Corporate Cosmopolitanism:

Global Citizenry and White Collar Crime

Brent Cooper

University of British Columbia

2008

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“To whom much is given, much is required.”— John F. Kennedy.

How does the phrase “Think global, act local” apply to corporate actors? Can a

corporation be a ‘global citizen’? To understand these questions and their daunting

implications we must define two concepts: ‘global citizen’ and ‘white-collar crime.’

Broadly understood, a global citizen is somebody who can see through the arbitrary

social constructions that divide us, identifies with greater humanity, and acts accordingly.

White-collar crime, a more problematic concept, can be generally viewed as a social

deviation in a professional framework that does not directly entail physical harm to

others, but harm nonetheless. Surprisingly, these concepts are rarely recognized, yet both

have large consequences for the world. The average citizen fails to comprehend how

his/her actions reverberate throughout the world, and likewise the average white-collar

criminal considers his/her actions as victimless crimes. When scaled to the level of multi-

national corporations (MNCs), the unintended consequences of this self-centered

mentality constitute a new sociological challenge. Since a corporation is legally

considered a person, we must find new ways to nurture the development of the

corporation through a process of socialization. In this essay I will explore these two

concepts and discuss the prospect of a corporate global citizen.

What is a Global Citizen

A global citizen is someone who understands the world, who thinks on a global

scale, and who recognizes their local role and acts responsibly. Global citizen is a new

term, but expresses an old idea found in the ancient Greek ideals of cosmopolitanism,

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which sees all of humanity belonging to a single moral community. One of the oldest

known accounts of a global citizen was Diogenes: when anyone asked him where he

came from, he said, “I am a citizen of the world” (Nussbaum, 1994). Unfortunately, this

was not the way all Greeks thought, but nor was it a tradition exclusive to Diogenes and

the Greek Cynics. This concept was further refined by the virtuous Roman Stoics and

preached by the eminent Marcus Aurelius. Despite its ubiquity, it has lived in the

shadows of ethnic, class, and national warfare all throughout human history. In all

regions, sectarian and partisan loyalties typically have prevailed in shaping the status-

quo. In reality, until now it has never been possible to be a true global citizen. The reason

is that prior to the 20th century the world was never globalized in the sense it is today;

made possible by swift global communication and transportation. In the 21st century we

are in the advanced stages of globalization and individuals are beginning to identify with

transnational issues over national ones. In a similar fashion, corporations have recognized

the interconnectedness of the world. Even though corporations, as always, are identifying

primarily with profits they are finally beginning to capitalize on the changing trend by

appealing to the demands for social and environmental responsibility.

Creating Global Citizenry

Diogenes has also been known to contend that ‘the foundation of every state is the

education of its youth.’ In her essay Patriotism and Cosmopolitanism, Martha Nussbaum

brilliantly argues the character of a global citizen. She extols the Stoic philosophy that a

good civic education is global citizenship education (Nussbaum, 1994). This position is

based on three grounds: 1) the study of humanity on the macro scale is invaluable in

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gaining understanding of ourselves and our relations to others; 2) this way is the most

effective form of problem solving, and factional and local allegiances undermine political

deliberation; and 3) the cosmopolitan stance emphasizes that all persons fundamentally

aspire to justice and goodness (Nussbaum, 1994).

Nussbaum comments that Nobel laureate Rabindranath Tagore shares these

sentiments in his literary work. They both observe how despite the reason behind this

stoic philosophy, most people are nevertheless attracted to the ‘color’ of local traditions

and identities and often spurn cosmopolitanism in favor of the seduction of nationalism

(Nussbaum, 1994). Implicit in this education system is the transcendence of the socially

constructed boundaries such as race, nationality, class, and religion. Our education

system promotes the notion of tolerance, but it avoids the abstract idea of sameness.

Nussbaum recognizes the potential for taking this philosophy to the extreme by denying

individuality and infringing on fundamental personal liberties (Nussbaum, 1994).

However, this philosophy should become the foundation for global citizenship education

for its declaration of the preeminence of the notion of “interdependence of all human

beings and communities” (Nussbaum, 1994). The basic theme is that concepts like

nationalism continue to act as a matrix that prohibits individuals from becoming global

citizens. In its extreme form, nationalism has more dangerous implications than extreme

cosmopolitanism. In the United States, for instance, we see that its particular brand of

patriotism is actually jingoism - extreme patriotism in the form of aggressive foreign

policy. Global citizens are dedicated to rising above these challenges for the greater good.

