Return to Philosophy Electronic Resources Page
Below
is an excerpt from Is Business Bluffing
Ethical? by Albert Carr. The full text of Carr’s
article can be found on a page created by James
Moulder, at the following URL.
http://falcon.tamucc.edu/~sencerz/Carr_Business_Bluffing.htm
_____________________________________________________________________________
Is
Business Bluffing Ethical? by Albert Carr
Harvard Business Review 46, January-February, 1968, pp. 143-53.
A
respected businessman with whom I discussed the theme of this article remarked
with some heat, "You mean to say you're going to encourage men to bluff?
Why, bluffing is nothing more than a form of lying! You're advising them to
lie!"
I
agreed that the basis of private morality is a respect for truth and that
the closer a businessman comes to the truth, the more he deserves respect.
At the same time, I suggested that most bluffing in business might be regarded
simply as game strategy-much like bluffing in poker, which does not reflect
on the morality of the bluffer.
I
quoted Henry Taylor, the British statesman who pointed out that "falsehood
ceases to be falsehood when it is understood on all sides that the truth is
not expected to be spoken"-an exact description of bluffing in poker,
diplomacy, and business. I cited the analogy of the criminal court, where
the criminal is not expected to tell the truth when he pleads "not guilty."
Everyone from the judge down takes it for granted that the job of the defendant's
attorney is to get his client off, not to reveal the truth; and this is considered
ethical practice. I mentioned Representative Omar Burleson, the Democrat from
I
reminded my friend that millions of businessmen feel constrained every day
to say yes to their bosses when they secretly believe no and that this is
generally accepted as permissible strategy when the alternative might be the
loss of a job. The essential point, I said, is that the ethics of business
are games ethics, different from the ethics of religion.
He
remained unconvinced. Referring to the company of which he is president, he
declared: "Maybe that's good enough for some businessmen, but I can tell
you that we pride ourselves on our ethics. In thirty years not one customer
has ever questioned my word or asked to check our figures. We're loyal to
our customers and fair to our suppliers. I regard my handshake on a deal as
a contract. I've never entered into price-fixing schemes with my competitors.
I've never allowed my salesmen to spread injurious rumors about other companies.
Our union contract is the best in our industry. And, if I do say so myself,
our ethical standards are of the highest!"
He
really was saying, without realizing it, that he was living up to the ethical
standards of the business game-which are a far cry from those of private life.
Like a gentlemanly poker player, he did not play in cahoots with others at
the table, try to smear their reputations, or hold back chips he owed them.
But
this same fine man, at that very time, was allowing one of his products to
be advertised in a way that made it sound a great deal better than it actually
was. Another item in his product line was notorious among dealers for its
"built-in-obsolescence." He was holding back from the market a much-improved
product because he did not want it to interfere with sales of the inferior
item it would have replaced. He had joined with certain of his competitors
in hiring a lobbyist to push a state legislature, by methods that he preferred
not to know too much about, into amending a bill then being enacted.
In
his view these things had nothing to do with ethics; they were merely normal
business practice. He himself undoubtedly avoided outright falsehoods-never
lied in so many words. But the entire organization that he ruled was deeply
involved in numerous strategies of deception.
Pressure
to Deceive
Most executives
from time to time are almost compelled, in the interest of their companies
or themselves, to practice some form of deception when negotiating with customers,
dealers, labor unions, government officials or even other department of their
companies. By conscious misstatements, concealment of pertinent facts, or
exaggeration-in short, by bluffing-they seek to persuade others to agree with
them. I think it is fair to say that if the individual executive refuses to
bluff from time to time-if he feels obligated to tell the truth, the whole
truth, and nothing but the truth-he is ignoring opportunities permitted under
the rules and is at a heavy disadvantage in his business dealings.
But
here and there a businessman is unable to reconcile himself to the bluff in
which he plays a part. His conscience, perhaps spurred by religious idealism,
troubles him. He feels guilty; he may develop an ulcer or a nervous tic. Before
any executive can make profitable use of the strategy of the bluff, he needs
to make sure that in bluffing he will not lose self-respect or become emotionally
disturbed. If he is to reconcile personal integrity and high standards of
honesty with the practical requirements of business, he must feel that his
bluffs are ethically justified. The justification rests on the fact that business,
as practiced by individuals as well as by corporations, has the impersonal
character of a game-a game that demands both special strategy and an understanding
of its special ethics.
