Abstract
Incentivizing Injustice seeks to shed light on the intricate issue that emerged in the wake of the 2008 financial crisis—specifically, the near-total lack of criminal prosecutions against financial executives involved in the scandal. Authored by Sari Krieger, a professor of political science at the University of Albany, the book addresses the question of why the criminal justice system largely failed to act. This is particularly striking given that the 2008 crisis is often considered to be of a magnitude comparable to the Great Crash of 1929. Despite being published 15 years after the crisis, the book's relevance remains undiminished. For several years following the crisis, the prevailing narrative attributed the financial turmoil to over-exuberant commercial practices. Only a few experts, such as journalist Danny Schechter in his book The Crime of Our Time, immediately argued that potentially criminal actions were at the heart of the collapse. It was not until later that academic research began to challenge this mainstream view. The discourse surrounding the financial crisis continues to evolve. Works that delve into both the legal and ethical complexities of the events are still of critical importance. This is especially true as efforts to generate a counter-narrative, one that focuses on the criminal relevance of the financial practices, remain an ongoing endeavor. In this regard, the volume serves a dual purpose: on one hand, it contributes to disrupting the commercial-focused understanding of the crisis; and on the other hand, it highlights the startling reality that prosecutions for economic crimes related to the crisis resulted exceedingly rare. The volume's objective is not to offer an exhaustive analysis of the scandal; rather, it aims to investigate the reasons behind the lack of proactive prosecution, focusing especially on law enforcement considerations.
Examining the book structure, it is possible to conceptually divide it into two main parts. The first part, encompassing Chapters 1 to 6, sets the general context. It provides a succinct overview of the 2008 crisis, outlines the history of how economic crime has been addressed in the U.S.A., touches upon the recent trend of prosecuting corporations rather than individuals, and delineates how pivotal cases like the collapse of Enron and Arthur Andersen signified a turning point. Chapter 6 specifically delves into relevant case studies, including the Lehman Brothers’ downfall and the role played by Credit Rating Agencies during the crisis. The aim of Incentivizing Injustice is not to offer a comprehensive analysis of the scandal; its purpose is to investigate the reasons for the prosecutorial inertia focusing in particular on law enforcement factors. In order to achieve such an objective, the book proceeds in a way that allows us to conceptually divide it into two main parts. The first part, from Chapters 1 to 6, sets the context. It gives a brief overview of the 2008 crisis, describes how economic crime has been countered in the U.S.A. over the years, addresses the more recent prosecutorial trend of criminalizing corporations instead of individuals, and explains how the collapse of the energy giant Enron, along with the downfall of the audit firm Arthur Andersen—which was engulfed by the resulting criminal investigations—represented pivotal turning points in the American prosecutors’ approach to economic crimes. The ensuing Chapter 6 specifically delves into relevant case studies, including the Lehman Brothers’ downfall and the role played by Credit Rating Agencies during the crisis. The second part, consisting of Chapters 7 to 10, focuses on Sari Krieger's analysis and arguments regarding the factors that could have contributed to the lack of an adequate prosecutorial response to the crisis. This part begins with an examination of counter-incentives that may have hindered the efforts of American prosecutors. The book identifies several such factors, including the cost of living, salaries, career prospects in law firms, Justice Department strategies, and resources available for investigations. After that, the author explores “alternative explanations,” or perhaps more appropriately combined factors, for the criminal justice system's inertia. Specifically, in Chapter 8, the author narrows her focus to examine the intricate situation of political capture that could be generated by the complex flow of money and economic benefits linking the financial elite with government representatives. Moving on to the ninth chapter, the book turns its attention to scrutinizing the influential role that presidential authority could wield over prosecution activities. Lastly, Chapter 10 delves into the multifaceted theme of cultural capture, elaborating on the potential implications that arise from the existence of close socio-economic connections among the members of the country's ruling class, whether they serve as government representatives or are actively engaged as operators in the financial market. In her conclusion, Krieger argues that the primary reasons for prosecutorial inaction resided in both institutional and personal incentives within the Justice Department. The changes within this institution, coupled with external influences, created a situation that discouraged de facto the pursuit of complex, high-stakes legal cases against Wall Street executives potentially responsible for the crisis. In that regard, it is possible to appreciate that, given the intricate and relatively underexplored areas of political, regulatory, cultural, and cognitive capture, the task of pinpointing the most relevant factors contributing to prosecutorial inaction represented complex endeavor.
Incentivizing Injustice emerges as a valuable work for three main reasons. The first notable contribution of this volume is that it provides a comprehensive and coherent analysis of the intricate system of incentives and disincentives that directly influence prosecutors’ willingness or reluctance to initiate and pursue complex criminal investigations in the area of economic crime within the American legal system. Secondly, the book serves as an additional scholarly endeavor aimed at challenging the narrative, which attributes the 2008 financial crisis to aggressive business practices, overlooking its potential criminal relevance and illegal activities. Lastly, the book distinguishes itself through its simplicity and brevity of approach, making it an invaluable resource not only for those who are novices in the subject matter and wish to acquire foundational knowledge but also for academics seeking to offer their students an insightful supplementary text in their academic courses.
