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“If you choose to be a person of integrity, you have no choice when it comes time to honor your word. To be in integrity you must apply cost/benefit analysis to giving your word and you must never apply cost/benefit analysis to honoring your word.”
~Werner Erhard
Simply put, when I give my word to another, that act creates various conditions of “counting on” or “reliance on”, in the relationship between me and the other. Given that one’s word creates the relationship, it follows that when one’s word is whole and complete, the aspect of the relationship it creates is whole and complete. In a critical sense, who I am for another is my word, i.e., my expression of my self. For a relationship to have integrity (to be whole and complete), one’s word must be whole and complete. As Shakespeare said, “This above all: to thine own self be true, it must follow, as the night the day, Thou cans’t not be false to any man.” When one is true to one’s word (which is being true to one’s self), one cannot be but true to any man.
http://ow.ly/MQcm30lwhFL
Behavior that lacks integrity leads to value destruction. This paper analyzes some common beliefs, actions, and activities in finance that are inconsistent with being a person or a firm of integrity. Each of these beliefs leads to a system that lacks integrity, i.e., one that is not whole and complete and therefore creates unworkability and destroys value. Focusing on these phenomena from the integrity viewpoint, the authors argue, makes it possible for managers to focus on the value that can be created by putting the system back in integrity and correcting the non-value maximizing equilibrium that exists in capital markets. Overall, this paper summarizes a purely positive theory of integrity that has no normative elements whatsoever, and demonstrates how it applies to both individuals and organizations. In effect, integrity is a factor of production just like knowledge, technology, labor, and capital, but it is undistinguished—and its affect (by its presence or absence) is huge. Key concepts include:
- Integrity matters. Not because it is virtuous, but because it creates workability.
- Workability increases the opportunity for performance, and maximum workability is necessary for realizing maximum value.
- Integrity thus becomes a necessary (but not sufficient) condition for value maximization-a proposition that should become an important element in every finance course in every business school.
– The text above is as stated in Harvard Business School – Working Knowledge – The Thinking That Leads – about the working paper by Werner Erhard and Michael C. Jensen entitled, Putting Integrity into Finance: A Purely Positive Approach
Columbia University’s Center on Capitalism and Society recently announced its new issue of Capitalism & Society Journal (May 2017), featuring the paper “Putting Integrity Into Finance: A Purely Positive Approach,” authored by Werner Erhard and Michael C. Jensen.
Unique among economics journals, Capitalism & Society focuses on what makes capitalism dynamic: innovation and entrepreneurship. Topics include ownership, corporate control, entry and venture capital, the discovery process, and commercial performance. While these topics have been studied from a micro-perspective, Capitalism & Society breaks new ground as the only mainstream forum that discusses how capitalism works from a broad social science perspective. Editors of this peer-reviewed journal include some of the best-known and most widely-published scholars in the fields of economics, business, law, and sociology, such as Jeffrey Sachs, Saskia Sassen, Richard Nelson, Robert Shiller, and Nobel Prize winning economists Joseph Stiglitz, Amartya Sen, and Edmund Phelps.
Click here to access the new issue of Capitalism & Society.
The Impact of Integrity As A Positive Phenomenon
We define integrity as the state of being whole, complete, unbroken, unimpaired, sound, in perfect condition – clearly, the definition of a positive phenomenon. As is the case with any positive phenomenon – for example, gravity – there are effects caused by actions related to that phenomenon. The action of stepping off a cliff will, as a result of gravity being a positive phenomenon, cause an effect (whether one likes
the effect or not). Likewise, action that is consistent or inconsistent with integrity will, as a result of integrity being a positive phenomenon, also cause an effect (again, whether one likes the effect or not).
When integrity is revealed and dealt with as a positive phenomenon as it is in our model, the relation between integrity, workability and performance is as follows:
1. Maximum workability for an object, system, person, or other human entity (such as a partnership or corporation) is a necessary (although not sufficient) condition for maximum performance,
2. Integrity as we distinguish and define it (the state of being whole, complete, unbroken, sound, in perfect condition) is a necessary (and sufficient) condition for maximum workability,
3. It follows that for an object, system, person, or other human entity integrity is a necessary (although not sufficient) condition for maximum performance, and
4. It follows that as integrity declines, the opportunity for performance declines.
5. This leads to the empirically refutable proposition that, ceteris paribus, as integrity declines, performance declines.
From “Putting Integrity Into Finance, A Purely Positive Approach” by Werner Erhard and Michael C. Jensen; published in the Capitalism and Society Journal
The Center on Capitalism and Society published Werner Erhard and Michael C. Jensen’s paper, Putting Integrity Into Finance: A Purely Positive Approach in their May 2017 Journal, Capitalism and Society Volume 12, Issue 1.
“Integrity as we define it (or the lack thereof) on the part of individuals or organizations has enormous economic implications for value, productivity, and quality of life. Indeed, integrity is a factor of production as important as labor, capital, and technology. Without a clear, concise, and most importantly, an actionable definition of integrity, economics, finance and management are far less powerful than they can be.”
“Putting Integrity Into Finance: A Purely Positive Approach” by Werner Erhard and Michael C. Jensen Ph.D. Published by Columbia University’s Center On Capitalism and Society in their Journal: Capitalism and Society, Volume 12, Issue 1.