The
game is played at all levels of corporate life, from the highest to the lowest.
At the very instant that a man decides to enter business, he may be forced
into a game situation, as is shown by the recent experience of a Cornell honor
graduate who applied for a job with a large company:
This
applicant was given a psychological test which included the statement, "Of
the following magazines, check any that you have read either regularly or
from time to time, and double-check those which interest you most. Reader's
Digest, Time, Fortune, Saturday Evening Post, The New Republic, Life, Look,
Ramparts, Newsweek, Business Week, U.S. News & World Report, The Nation,
Playboy, Esquire, Harper's, Sports Illustrated."
His
tastes in reading were broad, and at one time or another he had read almost
all of these magazines. He was a subscriber to The New Republic, an enthusiast
for Ramparts, and an avid student of the pictures in Playboy. He was not sure
whether his interest in Playboy would be held against him, but he had a shrewd
suspicion that if he confessed to an interest in Ramparts and The New Republic,
he would be thought a liberal, a radical, or at least an intellectual, and
his chances of getting the job, which he needed, would greatly diminish. He
therefore checked five of the more conservative magazines. Apparently it was
a sound decision, for he got the job.
He
had made a game player's decision, consistent with business ethics.
A
similar case is that of a magazine space salesman who, owing to a merger,
suddenly found himself out of a job:
This
man was 58, and, in spite of a good record, his chance of getting a job elsewhere
in a business where youth is favored in hiring practice was not good. He was
a vigorous, healthy man, and only a considerable amount of gray in his hair
suggested his age. Before beginning his job search he touched up his hair
with a black dye to confine the gray to his temples. He knew that the truth
about his age might well come out in time, but he calculated that he could
deal with that situation when it arose. He and his wife decided that he could
easily pass for 45, and he so stated his age on his résumé.
This
was a lie, yet within the accepted rules of the business game, no moral culpability
attaches to it.
The
Poker Analogy
We can learn a good deal about the
nature of business by comparing it with poker. While both have a large element
of chance, in the long run the winner is the man who plays with steady skill.
In both games ultimate victory requires intimate knowledge of the rules, insight
into the psychology of the other players, a bold front, a considerable amount
of self-discipline, and the ability to respond swiftly and effectively to
opportunities provided by chance.
No
one expects poker to be played on the ethical principles preached in churches.
In poker it is right and proper to bluff a friend out of the rewards of being
dealt a good hand. A player feels no more than a slight twinge of sympathy,
if that, when-with nothing better than a single ace in his hand-he strips
a heavy loser, who holds a pair, of the rest of his chips. It was up to the
other fellow to protect himself. In the words of an excellent poker player,
former President Harry Truman, "If you can't stand the heat, stay out
of the kitchen." If one shows mercy to a loser in poker, it is a personal
gesture, divorced from the rules of the game.
Poker
has its special ethics, and here I am not referring to rules against cheating.
The man who keeps an ace up his sleeve or who marks the cards is more than
unethical; he is a crook, and can be punished as such-kicked out of the game
or, in the Old West, shot.
In
contrast to the cheat, the unethical poker player is one who, while abiding
by the letter of the rules, finds ways to put the other players at an unfair
disadvantage. Perhaps he unnerves them with loud talk. Or he tries to get
them drunk. Or he plays in cahoots with someone else at the table. Ethical
poker players frown on such tactics. Poker's own
brand of ethics is different from the ethical ideals of civilized human relationships.
The game calls for distrust of the other fellow. It ignores the claim of friendship.
Cunning deception and concealment of one's strength and intentions, not kindness
and openheartedness, are vital in poker. No one thinks any the worse of poker
on that account. And no one should think any the worse of the game of business
because its standards of right and wrong differ from the prevailing traditions
of morality in our society. .
. .
"We
Don't Make the Laws."
Wherever we
turn in business, we can perceive the sharp distinction between its ethical
standards and those of the churches. Newspapers abound with sensational stories
growing out of this distinction:
·
We read one day that Senator Philip A. Hart of
·
·The next day there is a Congressional to-do over Ralph Nader's book, Unsafe At Any Speed,
which demonstrates that automobile companies for years have neglected the
safety of car-owning families.
