Elite Deviance

Elite deviance is one of the most pervasive and persistent social problems in the world today. It consists of criminal and deviant acts by persons of the highest socioeconomic status employed by or for the largest corporations and the most powerful political organizations. Such acts violate generalized rules of appropriate behavior by perpetuating various social harms and by enriching persons or corporations at public expense. The global reach of elite deviance is currently demonstrated by the involvement of elites in the proliferation of international money laundering, the continuing evidence of global environmental pollution, and the subsidizing of illegal wars in which elites form strategic alliances with known drug traffickers, arms dealers, and global crime syndicates.

Elite deviance is produced by a system of political economy in which wealth and power are increasingly held by a small elite. This elite believes that its power enables it the right to construct its own norms or to evade culturally accepted rules of conduct in political and economic spheres of influence. It does not care that such self-constructed standards or evasive actions may run counter to societal norms or offend deeply held values.

There are at least three kinds of elite deviance: acts of economic domination, crimes of government and governmental control, and denial of basic human rights.

[Page 331]Acts of economic domination are crimes and unethical deeds committed by a single corporation or by multiple corporations in league with other organizations, including governments. Violations of antitrust laws, price fixing, false advertising, corporate influence peddling, fraud, and corruption are prime examples of such domination. The pervasiveness of this kind of elite behavior is represented by the phenomenon of corruption. Corruption is estimated to add up to 10 percent to the cost of doing business in many parts of the world; bribery alone has become a $1 trillion industry, according to the World Bank. Like most acts of economic domination, bribery persists because the benefits of the act far outweigh the minimal risks of apprehension and penalty.

Acts of economic domination also encompass business crimes such as the failure to correct unsafe working conditions and the deliberate manufacturing of a wide range of potentially hazardous products, including financial services products. The lack of effective government regulation of business in such cases makes the government a witting partner in the production or reproduction of such unsafe practices and products. For example, lack of government regulation played a substantial role in the events leading to the economic crisis of 2008. The financial services industry was deregulated in 1999 when the Glass-Steagall Act of 1933 was overturned after strong industry lobbying. The act made it illegal for bank-holding companies to own investment banks and other financial companies.

Overturning this act deregulated the entire financial services industry, allowing banks and insurance firms to engage in risky ventures. At the same time, it enabled a virtual deregulation of the real estate mortgage industry. Consequently, a massive $1.5 trillion subprime mortgage market was born in which predatory lending practices allowed mortgage loans to be sold to consumers who were unable to repay them. These bad mortgages were bundled and basically hidden by the invention of some new investment securities, which also were invented thanks to deregulated markets, including $4 trillion in collateralized debt obligations or CDOs. CDOs are pooled groups of individual subprime loans that bore the original rating of AAA, but later were found to be in serious risk of default. These instruments were sold to school districts, cities, pension funds, banks, and foreign governments.

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