CRIME AND CORRUPTION ARE TWO OF THE WORLD'S LARGEST MULTINATIONAL INDUSTRIES
CORRUPTION AND THE FLOUTING OF RULES IS HARDLY A NOVEL OR UNIQUE EVENT
By Dr. Gary K. Busch
The world press is full of the terrible problems which a rogue banking system has caused. The actions of the banks in the fall of Lehman Brothers and the corrupt fixing of the LIBOR rate in London by Barclaysand other banks has been presented by journalists and analysts as a breakdown of the system. This may well be true but corruption and the flouting of rules is hardly a novel or unique event. Much of all international economic life, under capitalist, socialist, communist or despotic systems which utilises the abstraction of currency to express value and as a means of exchange has always been full of variations on the same theme.
ONE OF THE MOST SIGNIFICANT ASPECTS OF THE INTERACTION BETWEEN BUSINESS AND SOCIETY HAS BEEN THE GROWTH AND SPREAD OF CRIME AND CORRUPTION AS A MAJOR INDUSTRY
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| Organized Crime Analytical Model |
Corruption is often conducted on such a massive scale that it involves sums greater than the Gross National Productof major industrial nations.
Theoretically, when one country has a balance of payments debt another country or countries have an equivalent credit. The system is constructed as a zero-sum game where each debit is balanced by an equivalent credit. By 1970, this system had developed what the International Monetary Fund called an "asymmetry"; the sums did not cancel each other out. By 1980 the world was missing over $100 billion. By 1990 this "asymmetry" was over $320 billion. Current figures are in the trillions. These are the official figures relating to national debts and the official exchange of goods and services among nations. The true sums, reflecting both official and unofficial transactions, are certainly many multiples of these.
Theoretically, when one country has a balance of payments debt another country or countries have an equivalent credit. The system is constructed as a zero-sum game where each debit is balanced by an equivalent credit. By 1970, this system had developed what the International Monetary Fund called an "asymmetry"; the sums did not cancel each other out. By 1980 the world was missing over $100 billion. By 1990 this "asymmetry" was over $320 billion. Current figures are in the trillions. These are the official figures relating to national debts and the official exchange of goods and services among nations. The true sums, reflecting both official and unofficial transactions, are certainly many multiples of these.
LAUNDERING EFFECT
Some of these missing funds disappeared as "flight capital", fleeing fiscal authorities in the Third World. Some left home as "black money" to be laundered and returned clean. Some of these funds "leaked" from foreign aid schemes in a web of corruption involving suppliers, shippers and government officials. Some left as overpayments of invoices for goods and services with the excess reimbursed to the payer overseas; some disappeared as insurance payments on phantom goods loaded aboard sunken ships or supposedly destroyed in "friendly fires" in empty factories and warehouses; some vanished as unjustified depreciation of assets claimed by giant corporations or in their accountants' creative use of transfer pricing; some vanished as export subsidies on goods that never left the domestic economy.
Some left as unvouchered cash donations to ethnic, religious and cultural organizations. Some were transferred by invoice; some by documentary credits; some by matching bank deposits; some by cash; and a great deal by the exchange of illicit goods (arms, drugs, high technology intellectual property) whose import and export never are accounted for in official trade statistics. Some were just made up by national treasuries in what was euphemistically called “quantitative easing”
THE EUROPEAN UNION’S EURO SYSTEM, A FANTASY-LAND OF VIRTUAL MONEY?
These international transfers financed the growth of banks, legal practices, accounting firms, inspection agencies and financial institutions dedicated to institutionalizing, enhancing and preserving national or regional accounts, establishing liquidity for illiquid currencies and some to preserve corruption.
These international transfers financed the growth of banks, legal practices, accounting firms, inspection agencies and financial institutions dedicated to institutionalizing, enhancing and preserving national or regional accounts, establishing liquidity for illiquid currencies and some to preserve corruption.
A substantial portion of these funds were handled directly by the internationally-integrated world of organized crime operating in symbiotic alliance with politicians and military figures in governments across the world. The bulk of the money, from all these sources, however it entered circulation, ended up in the respectable banks and trading houses which control the stock, bond and commodity markets of the world. These funds have financed 'institutional trading', fiscal anomalies like the junk bond industry, legitimate corporate lending and, most importantly, further criminal activities.
