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Rats, Peanuts & Madoff

From Ponzi schemes to tainted peanuts, corporate wrongdoing is on everyone’s mind. What makes bigwigs think they can do whatever they want?

Did you hear about the peanut butter recalls? The disgusting conditions at the Peanut Corporation of America? The company’s factory is closed, but only after it shipped peanut butter that had been infiltrated by rats and cockroaches, according to former employees. Workers told journalists that managers insisted the batches be shipped regardless of quality, because the company would lose too much money otherwise.

Hearing about this incident reminded me of Upton Sinclair’s 1906 novel The Jungle, about poor conditions in the meatpacking industry. As at the peanut butter factory, in Sinclair’s book rats are routinely ground into the meat.

That expos� led to the Pure Food and Drug Act of 1906, which meant that the federal government would inspect food-producing plants for safety. When I read The Jungle in high school, about 80 years after this landmark legislation, I believed that things had really changed from the old days, and that the food my family bought at the grocery store would never be as dangerous as it was before Congress passed this and other laws.

My high school self would be shocked to read the recall notice that I saw at the bottom of my grocery receipt in early February, warning about a particular product which I had purchased weeks before, and had long since eaten. I won’t mention the brand behind those peanut butter-flavored snacks, but it markets its products as healthy and wholesome.

Perhaps after reading The Jungle, I needed to believe that the gross things in the book could never happen. Not only did I believe that food producers would follow the law, but I presumed that basic morality would prevent them from selling food they knew was tainted.

Why would a company knowingly sell tainted food? Sociologists call this elite deviance, behavior that violates moral, ethical or legal standards for the benefit of a corporate or government entity. Sociologist David R. Simon argues that elite deviance is committed by those at the highest levels of power, and often causes physical, financial or moral harm. While we frequently hear of people in power ripping off the public and sometimes even wiping them out financially, elite deviance can be hazardous to public health and safety too.

Power is a central feature of elite deviance; it is what enables people like self-confessed Ponzi schemer Bernard Madoff to get access to billions of dollars in the first place. Simon details how those involved in elite deviance often know and influence people in high places. Madoff, for example, was once chair of the National Association of Securities Dealers and therefore knew securities laws well enough to evade them. Madoff’s reputation seems to have also deterred the U.S. Securities and Exchange Commission from following through on the many investigations started into his firm’s dealings.

Elite deviance tends to yield relatively minor penalties, if any. Peanut Corp. has filed for bankruptcy, so it may not end up paying any fines for the salmonella outbreak that resulted from its wrongdoing. Limited liability laws mean that in some cases individuals can’t be held legally responsible for corporate behavior. Criminal charges for deaths or physical injury that result from elite deviance are unusual, too.

David Simon describes a “cloak of secrecy” that many elites in the highest positions of authority use to hide their misdeeds. Corporations can hire public relations firms in an effort to counter claims against them and revamp their image. Or they can simply change their names. After numerous tobacco lawsuits, Philip Morris became Altria. Blackwater, a military contractor under scrutiny for alleged improper behavior in Iraq, changed its name to Xe. Most of us don’t have the benefit of starting anew with a brand new identity, nor do we have spin doctors at our disposal.

Another key reason elite deviance continues is diffusion of responsibility, in which no one feels explicitly responsible for an organization’s activities. The clich� of “just following orders” might seem like a cop-out, but consider the role of power in elite deviance. Many workers at Peanut Corp. earned minimum wage and struggled for their basic survival; losing a job could have been financially devastating for them and their families. They might have felt that they had little power to change the conditions of the plant.

Corporations are typically hierarchical; even people higher up in a company may feel pressure to conform to the expectations set by those at the top. Managers who have spent many of their waking hours at a company and devoted years of their lives to it may not want to risk blowing the whistle; people who expose their employers may have trouble finding another job in their industry.

Ideally, individual morality would outweigh such factors. We’d like to think that if we were in the position to blow the whistle, we would. But sometimes the realities of power dynamics get in the way.

Karen Sternheimer, sociologist in the USC College of Letters, Arts and Sciences, is an expert on deviance and American celebrity culture. Other columns by Sternheimer may be found on her Everyday Sociology Blog.

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