Galt's Gulch

Is Bribery Between Businesses Physical Force?

Posted by ddardick24 10 years, 4 months ago to Economics
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This may end up being an easy answer and maybe I am overthinking this, but here is the scenario: Let's say a large business (business A) discovers an emerging source of competition (business B), and it wants to prevent business B from threatening their share of the market. Instead of improving quality and lowering costs, business A attempts to bribe any bank (or other source of loans) business B approaches to "persuade" that bank to never provide business B with capital, thereby hindering the competition. My question, therefore, asks whether or not this action of bribing would/should be considered physical force in a capitalist society. Perhaps I'm overthinking the issue and presenting an unlikely scenario, but I'm curious what others think, because I am divided. Please let me know if this scenario or question needs clarification.

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  • Posted by iroseland 10 years, 4 months ago
    First things first.. If I was a banker and business A was sitting in front of me desperate enough to try to bribe me into not lending to Business B. I would find myself wondering why I am talking to business A at all, and not instead working up terms for a loan to Business B. They would essentially be showing me their weak hand at that point and I would use the knowledge to get into the next big thing on the ground floor. But there is a more insidious version of bribery as a use of force. What if instead of going to the banks Business A started going to campaign meetings? What if instead of bribery, they simply made donations under the expectation that they get a law passed in return.. Or perhaps its not a law, but for some reason Business B's interactions with regulators suddenly take twice as long. Or maybe they cannot get a needed permit. While the bribery of a bank might not be backed up by guys with guns, when you start using the government to get things done the use of actual physical force does enter the equation.
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    • Posted by ddardick24 10 years, 4 months ago
      Alright, I believe I understood your point. It is really only physical force when the government intervenes to help business A. Otherwise, this situation in a free market is really not even likely (or possible) because intelligent businessmen probably wouldn't sacrifice an opportunity for a simple bribe. Thank you, that really helped!
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      • Posted by khalling 10 years, 4 months ago
        More than just the liklihood or not, a bribe while immoral is not force. However, every action that the government takes has the threat of force behind it, including moral actions.
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        • Posted by Zenphamy 10 years, 4 months ago
          khalling: I can't agree. "a bribe while immoral is not force". I think you're being to restrictive in the definition of force. I see the action as coercive force and subject to at least Tort correction through the court.
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          • Posted by khalling 10 years, 4 months ago
            Common law states "tortious interference with a business relationship" would definitely cover that. my guess is the reasoning behind this we want business to happen, without disruptive tactics such as these-for efficiency.
            It's not likely to last in a free market because it's bad business. Company B can just move on to the next bank. IF cronyism is involved, well, you are back at force. But the bank can refuse a loan to a potential customer for whatever reason it wants, including immoral reasons. Freedom of association. Now, if company A used fraud to get the bank to not loan to company B, that would be force. A force (against both the bank and company B) that is implied as opposed to an actual gun. You would be deliberately misleading the bank regarding Company B. But in the scenario dd refers us to, I still stick with no force.
            Rand: "Fraud involves a similarly indirect use of force: it consists of obtaining material values without their owner’s consent, under false pretenses or false promises." "The Nature of Government," TVOS
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  • Posted by Zenphamy 10 years, 4 months ago
    It's not physical force, but is coercive force, which is an attack on the Natural Rights of business B. It is subject to defensive, retaliatory force.

    It might fail under some understandings of the NAP, but under non-initiation of force guidelines for response of force meets the level of self defense.
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    • Posted by khalling 10 years, 4 months ago
      but what is actually taken from Company B but an opportunity? Let's say I own Company A and the bank owner is my best friend. good old boy relationships are formed in this way with company A owner saying, I'll take my business elsewhere if you give a loan to my competitor. Company B should have done its due diligence in that case. Now if money changes hands there would be force- fraud against the bank. Because a bribe goes to an individual. The individual is enriched at the bank's expense in not taking the opportunity to loan to a qualified customer. Company B may make a case they were harmed, but it is not as strong as the shareholders of the bank's case against the bribe taker.
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      • Posted by ddardick24 10 years, 3 months ago
        So my understanding of your statement is that a bribe to an individual associated with the bank could be considered fraud because the exchange of the bribe hurt the interests of the shareholders without their consent, but a bribe that's occurrence is fully disclosed to the shareholders and goes to the bank's general fund (or wherever requested) is, while completely immoral and irrational, legal? (assuming the shareholders agree to this deal; obviously the likelihood of this type of deal to be disclosed and/or the shareholders' acceptance to a bribe instead of pursuing an opportunity is extremely unlikely, but just for the sake of circumstance and clarification)
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        • Posted by khalling 10 years, 3 months ago
          the question does not turn on shareholders. and for the purpose of this exercise, corporate law is not what we'll get into. Assume the company is aware of what happened. The law should not be involved in policing this situation. No force has been used.
          Offering someone money to do or not do something is immral only because it is irrational. IT should not be immoral in any legal sense of the word. Think of it like this. I want to perform at halftime of the super bowl. I want you to choose me. I offer you money to make that offer to me. Until there is a contract that someone breaches the terms of, offering money is certainly not criminal. However, US law says it is a tort issue, not a criminal issue. But if we were discussing rules governing pure capitalism, I would say, it is not force, therefore not actionable.
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