Seeing Like an Anti-Fraud State
Keywords:
Fraud American legal history Regulatory innovation Entrepreneurial freedom Economic crime GovernanceAbstract
“They look upon fraud as a greater crime than theft, and therefore seldom fail to punish it with death,” Jonathan Swift famously wrote of the fictional island of Lilliput in Gulliver's Travels. Appearing as an epigraph of Edward Balleisen's Fraud: An American History from Barnum to Madoff, it invites comparison of Lilliput with the United States, not least because it is paired with a 2007 quotation from the former Federal Reserve Chairman Alan Greenspan, who was rather more philosophical about fraud. As the world teetered on the edge of economic crisis, he wrote it off as a regrettable but inevitable part of “the way human nature functions,” suggesting that “what successful economies do is keep it to a minimum.” Looking backward, Balleisen finds greater ambivalence in the historical record, as a matter of both human psychology and American law. From the nation's founding, he observes, “the country's lionization of entrepreneurial freedom has given aid and comfort to the perpetrators of duplicitous schemes.” But this is not to say that they have been allowed to act with impunity. To the contrary, their creative deceptions have inspired a wide array of anti-fraud initiatives, operating “at the leading edge of regulatory innovation.” In chronicling these conflicting and conflicted pursuits of profit and justice over the course of two centuries of American history, Balleisen brilliantly elucidates an enduring dilemma of governance: how to promote ingenuity without undermining “‘the capital of confidence upon which all progress depends.’”
References
1
Balleisen, Edward J., Fraud: An American History from Barnum to Madoff (Princeton, N.J.: Princeton University Press, 2018), 5Google Scholar.
2
Ibid., 9.
3
Ibid., 178.
4
Ibid., 8.
5
Ibid.
6
Ibid., 12.
7
Ibid., 245.
8
Ibid., 283, 286.
9
Ibid., 304, 311.
10
Ibid., 351.
11
Ibid., 381.
12
Ibid., 383.
13
Ibid., 5.
14
For an intriguing study that pursues some of these lines of inquiry, see Pettit, Michael, The Science of Deception: Psychology and Commerce in America (Chicago: University of Chicago Press, 2013)Google Scholar.
15
Ibid, 43.
16
It bears noting that Balleisen accords historical priority to Sarah Howe for the pyramid scheme that has since been named after Charles Ponzi and was subsequently made all the more famous by Bernie Madoff. Nonetheless, her mug is noticeably absent from the book's cover, and women mostly figure as victims in Balleisen's account. On the enforcement side, mention is made of women holding important posts as consumer affairs advisors in postwar administrative agencies, (Ibid., 291, 302, 304), and Elizabeth Warren is credited with providing the blueprint for the Consumer Financial Protection Bureau in the more recent past (370), but the role of gender in the anti-fraud state is not considered.
17
Capitalism Takes Command: The Social Transformation of Nineteenth-Century America, Michael Zakim and Gary J. Kornblith, eds. (Chicago: University of Chicago Press, 2012). For a case study probing these themes, see Susanna L. Blumenthal, “Counterfeiting Confidence: The Problem of Trust in the Age of Contract,” in Alison L. LaCroix, Saul Levmore, and Martha C. Nussbaum, eds., Power, Prose, and Purse: Law, Literature, and Economic Transformations (New York: Oxford University Press, 2019), 15–50.
18
These developments have been mapped most fully by historians of English law. See John P. Locker and Barry Godfrey, “Ontological Boundaries and Temporal Watersheds in the Development of White-Collar Crime,” British Journal of Criminology (2006), 976–92; Lindsay Farmer, Making the Modern Criminal Law: Criminalization and Civil Order (Oxford University Press, 2016), 201–33; James Taylor, Boardroom Scandal: The Criminalization of Company Fraud in Nineteenth-Century Britain (Oxford: Oxford University Press, 2013); Michael Lobban, “Commercial Morality and the Common Law: or, Paying the Price of Fraud in the Later Nineteenth Century,” in Margot Finn, Michael Lobban, and Jenny Bourne Taylor, eds., Legitimacy and Illegitimacy in Nineteenth-Century Law, Literature and History (Basingstoke: Palgrave Macmillan, 2010), 119–47; Graham Ferris, “Larceny: Debating the ‘Boundless Region of Dishonesty,'” in Judith Rowbothan and Kim Stevenson, eds., Criminal Conversations: Victorian Crimes, Social Panic, and Moral Outrage (Columbus: Ohio State University Press, 2005), 70–88; Cerian Charlotte Griffiths, Prosecuting Fraud in the Metropolis, 1760–1820 (PhD dissertation, University of Liverpool 2017).