“When my integrity is lacking, I am clear that I just got to be a bit smaller as a person. That keeps me working on my integrity. And the thing about integrity is it’s a mountain with no top.”
Werner Erhard in The New York Times, November 29, 2015
“Without being a man or woman of integrity you can forget about being a leader. And, being a person of integrity is a never‑ending endeavor. Being a person of integrity is a mountain with no top – you have to learn to love the climb.”.
-Werner Erhard
“Integrity (in our model) is not about good or bad, or right or wrong, or what should or should not be.
We distinguish integrity as a phenomenon of the objective state or condition of an object, system, person, group, or organizational entity, and define integrity as: a state or condition of being whole, complete, unbroken, unimpaired, sound, perfect condition.
We assert that integrity (the condition of being whole and complete) is a necessary condition for workability, and that the resultant level of workability determines the available opportunity for performance. Hence, the way we treat integrity in our model provides an unambiguous and actionable access to superior performance (however one wishes to define performance).
For an individual we distinguish integrity as a matter of that person’s word being whole and complete, and for a group or organizational entity as what is said by or on behalf of the group or organization being whole and complete. In that context, we define integrity for an individual, group, or organization as: Honoring one’s word.
Oversimplifying somewhat, honoring your word as we define it means you either keep your word (do what you said you would do and by the time you said you would do it), or as soon as you know that you will not, you say that you will not to those who were counting on your word and clean up any mess caused by not keeping your word.
Honoring your word is also the route to creating whole and complete social and working relationships. In addition, it provides an actionable pathway to earning the trust of others.”
Integrity: Where Leadership Begins – A New Model of Integrity
By Werner Erhard and Michael C. Jensen
NBER Working Paper No. 19986
Issued in March 2014
NBER Program: Corporate Finance
Abstract: The seemingly never ending scandals in the world of finance with their damaging effects on value and human welfare (that continue unabated in spite of all the various efforts to curtail the behavior that results in those scandals) argues strongly for an addition to the current paradigm of financial economics. We summarize here our new theory of integrity that reveals integrity as a purely positive phenomenon with no normative aspects whatsoever. Adding integrity as a positive phenomenon to the paradigm of financial economics provides actionable access (rather than mere explanation with no access) to the source of the behavior that has resulted in those damaging effects on value and human welfare, thereby significantly reducing that behavior. More generally we argue that this addition to the paradigm of financial economics can create significant increases in economic efficiency and productivity. http://www.nber.org/papers/w19986
“”We assert that integrity (the condition of being whole and complete) is a necessary condition for workability, and that the resultant level of workability determines the available opportunity for performance. Hence, the way we treat integrity in our model provides an unambiguous and actionable access to the opportunity for superior performance, no matter how one defines performance.
For an individual we distinguish integrity as a matter of that person’s word being whole and complete. For a group or organizational entity we define integrity as that group’ or organization’s word being whole and complete. A group’s or organization’s word consists of what is said between the people in that group or organization, and what is said by or on behalf of the group or organization. In that context, we define integrity for an individual, group, or organization as: honoring one’s word.
“Oversimplifying somewhat, “honoring your word”, as we define it, means you either keep your word, or as soon as you know that you will not, you say that you will not be keeping your word to those who were counting on your word and clean up any mess you caused by not keeping your word. By “keeping your word” we mean doing what you said you would do and by the time you said you would do it.
“Honoring your word is also the route to creating whole and complete social and working relationships. In addition, it provides an actionable pathway to earning the trust of others.“
– From the Abstract for A New Model of Integrity: An Actionable Pathway to Trust, Productivity and Value, by Werner Erhard, Michael C. Jensen and Steve Zaffron
“We argue here that the four factors we identify as constituting the foundation for being a leader and the effective exercise of leadership can also be seen as the foundations not only for great leadership, but also for a high quality personal life and an extraordinary organization. One can see this as a “value free” approach to values because, 1) integrity as we define it (being whole and complete) is a purely positive proposition, 2) authenticity is also a purely positive proposition (being and acting consistent with who you hold yourself out to be for others and who you hold yourself to be for yourself), 3) being committed to something bigger than oneself is also a purely positive proposition (that says nothing about what that commitment should be other than it be bigger than oneself), and 4) being cause in the matter as a declaration of the stand you take for yourself regarding everything in your life is also a purely positive proposition”
– Werner Erhard and Michael C. Jensen
For an individual we distinguish integrity as a matter of that person’s word being whole and complete. For a group or organizational entity we define integrity as that group’s or organization’s word being whole and complete. A group’s or organization’s word consists of what is said between the people in that group or organization, and what is said by or on behalf of the group or organization. In that context, we define integrity for an individual, group, or organization as: honoring one’s word.
Oversimplifying somewhat, honoring your word, as we define it, means you either keep your word, or as soon as you know that you will not, you say that you will not be keeping your word to those who were counting on your word and clean up any mess you caused by not keeping your word. By keeping your word we mean doing what you said you would do and by the time you said you would do it.
Honoring your word is also the route to creating whole and complete social and working relationships. In addition, it provides an actionable pathway to earning the trust of others.
Integrity: A Positive Model that Incorporates the Normative Phenomena of Morality, Ethics and Legality Werner Erhard, Michael C. Jensen, Steve Zaffron, published March 23, 2009 at SSRN
“Your life works to the degree you keep your agreements.”
– Werner Erhard
Werner Erhard leading the est training
Werner Erhard Quotes 