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A Time to Lie?

by Simon Longstaff

The 'robber barons' of the 1980s seemed to laugh with scorn at values such as integrity and fair dealing. A number of them traded in deceit, sometimes aided by government, sometimes acting alone in a breathtaking display of arrogance. Even now, many seek to evade responsibility. At the height of their fortune they seemed to operate according to their own special code of rules. Why change now?

It is a little under a quarter of a century since the Harvard Business Review published an article entitled, Is business bluffing ethical?. That article was probably one of the most controversial published by the magazine. At the time it stimulated a storm of comment that carried over into the next issue.

What had its author, Albert Z Carr, said to generate such a fever of interest? In its simplest form, Carr suggested that business was like a poker game where all the players know that the rules permit a certain amount of deceit. He suggested that business is a kind of game in which all the players understand that, in pursuit of a win, anything is permitted unless it is an outright example of cheating.

None of this was meant to suggest that people in business were inherently greedy and unscrupulous. Rather, Carr made explicit the proposition that there are special rules that apply in the game of business. For example, while a person in business might think it wrong to practice deceit in his or her private life, such scruples would be misplaced when seeking to win in the game of commerce.

Some people found this shocking at the time. They maintained, as many (if not most) do today, that there is nothing inherent in the practice of business that requires one to lie. Others applauded Mr Carr for his realism and honesty. Still, others were just a little confused about Carr's intentions. Was he simply describing a situation as he saw it, or was he championing the rules of the game?

As we approach the end of the twentieth century, Carr's article still has the power to galvanise opinion. But how to respond? Is the person who borrows money without any intention of repaying the debt just playing the game? Does the use of the courts to frustrate creditors demonstrate a mastery of the rules? Does a good player know how to appear to answer a question in full, whilst skilfully concealing vital information? And how many 'games' are there? Is there a business game, a politics game, an industrial relations game and so on?

It's probably fair to say that most people, if asked what they think of lying, would reply with something like, "all things being equal, people should tell the truth". In many respects this would be a prudent answer. Who hasn't been the author of a 'fib', a 'white lie' or something worse? We all need that let out clause, "all things being equal", lest we condemn ourselves by our own words.

But at a deeper level people generally seem to believe that there are some circumstances where a lie can be justified. There are the classic moral dilemmas. Should medical practitioners always tell their patients the truth - even if to do so may cause the patient harm? Is there ever such a thing as a 'noble' lie? Is it acceptable to lie to a murderer about the whereabouts of his or her intended victim? If you could save one thousand innocent people by lying to convict one innocent person with your testimony, then should you do so?

Opinion concerning the correct answer, to questions such as these, has varied considerably. Some people have argued that it is always wrong to lie, whatever the outcome. Others look to the consequences that are likely to flow from telling the truth. The point is that it is extraordinarily difficult to set hard and fast rules about what should be done. The context seems to matter.

So, at first glance, there would appear to be something to be said for Mr Carr's proposition. Maybe there are special rules that help to define the context for business.

It isn't necessary to go to the extreme of concocting ethical dilemmas in order to see other sorts of precedents that might indicate support for Carr's point of view. One need only look at the way our courts operate. For example, barristers do not see it as their job to present the truth. Rather, the rules of the game require them to present evidence within strict guidelines that determine what is admissible. Solicitors will only brief a barrister in terms likely to be of help to the client. Witnesses may have to tell "the whole truth and nothing but the truth". Other participants have a different relationship with the truth. Of course, all of this is justified on the grounds that it is a necessary feature of our system of justice.

Once again, there seems to be a plausible precedent for assuming that there may be a special set of rules that apply in business. One formulation of these rules suggests the maxim, "If it is legal, then it can be done".

Too fixed a focus on the letter of the law can lead to forms of behaviour that, at an intuitive level, we feel to be wrong. Some people are expected to adopt a code in which it may be in order to tell the boss that he or she is correct, even if he or she is not. It may become acceptable to re-invent one's past in order to get that first interview. Buyers beware, it is not the job of the company to give a full account of any possible faults in the design of a product! Employees need not know that the plant will be closing in three months; they can be told that, for the 'foreseeable future', things will be fine.

