On day one of an economics course a new student is taught the answer: to maximize shareholder profit. But this single idea that pervades all our thinking about the role of the corporation is fundamentally wrong. Constraining the firm to a single narrow objective has had wide-ranging and damaging consequences; economic, environmental, political, and social.
Hat Tip ~ PROSPERITY, Colin Mayer
Tuesday, May 26, 2020
Monday, May 25, 2020
Evolutionary Finance... From Modern to Modular... Evolution is Modular... ATBPO ~ And The Band Plays On...
Finance applies statistics to financial markets as a top-down approach. Statistics assume implicity that the underlying process produces random outcomes which are stable and stochastically predictable. The stability hypothesis in finance, such as rationality, the efficient market hypothesis, arbitrage, fundamental intrinsic value, and market equilibrium provide the foundation of Modern Finance Theory.
An alternative approach however is evolutionary finance, which is a bottom-up approach that starts with the behavior of market participants. The evolutionary approach has gained ground in a variety of sciences. The constitutional metaphor of the bottom-up approach is evolutionary biology, instead of mechanical and statistical physics as used in neoclassical finance. The Santa Fe Institute, a research center for the evolutionary approach in science was founded in 1984, has played an important role in promoting the evolutionary approach.
Evolutionary finance is grounded on a number of related theories, such as dynamic systems, reflexivity. complexity, and emergence."
Hat Tip ~ HETERODOX INVESTMENT THEORY, Thomas Pistorius
An alternative approach however is evolutionary finance, which is a bottom-up approach that starts with the behavior of market participants. The evolutionary approach has gained ground in a variety of sciences. The constitutional metaphor of the bottom-up approach is evolutionary biology, instead of mechanical and statistical physics as used in neoclassical finance. The Santa Fe Institute, a research center for the evolutionary approach in science was founded in 1984, has played an important role in promoting the evolutionary approach.
Evolutionary finance is grounded on a number of related theories, such as dynamic systems, reflexivity. complexity, and emergence."
Hat Tip ~ HETERODOX INVESTMENT THEORY, Thomas Pistorius
The Economists' Hour
In The Economists' Hour, Binyamin Applebaum traces the rise of the economists, first in the United States and then around the globe, as their ideas reshaped the modern world, curbing government, unleashing corporations, and hastening globalization....
Sunday, May 24, 2020
Modular-Finance™, Stakeholder Capitalism & the GFC
"The Global Financial Crisis has spawned an industry of analysis and calls for reform. While the forces that shaped the GFC had been emerging long before 2008, we see the GFC as a perfect storm that woke us up to the flaws in the way that we think about business. We believe that the GFC will be seen as a historical turning point in how we think about business and its role in society."
The Power of AND, R. Edward Freeman, Kirsten E. Martin, & Bidhan L. Parmar
Even the Business Roundtable, an organization of about two hundred CEOs of the largest U.S. companies, has affirmed the idea that the old narrative of business is incomplete. Traditionally, the Roundtable had been firmly behind a 'shareholder-centric" view of business. More recently, in August 2019, they issued a statement that said:
While each of our companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:
* Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
* Invest in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity, and respect.
* Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to other companies, large and small, that help us meet our missions.
* Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
* Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow, and innovate. We are committed to transparency and effective engagement with shareholders.
* Each of our stakeholders is essential. We commit to deliver value, for the future success of our companies, our communities, and our country.
Hat Tip ~ The Power of AND ~ R. Edward Freeman
The Power of AND, R. Edward Freeman, Kirsten E. Martin, & Bidhan L. Parmar
Even the Business Roundtable, an organization of about two hundred CEOs of the largest U.S. companies, has affirmed the idea that the old narrative of business is incomplete. Traditionally, the Roundtable had been firmly behind a 'shareholder-centric" view of business. More recently, in August 2019, they issued a statement that said:
While each of our companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:
* Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
* Invest in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity, and respect.
* Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to other companies, large and small, that help us meet our missions.
* Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
* Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow, and innovate. We are committed to transparency and effective engagement with shareholders.
* Each of our stakeholders is essential. We commit to deliver value, for the future success of our companies, our communities, and our country.
Hat Tip ~ The Power of AND ~ R. Edward Freeman
Saturday, May 23, 2020
From Modern to Modular
The Modern World began on
The Modular-World began on September 15, 2008
A week later Alan Greenspan testified Before Congress... There was a Flaw in my Thinking... The World is More Complex than I originally..... In The World of Finance ... The Modern World is Being reExamined...
The Modular-World began on September 15, 2008
A week later Alan Greenspan testified Before Congress... There was a Flaw in my Thinking... The World is More Complex than I originally..... In The World of Finance ... The Modern World is Being reExamined...
Friday, May 22, 2020
From Modern to Modular...
At two 2016 meetings at the White House sponsored by the Obama Administration's department of labor, seventy-five people from a variety of organizations and movements gathered to discuss whether or not there needed to be one brand that identifies the emerging new story of business.
While such a brand may someday surface, for our purposes we want to focus on the underlying ideas and principles that are inspiring all this activity.
That is the purpose of Modular-Finance Forum...
Whatever brand ultimately becomes the rallying cry of this conceptual revolution, it will have to be based on a sense of purpose and ethics that is central to the new narrative as profit is to the old one.
From Modern vs Modular
It will have to address how companies can simultaneously create value for all of their key stakeholders. The brand will have to take sustainability and the physical limits of business very seriously. It will have to account for the fact that all businesses are embedded in societal institutions and processes. It will have to recognize that people are complex (vs Rational Expectations) and that they can and do collaborate with others to create value.(Vs Selfish). And it will have to integrate these ideas into a coherent framework.
Getting them to work together - The Balance or the Blend if you will - is what we call - Modular-Finance™
The Five Key Ideas can be found below:
While such a brand may someday surface, for our purposes we want to focus on the underlying ideas and principles that are inspiring all this activity.
That is the purpose of Modular-Finance Forum...
Whatever brand ultimately becomes the rallying cry of this conceptual revolution, it will have to be based on a sense of purpose and ethics that is central to the new narrative as profit is to the old one.
From Modern vs Modular
It will have to address how companies can simultaneously create value for all of their key stakeholders. The brand will have to take sustainability and the physical limits of business very seriously. It will have to account for the fact that all businesses are embedded in societal institutions and processes. It will have to recognize that people are complex (vs Rational Expectations) and that they can and do collaborate with others to create value.(Vs Selfish). And it will have to integrate these ideas into a coherent framework.
Getting them to work together - The Balance or the Blend if you will - is what we call - Modular-Finance™
The Five Key Ideas can be found below:
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