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Twelfth Day of Dickens: Business Fraud

I was waiting for this newsletter to come out (links to a PDF). It's The Stepping Stone, a quarterly newsletter from the Management and Personal Development Section of the Society of Actuaries. For some time, I had been reviewing business books for this newsletter, until I took a swerve and decided to start pushing generic humanities and not specific business books.

My first two articles in that series were "Leadership Books: The Classics" and "Leadership Books: The Classics, Part 2", where I hold up books like Plutarch's Lives and the Iliad as profiles in leadership.

This article is on Dickens and business fraud, and I will quote myself:


If I say “Dickens,” you may think of grand social drama—“It was the best of times, it was the worst of times”—along with some comic characters with silly names. If I say “Dickens and business,” you probably will think of Ebenezer Scrooge, the cold-hearted businessman who changes when he gets visited by four ghosts and learns the True Meaning of Christmas (thus spawning a whole genre of TV specials).

However, Dickens went beyond the psychology of a miser in portraying business and businessmen (and businesswomen, though there are fewer of those in his novels). This is hardly surprising given how much Dickens was a London boy, through and through. The business of the City of London was Business writ large, and as Dickens became a prominent man himself, and even before, when he was a parliamentary recorder, he became more familiar with the lifeblood of the city. One issue Dickens knew well was fraud of all types— while he mainly covered social frauds of various sorts, given the more rigid class-based society of Victorian England, he also covered the matter of business fraud, both large and small.

Scrooge himself was no fraud—just a man who valued the world only in pounds, shillings and pence. Dickens even wrote of beneficent businessmen other than the post-ghost Scrooge, such as the Cheeryble brothers of Nicholas Nickleby. He wrote of smaller, personal frauds, such as Uriah Heep of David Copperfield, who had been embezzling from his master. In this article, I will look at the two largest business frauds portrayed by Dickens in the novels Martin Chuzzlewit and Little Dorrit, frauds that ring true with events that occurred in Victorian times … and frauds that still occur today.



That's my open, and here's my close:


How do we prevent new frauds and asset bubbles? One may take a technical approach, but at the heart is human nature—how people behave, how people have particular goals, and how some will try to get what they want fraudulently. Many of these frauds are successful due to the perpetrator’s own knowledge of human nature. It’s hilarious how often we hear “This time it’s different!”.... and it turns out people’s greed, envy, pride, and pretty much all the mortal sins, come into the mix in the same old way.

Fiction takes us away from particular concrete facts and asks us to look and think more broadly. If you want to catch the next fraud, don’t look at the particular tools necessarily, but how people and societies behave. These two novels of Dickens help give a little piece of that puzzle, and reading more broadly may provide you with more such pieces.



Go to the article for the middle bits where I explain the frauds -- I will tell you the Martin Chuzzlewit fraud is my favorite because it's a life insurance company, and the guy running the fraud is an excellent profile of a con man.

FWIW, I'm working on a more general article in praise of the humanities in general for The Stepping Stone -- I was making explicit links between leadership profiles and business fraud in my prior articles, but now I'm going to make an argument that the proper study of man is mankind (luckily, many have made that argument before, so I just need to modernize the language).

And the lovely thing about the humanities is that the older one gets (as long as there's no senility), the easier it is to get into it -- because now you understand many of the issues you didn't even see as a teen, when you were being forced to read these books.
Tags: dickens
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