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What is White-collar Crime?

The traditional conceptualization of white-collar crime was layed out by Edwin

Sutherland as “a crime committed by a person of respectability and high social status in

the course of his occupation” (Chirayath and De Zolt, 2004). Over the years, the

definition has been modified to include the acquisition of property through deception

(Chirayath and De Zolt, 2004). Other key characteristics identified by scholars are

difficulty of detection, rare prosecution, and are often committed by trusted people in

large organizations (Meloff and Pierce, 1994). Part of the challenge of white-collar

deviance is in establishing wrong-doing. Historically, many deviants like Socrates, Louis

Riel, Mohandis Ghandi, and Nelson Mandela were labelled criminals (Lecture 35, 2008).

Although they were not technically white-collar criminals, by some categorizations they

were, since they were not engaged in blue-collar crime. Unlike social deviance however,

there is seldom benefit from corporate crime. These heroes, as history remembers them,

in a way are exemplars of global citizenry. But in actual white-collar crime the negative

social consequences are not realized immediately. Under our working definition of white-

collar crime typical examples are tax evasion, fraud, money laundering, insider trading,

corporate espionage, corruption, and bribery (Lecture 35, 2008). White-collar crimes

such as these do not necessarily victimize others directly, and are usually neglected in

crime statistics, although they do in fact place higher costs and cause more harm to

society than regular crime (Meloff and Pierce, 1994).

According to W. Steve Albrecht, associate dean at the Marriott School of

Management at Brigham Young University, people commit fraud for three reasons:

“financial pressure, the perception of an opportunity, and rationalizing it as O.K.”

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(Labaton, 2002). This is an adaptation of the popular cultural interpretation of the criteria

for conviction under U.S. Criminal Law; that of means, motive, opportunity. According

to him and others, fraud is also becoming more common. The Association of Certified

Fraud Examiners lists two reasons for this increase: age and education (Labaton, 2002).

First, fraud is the preferred crime of the older perpetrator and a rise in fraud should be

expected with an aging population. Second, an educated person is more likely to see the

rational incentive to pursuing fraud. Rationality drives a white-collar criminal because the

reward is greater, and the punishment is less significant; in other words, the benefits

outweigh the costs. The cost/benefit analysis is the hallmark of a rational decision maker.

Theories

Sociologists have explained crime as a symptom of “the gap between culturally

prescribed aspirations and the socially structured avenues for realizing those aspirations”

(Meloff and Pierce, 1994). This is not just the gap between what you want and what you

have relative to others. It is the rift between the American dream and the narrow

possibility of its realistic achievement. Therefore, this strain theory observes that white-

collar criminals will resort to innovative or illegitimate strategies when the frustrations of

this gap reach a critical level (Meloff and Pierce, 1994; Lecture 35, 2008). But what is the

critical level? Why do some people manage to cope with life’s challenges and others do

not? It depends on the level of integration of an individual within society.

Control theory emphasizes the bond between society and the individual (Meloff

and Pierce, 1994; Lecture 35, 2008). As that relationship weakens, deviance is more

probable. Furthermore, some individuals have different beliefs than law-abiding citizens

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and are freer to deviate from the socially constructed norms (Meloff and Pierce, 1994). In

the positive sense, this means unjust laws can be challenged by progressive individuals.

On the other hand, it means white-collar criminals will have fewer scruples about their

dishonest activities. Education and high social status inevitably dissociate individuals

from the general public, which is relatively poor and uneducated. In the context of high-

profile white-collar crime, the fact that individuals can be abnormally distanced from

society by their unequaled knowledge, wealth, and power, predicts that their attachment

to society will be weak. Evidently, corporations are virtually never engaged in non-

financially motivated acts of altruism, whereas true global citizens are. When strain

theory and control theory are applied together with the rationality of white-collar crime

there is little incentive for corporate actors to act as global citizens.

