Integrity: The Evolution of an Idea




Academic Paper in Progress

Werner Erhard and Professor Michael Jensen define integrity and discuss their research linking integrity and personal and corporate performance. Their recent presentations have included, Harvard University's Center For Public Leadership at John F. Kennedy School of Government, Harvard Law School, Yale University, University of Rochester Simon School of Business, and posted at the Kaufman Foundation.


"Our primary purpose here is to present a positive model of integrity that provides powerful access to increased performance for individuals, groups, organizations, and even societies. Our model reveals the causal link between integrity as we clarify and define it, and increased performance and value-creation for individuals, groups, organizations and even societies. And our model provides access to that causal link for private individuals, executives, economists, philosophers, policy makers, leaders, and legal and governmental authorities." Read the full Abstract or View the Slide Presentation.


Harvard Business School; Social Science Electronic Publishing (SSEP), Inc.; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)


"The seemingly never ending scandals in the world of finance with their damaging effects on value and human welfare argue 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 will create significant increases in economic efficiency, productivity, and aggregate human welfare.

Because integrity has generally been treated as nothing more than a virtue (a normative phenomenon), the damaging effects of out-of-integrity actions are assigned to causes other than out-of-integrity actions – that is, these damaging effects are assigned to false causes. This makes the actual source of the damaging effects of out-of-integrity actions invisible to us. As a result, in spite of all the attempts to police the false causes of these damaging effects, the out-of-integrity actions that are the actual source of these effects continue to be repeated.

Integrity as we define it (or the lack thereof) on the part of individuals or organizations has enormous economic implications (for value, productivity, quality of life, etc.). Indeed, integrity is a factor of production as important as labor, capital, and technology. Without a clear, concise and actionable definition of integrity, economics is far less powerful than it can be. So too finance and management."

"Putting Integrity Into Finance: A Purely Positive Approach" by Werner Erhard and Michael C. Jensen Ph.D. at Social Science Research Network (SSRN), Inc. This paper is also available at:

National Bureau of Economic Research (NBER), Also Online Appendix

European Corporate Governance Institute (ECGI)

Harvard Law School Forum on Corporate Governance and Financial Regulation

Harvard Business School Working Knowledge



Excerpt from a presentation given by Werner Erhard in San Francisco on May 23, 1973


Now, I’d like to discuss agreements. The problem with agreements is that they go solid. Games go solid, agreements go solid. So if you are over here, and you make over there more important than over here, then over there is more important than over here. So somehow you’ve got to get over there. And what a lot of us have done is just not to have acknowledged that over there is where we said we wanted to be. We are standing over here saying, “Well, I did it my way!” which makes us very right – and not very masterful. The mastery of life includes handling the agreements you’ve already made. One of the agreements I made was to be my mother’s and father’s son. I tried to break that agreement. The problem was that for a whole raft of people that agreement still existed. Instead of taking responsibility and letting go of my agreement, I broke it. By breaking it, I became subject to it. Instead of wanting to go over there, I had to not go over there. I had no choice any more.


The mastery of life includes integrity. Integrity is the process of cleaning up the mess you made. We made a whole bunch of agreements and didn’t keep them. I said I wanted to be a chemist and never kept that agreement. I only made that agreement with myself, but I am very important in my life. So I have to get my agreement that it is alright to let that agreement go. Once I do that, the agreement ceases to exist. I start to look at the things that I agreed that I wanted to be, do and have, and find out that it’s all right not to be, do and have those now, and the agreements go.

I’ve also made some agreements with other people and I will have to handle those agreements. I’ll have to say to whomever I made the agreement, "Look, I made an agreement with you and what I’d like to do now is not to keep that agreement. I’d like to know what you need in order to be willing to accept that."

In your lives there will be people that you have an inherent agreement to communicate with that you haven’t communicated with. You’ve withheld your communication. You can go back and clean up that mess by taking responsibility and communicating with those people.

If you’ve left some problems unsolved in your life – and a problem unsolved in your life is one that keeps coming up – you can handle it by expanding your purposes to include solving it. All of a sudden, what was a problem ceases to be a problem. It becomes a part of the solution. For the most part, simply acknowledging to the person that you made an agreement with them, that you didn’t keep your agreement with them, or that you did something to them, would be enough to clean it up. Essentially, what you do it for is to expand your purposes – which are to make your life work – to include making their life work.

You can say, "My goal is to make my life work and for your life to work." You’ve got to clean up the mess with the people you have upsets with, the people you are out of sorts with. That’s the beginning of mastery. You need to clean up the mess you made, whatever the mess is. To make it effortless to clean up the mess you’ve made, you’ve got to assume the point of view that your purpose in life includes cleaning it up. That allows you to move from here to there and include on the way over, cleaning up the mess. You could also stop moving from here to there and go clean up the mess you made, but that isn’t necessary. If there are any things you’ve done wrong, any badness, any horrors, any secrets – if you’ve got any of that stuff in your life, you don’t have to stop your life. All you have to do is expand your purposes, so that the process of getting from where you are to where you want to be includes cleaning up all the messes you’ve made. That takes the heaviness and horror out of it.

-Werner Erhard



In life you wind up with one of two things - the results or the reason why you don't have the results. Results don't have to be explained. They just are.
Werner Erhard