Are business liars true blue?

By Simon Longstaff

A version of this article was first published: ABM - July 1992

On 28 June 1992 Alan Bond was convicted for criminal dishonesty. For a number of business people, Bond's fate will have concentrated their minds wonderfully. These will be people who have, for whatever reason, failed to be totally candid with others being asked to give their informed consent in response to some inducement.

But does Bond's conviction mean that business people must tell the whole truth and nothing but the truth?

It is a little under a quarter of a century since the Harvard Business Review published an article titled, 'Is business bluffing ethical?'. That article was probably one of the most controversial ever published by the magazine, stimulating a storm of comment that carried over into the next issue. What had its author, Albert Carr, said to generate such a fever of interest?

Put simply, 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 game in which all the players understand that, in pursuit of victory, anything is permitted unless it is an outright example of cheating.

This was not meant to suggest that people in business are inherently greedy and unscrupulous. Rather, Carr explicitly said there are special rules that apply in the game of business. While someone in business might think it was wrong to practise 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. 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 Carr for his realism and honesty. Others again were 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 of frustrate creditors demonstrate a mastery of the rules? Does a good player know how to appear to answer a question in full, while 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 is probably fair to say that most people, if asked what they think of lying, would reply along the lines of, “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-our clause – “all things being equal” – lest we condemn ourselves by our own words.

The 'good lie'

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?

Opinion about 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 seems to be something to be said for Carr's proposition. Maybe there are special rules that help to define the context for business.

It isn't necessary to concoct ethical dilemmas to find 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", but other participants have a different relationship with the truth. 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 applies in business.

According to some people, these rules can be expressed as: “If it is legal, then it can be done”. But too fixed a focus on the letter of the law can lead to forms of behaviour that, at an intuitive level, we feel are wrong. For example: some people may have 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; 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 a narrow view of self-interest, and many of those who do succumb to the pressure do so reluctantly. No matter how they feel about such behaviour personally, they feel they have 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 a horrendous personal price when faced with a situation where they think they have to set aside personal values in favour of the company's. They then look for solace in the belief that what they have done is normal.

There is an obvious weakness in the belief that morality is the same as 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. Slavery was wrong even when most people thought it was right. We know better now. We have come to see that the rules of that game were never really tenable.

'Distorting' the market

There are some particular problems for those who argue that business people are justified when they 'bend the truth' because to do so is just part of the game.

The first difficulty is 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. If information is distorted, so is the market.

People who believe that they can put a false gloss on their activities, or who try to conceal the truth when confronted by a reasonable request for information, or who authorise false advertising, all distort the market.

This may be self-defeating in the long run, as it risks everything for short-term gain. If the long-term objective is to promote a flourishing business, then having a reputation for honesty and fair dealing may be a vital element in one's strategy for success. We have seen what comes from the unfettered greed of people who believed any tactic was justifiable in the pursuit of victory.

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

The whole notion that business is a special game 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. The poker players are there voluntarily and they know that there will be some winners and some losers. That might also be true for those who play the business game.

But what of the countless others who are affected by it? 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. The loss of trust is the truly poisonous legacy of those who played by their own special rules in the face of conventions of honesty and integrity, and it is already becoming a burden for the community as a whole. The legacy of the bluffers and liars is increased regulation and surveillance, and increased cynicism about our central institutions.

Nevertheless, there are circumstances where one needs to exercise wisdom in the deployment of information. Certain information is properly regarded as a commercial secret.

But it is easy to understand the outrage expressed by many at Albert 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? Shouldn't businesses try to 'sell' the truth to their various stakeholders (“Yes, our product is more expensive than our competitor's, but look at its superior qualities”)?

It is relatively easy to lie and our culture tolerates a fair degree of latitude in the economy of truth. But at what cost?