·
·Then another Senator, Lee Metcalf of
These
are merely dramatic instances of a prevailing condition; there is hardly a
major industry at which a similar attack could not be aimed. Critics of business
regard such behavior as unethical, but the companies concerned know that they
are merely playing the business game.
Among
the most respected of our business institutions are the insurance companies.
A group of insurance executives meeting recently in
It
was difficult for the audience to deny the validity of these charges. But
these men were business game players. Their reaction to Moynihan's attack
was much the same as that of the automobile manufacturers to Nader,
of the utilities to Senator Metcalf, and of the food processors to Senator
Hart. If the laws governing their businesses change, or if public opinion
becomes clamorous, they will make the necessary adjustments. But morally they
have, in their view, done nothing wrong. As long as they comply with the letter
of the law, they are within their rights to operate their businesses as they
see fit.
The
small business is in the same position as the great corporation in this respect.
For example:
·
In 1967 a key manufacturer was accused of providing master
keys for automobiles to mail-order customers, although it was obvious that
some of the purchasers might be automobile thieves. His defense was plain
and straightforward. If there was nothing in the law to prevent him from selling
his keys to anyone who ordered them, it was not up to him to inquire as to
his customers' motives. Why was it any worse, he insisted, for him to sell
car keys by mail, than for mail-order houses to sell guns that might be used
for murder? Until the law was changed, the key manufacturer could regard himself
as being just as ethical as any other businessman by the rules of the business
game.
Violations
of the ethical ideals of society are common in business, but they are not
necessarily violations of business principles. Each year the Federal Trade
Commission orders hundreds of companies, many of them of the first magnitude,
to "cease and desist" from practices which, judged by ordinary standards,
are of questionable morality but which are stoutly defended by the companies
concerned.
In
one case, a firm manufacturing a well-known mouth-wash was accused of using
a cheap form of alcohol possibly deleterious to health. The company's chief
executive, after testifying in
"We
broke no law. We're in a highly competitive industry. If we're going to stay
in business, we have to look for profit wherever the law permits. We don't
make the laws. We obey them. Then why do we have to put up with this 'holier
than thou' talk about ethics? It's sheer hypocrisy. We're not in business
to promote ethics. Look at the cigarette companies, for God's sake! If the
ethics aren't embodied in the laws by the men who made them, you can't expect
businessmen to fill the lack. Why, a sudden submission to Christian ethics
by businessmen would bring about the greatest economic upheaval in history!"
It
may be noted that the government failed to prove its case against him.
Cast
Illusions Aside
Talk about ethics
by businessmen is often a thin decorative coating over the hard realities
of the game:
Once
I listened to a speech by a young executive who pointed to a new industry
code as proof that his company and its competitors were deeply aware of their
responsibilities to society. It was a code of ethics, he said. The industry
was going to police itself, to dissuade constituent companies from wrongdoing.
His eyes shone with conviction and enthusiasm.
The
same day there was a meeting in a hotel room where the industry's top executives
met with the "czar" who was to administer the new code, a man of
high repute. No one who was present could doubt their common attitude. In
their eyes the code was designed primarily to forestall a move by the federal
government to impose stern restrictions on the industry. They felt that the
code would hamper them a good deal less than new federal laws would. It was,
in other words, conceived as a protection for the industry, not for the public.
The
young executive accepted the surface explanation of the code; these leaders,
all experienced game players, did not deceive themselves for a moment about
its purpose.
The
illusion that business can afford to be guided by ethics as conceived in private
life is often fostered by speeches and articles containing such phrases as,
"It pays to be ethical," or, "Sound ethics is good business."
Actually this is not an ethical position at all; it is a self-serving calculation
in disguise. The speaker is really saying that in the long run a company can
make more money if it does not antagonize competitors, suppliers, employees,
and customers by squeezing them too hard. He is saying that oversharp policies reduce ultimate gains. That is true, but
it has nothing to do with ethics. The underlying attitude is much like that
in the familiar story of the shopkeeper who finds an extra twenty-dollar bill
in the cash register, debates with himself the ethical problem-should he tell
his partner?- and finally decides to share the money because the gesture will
give him an edge over the s.o.b. the next time they
quarrel.
I
think it is fair to sum up the prevailing attitude of businessmen on ethics
as follows:
We
live in what is probably the most competitive of the world's civilized societies.