CRIME AND CORRUPTION ARE TWO OF THE WORLD'S LARGEST MULTINATIONAL INDUSTRIES
CRIME AND CORRUPTION ARE TWO OF THE WORLD'S LARGEST MULTINATIONAL INDUSTRIES
Most people are generally aware that crime and corruption are part of their national or local scenes to one degree or another. They know that 'criminals' or 'corrupt politicians' run or tolerate illegal gambling clubs; brew illegal whisky; 'arrange' planning permission for commercial property; sell or auction votes in local and national assemblies; maintain illegal cartels or 'rings' which distort prices in the construction, transport and art businesses; and generally conduct those extra-legal activities which fill the tabloid newspapers with juicy stories every morning.
They sometimes catch a glimpse of more sophisticated crimes when men like Boesky are brought before the courts or when cases like the “Maxwell Affair” and the BCCI scandal are reported in the press or banks are caught faking documentation of junk mortgage paper to assist their foreclosures. They are forced to be aware of the existence of a web of organized crime which is behind the trade in illicit substances and in the 'protection rackets' of the urban slums because these are all shown and discussed in television's endless police series or brought to the big screen in blockbusters like the 'Godfather' or the 'French Connection'.
A PROPER DEFINITION OF CORRUPTION IS ESSENTIALLY 'INSTITUTIONALISED UNPROSECUTED CRIME' ,
A PROPER DEFINITION OF CORRUPTION IS ESSENTIALLY 'INSTITUTIONALISED UNPROSECUTED CRIME' ,
comprising activities engaged in by one or more persons in contravention of the laws governing their legal environment which go unpunished or unprosecuted. These unpunished acts may be petty in nature or may be major delicts with international implications. In either case they represent unpunished and unpursued violations of the law.
What is vital to the understanding of what constitutes corruption is not the criminal act itself, but why this act is unpunished. In most cases these criminal acts go unpunished because they derive from a strong element of abuse of power, privilege or status. Someone or some organization or group wielding political, economic, social or religious power has used this power to deflect the ordinary course of justice. This aspect is crucial to understanding what makes 'crime' turns into 'corruption'. There is a lot of unpunished crime which is not corruption (often depending on lack of prosecutable evidence or triviality) but there is no corruption without criminality. It is the abuse of power which is exercised in the avoidance of prosecution which distinguishes corruption from mere criminality.
CRIME AND CORRUPTION ARE BOTH MASSIVE, PERVASIVE AND MULTINATIONAL
What is difficult for many to understand is that crime and corruption are both massive, pervasive and multinational; conducted on a scale which defies one's ability to manipulate numbers; and which plays such an important role in one's own political and economic life even though one may be oblivious to its influence.
What is difficult for many to understand is that crime and corruption are both massive, pervasive and multinational; conducted on a scale which defies one's ability to manipulate numbers; and which plays such an important role in one's own political and economic life even though one may be oblivious to its influence.
However, the fundamental reason why crime and corruption thrive and prosper is the most difficult for anyone to accept; it goes against everything one has been taught or led to believe. The reason is both simple and obvious.
CRIME AND CORRUPTION ARE NOT ANOMALIES OR SIGNS OF A BREAKDOWN IN OUR ECONOMIC OR POLITICAL SYSTEMS; THEY ARE VITAL AND INTEGRAL PARTS OF THOSE SYSTEMS
Quite simply, our national and international political and economic systems have developed so that they do not work without them. Crime and corruption is so massive and sophisticated an industry that most analysts cannot comprehend its sheer scale and the level of its integration into the international system or its symbiotic relationship with power and influence.
People and corporations with power abuse their power to influence, buy and pursue political aims with an impunity which derives from the learned helplessness of those set up to control them, or as a result of their complicity in the abuse.
THE SOCIOLOGY OF CORRUPTION :
One missing ingredient in the learned studies of crime, criminality and corruption is the controlling variable of time or 'time horizons'. The poorer the person the shorter his time horizon.
People and corporations with power abuse their power to influence, buy and pursue political aims with an impunity which derives from the learned helplessness of those set up to control them, or as a result of their complicity in the abuse.
THE SOCIOLOGY OF CORRUPTION :
One missing ingredient in the learned studies of crime, criminality and corruption is the controlling variable of time or 'time horizons'. The poorer the person the shorter his time horizon.
A GOVERNMENT can plan and function on a relatively long time horizon. It has a five-year plan; a series of three-year pilot projects, regional development schemes, etc. Its time horizon stretches out into the distant future.