Many people are under pressure to operate according to a short-term policy based on an all too narrow view of self-interest. A good number of those who succumb to the pressure, do so reluctantly. No matter how they feel about such behaviour personally, they feel constrained to work within the bounds of current business practices; "If I don't do it, someone else will", "If we always told all of the truth we'd go out of business in a week", "Everyone does it!". Many people in business pay an horrendous personal price when faced with a situation where they think it to be necessary to set aside personal values in favour of the company's. They then look for solace in the belief that what has been done is a reflection of the norm.

There is an obvious weakness in a point of view which equates morality with the will of the majority. The majority can be wrong. Something doesn't become more or less ‘right’ according to the number of its adherents. To take an extreme example, slavery was wrong even at a time when most people thought it to be right. We know better now. We have come to see that the rules of that game were never really tenable. A similar revision of old orthodoxies is taking place in other areas of our society.

There are some particular problems that have to be faced by those who would argue that business people are justified whenever they 'bend the truth' because to do so is just part of the game.

The first difficulty flows from the fact that the successful operation of any free market requires otherwise. The market is the immediate structure within which the practice of business is housed and it quite literally depends on there being a full disclosure of relevant information. To the extent that information is distorted, so is the market. Those people who believe that they can put a false gloss on their activities, or who seek to conceal the truth when confronted by a justified request for information, or who authorise false advertising, all act to distort the market. To do so may be self-defeating in the long run; it risks everything for short-term gain. If the long-term objective is to promote a flourishing business, then the maintenance of a reputation for honesty and fair dealing may be an indispensable element in one's strategy for success. We have seen what comes from the unfettered greed of some who have seen any tactic as being justifiable in the pursuit of what has become for them, and for many others, nothing more than a brief pyrrhic victory.

This leads on to a second and, perhaps, more fundamental point.

It is that the whole notion of there being a special game for business is inherently flawed. Business is nothing like a game of poker where all the players sit down at the table with the explicit intention of playing the game. They are there voluntarily and they know that there are likely to be some winners and some losers.

The analogy might hold good for those who play the business game. But what of the countless others who are affected by the game? Consumers do not consent to the special rules that some seek to apply. Creditors lend their money in good faith, expecting that debtors will honour their bond. They are affected by the conduct of the game, they sometimes get hurt, but in no sense are they players. Worst of all, they are unlikely to be aware of the special rules that apply.

The application of special rules in business has already caused considerable harm to our society. This harm may come to exceed the financial pain that is being experienced. And its effects may be more lasting. The loss of trust, that is the truly poisonous legacy of those who played by their own special rules in the face of conventions of honesty and integrity, is already becoming a burden to be borne by the community as a whole. The legacy of the bluffers and liars is a regime of increased regulation and surveillance, and a growing level of popular cynicism concerning the place of some of our central institutions. There is also a corresponding tide of vengeance that will lap at the walls of the innocent long after the guilty have escaped.

Having said all of this, it is as well to recognise that there are circumstances where one needs to exercise wisdom in the deployment of information. It is a fact of life that certain information should properly be regarded as commercial secrets. The theft of intellectual property, which can include: corporate strategy, pricing policies, details of suppliers, designs and so on, is a real threat that needs to be met. Not everybody is entitled to know everything about everybody else.

At the same time, it is easy to understand the sense of outrage expressed by many at Carr's depiction of the bounds of 'bluffing' in business. Rather than lie, why not politely inform the enquirer that certain information is not available? Wouldn't it be better to encourage a culture in the workplace where colleagues can be frank with each other without fear of causing offence? Should not business try to 'sell' the truth to their various stakeholders, "Yes, our product is more expensive than that of our competitor, but look at its superior qualities".

Complexity abounds and it is relatively easy to lie. Our culture tolerates a fair degree of latitude in the economy of truth. But at what cost?

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