Cecily Zamora
Corporations are not people, but people are responsible for corporate lawbreaking. While Credit Suisse pleaded guilty to criminal conduct, no executives were charged with violating the law. Instead, the government imposed corporate fines. However, these fines are often treated as costs of doing business and are not enough to deter giant corporations from harming the public. To hold corporations accountable, individuals who cause harm must be prosecuted.
| Characteristics | Values |
|---|---|
| Corporations are not people | Specific people break the law |
| Fines are often treated as costs of doing business | Fines are not a deterrent |
| Shareholders are not held accountable | Shareholders are not punished |
| Imprisonment is not possible | Corporations cannot be put behind bars |
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What You'll Learn
Corporations aren't people, people are responsible for breaking the law
In the cases of GM and Credit Suisse, evidence points to executives at or near the top being responsible for any wrongdoing. However, no executives have been charged with violating the law, and instead, the government has imposed corporate fines. The logic is that since the corporation as a whole benefited from these illegal acts, the corporation as a whole should pay. But this logic is flawed, as such fines are often treated as a cost of doing business and don't deter future bad behaviour.
To hold corporations accountable, individuals who break the law must be prosecuted. This is the only way to deter giant corporations from harming the public. While it may be difficult to pinpoint exactly who is responsible, especially in large corporations, it's important to look towards the top. Those in leadership positions are often aware of any issues and may even be orchestrating illegal activities.
When individuals are held accountable, it sends a strong message to others within the corporation and beyond. It also ensures that those who have profited from illegal activities are punished, rather than current shareholders who may not have been involved. Ultimately, it's people who make decisions and take actions, and they are the ones who should be held responsible when things go wrong.
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Fines are often treated as costs of doing business
This approach to corporate lawbreaking has been criticised as flawed and ineffective. Robert B. Reich, a professor of public policy at the University of California, Berkeley, and former secretary of labor, argues that the only way to deter giant corporations from harming the public is to prosecute the individuals who cause the harm. He suggests that holding specific people accountable, rather than the corporation as a whole, is the key to preventing future lawbreaking.
However, it is important to note that prosecuting individuals within a corporation can be challenging. In many cases, lawbreaking occurs due to a collective failure or a series of small decisions made by multiple people. Identifying who is ultimately responsible and proving their guilt beyond a reasonable doubt can be difficult. Additionally, corporations may have complex structures and global operations, making it hard to determine who was aware of or involved in illegal activities.
Despite these challenges, the alternative of treating fines as costs of doing business can create a culture of impunity within corporations. It may send the message that illegal behaviour will only result in financial penalties, which some companies may view as a manageable risk. This could potentially encourage future lawbreaking and create an uneven playing field where companies that follow the rules are at a competitive disadvantage.
To address this issue, a combination of individual accountability and corporate reform may be necessary. Holding individuals accountable can send a strong message of deterrence, while also ensuring that those responsible for harm are punished. At the same time, corporations can implement stronger internal controls, ethical guidelines, and oversight to prevent and detect lawbreaking before it occurs. By combining individual prosecution with corporate reform, it may be possible to create a more effective and just system for addressing corporate lawbreaking.
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Shareholders aren't usually affected by corporate punishment
It's important to remember that corporations don't break laws, people do. While a corporation may be found guilty of criminal conduct, it cannot be put behind bars. This is an important distinction because it means that the individuals responsible for illegal actions are not always held accountable. In the case of GM and Credit Suisse, for example, there is evidence pointing to executives at or near the top, yet no executives have been charged or gone to jail.
Corporate fines are often treated as a cost of doing business and can be shrugged off by large corporations. For example, GM was fined $35 million, which is a relatively small amount for a hundred-billion-dollar corporation. Credit Suisse was fined $2.8 billion, but even this amount was not enough to significantly impact the company. These fines do not serve as a deterrent because they do not target the individuals who are truly responsible.
To effectively deter corporations from harming the public, it is necessary to go after the people who cause the harm. This could involve prosecuting individuals, such as executives or engineers who are aware of the problem and choose to do nothing. By holding specific people accountable, it may be possible to prevent future lawbreaking and ensure that those who profit from illegal actions are the ones who face the consequences.
In summary, shareholders aren't usually affected by corporate punishment because the punishment is often directed at the corporation as a whole, rather than the individuals who are truly responsible. By treating corporate fines as a cost of doing business, large corporations can avoid significant consequences. To effectively deter corporate lawbreaking, it is essential to hold specific people accountable for their actions.
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Corporations can be 'executed'
Corporations can be executed. In 2002, the giant accounting firm Arthur Andersen was found guilty of obstructing justice when certain partners destroyed records of the auditing work they did for Enron. As a result, Andersen's clients abandoned it and the firm collapsed.
However, it is important to remember that corporations don't break laws, specific people do. Therefore, to deter giant corporations from harming the public, it is necessary to prosecute the individuals responsible for any illegal actions. This can be challenging, as those responsible may be executives at or near the top of the corporate hierarchy.
In some cases, the government may impose corporate fines as a form of punishment. However, these fines are often treated as mere costs of doing business and may not effectively deter future illegal behaviour.
To address corporate lawbreaking effectively, it is crucial to hold individuals accountable, ensure proper enforcement of laws, and consider the impact of any punishment on the corporation as a whole, including its current shareholders who may not have been involved in the illegal activities.
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The capitalist system is to blame
In the case of GM, for example, the company received complaints about the ignition switch for a decade but chose to do nothing. This inaction was the fault of those at the top of the company, including executives and engineers, yet no one was charged or prosecuted for violating the law. Instead, the government imposed a corporate fine of $35 million, a negligible amount for a hundred-billion-dollar corporation.
A similar situation occurred with Credit Suisse, which was fined $2.8 billion for criminal conduct. While this amount is much larger, it was still shrugged off by financial markets. The people who were hurt by these crimes were not the shareholders who profited from them, and no one was held accountable.
The capitalist system allows corporations to get away with breaking the law because the punishment does not fit the crime. Fines are often treated as costs of doing business, and the individuals who are truly responsible are not prosecuted. As a result, there is little deterrence for corporations from harming the public.
To stop corporate lawbreaking, the capitalist system must be reformed to hold individuals accountable for their actions within a corporation. Only then can we ensure that those who cause harm are punished and that corporations are deterred from breaking the law in the future.
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Frequently asked questions
Corporations don't break laws, people do.
The government imposes corporate fines. However, this is often treated by corporations as a cost of doing business.
Prosecute the people who break the law.
A corporation can't be put behind bars. However, it can be effectively 'executed'. For example, in 2002, the giant accounting firm Arthur Andersen was found guilty of obstructing justice and collapsed as a result.
