In Barnett and Block (J Bus Ethics 88(4):711–716, 2009a), the present authors claim that borrowing short and lending long is fraudulent, and thus ought to be prohibited on legal grounds. Bagus and Howden (J Bus Ethics 90(3):399, 2009) take issue with our ethical analysis. The present paper is our response to these authors; it is an attempt to defend Barnett and Block (J Bus Ethics 88(4):711–716, 2009a) against the very interesting and important, although we believe, erroneous, criticisms of Bagus and (...) Howden (J Bus Ethics 90(3):399, 2009). (shrink)

In Barnett and Block :711–716, 2009a), the present authors claim that borrowing short and lending long is fraudulent, and thus ought to be prohibited on legal grounds. Bagus and Howden :399, 2009) take issue with our ethical analysis. The present paper is our response to these authors; it is an attempt to defend Barnett and Block :711–716, 2009a) against the very interesting and important, although we believe, erroneous, criticisms of Bagus and Howden :399, 2009).

Libertarian philosophy asserts that only the initiation of physical force against persons or property, or the threat thereof, is inherently illegitimate. A corollary to this assertion is that all forms of speech, including fraudulent advertising, are not invasive and therefore should be considered legitimate. On the other hand, fraudulent advertising can be viewed as implicit theft under the theory of contract: if a seller accepts money knowing that his product does not have some of its advertised characteristics, he acquires the (...) property title to the customer’s money without voluntary consent, which is theft. The balance between these two logical extensions of property rights—the right of free speech and the right of contract—lies somewhere in the area of communication philosophy, and can be explained through understanding the role of communication in human interactions. Advertising is a form of communication that may convey important information about the conditions of the proposed contract. These conditions are expressed in particular words that may have different meanings in different circumstances. Therefore to determine whether a particular example or “misinterpretation” is mere sophistry or a type of fraud, the judicial system has to approach each issue on a case-by-case basis. The border between legal and illegal should be determined by precedents and by expectations based on commonly accepted definitions of terms—what people commonly understand by the words and other forms of communication they use. (shrink)