19
For evidence of the indeterminacy of the meaning of “business” in legal thought and practice at the turn of the twentieth century and the stakes of this definitional enterprise, see Edward A. Adler, “Business Jurisprudence,” Harvard Law Review 28 (1914): 135–62. The legal foundations of American capitalism have received more extensive consideration in recent work by William J. Novak, New Democracy: The Creation of the Modern American State (Cambridge, MA: Harvard University Press, 2022); and Joseph Fishkin and William E. Forbath, The Anti-Oligarchy Constitution: Reconstructing the Economic Foundations of American Democracy (Cambridge, MA: Harvard University Press, 2022); cf. Jonathan Levy, Ages of American Capitalism: A History of the United States (New York: Random House, 2021).
20
Balleisen's citations to the work of James Taylor, in particular Boardroom Scandal: The Criminalization of Company Fraud in Nineteenth-Century Britain (Oxford: Oxford University Press, 2013), suggest significant parallels in the treatment of business fraud in Victorian-era courts on both sides of the Atlantic, but these comparative lines of inquiry are not pursued within the confines of Fraud. Moreover, while the antifraud initiatives upon which the book centers are described as novel departures in regulatory governance, they are not fully contextualized within the broader history and historiography of American statecraft. The proliferation of studies in the last two decades, illustrating the heretofore hidden strengths of the American state from the founding forward, are comprehensively assessed in Gautham Rao, “The New Historiography of the Early Federal Government: Institutions, Contexts, and the Imperial State,” William and Mary Quarterly 771 (2020): 97–128; see also Jeremy Kessler, “The Struggle for Administrative Legitimacy,” Harvard Law Review 129 (2016): 718–73.
21
For an argument of a criminologist along these lines, see Richard V. Ericson, Crime in an Insecure World (Cambridge: Polity Press, 2006), 72–73, which conceives of this mode of governing as characteristic of neoliberal political cultures; cf. Jonathan Simon, Governing through Crime: How the War on Crime Transformed American Democracy and Created a Culture of Fear (New York: Oxford University Press, 2007).
22
See, for example, Spencer Headworth, Policing Welfare: Punitive Adversarialism in Public Assistance (Chicago: University of Chicago Press, 2021); Julilly Kohler-Hausmann, Getting Tough: Welfare and Imprisonment in 1970s America (Princeton: Princeton University Press, 2017); Kaaryn Gustafson, Cheating Welfare: Public Assistance and the Criminalization of Poverty (New York: New York University Press, 2012); Loic Wacquant, Punishing the Poor: The Neoliberal Government of Social Insecurity (Durham: Duke University Press, 2009); David Garland, Culture of Control (Chicago: University of Chicago Press, 2001); and Katherine Beckett and Bruce Western, “Governing Social Marginality: Welfare, Incarceration and the Transformation of State Policy,” in Mass Imprisonment: Social Causes and Consequences, ed. David J. Garland (London: Sage Publications, 2001), 35–50. Earlier periods of United States history have been surveyed in two classic works by David J. Rothman, The Discovery of the Asylum: Social Order and Disorder in the New Republic (Boston: Little, Brown, 1971; rev. ed. 1990); and The Asylum and Its Alternatives in Progressive America (Boston: Little, Brown, 1980; rev. ed. 2002).
23
JKohler-Hausmann, ulilly, “Welfare Crises, Penal Solutions, and the Origins of the ‘Welfare Queen,’” Journal of Urban History 41 (2015), 756–71CrossRefGoogle Scholar; Kohler-Hausmann, Julilly, “‘The Crime of Survival’: Fraud Prosecutions, Community Surveillance, and the Original ‘Welfare Queen,’” Journal of Social History 41 (2007), 329–54CrossRefGoogle Scholar; and Balleisen, Fraud, 356–68.
