by Dr. Jan Garrett

This page revised March 30, 2005

On the face of it, the economy seems to be an arena of uninhibited deal-making, buying and selling, goods, services, and money exchanging hands. The impression arises that just so long as sellers tell the truth about their products and services and actually deliver what they promised, everything will be ethically all right.

Is the Moral Basis of the Market Up for Sale?

What is not always clearly realized is that not everything can be put up for sale. If the market system is morally justified all things considered, then one cannot morally justify violating it. And that, I suggest, is the fundamental mistake of bribery. The recipient of the bribe acts as if he is free to make a deal which he is not morally permitted to make. He is not morally permitted to make it because of prior morally governed transactions What is more, the very rule that the bribe taker sees as linking himself to the briber--the rule that one should act as one has promised to act--is a rule which the bribe taker violates in taking the bribe in the first place.

Principal and Agent

We need to introduct two related concepts--the concept of principal and agent. A principal in this sense is the person (or organization) from whom an agent's authority derives; an agent, then, is a person empowered to act on behalf of another, i.e., the agent's principal. (A real estate agent is an agent of the seller of the real estate, the seller is the principal relative to the realtor.)

Why Bribe-Taking Is Wrong

In bribery cases, the bribe taker is already an agent for a principal before he accepts the bribe. The person is already contracted to perform duties for the principal, such as a corporation or government. The one who accepts a bribe in exchange for a favor is violating his or her contractual duty towards his principal. This contractual duty excludes precisely the sort of favor which the briber seeks. The receiver of the bribe does not inform her principal, on behalf of whom she is supposed to be acting. The agent is, in effect, violating her contractual duty to the principal, to whom she has made a prior commitment.

Why Offering a Bribe Is Wrong

I have been discussing the bribe taker and his principal only, up to now. Why is the action of the briber wrong? Quite clearly, the briber, the one who pays the bribe, acts wrongly in tempting the potential bribe taker, or in providing an incentive for the potential bribe taker to violate her preexisting contractual duties. If there were no bribers, there would be no bribe takers.

Why Bribery Is Conducted in Secret

Bribery, then, is a payment which creates a bond of precisely the sort made morally wrong by prior contractual relationships. Yet bribery could not occur unless prior contractual commitments had been made and the principal assumes agents are still loyal to them. A salesman for A would not bribe the purchasing agent of corporation B buy A's products if the salesman thought that the B corporation believed that the purchaser's primary loyalties were to the salesperson for A. In that case the purchaser would probably find himself fired tomorrow and the purchase order would be invalidated before payment was made. This is the reason that bribery is typically conducted in secrecy. A "successful" bribery requires that the bribe taker appear to act on behalf of one entity while really, at the moment, being loyal to another.

Why Bribery Is Not a "Normal Business Transaction"

A bribe, therefore, is not simply a material inducement to get someone else to act in your favor. When we buy things in a straightforward way, we are giving the receiver a material inducement to part with those things. But a bribe is a material inducement, paid under the table, or secretly, that establishes a relationship which violates particular contractual duties that already exist. Moreover, it violates the general rule of fidelity, that is to say, that "a person ought to keep compacts made." The bribe taker's principals, whom he has betrayed, falsely believe that he is not a bribe taker and that he has not betrayed them; therefore, a bribe involves a misrepresentation or failure to disclose on the part of the bribe taker in relation to his principals.

The bribe taker no longer acts in the interest of his principal. He may in fact be acting contrary to the interests of his principal. Moreover, his principal does not realize that it would be in its (or his or her) legitimate interests to fire the bribe taker and hire someone who will be more loyal to them. For all these reasons, bribery not only violates contractual duties, but often implies a injury to the welfare of the principal.

Subtle Long-Term Social Consequences of Bribery

Finally, though particular acts of bribery often escape detection, wherever bribery is widely practiced, specific cases of it are soon discovered. People reasonably assume that for every such activity uncovered, there are many that escape detection. There is a multiplier effect: a single proven act of bribery creates a significant erosion of trust. Every such discovery contributes to the breakdown of social order necessary for a good business climate and future confidence in contracts. Bribery violates the very fabric of community. (For more on this, see the Critique of the Fallacious Defense #2.)

Factors that Possibly Encourage Bribery

I suspect that one reason many people allow themselves to be bribed is that their obligations to their firm or society are not often clearly and explicitly stated. In fact, most people take these obligations for granted and would almost be insulted if an employer, upon hiring them, spelled out in detail, in the employment contract, the corporate ends for which the employee is expected to act. When faced with the prospect of extra income, the weak-willed potential bribe taker temporarily forgets those not often stated obligations and deceives himself into thinking that he is free to make a deal to do someone a special favor. But weakness of will is a character flaw; it almost always involves self-deception and not ignorance of what is morally required.

