Putting Integrity Into Finance: A Purely Positive Approach (Excerpt)

Conclusion:

We argue that the financial economics paradigm is incomplete. The evidence for any paradigm being incomplete is the presence of a significant continuing breakdown in the discipline, along with the discipline’s continuing ineffectiveness in dealing with that breakdown
(what Kuhn (1962, 2012) termed “crises and anomalies” in a discipline). In the world of finance, the combination of 1) the extent of out-of-integrity behavior and its consequent impact on value, coupled with 2) the financial economics discipline having provided little or
nothing that has been effective in stemming this out-of-integrity behavior, is evidence for our argument that the financial economics paradigm is incomplete.

The out-of-integrity behavior we termed the “scandals” in Section 2 and the various examples of out-of-integrity behavior discussed in Sections 3 through 11 (mostly unrecognized as out-of-integrity behavior) are important examples of what contributes to the general
atmosphere of low integrity in the world of finance (albeit not identified as such and certainly not spoken of). Out-of-integrity behavior has become virtually institutionalized.

The environment of low integrity is so pervasive it seems to be nothing more than business as usual, or just a part of the nature of finance. Forstmoser’s (2006) first three indicators of the lack of integrity (listed in Section 6.b)—”Everyone else is doing it.”; “We’ve always done
it.”; and “This is the way this business works.”—illustrate this environment. When we speak of “integrity”, in the case of a system (or object) we mean nothing more than, but nothing less than, that the design, the implementation of the design, and the use of the system (or object) are whole, complete, unbroken, sound, and in perfect condition with respect to its intended purpose. When we speak of integrity for a person or other human entity, we mean nothing more than, but nothing less than, that the word (as defined earlier) of the person or other human entity is whole, complete, unbroken, sound, in perfect condition. We have shown that integrity dealt with in this way is an important factor of
production.

However, integrity as it is currently understood has been undistinguished as a factor of production, with the result that its impact on workability, and therefore productivity and value (by its presence or absence) has been wrongfully assigned to other causes. Integrity,
as we define it, matters. Not because it is virtuous, but because it creates workability. And workability increases the opportunity for performance, and maximum workability is necessary for realizing maximum value.

Note that describing the effects of integrity is not normative. In addition, we make no admonition to act with integrity; it doesn’t work to tell people what they should do. People act in what they perceive to be in their self-interest in the way it shows up for them in the
circumstances they are dealing with or are confronted by. We don’t tell people what to do, rather we give a picture of reality (in this case a picture of the reality of integrity revealed as a positive phenomenon) that naturally alters their correlated behavior.

As the Law of Integrity states: As the integrity (the state of being whole and complete, etc.) of an object, system, person, or other human entity or practice declines, workability declines, and as workability declines the opportunity for performance declines. Note however that when the behavior is not recognized as out of integrity, the decline in the opportunity for performance will be explained in some other way.

The model of integrity introduced in this paper makes clear just how widespread out-of-integrity behavior actually is, and the enormity of the cost of out-of-integrity behavior. The model also makes clear that given the way integrity is currently understood, our out-of-integrity behavior does not occur for us as such, and as a result we ascribe the cause of the damage of out-of-integrity behavior to something other than our out-of-integrity behavior. But the recognition of the foregoing is only a beginning for persons, groups, and organizations to have access to acting with integrity.
From within our new model of integrity when it is fully understood, integrity occurs for people (is understood by people, shows up for people) such that:
1) out-of-integrity behavior actually shows up for people as out-of-integrity behavior, but most importantly,
2) the damaging consequences of that behavior, whether immediate or long term, show up in present time right along with the out-of-integrity behavior, and
3) the damaging consequences show up as being caused by the out-of-integrity
behavior.
This shift in the showing up profoundly alters the way out-of-integrity behavior occurs or shows up for people. As we have said, people with normal brains act in what appears to them to be in their self-interest, but in their self-interest given the way in which what they are dealing with occurs or shows up for them.

Our purpose here has been to show that including integrity as a purely positive phenomenon, and as such an important factor of production in the paradigm of financial economics, would allow financial economics scholars to develop the tools to effectively deal with the “crises and anomalies” of the value-destroying out-of-integrity behavior in the world of finance, and ultimately to transform the culture of finance into one of integrity.

