David Whyte Corporate Crime and the Case for Abolishing the Corporation

Corporate crime is a serious problem afflicting society.

Experts differ on how to curb it.


Some say – increase budgets of corporate crime prosecutors.

Some say – encourage corporations to be more socially responsible.

Other says – enhance corporate compliance programs.

Now comes David Whyte, a professor at the University of Liverpool in the UK.

Whyte takes an altogether different approach.

Whyte says simply — abolish the corporation.

Whyte and his colleague Steve Tombs have written a book titled — The Corporate Criminal: Why Corporations Must be Abolished  (Routledge, 2015.)

“Human beings have the capacity to make judgements about what might be beneficial to the people around them and to themselves,” Whyte told Corporate Crime Reporter in an interview last week. “Corporations are constituted to put the interests of their owners above any social interest — to subordinate social benefits to profits. That’s in their DNA. The whole constitutional structure of the corporation is to enable individuals to combine wealth in order to generate more wealth. That’s the fundamental principle. Once you start probing into how that happens — a separate person is created, a separate identity is created, an identity separate from individuals. The corporation is only a form of property, but it is a form of property that is given a title and a name and an identity to make it seem like a human being.”

“Actually, it is there to subordinate human interests, social interests, to the interests of a narrow group of people who own that corporation.”

When you say — abolish the corporation, do you mean get rid of limited liability?

“We do need to get rid of the principle of limited liability,” Whyte says. “ It’s the principle of limited liability that enables all kinds of costs — whether they are costs to workers dying at work, or costs to the environment – to be externalized, to be kept off the corporate balance sheet. The owners are not liable for those costs. Yes, we do support the ending of limited liability.”

“The idea that corporate persons have the same rights of human persons — we would want to see that abolished. Bernie Sanders, a few years ago, put together a legislative proposal together to challenge the Supreme Court judgement which upheld the rights of corporations under the 14th Amendment.”

If you got rid of limited liability for shareholders, you effectively abolish the corporation, don’t you? Or does it move to some kind of scheme where the shareholders get insurance against their losses?

“We don’t know. And that’s unlikely to happen overnight. But if you were able to achieve such an aim, the first thing that would happen is that other models of the corporation would have to be considered — models of the corporation in which the costs of the corporation were distributed differently. There would be a huge disincentive for predatory investors who just want to use the corporation as a vehicle for profit making.”

“Attacking the legal basis of the corporation also attacks the social basis of capitalism. Corporations are only institutional forms of capital. The corporation is only a form of property in which investors are able to cobble together their investments. You challenge the corporation and you begin to challenge the foundations of what we would argue is a pretty unequal and unfair society at the moment.”

Are there any societies that have moved to abolish the corporation?

“No. In fact, the trend has been in the opposite direction. But there are states where alternative models have flourished. Take for example the Basque country in Spain – a large proportion of the people are employed by cooperatives.”

“These are businesses that may not be perfect and do operate within a capitalist economy, but they are not profit generating machines, they are not externalizing machines, they are not criminogenic machines the way large transnational corporations are. Very often they are owned by their workers and very often they have rules that limit the salaries of managers and profits are plowed back into the business.”

“I’m not saying that’s the ideal model. But it is an alternative model. And we do have examples across the world where those alternative models are pursued.”

“By identifying the core problem with corporate power, we would argue that you can’t but help to look immediately for alternatives.”

Of the thousands of criminologists in the world, how many are aligned with your view?

“I don’t know how many, but I know it’s a small minority. You go to criminology conferences and you are bombarded with paper after paper after paper about security threats or the problem of youth crime and drug taking. We are definitely in the minority.”

“The reason we started the book with a discussion of the routine nature of corporate crime was just to underline the point that corporate crimes affect everyone. We might not recognize that. We might not know when we are being victimized. But actually, the scale, the human destruction, the killing, the maiming, the theft and the degree to which we are being ripped off by corporations dwarfs the comparable impacts of interpersonal crime.”

“Steve Tombs and I did some work a number of years ago where we analyzed the proportion of articles dedicated to corporate and state crime. We found that only three percent of articles in the top six criminology journals were dedicated to either state or corporate crime. The rest were dedicated to interpersonal crimes. Criminology has a problem.”

Regulation has been effectively compromised by corporate power. Why do you place so little faith in strong corporate criminal prosecutions, for example?

“We would support that. We have worked for strict regulation, for regulations that hold companies to account. Under the current conditions we live in, that’s crucial. If there is one cause that we can attribute to the 2008 financial crash, it is the way in which regulations changed.”

