International Journal on Criminology Volume 1, Number 1, Fall 2013 | Page 28

Subprime or Subcrime?
to the real world and its “animal instincts” (J.M. Keynes),3 far from the abstractions and
abuses of mathematical modeling.4
Despite today’s constant references to the Great Depression, no-one seems to
remember the United States Congress’s “Pecora Commission”5 whose hearings (1932–
1934) revealed massive financial malpractice by establishment “robber barons” to an
indignant public. President Franklin D. Roosevelt made skilful use of this widespread
indignation to push through his major reform laws. The lesson of the senate hearings and
the reforms enacted is clear: unregulated markets will inevitably descend into speculative
and fraudulent excesses.
Dogmatic and criminogenic market deregulation
From the 1980s onwards, oversight and blindness began to take over.6 America,
followed by parts of the rest of the world, began a dogmatic deregulation of its markets
with criminogenic consequences. Criminogenic in the strict meaning of the term: new
opportunities and impetuses for fraud were made available to the least scrupulous
economic and financial players. For the subprime crisis has a history—it was not an
accident, nor an isolated event. In fact, it is simply the most recent in a long list of
criminal failures and crises spreading across a generation: the collapse of savings and
loan associations,7 then of numerous multinational companies including the giant Enron,
representing the epitome of the “rogue stage of financialized capitalism”. However, when
the financial and real estate bubble linked to subprime lending burst, the standard
explanations immediately returned (economic cycles, greed, etc.). Economists attempted
to use well-oiled but short-sighted concepts (market asymmetry, moral hazard, defaulting
loans, etc.) to explain circumstances which they had previously failed to foresee. This
was done with a certain level of discomfort, however, as economic science not only failed
to predict the subprime crisis but also partly helped to trigger it by promoting an unreal
vision of supposedly efficient and self-regulating (and thus infallible) markets.8 This
crisis can be traced back to clear ideological roots. However, the “invisible hand of the
market” is only a representation; moreover a quasi-religious one, with questionable
scientific merit; by contrast, the “invisible hand of crime” working on unmonitored
markets is always proven. Deregulation born of public policies thus initiated a cycle of
criminal finance punctuated by fraudulent financial crises and collapses.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
3. George A. Akerlof and Robert J. Shiller. Animal Spirits: How Human Psychology Drives the
Economy, and Why it Matters for Global Capitalism (Princeton University Press, 2009).
4. Excessive modeling has clearly resulted in excessive simplification and specialization. This is
known as scientism.
5. Michael Perino. The Hellhound of Wall Street: How Ferdinand Pecora’s Investigation of the
Great Crash Forever Changed American Finance (Penguin Books, 2010).
6. On this concept of blindness:Xavier Raufer. Les nouveaux dangers planétaires. Coll. Biblis.
CNRS éditions, 2012. Also:Jean-François Gayraud and François Thual. Géostratégie du crime
(Odile Jacob, 2012).
7. Gayraud. La grande fraude. Also general literature on the subject: William K. Black, The Best
Way to Rob a Bank is to Own One (University of Texas Press, 2005).
8. The ultra-liberal doxa has successfully attached itself to the edges of science, and thus gained an
important legitimacy, thanks to multiple Nobel prizes during the 1970s and 1990s. On this ideology
and its role in the economic and financial history of the United States: John Cassidy. How Markets
Fail: The Logic of Economic Calamities. Farrar, Straus and Giroux, 2010. Also:James K. Galbraith,
The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too
(L’Etat prédateur: Comment la droite a renoncé au marché libre et pourquoi la gauche devrait en
faire autant. Seuil, 2009).
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