What makes this addition to the current financial economics paradigm challenging for most professionals is that the “proof ” of a paradigm is the “testing” of it in practice, rather than in the a priori theoretical proof of it. While the proposition that “as integrity (whole and complete) decreases, workability decreases” is unmistakably valid, the proposition that “any diminution in the integrity (wholeness and completeness) of an individual’s or other human entity’s word results in a diminution of workability for that individual or entity” is a heuristic. It just works. When the fact that it actually works in practice becomes a clear-cut personal discovery, this naturally alters future behavior.

 

Erhard, Werner and Jensen, Michael C., Putting Integrity Into Finance: A Purely Positive Approach (2017). Capitalism and Society, Vol. 12 [2017], Iss. 1, Art. 1. Available at SSRN: https://ssrn.com/abstract=2963231

Capitalism and Society

In their groundbreaking paper published by The Center on Capitalism and Society, “Putting Integrity Into Finance: A Purely Positive Approach,” Werner Erhard and Professor Michael C. Jensen discuss their positive model of integrity that links integrity and personal and corporate performance.   The creation of this model reveals a causal link between integrity and increased performance. Through the work of clarifying and defining what integrity is and it’s causal link to performance, this model provides access to increased performance for private individuals, executives, economists, philosophers, policy makers, leaders, legal and government authorities.

“The Center on Capitalism and Society brings together leading scholars in economics, business, finance, and law to study capitalist institutions, their effectiveness, and their weaknesses in order to get some answers to such basic questions about capitalism – its working, its dynamism, and the instability it may cause, its inclusiveness or lack thereof and its role in a democracy.”

Power is a Function of Velocity: “Your

Power is a Function of Velocity: “Your power is a function of velocity, that is to say, your power is a… http://wp.me/pbw9H-du

Breaking Out Of The Box

Social paradigms dictate our behavior and collective values. In the 1950s, the rule was “throw it anywhere, it will go away,” and smokestacks billowing black smoke were a proud symbol of productivity…

While we are in a paradigm, we take its rules and boundaries for granted. It is what we call “reality.” Like eyeglasses with colored lenses, our paradigm colors whatever we perceive. “Most of our notions about the world come from a set of assumptions which we take for granted, and which, for the most part, we don’t examine or question,” says Werner Erhard. “We bring these assumptions to the table with us as a given. They are so much a part of who we are that it is difficult for us to separate ourselves from them enough to be able to talk about them. We do not think these assumptions, we think from them.”

Expressions such as “that’s impossible,” or “that’s not the way we do it around here” speak to the existence of paradigms, or belief systems, that are operating, unseen, in the background. Like water to a fish, they are not recognized by us as our paradigms. Yet, they influence what we think – and even what we see.

Once we recognize that our paradigms are an invisible structure through which we think, the next step is to understand the degree to which they determine what we see and experience. Their influence is far more powerful than we may realize.

Thomas Khun, who in 1962 wrote a seminal book on scientific paradigms called The Structure of Scientific Revolutions, points to an experiment that illustrates the paradigm effect. In the experiment, originally reported in 1949, people were briefly shown a deck of playing cards in which some cards had red spades instead of black. The subjects literally saw the red spades as black, because that’s what they expected. Once the anomaly was pointed out, the subjects had no trouble spotting the red spades. The experiment and others like it led Khun to the conviction that our paradigms act as filters on reality. We never see the world directly; we always see it through these paradigms filters. We never see the world in its entirety; we only see pieces. And our mental frameworks naturally bias us toward only seeing that part of the world that supports our paradigms.

“Our paradigms determine the way the world ‘shows up’ for us,” Says Erhard, “and that allows for only certain possibilities. Our paradigms determine our worldview, the way we perceive things, what we perceive, what we can see as possible, what we can’t see as possible and what we can’t see at all. Ultimately, they limit our strategies and our actions.”

The secret of paradigms is that, with them, we construct our own reality. As Thomas Khun said in 1962: “When paradigms change, the world itself changes with them.”

It’s a revolutionary thought, and it is the most important thing to know about paradigms.

How reality occurs – or “shows up” – for people is not determined by what’s there to be seen, but by how we are seeing it.