Corporation is a Person

Joel Bakan, a law professor at UBC, keenly observes that a corporation, when

legally viewed as a person, exhibits the behavior of a destructive and heartless sociopath

(Bakan, 2004). The average citizen can constantly monitor their own relationship to

society, whereas a corporation is an entity made up of individuals incapable of reining in

character of the greater being. Corporations stop at virtually nothing to achieve their

goals, including manipulating public opinion (Bakan, 2004). This is reminiscent of the

anecdote that ‘advertising/marketing is the science of arresting a person’s intelligence

long enough to get money from them.’ Corporations also conveniently absolve

themselves from responsibility and feelings of remorse (Bakan, 2004). In a sense, a

corporation has the morality of an infant. Since they are not properly punished when they

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are caught, they do not perceive an act as right or wrong; they see everything that rewards

them with money as right. Because of this, there is a high probability of recidivism; they

will continue to break the law so long as the rewards outweigh the risks (Murphy and

Harris, 2007). If a corporation continues to act like an infant, it must be treated like an

infant, until it matures, figuratively speaking. Between an insatiable drive and cold

calculating psyche, a corporation is able to shape a public image drastically different

from its real operations. Enron is the infamous example of a corporation that was a

“paragon of social responsibility and corporate philanthropy… [that] collapsed under the

weight of its executives’ greed, hubris, and criminality” (Bakan, 2004).

Two scholars, Verghese Chirayath and Ernest De Zolt, comment on the impact of

white-collar crime in transitional economies. They argue that globalization opens doors

for MNCs to developing nations where the financial prospects are lucrative and the

business, environmental, and labor regulations are weak (Chirayath, 2004). This type of

situation is precisely where a corporate actor must act as a global citizen. Unfortunately,

they do not, and consequently these arrangements encourage the worst type of white-

collar crime; they exacerbate global inequality by exploiting societies desperately trying

to catch up to the Western world. Coming back to Enron, their bankruptcy (due to

multiple counts of fraud), caused serious repercussions in India when the Dhabol power

plant project was abandoned and the Indian government had to suffer the losses.

Developing countries are also competing with each other for business with MNCs so they

have to further weaken regulations or potentially lose out (Chirayath, 2004). As a person,

the corporation manages to exculpate itself by pretending that because it is in a foreign

land, a degree of corruption is acceptable.

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Challenge of Sentencing and Deterrence

Sentencing white-collar crime is a challenge. Often, an individual’s rank on the

corporate ladder is not taken into account in determining their culpability in the act

(Podgor, 2007). Furthermore, courts discount motivations for such crimes and any

individual profit gained as a result (Podgor, 2007). Implicit in these observations is that

the higher the individual is on the corporate ladder, usually the more money they have

and the better lawyer they can hire. Thus, in the real world, there is a correlation between

corporate rank and perceived culpability.

Some scholars are studying shaming theory – the idea that the stigma of

criminality is a powerful deterrent – as it applies to white-collar crime. Shaming theory is

popular in combating blue-collar crime and is successful in some approaches to white-

collar crime. In the context of a corporation, corrupt businessmen are more deterred by

jeopardized financial prospects and opportunities than from shaming (Murphy and Harris,

2007). In general, researchers conclude that understanding social and emotional factors

can help deter white-collar crime shaming (Murphy and Harris, 2007), but ultimately we

must rely on something that has proven far more valuable: whistleblowers.

Whistleblowers

In 2002, Time magazine selected three whistleblowers as “Persons of the Year.”

Statistics say that 75% of cases of fraud are perpetrated by men (Wells, 2002) so it may

not come as a surprise that these three whistleblowers were women. One of these

individuals was responsible for blowing the whistle on Enron. The other two ignominious

crimes were WorldCom’s accounting fraud and the FBI’s failure to investigate

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information pertaining to the 9/11 attacks. Not only is blowing the whistle on corruption

incredibly effective, there is a positive feedback mechanism: the public awareness of this

large scale fraud lowers public confidence in business and government institutions and in

turn encourages more whistleblowers to come forward (Banisar, 2006). Despite the

obviousness of this solution there is little framework to provide incentives or protection

for people to come forward. Whistleblowers take huge personal and professional risks

and have little to gain. According to one report, whistle-blowing is still in its infancy

(Banisar, 2006). If this is the case, then now is the time to begin nurturing the practice of

whistle-blowing into maturity. In a way, whistleblowers are global citizens and they are

exactly what are needed in high-level corporate positions if a MNC is to act like a global

citizen. The same report notes the curiosity that the corporate sector favors

whistleblowers more than the government does (Banisar, 2006). This has dangerous

implications for white-collar crime because the government has to be responsible for

creating, and also enforcing, legislation against corporate criminality.

