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Business Ethics: Some Thoughts on Playing the Game

by Dr. Larry V. Ort

In American society, when two business people meet and introduce themselves, one will often ask the other, "What game are you in?" The other may respond with some answer such as, "I'm in computers," or "I'm in oil," or "I'm in insurance." Many look upon business as a "game." Once business people have made their fortune, it is no longer the money that holds their interest; to the contrary, it is playing the game, for there is a thrill that comes from playing the game. Vladimir Aleksanyan, a Russian émigré involved in an import-export business used this terminology to describe the activities of the new Russian millionaires, "I've been fascinated watching this generation…and its clear they love the game more than the money as an end in itself" (Remnick, 1994, p. 315).

Within this paper, I will argue that business is far more than a game. I will further argue the game mentality fails to recognize the elements of trust and mutuality that are the very basis of the business enterprise and of society at large.

To more fully explore this thesis, let us set aside the notion of a game for a moment. Now, imagine a society in which the predominant values, or the forces that drive the social system, are wealth, power, and prestige. In such instances, the accumulation of wealth typically leads to increased power. Both wealth and power typically lead to increased prestige. A mutually reinforcing relationship appears to attain among wealth, power, and prestige; an increase in one invariably leads to an increase in the other two.

Those who possess significant levels of wealth, power, and prestige naturally seek alliances that serve to safeguard their interests. Apart from any system of checks and balances (legal or moral), ruthless exploitation and repression become the norm. Anyone who is a threat is eliminated, either economically or physically. Physical elimination ranges from institutionalization on the basis of insanity, imprisonment, or execution. Political and economic manifestations of this phenomenon may readily be identified.

Even within an economic and political framework that attempts to provide an adequate set of checks and balances, there is a tendency for the legal system to evolve in such a manner that it ultimately comes to retain a minimal degree of justice. The minimal degree of justice considered desirable by those who possess wealth, power, and prestige allows for the maximal attainment of their goals while maintaining social order. That is, the minimal degree of justice will, on this view, be established just above the minimum threshold necessary to maintain social order. Violation of this threshold is avoided, for such violation would likely lead to anarchy and endangerment of the attained levels of wealth, power, and prestige.

This economic phenomenon cuts across various socio-economic and political systems. For example, within capitalism, the unbridled acquisition of wealth, power, and prestige on a company scale results in monopoly. The competition is ruthlessly dispatched. I personally witnessed this occur in the operation of two companies that I will refer to as Company A and Company B. Company A was a large and highly successful company; Company B was a relatively small company that was attempting to take over some of Company A's business. Recognizing this threat, Company A offered Company B a lucrative subcontract that required the investment of considerable capital. Company B accepted the contract and heavily invested in plant and equipment. Company A, on a legal technicality, then withdrew the contract. As a consequence, Company B was unable to meet its financial obligations and went bankrupt. In this instance, Company A engaged in a deliberate strategy of deception to ruthlessly eliminate its competition.

But the same phenomenon happens in other economic and political systems, even in communism. One may argue that in pure theory, this would not be the case. But as one former professor of Marxist philosophy said to me, "Of course it is a beautiful theory; the problem is, it just doesn't work." Interestingly enough, the early Christian church also experimented with communism; it didn't work there either.

Today, many readily acknowledge that the true principles of communism were betrayed within weeks of the October Revolution. On November 6, 1991, Yeltsin issued a decree in which he charged that the Communist party "'was never a party,' but rather 'a special mechanism for the creation and realization of political power'" (Remnick, 1994, p. 505).
In response to Yeltsin's decree, thirty-seven communist deputies petitioned the Constitutional Court of the Russian Federation for a hearing into the legal status of the Communist Party. In 1992, a Constitutional Court was convened. Richard Pipes, a Harvard University historian, submitted into evidence a report that detailed the manner in which the Communist Party seized absolute state power within three months of the Revolution (Remnick, 1994, p. 509). Pipes further argued, "From the point of view of historical science, the so-called party of the Bolsheviks was, of course, not a party, but an organization of a wholly new type, which had some features of a political party: Its structure was without precedent, an organization which was beyond government, which controlled the government and controlled everything, including the country's wealth" (cf. Remnick, 1994, p. 509).

The rise of the oligarchs may also be interpreted from this perspective. With the demise of the Soviet Union, these people used positions of power and prestige to grab onto immense fortunes. A moral vacuum and the lack of adequate legal checks and balances allowed them to do so.

The fact that this phenomenon cuts across various economic and political systems indicates that something is operating on a much deeper, far more basic, level.