Our customs encourage a high degree of aggression in the individual's striving
for success. Business is our main area of competition, and it has been ritualized
into a game of strategy. The basic rules of the game have been set by the
government, which attempts to detect and punish business frauds. But as long
as a company does not transgress the rules of the game set by law, it has
the legal right to shape its strategy without reference to anything but its
profits. If it takes a long-term view of its profits, it will preserve amicable
relations, so far as possible, with those with whom it deals. A wise businessman
will not seek advantage to the point where he generates dangerous hostility
among employees, competitors, customers, government, or the public at large.
But decisions in this area are, in the final test, decisions of strategy,
not of ethics.
The
Individual and the Game
An individual within a company often
finds it difficult to adjust to the requirements of the business game. He
tries to preserve his private ethical standards in situations that call for
game strategy. When he is obliged to carry out company policies that challenge
his conception of himself as an ethical man, he suffers.
It
disturbs him when he is ordered, for instance, to deny a raise to a man who
deserves it, to fire an employee of long standing, to prepare advertising
that he believes to be misleading, to conceal facts that he feels customers
are entitled to know, to cheapen the quality of materials used in the manufacture
of an established product, to sell as new a product that he knows to be rebuilt,
to exaggerate the curative powers of a medicinal preparation, or to coerce
dealers.
There
are some fortunate executives who, by the nature of their work and circumstances,
never have to face problems of this kind. But in one form or another
the ethical dilemma is felt sooner or later by most businessmen. Possibly
the dilemma is most painful not when the company forces the action on the
executive but when he originates it himself-that is, when he has taken or
is contemplating a step which is in his own interest but which runs counter
to his early moral conditioning. .
. .
Temptations
of this kind constantly arise in business. If an executive allows himself
to be torn between a decision based on business considerations and one based
on his private ethical code, he exposes himself to a grave psychological strain.
This
is not to say that sound business strategy necessarily runs counter to ethical
ideals. They may frequently coincide; and when they do, everyone is gratified.
But the major tests of every move in business, as in all games of strategy,
are legality and profit. A man who intends to be a winner in the business
game must have a game player's attitude.
. . .
All
sensible businessmen prefer to be truthful, but they seldom feel inclined
to tell the whole truth. In the business game truth-telling usually has to
be kept within narrow limits if trouble is to be avoided. The point was neatly
made a long time ago (in 1888) by one of John D. Rockefeller's associates,
Paul Babcock, to Standard Oil Company executives who were about to testify
before a government investigating committee: "Parry every question with
answers which, while perfectly truthful, are evasive of bottom facts.'' This
was, is, and probably always will be regarded as wise and permissible business
strategy. . . .
Playing
to Win
. . . If a man plans to take a seat in the business
game, he owes it to himself to master the principles by which the game is
played, including its special ethical outlook. He can then hardly fail to
recognize that an occasional bluff may well be justified in terms of the game's
ethics and warranted in terms of economic necessity. Once he clears his mind
on this point, he is in a good position to match his strategy against that
of the other players. He can then determine objectively whether a bluff in
a given situation has a good chance of succeeding and can decide when and
how to bluff, without a feeling of ethical transgression.
To
be a winner, a man must play to win. This does not mean that he must be ruthless,
cruel, harsh, or treacherous. On the contrary, the better his reputation for
integrity, honesty, and decency, the better his chances of victory will be
in the long run. But from time to time every businessman, like every poker
player, is offered a choice between certain loss or
bluffing within the legal rules of the game. If he is not resigned to losing,
if he wants to rise in his company and industry, then in such a crisis he
will bluff-and bluff hard.
Every
now and then one meets a successful businessman who has conveniently forgotten
the small or large deceptions that he practiced on his way to fortune. "God
gave me my money," old John D. Rockefeller once piously told a Sunday
school class. It would be a rare tycoon in our time who would risk the horse
laugh with which such a remark would be greeted.
In
the last third of the twentieth century even children are aware that if a
man has become prosperous in business, he has sometimes departed from the
strict truth in order to overcome obstacles or has practiced the more subtle
deceptions of the half-truth or the misleading omission. Whatever the form
of the bluff, it is an integral part of the game, and the executive who does
not master its techniques is not likely to accumulate much money or power.
*****