Abstract
In an age of accelerating wealth at the very top and accelerating risks at the bottom, there is a clear disjunction between the flow of social benefits and social damages produced by different actors and their share of these respective benefits and damages. Yet, the specific processes that generate the dualization of tracks of accumulation of rewards or accumulation of risks and precarity are still up for debate. In tackling this dual process in a way that is attuned to the critical contribution of contemporary forms of the law to this uneven accumulation of wealth and of risks, this paper focuses on organized irresponsibility—where individuals can cumulatively contribute to risks, but avoid individual culpability—and how relations of organized irresponsibility provide extensive opportunities for risk arbitrage. Risk arbitrage is correspondingly a process where actors, whether it be individuals or larger organizations, can produce social risk, appropriate benefit from these risks, and disproportionately avoid the consequences of the risks so as to benefit from the overall “cycle of reward and risk”—even if society as a whole is worse off. The paper identifies organized irresponsibility as fundamentally undergirded by mismatches between existing configurations of law and the existing complexity of the processes of the production of social goods and risks. This paper proceeds to show how gaps in the law enable the organized irresponsibility principle—that given a level of risk production, the greater the number of actors involved and the greater complexity between causes and the risk’s impacts, the less overall culpability that tends to be assigned. It then shows how the organized irresponsibility principle enables relationships of risk arbitrage that intensify contemporary risk and inequality.
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Notes
There is in addition a literature that questions whether risks are actually growing, associated with the “culture of fear” thesis (Furedi 1997). While this is unquestionably a valid perspective for violent and personal crime, it is less debatable that there are a series of risks associated with the environment, in particular climate change, and finance that have grown over the last few decades.
It is important to note that there have been important discussions of how the law has enabled specific risks that have affected inequalities, especially with regards to financial risk (for one example, see Will et al. 2013; Barak 2015). There however has been much less discussion of how law enables this relationship between risk and inequality in a transposable manner, that is risk qua risk (rather than risk qua financial risk), in a way that applies across different domains of social life.
For one example, see Ormerod and Laird (2015: Chap. 1).
For a key early text on this theme, see Pearce (1976).
There are some notable specific examples of risk and inequality, such as the study of environmental justice. This paper though extends and builds on this literature by addressing these inequalities qua risk showing the generalizability of these types of specific, environmental inequalities to risk inequalities more generally (see also Curran 2018a).
The focus here is on Anglo-American common law systems—though this is also a more general problem for other law systems such as the law in Germany—see Beck (1992b).
Describing these different entities as “agents” is not to take a definite stake in the structure and agency debate (Giddens 1984) or to reify these supra-individual organizations as bona fide agents on the level of human beings, but rather to identify these entities as being sufficiently organized to engage in agreements, including contracts and to be said to “act” or “do” in the way that many organized entities do things (i.e. individuals walk down the street, universities raise tuition fees, states make free trade agreements) (for the critique of hypostatization of organizations, see Weber 1994: 238–239).
On this gap more generally, see Veitch (2007).
See Goldin and Mariathasan (2014).
Likewise, harm interpreted as sufficient for prohibition would be too strong (see the point above).
There is admittedly a small subset of “conduct” crimes, in which the question of causation or “results” are not involved—such as perjury (Ormerod and Laird 2015: 53–54). Ultimately though these conduct crimes are still primarily justified in terms of how the prohibited action can in itself tend to harm others or to undermine institutions designed to protect all (i.e. how perjury weakens the legal system).
Though this is not to dispute that they do not play a key role in these processes.
The use of the term “principle” is intended to highlight that it is a general transposable mechanism that functions in different sectors and industries of contemporary capitalist societies (in particular Anglo-American common law systems, but not exclusive to them), not that it is a universal principle of law, society and harm. That is, the intention is to not to reify these relations of organized irresponsibility and risk arbitrage as universal, but rather to identify their expansive scope so as to make them and their impacts more susceptible to systemic change.
Marx (1976) powerfully pursued an internal critique of the dominant economic thought of his time, classical political economy, yet perhaps given Marx’s dominant, definitive status, there is more reticence in pursuing a similar internal critique of neo-classical economics, though there have been important discussions of the limits of the “invisible hand” as emerging from engagement with the tools of mainstream economics (see Medema 2009).
For an account of how analyses of environmental inequalities can benefit from greater engagement with risk inequalities, see Curran (2018a).
See also Norrie (2001).
For risk arbitrage opportunities to be utilized they do not have fully perceived qua risk arbitrage opportunity; nevertheless, structures of complexity and siloed responsibility tend to make financial agents acutely aware of idiosyncratic risks, but more willing to see systemic risk as out of their control and hence themselves as not individually responsible for this type of collective risk product.
In this vein, the complexity of both the causes and of identifying the specific nature of the damages caused tend to undermine liability.
(See Packer 1968 in Ormerod and Laird 2015: 11). That many of these harms are global or at least transnational is an additional key factor to be further factored in, while also further intensifying the complexity of risk production. Yet, as Beck’s example shows even more regional harms within a country that are the complex contribution of many different actors tend to also enjoy “organized irresponsibility” (see Beck 1992b: 100). The way American banks were able to largely avoid culpability for the crisis due to the difficult of tracing damages to specific actions provides another example of this dynamic.
Chancel and Piketty (2015: 29) estimate that top 1% in the US (constituting 3.16 million people) annually consume on average 318.3 tCO2e, while in Canada, which is also one of the top emitters per capita, the top 1 per cent consume 203.9 tCO2e, which is respectively 51 and 33 times the world average and 244 and 156 times current estimates of sustainable levels of carbon emissions. That it is the poor in the Global South that will disproportionately bear the burden of climate change only further highlights the processes of risk arbitrage that are occurring (Roberts and Park 2007).
See Habermas (1975) for a discussion of the value of empirically oriented theory leading more detailed empirical investigations.
Merrill Lynch went public in 1971, Bear Stearns and Morgan Stanley in 1985, Lehman Brothers in 1994, and Goldman Sachs was the last go public in 1999 (Cooley et al. 2013: 3).
Beck (2013) has sought to critique “crisis” approaches to social life, as they miss the longer-term “ordinary” processes of risk production in society. While his critique has some validity, ultimately risk and crisis literatures provide more social insight by being brought together.
Approximately $3900 (USD).
The following point is discussed more specifically to do with resilience and risk-class inequalities in Curran (2017).
It should be noted that both of these goals, harm prevention and responsibility attribution, are at the heart of the aims of common law (Ormerod and Laird 2015); yet despite this, they constantly fail in the face of complex causality and systemic risks.
I am indebted to discussions with Frank Pearce for this idea, though this is not to imply that he would agree with my articulation of this idea.
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Curran, D. The Organized Irresponsibility Principle and Risk Arbitrage. Crit Crim 26, 595–610 (2018). https://doi.org/10.1007/s10612-018-9415-x
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DOI: https://doi.org/10.1007/s10612-018-9415-x