MOST MAJOR INTERNATIONAL CORPORATIONSoperate on a similar time scale. They can make 'long-term' investments; position themselves to take advantage of a market which is emerging over the medium term; build in 'loss leaders' for the short-term to buy long-term market share.
MIDDLE CLASS PROFESSIONALS, CIVIL SERVANTS AND WHITE-COLLAR WORKERS can plan their lives and career prospects in years.
BLUE COLLAR EMPLOYEES can plan in units of years, quarters or months.
POORER PEOPLE on the dole or receiving supplementary assistance can plan in weeks.
The truly poor can only plan on days or even shorter intervals. The shorter the time horizon, the more immediate the need for satisfaction of basic needs - food, shelter and protection. It is this time horizon disparity which has been the seed bed of corruption in societies across the globe.
The truly poor can only plan on days or even shorter intervals. The shorter the time horizon, the more immediate the need for satisfaction of basic needs - food, shelter and protection. It is this time horizon disparity which has been the seed bed of corruption in societies across the globe.
Governments, political parties, aid and social welfare agencies cannot minister effectively to the needs of the poor because they do not and cannot operate in the same time zone as the poor. Those who can deliver in the short term - deliver money, extend credit, provide food or craved illicit substances, protect households or shops from attack, arrange employment opportunities, and punish enemies - are almost exclusively criminal organizations and often receive in exchange for their assistance the control of the political, religious and economic powers of those whom they assist. Those who take these political powers in exchange for material goods trade them for more valuable considerations with governments, corporations or international agencies. This exchange is the beginning of the trail from criminality to corruption.
THE MAJORITY OF THE WORLD'S POPULATION HAS BEEN AND REMAINS UNDER WHAT IT CONSIDERS FOREIGN OR AT LEAST EXOGENOUS DOMINATION
A second dimension often missed out in the academic analysis of corruption is that for the large majority of the world's population most governments, including their own, are foreign governments or run by strangers. The majority of the world's population has been and remains under what it considers foreign or at least exogenous domination. Throughout history, the nations of EUROPE, LATIN AMERICA, the MIDDLE EAST, AFRICA and ASIA have been ruled by foreign powers - potent military occupiers stretching in a long line from the PERSIANS, the MOGHULS, the HAN CHINESE, ALEXANDER'S MACEDONIANS, the ROMANS, BYZANTIUM, the HOLY ROMAN EMPIRE, the FULANI, the ZULUS, the OTTOMANS, NAPOLEONIC FRANCE, the AUSTRO-HUNGARIAN EMPIRE, the BRITISH EMPIRE, the THIRD REICH, the GREAT EAST ASIAN Co-Prosperity Scheme, the USSR to name but a few. Even today, many of the peoples of the world, in developed as well as less-developed nations, although freed from the shackles of colonialism or occupation, still feel alienated from their governments which are led by a single tribe, ethnic group or powerful social or caste or religious elite not their own.
CRIMINAL ORGANISATIONS INSTITUTIONALISED CRIMINALITY ON THE BASIS OF A POLITICAL AND ETHNIC MESSAGES
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| see http://en.wikipedia.org/wiki/Yakuza |
There is a social, ethnic, political and economic distance between the leaders and the led. What this has meant in terms of crime and corruption is that there is a certain legitimacy which attaches to acts against a foreign occupying or dominant power and against those in power that represent a different ethnic group, religion, caste or class. Under these circumstances, criminal acts are not considered criminal; they are a tolerated subversion of an inequitable system. Many of the most durable of the world's criminal societies, the Mafia, the Camorra, 14-K ,the house of Hung, the Sun Yee On, the Wo Hop To, the Yamaguchi-Gumi, the Union Corse, the IRA, the Sendero Luminosa,, the Sons of Liberty and Black September arose directly out of this maelstrom of criminality cum nationalism and the struggle against foreign domination. Some end up as the new governments with their own enemies. Other preferred to continue their preference for more profitable criminal activities. What is important is that these criminal organisations institutionalised criminality on the basis of a political and ethnic message and spawned political parties, created political alliances, generated giant legitimate and semi-legitimate corporations as part of their service to the disenfranchised and, by so doing, created a symbiotic relationship with governments.
Background Information: World Criminal Societies
http://en.wikipedia.org/wiki/Camorra
http://en.wikipedia.org/wiki/Camorra
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