NCJ Number
68002
Journal
American Criminal Law Review Volume: 17 Issue: 4 Dated: (SPRING 1980) Pages: 419-476
Date Published
1980
Length
58 pages
Annotation
THE COMPARATIVE EFFECTIVENESS OF FINES AND IMPRISONMENT AS SANCTIONS FOR CORPORATE CRIME IS ANALYZED, USING THE ECONOMIC CONCEPT OF UTILITY-MAXIMIZING BEHAVIOR.
Abstract
THE ECONOMIC THEORY FOR UTILITY-MAXIMIZING BEHAVIOR IS PARTICULARLY RELEVANT IN EXAMINING SANCTIONS FOR CORPORATE CRIME, BECAUSE CORPORATE CRIME IS MOST LIKELY TO BE CONSCIOUSLY PLANNED BY OFFENDERS, WHO RATIONALLY WEIGH THE BENEFITS TO BE GAINED IN COMPARISON TO THE RISK AND SEVERITY OF NEGATIVE CONSEQUENCES. IF CORPORATE CRIME IS APPROACHED FROM THE THEORY OF UTILITY-MAXIMIZING BEHAVIOR, THE ENTIRE RANGE OF OUTCOMES WITH WHICH THE OFFENDER IS THREATENED ARE CONSIDERED, NOT ONLY THE PENALTY IMPOSED. CONSEQUENTLY, SIMPLE EXCHANGE RATE ADJUSTMENTS BETWEEN FINE AMOUNTS AND A PRISON SENTENCE LENGTH ARE NOT FEASIBLE, SINCE INCREASING THE DETERRENT THREAT OF A FINE INVOLVES NOT SIMPLY THE IMPOSITION OF A HIGHER FINE IN AN INDIVIDUAL CASE, BUT AN INCREASE OF THE MEAN VALUE OF THE ENTIRE PROBALITY DISPERSION FOR FINES. FROM THIS PERSPECTIVE, FINES WILL GENERALLY LACK THE DETERRENT VALUE OF INCARCERATION, BECAUSE THE RANGE OF THE THREATENED SANCTION OF IMPRISONMENT TYPICALLY EXCEEDS THAT OF FINES. IF SUBSTANTIAL RELIANCE IS PLACE OPON FINES AS A DETERRENT FOR CORPORATE CRIME, HIGHER TRANSACTION COSTS FOR THE JUDICIAL SYSTEM WILL RESULT. THE OFFENDER WILL HAVE INCENTIVE TO EVADE FULL PAYMENT AND SEEK REDUCTION OR DELAY WHENEVER INSTALLMENT PAYMENTS OR A PERCENTAGE-OF-INCOME FORMULA IS USED. CONSTANT MONITORING AND CONTESTED HEARINGS ARE INEVITABLE. CRIMINAL JUSTICE REFORMS MUST ALSO TAKE INTO ACCOUNT THE APPEARANCE OF BIAS WHICH WOULD RESULT FROM A SYSTEM OF SANCTIONS THAT FINES THE RICH (WHO CAN AFFORD IT) AND JAILS THE POOR. TO THE EXTENT THAT FINES ARE USED, PRECISE AMOUNTS FOR GIVEN CRIMES SHOULD BE AVOIDED, SO AS TO CONSIDER THE OFFENDER'S ABILITY TO PAY, THE LIKELY GAIN FROM THE OFFENSE, AND THE EXTENT TO WHICH THE FINE IS EQUIVALENT TO AN APPROPRIATE PRISON TERM IN ITS DISUTILITY FOR THE OFFENDER. A RATIONAL STRATEGY FOR SANCTIONS IN CASES OF CORPORATE CRIME SHOULD FOCUS UPON INDIVIDUAL DECISIONMAKER IN THE CORPORATE FRAMEWORK. WHERE CORPORATE BEHAVIOR HAS BEEN REPEATEDLY DELINQUENT, PREVENTIVE RESTRAINTS SHOULD BE CONSIDERED. FOOTNOTES ARE PROVIDED. (AUTHOR ABSTRACT MODIFIED---RCB)