Is Business Bluffing Ethical?

Albert Carr stated that legality and profits are the only standard that people in business should follow. In Carr’s article “Is business bluffing ethical?” he compared and found the rules of business to be similar with the rules of poker. In a game of poker, bluffing is a central part of the game and this is known and accepted by all the players. So bluffing in poker is not considered morally wrong. If in business everyone understands that bluffing is okay, should we still consider bluffing immoral? As a matter of fact, Carr also pointed out the moral rules in business are different with those outside of business. Most people think that bluffing both inside and outside of business should be ruled by the same moral standard. Therefore, I am going to use Mill’s Utilitarianism, and Kant’s ethical theory to support Carr. I will also use the stakeholder theory to view business bluffing. Since bluffing is often mistaken for cheating, the difference between them should first be made clear. Bluffing, according to Carr, is not entirely cheating but not entirely telling the truth either. It is usually just an exaggeration of a true fact. In his theory of Utilitarianism, Mill argues that if an action can cause both good and bad consequences, the way to judge whether this action is morally right or wrong depends on which action produces more happiness. In addition, Mill also advocates producing the greatest happiness for the greatest number of people. Applying this theory in business, bluffing can also cause two consequences, bringing more profits to the business or creating mistrust among its customers. It is not hard to measure which consequence produces more happiness for people. Just check any company’s business plan and one can see that all they want to do is increase profits, not be honest. In the short run bluffing in business promotes sales for firms and increases profits. In the long run, people tend not to believe everything a businessman says. They take everything they say with a grain of salt. In other words, if a businessman says his product is the best, consumers tend to believe that it may be average or even close to the best but not necessarily the best. Therefore unless the businessman totally cheated and lied to them about his or her product, they keep buying this product. Products without bluffing are hard to sell compared to products with bluffing involved. Consequently in the long run, bluffing in business causes an increase of consumption expenditures, which stimulates the rate of economic growth. As a result, customers satisfy their needs, firms have higher revenue, the government collects more tax, and some portion of the collected tax is also used to benefit less fortunate people. So we can see that bluffing, in effect, guarantees more happiness to more people. In addition, if customers are really cheated or harmed in any way there are always laws to protect them from that kind of business dishonesty. In contrast, if a firm does not use business bluffing; it does not matter how honest a firm runs its business, if it goes into loss, nobody will pay back what is lost. Therefore, bluffing produces more happiness for more people than being completely honest. Thus, business bluffing, according to Utilitarianism, is morally right inside of business. According to Kant, testing whether an action is morally right or wrong depends on whether the maxim, on which the action was based, can be universalized. A maxim cannot be universalized if it contains a logical contradiction or a contradiction between two wills. If the maxim is one such that the person would will it for him/herself, but would never require all people to follow this maxim always at all times, then the maxim cannot be universalized. By universalizing the maxim we mean to apply it to all people at all times. Kant strongly suggests that thinking of a logical contradiction is one way to test whether a maxim can be universalized. A logical contradiction means a contradiction in the very proposition that someone acts on a maxim when one tries to universalize that maxim. Kant demonstrates this by using false promise as a typical example. If somebody gets what he/she wants by making false promises, the maxim of the action can only be universalized if the person making the false promise allows that everybody else can make false promises all the time, even to him/herself. What if everybody made false promises on everything all the time? Then everybody would know that everybody else was making false promises and what was promised would never become a reality. So people will not believe any promise and promise will not be taken as a promise and won’t be able to achieve its goal. The person, who is going to achieve his /her goals by making false promises, can never succeed. Thus there is a logical contradiction in universalizing false promise because once false promise is universalized it ceases to exist; this is why, according to Kant, it is wrong to make false promise. Apply this test to business bluffing. Business bluffing has been going on for so long and every business agent in the past and today has been doing it. For example, after watching shampoo commercials on television, consumers do not believe that using a certain brand of shampoo will make their hair exactly as shiny as shown on the commercial. However, people are still attracted to the beautiful hair they see on television. This is not only the case with shampoo commercials, but all kinds of other products. As a matter of fact, consumers are more easily persuaded to purchase products by these over exaggerated commercials. Customers know that what is showed on TV is not a promise, it just a way the product can help things get better. Statements such as: this shampoo makes your hair shinier or this detergent makes your clothes become softer are true to a certain degree though not completely accurate. This has been used as practical business strategy. If a firm gets what it wants by bluffing, the maxim of the action can be universalized because the firm allows that every other firms use business bluffing all the time, even to itself. Business bluffing is a given and is known by everyone, yet it still goes on. Both customers and firms accept business bluffing and thus it goes on all the time. This shows that business bluffing can be universalized without ceasing to exist. As a matter of fact, bluffing passes the test of universality at this point. Thus, according to Kant’s ethical theory, business bluffing is not morally wrong. Although, this theory seems logical, the fact is that people in business have no problem with allowing both bluffing and being bluffed. Thus in the case of business bluffing, it is possible for it to become a universal practice in the business sector. As shown before with product exaggeration in commercials, customers accept the businessman’s bluff. As for dealings between businesses, businessmen do not mind being bluffed by other businessmen. People use this as a way to do business all the time. It is a part of business that has been accepted by everybody involved in business and still goes on. Business people don’t mind business bluffing being universalized. Thus, there is no contradiction involved in the universalized practice of business bluffing. Therefore business bluffing can pass the test of universality. Viewing business bluffing through the two versions of the stakeholder theory yields two results. The narrow version would view bluffing as not being immoral, but if the owners of the company were the ones being bluffed, than that would be a problem because they are the owners. If bluffing were to be used by the company to maximize profits, than there would be no problem because that is the essence of the narrow version. You could say that the wide version on the other hand views bluffing as immoral. The business has a duty to be honest and to take into consideration the interests of all the stakeholder groups. Business bluffing could affect the habits of consumers and that could lead to decreased profits which is bad for business. To sum it all, the Utilitarian theory is very practical in this case, because profit is the goal for most businesses and satisfying needs is the goal of consumers. Both of these are satisfied by business bluffing and so this theory seems to work well for business bluffing. From the view point of Kant’s ethical theory, if the rules for business bluffing are used outside the business field, it may run into logical contradictions and contradictions between two wills. However, within the business field it seems to encounter neither logical contradiction nor contradiction between two wills and thus can be universalized to the business field. According to Kant an action which can be universalized should be considered as a morally right. Therefore, Carr’s is right in claiming that business activities such as business bluffing are not morally wrong, that the only standard that people in business should follow is legality and profits.

References

ALBERT CARR, “Is Business Bluffing Ethical?” Harvard Business Review.

“Kant vs. Mill.” University of Wisconsin-Waukesha. 2003. Philosophy Department. 11-24-2003

PAUL GUYER, (1998). Kant, Immanuel. In E. Craig (Ed.), Routledge Encyclopedia of Philosophy. London: Routledge. Dec 04, 2003,

JOHN STUART MILL. Utilitarianism. Prentice Hall. Second edition, 2002.

ONORA ONEILL. Kantian ethics. In E. Craig (Ed.), Routledge Encyclopedia of Philosophy. London: Routledge. Dec 04, 2003,

DESJARDINS and MCCALL. Contemporary Issues in Business Ethics. Wadsworth 2000.