To illustrate this point, allow me to draw upon my experience in teaching management and organizational development for many years. To show the danger of the inappropriate use of power, I have employed a game, or simulation, called "Starpower." At the beginning of this game, the instructor tells the class that the game measures the students' ability to trade. The students are further told that those three students with the highest score will be declared the winner. All activities are carefully rule-governed, and the rules are carefully explained. Students are then broken into three groups, and each group is given a bag with different colored chips of varying value. By trading chips of unequal value, students have the opportunity to acquire several chips of the same color. If successful, they are given bonus points. At the end of the first round of trading, the students are reassigned to three groups: the squares (highest value), the circles (medium value), and the triangles (lowest value). The students are then given a corresponding badge to wear. After the students have been divided into the three groups, each group is given three bonus chips; each bonus chip is worth three points. These chips are to be distributed within the group. Students may argue for their own benefit, and if a student will not cooperate, the student may be expelled from the group.

After the bonus chips have been divided, the group plays a second round. Following the second round, the players are reassigned as necessary to keep the three groups approximately the same, but once a person is in the highest group (the squares), he or she is allowed to remain in that group. The second round is also followed by the apportionment of the bonus chips.

After the second round is complete, the students are told that in light of the superior trading ability demonstrated by the squares, the squares now have the right to meet and to change any rules of the game they would like to change. The squares are further told that they do not have to announce changes they make to the rules. The circles and the triangles may submit suggestions in writing, but these may rejected out of hand by the squares.

Following the rule making session, the rule changes are announced (if so desired) and the students are expected to play a third round of trading. Invariably, the circles and the triangles have formed an alliance to defeat the plans of the squares. In many instances, the third round of trading never gets off the ground, for people simply refuse to play.

In over 50 episodes of this game, I have witnessed, on a small scale, the affects of the abuse of wealth, power, and prestige. In only one instance cooperation, and the sharing of power, was the preferred mode of play! In this particular instance, over 80% of the students were from a corporation which has heavily emphasized teamwork and collaborative decision-making. In all other instances, the squares overtly and covertly abused their power.

When debriefing the simulation, I very often heard those who flagrantly abused their power assert, "Oh, come on! It is only a game!" In a certain sense, it is only a game. But in another sense, on a deeper level, it is anything but a game, for the simulation reflects the insidious nature of greed and exploitation!

When we look upon, or practice, business as a game, we have fallen prey to the false gods of wealth, power, and prestige. Such people are living under the illusion that they make the rules, but the rules have already been made! Their actions constitute a violation of the rules, a fundamental violation of the rights of others, and of their own human dignity.

The ethical imperatives found in the ethical/religious systems of varying cultures and faiths constitute an acknowledgement of the universality of greed and exploitation, and of the rules and prohibitions against living a life dedicated to the service of the same. For example, consider the exhortations of the Noble Eightfold Path of Buddhism, Aristotelian virtue ethics, the Covenant ethic of ancient Israel, and the restatement and extension of this covenant ethic as the Golden Rule found in the New Testament (Matthew 7.12: "In everything do to others what you would want them to do to you.").

All of these ethical precepts involve the notion of the rightness of relationships, i.e., of righteousness. Implicit in this notion are the correlative notions of balance, harmony, peace, mutuality, and reciprocity. Whether we acknowledge it or not, we stand in a social covenant with one another. Violation of this basic covenant breeds mistrust. When the students (the squares) changed the rules in ways that only benefited themselves, they broke trust, that is, they broke the social covenant.

If an economic system is to be successful, it must be founded upon the basic principle of trust. The current debate in Russia concerning international accounting standards (IAS) is fundamentally a debate about trust. As Andrei Ivanov, an analyst at Troika Dialog, observes, the Russian Accounting Standards financial statements are similar in form to the International Accounting Standards, but there are variations that may lead to "overvaluation of business assets and profitability" (Accounting Report, September/October 2000, p. 4). Such variations lead many potential investors to distrust the Russian market.

While there are other examples, I want to cite two outstanding companies that serve as examples of the application of sound business ethics: Herman Miller Corporation and Service-master. For these companies, business is more than a game! These companies recognize that the application of ethical principles and the commitment to sound ethical practices is to be pursued as an end in and of itself. In both instances, the founders of these companies engaged in business as a response to what they perceived to be God's call to live out these ethical commitments in ways that bring glory to God and benefit society. Nonetheless, as these companies have shown, acting in this manner is also good business practice, for it generates trust on the part of employees, customers, and the broader public that is also served.

Bibliography

Ivanov, Andrei (2000). Accounting Report, September/October 2000, Volume 3/4.

Remnick, David (1994). Lenin's Tomb: The last Days of the Soviet Empire. New York: Random House (Vintage Books Edition).

Stackhouse, Max L., McCann, Dennis P., and Roels, Shirley, with Williams, Preston N. (1995). On Moral Business: Classical and Contemporary Resources for Ethics in Economic Life. Grand Rapids: William B. Eerdmans Publishing Company.