Puffing or Bluffing

Leo J. Rain, M.D.

In 1968 The Harvard Business Review published a paper that has been in every business school textbook ever since. It was by Albert Z. Carr, titled "Is Business Bluffing Ethical?"  In it he compared and found the rules of business to be the same as the rules of poker.  Everyone knows the rules.  Bluffing is an integral part of the game accepted by all players so there is nothing immoral about it.  So, too, in business, everyone understands that bluffing goes on and it is not considered to be immoral nor is it illegal.  It is impersonal game ethics and not religious ethics. Most executives practice some form of deception when negotiating with customers, dealers, labor unions, government officials or even other departments of their own companies.   Everyone does it.  Competition forces it to happen.  These are the hard realities of business.  The only restraints are in the law which prohibits fraud, serious deception and cheating.  Social mores and the market also act as restraints as does the bluffer's own conscience or the fear of loss of trust by others if he is found out.  He should not be ruthless or cruel but should strive to maintain a reputation for honesty and integrity.  But he will bluff when he has to or at least use puffery which is an exaggeration to make someone believe something in a way that is not quite strong enough to be convincing.  This fits in with the ultra-minimalist, or agent of capital, concept of business ethics.

But the game of poker is a game and not real life although it may seem pretty close.  A game might allow things to take place that are not acceptable in real life because its intent is to amuse.  Therefore applying these same rules to real life can be harmful by blurring the lines between what is permissible and what is not.  In the real world bluffing is the same as lying.  Lying deprives people of knowledge and restricts their freedom to act as rationally as they might with better information.  They may be harmed economically or hurt by faulty products.  Lying is used as a coercive tactic which restrains the other from acting in his own best interests.  It undermines society's basic moral principles of honesty and trust.  Lying leads to more lying.  Relationships become adversarial.   Business transactions should exist to satisfy buyer and seller, or both parties in a negotiation.

How much then is a businessman obligated to tell about his item?  One need not or indeed cannot tell everything there is to know about a product.  The prospective buyer lacks information that needs to be supplied.  We must in general tell as much as a reasonable person would want to know and answer all questions honestly, completely and understandably.  Information that is readily available, such as competitive prices need not be volunteered.  This is known as conforming to the standards of professionalism.  All rules of capitalism call for honesty and fairness in all dealings no matter what theory you are working under.  One can avoid deception by keeping those rules in mind.  Short term gains should not be at the expense of long term losses.  Preserving one's principles, self-esteem and self-respect are very important.  It is dehumanizing to treat business as an impersonal game.  Rational understanding of the moral and ethical principles and how to resolve conflicts must be fully understood.  There is an old saying that "good ethics is good business."  That should not be the reason for practicing ethically.  It should be practiced  because it produces good for all concerned.  It is the right thing to do.  It should be habitual.