Another reason that people permit themselves to be bribed is that the practice of friendship and informal associations coexist with the more formal and impartial systems of duty, rights and justice. The elementary rule of friendship is that we should do favors for our friends to the extent that they are our friends; you scratch my back and I'll scratch yours. One problem with this rule is that it can easily degenerate into egoism, in which person A helps person B only if A reasons that helping B is to A's advantage. Another, more ethically serious, problem is that, taken by itself, it endorses the creation of cliques or factions which pursue the interests of a minority, as that minority understands their interests, at the expense of the common good. Historically, formal rules of justice and duty were developed in an attempt to restrain precisely this kind of occurrence.

The Contract Argument Summarized

1. One should keep one's contracts. (Thou shalt keep thy covenants.)

2. Bribery involves a contract committing the bribe-taker to break his/her (prior) contract.

3. Taking a bribe is wrong. (1,2)

4. To offer a bribe is to deliberately tempt another to take a bribe.

5. It is wrong to deliberately tempt another to do wrong.

6. Offering a bribe is wrong. (3,4,5)

The Utilitarian Argument from Markets Summarized

1. It is right to act so as to produce the greatest net benefit for all affected. (Utilitarian principle.)

2. Compared with other kinds of markets, perfectly competitive markets produce the greatest net benefit for all affected. (Utilitarian judgment regarding PCM's.)

3. It is right to operate in a PCM, and in the absence of a PCM, in a market that approximates a PCM as closely as possible. (1,2) Markets that are not PCM's are characterized by market imperfections.

[1-3] summarizes one interpretation of Adam Smith's argument for free markets.

4. PCM's involve many sellers, none of which can dominate the market.

5. Monopoly markets (MM's) are characterized by just one seller.

6. The bribery of a purchaser by a seller reduces a (more) competitive market to a MM. (It creates a market imperfection.)

7. It is wrong to bribe.

Objection to this argument: In fact, even without bribery, many markets are far removed already from perfectly competitive markets. Before Lockheed paid bribes to secure its sale of jumbo jets to Japan, there was only one other major competitor, McDonnell-Douglas. And it so happens that there were serious flaws in McDonnell-Douglas's planes (the extent of which become known only later). Perhaps Japanese consumers would have been better off with Lockheed's planes. In other words, if the market is already highly restricted, it's not clear that a bribe will reduce social utility of the market for those who participate in it.

But there may well be negative non-market consequences, such as the suffering caused by the breakdown of social trust and the decline of the sense that government officials are honest public servants.

The Liberty Argument for PCM's and against Bribery

1. Whatever reduces effective liberty, compatible with equal liberty for others, is wrong.

2. Compared to other market types, PCM's are characterized by greatest ease of entry to and exit from markets.

3. The bribing of a purchaser by a seller reduces a more competitive market to a MM.

4. MM's are characterized by having just one seller.

5. Bribery reduces effective liberty by eliminating other sellers (in other words, it violates the "rights" of other sellers to compete for a sale).

Fallacious Defense of Bribery #1

1. Bribery occurs frequently on in country/state X; many who engage in it are not exposed and few suffer significant penalties for bribery.

2. Whatever occurs frequently and without penalty in X must be acceptable in X.

3. So bribery is acceptable in X.


This is a fallacy of ambiguity because there is a shift in the meaning of the term "acceptable"--from "acceptable to persons doing it" to "morally acceptable."

  • The fact that some people take or give bribes means that their bribing or being bribed is acceptable to those persons.

  • The fact that some escape punishment means only that it is acceptable to law enforcement not to pursue, convict and punish them given the high costs of law enforcement.

    But these facts do not imply that bribery is morally acceptable or that one can get away with it in high profile cases (involving major government officials). Are there laws against it? If so, does that not say something about what is morally acceptable in the particular culture?

    Fallacious (Pseudo-Utilitarian) Defense of Bribery #2

    1. If I secure this large contract for my company through bribery, it will cost me/my company the bribe money, but the benefits will be enormous: to our employers, stockholders, managers, suppliers, the economy of the region in which we are located.

    2. The utilitarian principle of maximizing net social benefits demands that I pay a bribe if that's necessary to secure this contract.

    3. Utilitarianism is a respectable moral theory.

    4. So I have morality on my side in making this bribe.


    Aside from the other moral principles that the action would violate, the reasoning is not utilitarian but pseudo-utilitarian: It does not take into account all the effects of the act, and especially leaves negative effects aside:

    If the potential briber company does not bribe and loses the contract, the contract will go to another company or other companies; their employes, shareholders, suppliers, local regions will benefit instead of the original company's employees, etc. But the total benefit may be just as great or greater than it would have been if the bribe had been offered and accepted.

    But if the bribe is offered and accepted, the moral weakness of the bribed official is transformed into corruption, or if he is already corrupt, this corruption is reinforced. The official learns to see himself as having interests that do not necessarily coincide with the common good of his own company or nation. This undermines the basis of trust in a society. When corruption is exposed, as it inevitably is in a percentage of cases, social cohesion and solidarity further diminishes. This can only count towards negative utility.