Capitalism, Globalisation and Crime

Ian Taylor, writing from a socialist perspective, argues that economic globalisation (basically the spread of Capitalism) has led to more crimes being committed by elites – crimes which go unnoticed in the West

In ‘The Political Economy of Crime’ (1998) Ian Taylor wrote about important changes in the world economy in recent years, many of which have accelerated since he wrote the book. Three of these are covered below: The problems of global finance and tax havens, the problem of Transnational Corporations and ‘Law Evasion’ and the problem of increasing inequality caused by globalisation.

Global Finance, Tax Havens and Tax Evasion

For Elites, the ability to move finance around the world with minimal control enables a whole range of financial crimes, from tax evasion and insider trading to defrauding transnational organisations such as the EU out of grant and subsidy money. According to one 2012 estimate, the Global Super Rich have $21 trillion dollars squirrelled away in offshore bank accounts which are evading tax.

The existence of tax havens, such as the Cayman Islands, also allows organised crime gangs to launder the profits from illegal activities such as drugs production and distribution, because of said lose controls over capital movements.

Transnational Corporations and Law Evasion

The last half a century has seen many Transnational Corporations shift their production to developing countries in search for greater profitability. One of the reasons they do this is because poorer countries tend to have fewer environmental regulations, and so corporations can pollute more freely in those countries. Not having to clean up your mess is good for profits.

TNCs often subcontract out their production processes to various local companies – subcontracting encourages the employment of people who are working illegally, because it is often cheaper to hire illegal immigrants because they are prepared to work for less. This often happens in clothing, food and building industries. Subcontractors break rules to cut costs in order to get and retain contracts in competitive industries and to maximise their profits.

The Case Study of Union Carbide in Bhopal, the biggest industrial accident in world history, illustrates the problem of law evasion and corporate irresponsibility perfectly. Union Carbide, an American owned multi-national company, set up a pesticide plant in Bhopal in order to take ad-vantage of the cheap labour in India. In 1984, the plant accidentally leaked deadly gas fumes into the surrounding atmosphere. The leakage resulted in over 3500 deaths and caused permanent injury to at least a further 25 000. Investigations have since revealed that the company set up this particular plant because pollution controls in India were less rigid than in the USA and the escape of gas was caused by inadequate safety procedures at the plant, making this a criminal case of negligence.

Campaigners say Bhopal has an unusually high incidence of children with birth defects and growth deficiency, as well as cancers, diabetes and other chronic illnesses. These are seen not only among survivors of the gas leak but among people born many years later, they say.

Twenty years ago Union Carbide paid $470m (£282m) in compensation to the Indian government, and in 2010 (26 years after the disaster) 8 people (all Indian) were sentenced for 2 years for their crimes of negligence. No one on the board of the company has faced criminal charges.

Examples of corporations which have caused social or environmental harm due to law evasion (moving to a poorer country to cut costs)

1. Apple (in China)

2. Shell (in Nigeria)

3. Primark (in Bangladesh)

Increasing Global Inequality and Crime

The staggering extent of global inequality is one of the major causes of International Crime. Wealth in the developed world increases demand for global goods and services, and poverty in the developing world creates supply of criminal products and services.

On the demand side – In developed countries and among the wealthier segments of the population in developing countries, consumer culture pressurizes people into buying more and more material items and to engage in more and more leisure pursuits – and there literally billions of consumers in the world: the sheer volume of consumers means there is enormous demand for a huge range of products. Most people want to get these products and services as cheaply as possible, and getting hold of things through the global black market is often the cheapest way to keep up with consumerist pressure – illegally imported cigarettes and alcohol are cheaper than their taxed legal alternatives, and sleeping with a trafficked prostitute in Estonia is cheaper than paying for one in the UK.

The demand for outright illegal products such as drugs, guns and human organs (in Europe at least) is much smaller, but simply given the high numbers of people involved in the global consumer market place, it only takes a tiny percentage of people to generate significant levels of demand for such products.

On the supply side – In poorer, developing countries, providing illegal goods for shipment to wealthier people can be more lucrative than producing something legally. In Columbia for example it is estimated that 20% of the population depend on the Cocaine trade, which is more profitable than growing coffee, while in Afghanistan growing opium poppies, the basis of heroine, has remained the country’s largest export and the main source of income for the population during three decades of conflict.

In other poor countries where the climate isn’t conducive to growing drugs for export to the west, other illegal opportunities can be attractive – such as selling your children into a life of prostitution or other forms of slavery through human trafficking networks.

A further effect of TNCs being mobile is that they have reduced job security of full time staff and this increases the amount of part time, temporary and insecure employment, which in turn breeds the conditions for criminality.

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