“It’s important to have strong regulatory agencies that are willing to prosecute and uphold the law. They are crucially important. But it will not be a solution. It will always be a temporary solution. Corporations are set up in such a way that they can’t do anything else but drive for maximum profits. And they can’t do anything else but put the owners’ interests above social interests. Yes, we argue for strict regulation of course. But ultimately, we are in a world where we are being pushed closer and closer to the precipice. Climate change is real. Nobody denies it. The earth might not have much longer to go.”

“If we can think about a model which would push it even closer to the precipice, corporate capitalism is it. We need to get rid of this model if we are going to have any chance to ensure the survival of the species. Regulation is important but it’s not going to be a solution to the crisis we are in at the moment.”

Will the abolition of the corporation lead to smaller business organizations? Or can you envision giant multinational businesses organized along some other model?

“We don’t get into that in the book. One of the problems of corporate power is the global reach of corporations. Another problem is the monopoly or the oligopoly power of corporations. Markets are now controlled by very small numbers of companies. That’s concentration of power.”

“One of the main problems is the profit motive. You have to think about ways of diluting the centralization of power. One of the reasons that we as consumers have no control over corporate capital is because we are completely distanced from the productive conditions that make the products we use. We have no idea how our clothes are made, how our coffee is made. Some of us may try and buy some fair trade coffee or clothes. But we have no way of knowing.”

“The scale of the economy has distanced us from the real conditions of production. We don’t get into this in the book, but ultimately, we need to see a shrinking of that scale. We need be close to the conditions of production.”

“We wouldn’t argue against some kind of economic coordination. That means that economies of scale that can be viable. But at the moment, we have economies of scale that are completely unsustainable and need to be scaled down.”

You make a harsh critique of social corporate responsibility. Do you believe there are better and worse corporations?

“We don’t say that corporate social responsibility is purely a smokescreen. But corporate social responsibility is largely about repositioning relationships between the company and its consumers, the company and its workers and the company and the general public. It’s not about any kind of material security that we can rely on.”

Before you wrote your book, had you seen this idea of abolishing the corporation?

“There had been some attempts to pierce the corporate veil or to change the legal basis for the corporation. Normally, they are not discussed  as abolishing the corporation.”

“The reason we are using this phrase is to try and generate some debate. Clearly, the current relationship in contemporary capitalism, the corporation as a form of property and social relationship, has to change. In order to change, we have to think about ending that form of social and economic power.”

“Abolishing the corporation for us is a phrase — but it’s not an empty phrase. It’s a phrase that has to challenge people to think about how can we meaningfully change the basis of power in our society.”

You believe it’s a basket of goods — criminal prosecution, regulation, stripping the company of privileges and immunities, stripping the shareholders of limited liability.

“Yes. Also, we should think about how punishing companies should involve the punishment of the owners. The system of equity fines that has been proposed by legal scholars would impose a liability on the owners rather than allowing the company to absorb the fine and distribute the cost of that fine to workers or consumers. That’s not a particularly earth shattering measure. It’s a fairly self-contained measure.”

“We don’t have a recipe or a manifesto for how we deal with corporate power. But we do know that you can’t deal with the issue of corporate crime and adequate penalties without dealing with the issue of limited liability and the shield that’s given to owners.”

“And you can’t deal with those without also dealing with the relationship between government and businesses – the broader regulatory relationship in which governments prop up businesses. We have to look at the relationship between government and businesses through law in its entirety. But we also have to look at the legal basis for corporate power in its entirety.”

Let’s say we had a strong police model, where the company was criminally prosecuted when they committed crimes. And probation officers were put inside the company to make sure the wrongdoing wasn’t repeated. Why wouldn’t that address the issues that you are talking about?

“That only deals with one thing in the basket. In an ideal world, that would be a much better way of organizing production, consumption and distribution. It would allow us to mitigate the worst effects of the corporation. But take for example the chemicals industry. At the moment, we have quite a tightly regulated system of producing chemicals. And companies are licensed in the UK to produce certain levels of particularly dangerous chemicals. In order for them to be profitable, they don’t pay the full cost of cleaning up those chemicals. These are externalities.”

“There is no such thing as a successful private for profit company that doesn’t incur any costs on the model we have right now. The corporation is set up in order to do social harm and then not pay for it.”

[For the complete q/a transcript of the Interview with David Whyte, see 30 Corporate Crime Reporter 27(11), July 4, 2016, print edition only.]


Copyright © Corporate Crime Reporter
In Print 48 Weeks A Year

Built on Notes Blog Core
Powered by WordPress