“Think Global, Act Global”

Can a MNC be a global citizen? The nature of a corporation causes it to

exemplify the inverse of the global citizen catchphrase: “think local, act global.” The

corporation is designed to think of itself only, but in the process it unavoidably leaves its

footprint wherever it does business (Bakan, 2004). On the other hand, corporations are

made up of individuals. If the executives themselves are global citizens, then the

corporation can embody corporate global citizenship. The good corporate global citizen

must think global and act global. It must realize that any corruption in its system is a

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spreading poison that will eventually destroy the organization, harming or infecting many

others along the way. A corporate global citizen must be engaged in philanthropic

endeavors geared towards the creation of a global social environment that is

complimentary to ethical business operations. These mythical global citizens do exist.

Multibillionaires Warren Buffet, Bill Gates, and George Soros dominate a long list of

U.S. philanthropists. Their leadership in social progress and ethical business (anti-trust

lawsuits notwithstanding) sets an example for the rest of the world. Unlike average

citizens, corporate global actors such as these have the privilege and responsibility of

being able to affect real change in a short period of time. Despite these individuals

prospering from the stratification of society, they understand that patterned social

inequality is dangerous and systemic (Lecture 43, 2008) and leads to conflict within

society. Corporate global citizens need not be multi-billionaires to effect large change;

our heroic whistleblowers deserve just as much praise, for they often risk much more.

The common denominator, whether you are an individual in middle management or the

head of a global corporation, is to think globally.

What can we do?

One way that has proven effective is adopting an organic and holistic approach to

constructing society. As Marcus Aurelius advises, we should engage in the exercise of

conceiving the whole world as a single body (Nussbaum, 1994). Modern global citizen

Carl Sagan has agreed with this conception and added that “an organism at war with itself

is doomed” (Sagan, 1980). Until it is safe to eliminate the boundaries that divide us, it is

necessary to learn how to deconstruct them. By acknowledging that a morally arbitrary

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boundary such as a border plays a decisive role in our deliberations, we set an example of

hypocrisy for citizens by obscuring the fact that people should reach across the other

barriers the separate us (Nussbaum, 1994). Charities like Oxfam carry out global

citizenship education programs for children. Higher education institutions also need to

emphasize to future CEOs the rational economic incentives for global civility.

The practical strategy is to learn how to apply the traditional techniques of law

enforcement in new ways. Retributive justice is the idea that an equal amount of damage

should be inflicted on the offender as was caused by them (Lecture 39, 2008). In white-

collar crime this can be applied in the form of remuneration of the amount of money lost.

In practice, settlements are often mere fractions of what is truly owed (Bakan, 2004).

Rehabilitation can be more complicated for individuals engaged in white-collar criminal

acts, but if a corporation is seen as a person this concept can be applied in the sense of

reforming corporate structure.

Deterrence is the most popular tool. It assumes people who commit crimes

exercise rational decision making (Lecture 39, 2008). We know this is especially true in

these cases as white-collar criminals follow rational patterns. When an individual finally

is convicted a heavy sentence is often handed down. Jeffrey Skilling, the Enron CEO,

was sentenced to 24 years and 4 months in prison. Other high-profile incarcerations

include the cases of Martha Stewart and Conrad Black. The amount of psychological

pressure these individuals face also acts as a powerful deterrent. Skilling confessed he

had been driven to the brink of suicide. Unable to cope like Skilling, his colleague J.

Clifford Baxter allegedly took his own life. However, police later cast doubt on his

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apparent suicide, insinuating it was murder (CBS, 2002). Regrettably, murder can be a

powerful deterrent of whistle-blowing.

A dynamic lobbying campaign must be directed at both government and business

if white-collar crime is to be thwarted and corporations are to be socialized into global

citizens. Decisions made at the global level will become truly inclusive and participatory

only when macro-scale organizations change their internal incentives, rewards, decision

making structures, and knowledge systems (Gaventa, 2001).

Conclusion

In this essay I have explored the concepts of global citizenry, white-collar crime,

and the prospect of a new globally responsible corporation. We see the popular slogan

“think global, act local” is adopted by many citizens in their small sphere of influence but

that this philosophy becomes complicated with an increase in power. We see that white-

collar crime in its various forms is as wide-spread as blue-collar crime, but more

concealed, more expensive, and more seductive to those in power. Personal acts of

deviance by white-collar individuals can occur on the micro scale, but have consequences

on the macro scale. On the other hand, we have found that there are individuals who

exude the character of corporate global citizenship in the form of philanthropy. By

incorporating the cosmopolitan ethic into the larger sphere of influence of white-collar

workers, they enact new institutions that foster social justice. Lastly, global citizens,

whether small or large, understand that those who can give back, must.

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