THEORETISING THE FOUNDATIONAL CONCEPTS of THE PROCESS of FINANCIAL CRIMES in COMPARATIVE ECONOMIC SYSTEMS: An Attempt in Grounded Theory

Abstract

Financial crimes have become one of the most destructive types of crime in post-industrial societies in terms of economic and financial consequences. While the importance of financial institutions in the modern economic system cannot be negated, their critical function in the society with their enormous powers brings about many questions, especially in relation to systems of checks and balances. The increasing number of adverse examples in the last decades provide evidence for the enormous negative consequences of corporate failures resulting from shortcomings in the checks and balances.
This study, hence, is motivated by the current financial failures, and aims at exploring and examining financial crimes in terms of the process of becoming a financial white-collar criminal in various financial systems, namely capitalist, socialist and Islamic systems, as well as exploring the vulnerability and propensity of each system in relation to financial crimes. In addition, this study, departing from the shortcomings of Eurocentric understanding and referring to cultural and religious norms, aims to re-conceptualise some of the concepts, subcategories and dimensions with the objective of developing and theorising an improved version of rational choice theory in criminology for a better comparison.
In fulfilling the aims of the study, a discourse analysis approach through a deconstruction method is utilised to locate and identify the underpinnings of the existing theoretical frameworks through comparative case study as a method, by comparing extreme cases of market/capitalist finance, socialist/transitional and Islamic/moral finance. In addition, grounded theory is used as a method to construct a modified version of the existing theories by using a number of formal codes such as ‘motivation’, ‘environment’, ‘target’, ‘guardian’ as concepts and ‘opportunity spaces’, ‘real, perceived selves’, ‘ideal and feared’, ‘need and guarding gaps’, ‘haste’, ‘expectations’, ‘deviance’, ‘crime motivation’, ‘act of crime’ etc. as subcategories and ‘material’, ‘social’ and ‘moral’ as dimensions.
Such an attempt is rationalised on the ground that the current criminology theories are unfortunately linear theories and they do not make decisions about a regular person. Therefore, there is no crime theory that is confident enough to receive a regular person and make dynamic, relativist, complex analysis about them in prospect, depending on the changing conditions of the inner and outer world of the individual, unlike the ‘complex theory of crime’ produced by this research through grounded theory.
A comparative analysis to order the financial systems according to their vulnerability to financial crimes is also provided in this study using the ‘opportunity spaces’ concept of the grounded theory which develops the classical ‘opportunity’ argument of the rational choice theory to almost a small theory of opportunity. This analysis suggests that the most vulnerable financial system to financial crime is the market based financial system, which is followed by socialist/transitional and Islamized financial systems. The comparative analysis of the study on crime propensities of financial systems also confirms the literature on economic and financial systems that argues that the financial systems are converging despite their strong and distinctive ontological and epistemological differences and capacities to enrich and improve each other.
The theoretical model developed in this study reveals that crime motivation is only an extension of ordinary motivation and has a dynamic nature. Dynamic in both the micro world of the individual and his/her close social/physical environment and also the macro environment in terms of the wider space of political-economy and social culture.
This study fills an important gap in criminology literature which has been sought for decades since the 1970s. Indeed, the resultant theory in this study is unique in its approach because it is a micro-founded macro theory, unlike all the criminology theories which have either micro (biological, psychological theories, control theories) or macro (i.e. symbolic interactions, social bonds theory, life-course theory, conflict theory) foundations.