. The jobs that you could have gotten, the money that you could have made, the places you could have traveled to, the highways and grants and educational benefits you could have gotten, they are not there. And because you don’t know what opportunities disappeared when the corporation closed down, you are under the erroneous idea that you were not damaged.

You were.

The billions and trillions of dollars taken out of this country by corporate collapses like Enron and Worldcom, by the use of derivatives and sub-prime lending are real money. When that money, that value disappears, so do many of the possibilities of what you could have been, what you could have done, and what kind of future your community, your state and your country could have had.

That’s the reality of white collar crime. All the regular crime, you can figure out the effects, the dead people, the economic costs, the lost opportunities. You can count the bodies.  But corporate crime, white collar crime, it destroys the connecting fabric between individuals and simply eradicates possibilities making the world a smaller and more hostile place.