Gangster Capitalism: The United States and the Global Rise of Organised Crime
By Michael Woodiwiss
Constable, 2005
260 pages, $44.95 (pb)
In the early 1950s, members of an Italian-American gang were jailed for bulking out beefburgers with horsemeat in Chicago's "horseburger" affair. Because of its Mafia overtones, police and press attention was massive. However, argues Michael Woodiwiss in Gangster Capitalism: The United States and the Global Rise of Organised Crime, the publicity was a politically convenient diversion from the far deadlier, and unprosecuted, crimes of the big corporate food-processing criminals that routinely and knowingly sold food contaminated with "cockroaches, flies, rodents, mouse-droppings, faecal and urine waste, pesticides, mercury and salmonella, resulting in 4,000 deaths per year and millions of cases of non-fatal food poisoning".
The dividing line between the organised crime of the underworld and the organised crime of the capitalist and government "upperworld" is very fine, often nonexistent, writes Woodiwiss. Focussing attention on crime supergroups like the Chicago Mafia, Chinese Triad, Japanese Yakuza or Colombian drug cartels masks the vastly more powerful, profitable and ruinous reach of corporate crime.
Business criminality has a long and blemished history. US capitalism boasted its Rockefellers, Carnegies and other founding "robber barons" over a century ago. "Ruthless, brutal and corrupt", their fortunes grew from fraud, conspiracy, intimidation, bribery, jury-tampering, judge-buying, theft and fanatical repression of unions. Every year, preventable industrial accidents killed 35,000 workers, and maimed half a million more, in the land of these much-praised "industrial statesmen".
The 1920s was the decade of the classic gangster, but Chicago's Al Capone was left in the shade by the vast number and variety of rackets in the "legitimate" private sector. Five thousand banks collapsed from embezzlement, speculation and theft of depositors' money. Standard Oil and Ford were renowned for jaw-busting, anti-union thuggery by hired gangsters. Dead and disabled workers dropped like flies because safety got in the way of profits.
Government-sponsored moral panics opened up profitable niches for career criminals in illegal markets. Prohibition of alcohol (and gambling and prostitution) saw politicians, judges, lawyers, bankers and businesses creaming many millions of dollars from fraud, bribes and extortion while profits for gangsters, thieves, fraudsters, pimps, gamblers, bootleggers and industrial racketeers flourished.
Organised crime, writes Woodiwiss, played a not-insignificant role in the onset and depth of the 1930s Depression (a "floodtide of corporate larceny" in economist J.K. Galbraith's phrase). Because Depression-era workers were losing faith in capitalism, important sections of the capitalist class decided that reform of an unregulated laissez-faire market economy was needed. As part of Democrat president Franklin D. Roosevelt's mission "to rescue and to clean up capitalism", he made the country "a less hospitable place for career criminals, racketeers and corporate criminals". Roosevelt's New Deal included corporate regulatory controls, especially in the electricity, banking and finance industries. Prohibition was repealed and the cruder forms of criminal suppression of unions were restrained.
After Roosevelt, however, a corporate counter-offensive against regulation began on the back of the Cold War. In the age of the blacklist, however, few films portrayed capitalist crooks and few journalists exposed them. Instead, any problems to the perceived perfection of Cold War capitalism were externalised — crime became an "alien conspiracy" and the activities of a couple of dozen Italian-American crime families were inflated to a "hierarchically organised criminal conspiracy known as the Mafia or Cosa Nostra" in the 1960s. Much of the publicity was fiction. Mafia crime was "just the pickings of a much bigger feast" for corporate and white-collar criminals.
Since the 1960s, there has been an epidemic of toxic waste-dumping and pollution; and tax-cheating is a national sport for the corporate sector with little challenge from an under-resourced tax collector. Tax crimes contributed to lawful tax "reform", which has meant corporate tax as a proportion of US federal tax revenues fell from 32% in 1952 to 7% in 2003. White-collar crime (innocuously disguised as "accounting irregularities") has become bigger and more sophisticated. At the head of the table for this feast of fraud were Enron and WorldCom in the '90s. But those spectacular crashes just laid bare the "criminal corporate culture" that was the norm. Among the victims were workers whose employee retirement and pension funds had invested in crooked enterprises like Enron.
It is "deeply inadequate", argues Woodiwiss, to restrict the label of organised crime to the super-criminal organisation. For example, the "kill-rate of gangsters" is relatively small compared to "the reckless and deceptive practices of executives in the tobacco and asbestos industries alone". The cigarette kills 400,000 people in the US a year, and asbestos manufacturers have, over many decades, funded and controlled research to conceal the dangers of their product; suppressed information and lied to workers and the public; fought against safety standards; and obstructed or corrupted enforcement efforts. A hundred thousand US people will die in the decade following 2004 from diseases caused by exposure to asbestos 20-40 years ago.
The lethality of dangerous products (Ford Pinto petrol tanks, tampons, breast implants) was known and hushed up by their manufacturers. Workers died at work because a boss removed a safety device to speed up production, or didn't want to spend money for protective gear. Unnecessary surgery is estimated to cause 12,000 deaths a year in the US, the result of over-servicing, by a health-care system organised around profit-making in order to milk the government-funded Medicare and Medicaid insurance schemes for the poor and the old.
Price-fixing by competitors to fleece customers is a way of life. Pricing fraud against Medicare and Medicaid by the pharmaceutical giants Pfizer, GlaxoSmithKline and AstraZeneca cost the US public US$1.6 billion over two years to 2003, far exceeding the yearly total loss from bank robberies of all types ($70 million).
Adding to the corporate crime wave has been a government history of moral authoritarianism on personal behaviour. The failure of alcohol prohibition has been replicated in the "war on drugs". Stuffing the prisons with users and low-level dealers, however, has merely accelerated the establishment and upskilling of crime networks, while police corruption adds more cops on the take. Alternatives to drug prohibition to deal with the reality of demand, reduce the harm and drive out the underground, however, are not an option to the "tough on crime" zealots.
The US has inevitably exported crime. Opposing any threat to US business interests overseas under the cover of anti-communism and anti-terrorism has filled an encyclopedia with murderous dealings with brutal and corrupt foreign dictators and their greedy elites. Across the globe, illegal wars, CIA assassinations, torture, land dispossession, labour abuses, resources theft and toxic poisoning have been ongoing and prolific. In poor countries with lax regulatory regimes, crime by the capitalist First World is rewarding and unaccountable.
The US refuses to entertain international regulatory reform of the offshore banking system, which is riddled with tax evasion by the top 1% of taxpayers such as entertainers, business owners and investors through tax havens like the Cayman Islands that also shelter "dirty money" from illegal enterprises including drugs, gambling and arms sales.
Economically desperate and highly exploitable migrants are criminally preyed upon by First World sweatshops, and by very wealthy US people on the lookout for cheap nannies and maids. The most powerful country in the world bullies drug-producing countries into supporting its failed drug-control crusade by threatening the withdrawal of aid or increases in tariffs on goods imported into the US.
To restrain corporate crime, and its shadier cousin, Woodiwiss proposes bringing corporations under greater democratic control through tighter financial, environmental and labour regulation. Woodiwiss's social-democratic politics (his recommendation is a new version of Roosevelt's New Deal) may not be up to realising far-reaching economic and political democracy. However, his substantive and vigorously argued book points a necessary way towards what being really "tough on crime" means — taking on the power of the corporation and the criminal opportunities that thrive from deregulated, neoliberal global capitalism and its US corporate godfather.