Justice and Commercial Crime

Tibor R. Machan

No one in his right mind denies that people in commerce can become criminals. That's because people in any walk of life can--it is a basic human capacity not only to do something wrong but to hurt others with it.

No other known animal is like us in this respect, which is why the courts aren't flooded with cases of animal crime. Despite what all the champions of animal rights and liberation suppose, people are basically different from non-humans. And the source of that difference is free choice. Without it, all human misconduct, malpractice--including Goldman Sach's, Enron's, Bernard Madoff's, etc.--would be but natural disasters, like earthquakes or tsunamis or volcanoes. No one could be deemed guilty of anything at all since personal responsibility would be what many philosophers and social scientists claim it is, a sheer myth.

OK, then, but there is another implication of our difference from fellow critters in the world. This is that one person's or group of people's guilt doesn't imply the guilt of another's. This is why it is wrong to form prejudices based on what people have done who are in some respects similar to a wrongdoer. I am a college professor and if I do something wrong as such, it doesn't show anything about my colleagues. All we may infer from my misconduct is that, well, such misconduct is possible, that others like me might also act badly. But from my acting badly no one is justified in inferring that other professors are also doing so.

And this is a basic principle of justice within liberalism, be it classical or modern. Both type of liberals--be they like Milton Friedman or like John Maynard Keynes--insist that one needs to be convicted as an individual so as to be considered guilty of having done something wrong. And liberals also insist, in the same spirit, that the "sins of the fathers" do not extend to their offspring--your parents may have been racists but it doesn't follow that you are, for example.

Nonetheless modern liberals, unlike classical ones and libertarians, seem to overlook this principle when it comes to people in commerce. So if one Wall Street firm has been found guilty of fraud--which is to say the managers of such a firm have been found guilty of a certain kind of crime--many modern liberals will unhesitatingly rush to condemn other such firms. This is shown clearly by how readily they move from an instance of commercial crime to condemning all those doing the kind of commerce done by the guilty and how they insist that all these others must now be severely regulated even though they have not been found guilty of anything.

This is wrong, and modern liberals should be first in line condemning it, yet they are often first in line showing such prejudice toward all those doing the sort of business done by the ones found guilty of malpractice, like Goldman Sachs, for example.

And this is not the only instance of modern liberal prejudice toward commercial agents. The very institution of government regulation of people in business is flawed--it involves what in other contexts is considered impermissible prior restraint. Just because a business might do something untoward, it is deemed a valid target of prior punishment or imposition of burdens.

In the criminal law this is nearly uniformly resisted and condemned. Just because one might do harm to another--is rumored to be planning such harmful conduct--it doesn't mean one may be imposed upon via some kind of criminal sanctions. Due process requires that the suspect be shown to be guilty, not merely feared to be so.

But vis-a-vis commercial agents the modern liberal tends to carry on very differently. And today this is evident all over, from the highest political office to main street. Since some Wall Street folks have done what is criminal, so now all of them must be treated as if they were criminal as well and restrained, tamed, and regulated.

The injustice of this ought to be, but sadly is not, clear to anyone.