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Wednesday, October 27, 2010

Progressivism and the Criminal Law

Offenses against society.

The development of the criminal law under Progressivism, which began more than a century ago, is revealing. Before the Progressives hit the scene, criminal law pretty much was limited to dealing with actual harm that individuals visited on other individuals, including robbery, assault, and murder.

However, Progressives believed crimes were collective in nature, actions either that harmed “society” or violated a rule that Progressives believed was important. During the 1930s a socialist academic named Edwin Sutherland (pdf) coined the term “white collar crime” while claiming that most business owners really were criminals who should be prosecuted and imprisoned. (Not surprisingly, Sutherland’s “theories” have become popular in the academic and legal world, and the U.S. Department of Justice has a section honoring him on its website.)

As Louisiana State University law professor John Baker wrote, Sutherland was “concerned with whom the alleged perpetrator was, rather than what that person might have done.” Baker notes that Sutherland wanted to do away with the legal presumption of innocence in “white collar” cases. In fact, it was a Sutherland protégé, Donald Cressey, who created the “enterprise” idea that is the core of the infamous federal RICO statutes.

Progressives have not looked back since Sutherland’s ideas became law, and nowhere is suspicion about business under free competition stronger than at the “Newspaper of Record,” the New York Times. When Rudy Giuliani’s federal prosecutors were engaged in what former University of Chicago Law School dean Daniel Fischel calls a “reign of terror” on Wall Street during the 1980s, the Times was among the feds’ main cheerleaders.

When Giuliani’s staff illegally leaked grand jury material to the media as it sought to try Michael Milken in the press for his use of so-called junk bonds to finance company takeovers (depriving him even of the opportunity for a fair trial), the Times eagerly enabled those entrusted with the law to commit felonies, claiming “the people have a right to know.” (Milken eventually went to prison in a dubious plea deal.) And when Martha Stewart had her fateful meeting with federal investigators – leading to insider-trading charges and eventually prison — she was there because the U.S. attorney’s office illegally had leaked grand jury material to – what else? – the Times in order to damage Stewart’s company.

There is no more Progressive newspaper than the Times Its editors are true believers that the State and only the State can provide the Good Life for all. That Giuliani would eviscerate one constitutional protection after another was irrelevant to the newspaper that allegedly supports civil liberties. Giuliani was fighting competitive capitalism, and that is what Progressives have been doing since their early days.

Cronies and Entrepreneurs

The latest example comes from Frank Rich, a Times columnist who embraces everything the modern Progressive believes. While he attacks some Wall Street characters who have received bailouts and other favors, Rich clearly is incapable of distinguishing crony capitalism from free-market capitalism.

He writes that the “real problem” with the Obama regime is not that it has spent the nation into bankruptcy or that its antibusiness rhetoric all but guarantees a dearth of new capital investment. No, the “problem,” according to Rich, is that it lacks a “prosecutorial gene.” That’s right. It does not throw enough people into prison.

Unsurprisingly, Rich favored imprisoning Milken, claiming he was a symbol of the “Greedy 1980s” (whatever that means). Yet, here is what Murray Rothbard had to say about Milken:

The genius of Michael Milken was to find a way to make the free market work, a way around the roadblock of the Williams Act [which impeded corporate takeovers]. He also made an end-run around the Old Guard banks and blue-chip bond dealers with his new concept: financing takeover bids by issuing high-risk and therefore high-yield bonds, misleadingly called “junk” by their blueblood competitors.

Unfortunately, Progressives at the Times are not satisfied with vilifying free-market competition. They also believe they must throw entrepreneurs into prison, even if it means helping prosecutors break the law. And this will lead to economic recovery? I don’t think so.

  • Dr. William Anderson is Professor of Economics at Frostburg State University. He holds a Ph.D in Economics from Auburn University. He is a member of the FEE Faculty Network.