Erhard says that instead of waiting for a new paradigm to become apparent, we can create and invent futures that “were not going to happen anyway.”  He points out that when a breakthrough is needed, what is often called for is the development of a new paradigm.

“Changing the paradigm does not negate the need for realistic, hard-headed thinking,” he says. “In ‘business as usual,’ we get clear about the situation to determine what we can do and what we can’t. But to produce a breakthrough, you have to stand the usual approach on its head.”

The process begins with inventing a new possibility, without regard to whether you know what to do to realize it. You then look back at the situation from the standpoint of that new possibility.

“That is what gives you the new perspective and what allows you to see the situation in a way you haven’t seen it before,” says Erhard. “That is the beginning of generating a new paradigm. Breakthroughs are a product of seeing something in a new way, which enables you to see new opportunities and new openings for action that you couldn’t see before. Breakthroughs come as a result of shifting your commitment from the predictable future to a possible future.”

In so doing, we will – literally – change the world that there is for us to see.

Power is a Function of Velocity

“Your power is a function of velocity, that is to say, your power is a function of the rate at which you translate intention into reality. Most of us disempower ourselves by finding a way to slow, impede, or make more complex than necessary the process of translating intention into reality.”

-Werner Erhard

The Erhard Jensen Ontological / Phenomenological Initiative

The Purpose of The Erhard Jensen Ontological / Phenomenological Initiative is to:

Stimulate and support research into the development and application of the ontological / phenomenological laws of human nature and human behavior to the lives of individuals and human entities to reliably and significantly elevate human performance and quality of life. This includes all areas of living across the entire spectrum of human activity, for example:

  • Individuals, families and groups
  • Public and private organizations such as partnerships, corporations, non-profit and educational entities
  • Public agencies and governmental entities
  • Bring the ontological / phenomenological model and methodology utilized in this leadership course to education — including research, course development, and teaching.

Stimulate and support research into the study and teaching of the ontological /phenomenological laws of human nature and human behavior, and the impact of these laws on life, living, and self.

For more information see http://www.erhardjensen.org

(Content Curated from the Werner Erhard Biography Website)

Werner Erhard’s life is best understood through his ideas and their application to people’s lives

Werner Erhard is the originator of unique models of transformational learning that has helped shaped human consciousness in the last quarter of the 20th century. One of the great thinkers of the modern era, he has impacted, for decades, the areas of individual and organizational effectiveness throughout the world.  The website “Werner Erhard Information” has gathered extensive links to where Werner Erhard’s work has impacted people’s lives.  Ranging from scholarly publications at Harvard University to his contributions in the field of coaching and humanitarian projects created, his work continues to affect the trajectory of human history.

Werner Erhard – Taking A Stand for the Future

est Graduates shaping history

Did you know that there is a website for est graduates to connect and share what they got from the est Training? Here is what it says at http://erhardseminarstraining.com:

“A reunion for you and all the people who dared to create a new possibility for themselves and their lives. It is now the 21st Century and there is much talk of possibility and transformational leadership – but where did this all start? In 1971, in a hotel ballroom in San Francisco over 35 years ago, transformation burst onto the national stage.

Werner Erhard and the est Training brought to the forefront the ideas of transformation, personal responsibility, accountability, and possibility – and over the next decade, over a million people “Got it”. The est Training was as much a sign of the times as bell bottoms, peace rallies and space travel.

Over the years, more than two million people from all walks of life participated in est or the programs that grew out of Erhard Seminars Training. Professionals and leaders from government, business and health industries, as well as people in the fields of arts and entertainment actively participated in the programs of est. Enjoy the essence of what est created and the impact it has made on society through the archives, video and vivid shares on this site. Stand up and acknowledge how you have made a difference in this world out of having participated in the est Training. Celebrate in this tribute to the est Training, Werner Erhard and you.”

What about you?  What did you create for your life out of having done the est Training?  And what of those lessons learned can we bring forth today that might make a difference to how the world is going?

The Context for Creating a Transformed World: A World that Works for Everyone

“Sometime around now – it may have happened five years ago or fifty years ago – but sometime around now, the rules for living successfully on this planet shifted.  We can no longer hope to live meaningful, purposeful lives using the rules of a you or me world.  It’s becoming clearer and clearer to those who will look that in order to live successfully on this planet, we must discover and live by the rules of you and me.” – Werner Erhard