Economics and Accounting
In this issue we look at the link between economics and accounting, or rather the non-link. It was in the late 19th century that economics fell in love with statistics and mathematics and thus chose a basis in numbers of a very different kind to those that accounting entails – accurate records of real economic activity, albeit abstract and sometimes manipulated. To this day, this wrong turning needs to be remedied by, as they say in Turkey, going back to where the road forked and taking the other way. It is this, also – the link between accounting and economics – that is the hallmark of associative economics as a school of thought. Accounting-based economics is also a great ideological ‘no person’s land’.
Sign of Our Time/Truths about Money, sets the stage with clips from two modern-day commentators, Geoffrey Gardiner, and Perry Mehrling. Gardiner is a former director of the Financial Services Division of Barclays Bank and a member of the Institute of Creditary Economics, while Mehrling’s site is worth visiting because it illustrates very well how the ‘money view’ he proposes is a way of seeing the economics realm in terms of accounting operations.
Jacob Soll follows on with his account of the importance since the Renaissance in particular of accounting and its essential need even today perhaps especially today post 2007. Attention is drawn to the Dutch, whose pre-eminence in finance prior to the financial centre moving to London in the 18th century, is often attributed to having had basic financial management skills and to being acutely aware of the concept of balanced books, audits and reckonings.
Then we feature, Maths and Stats, an account by Eric Roll of how, through Jevons, economics took up with mathematics and statistics, not merely as a matter of ‘science’, but in direct furtherance of Benthamite pleasure-pain thinking – a moot philosophy indeed when it comes to the philosophical underpinnings of economic life. Understandable if economics is all about me, me, me; but hardly appropriate if it is about serving others.
Boom or Bust concludes the section with Rudolf Steiner’s description of the 1907 stock market crisis and how human will, not abstract cycles, is what matters. We take this up because of were Jevons makes his stand “the will … of the person immediately concerned is … the sole criterion for the time of what is or is not useful.”
The AEX Page features a description of one person’s experience of Associative Economics and double entry bookkeeping. As well as a look at the actions of giving and receiving and how these are recorded.
Finally Accounting Backdrop concludes this issue with a piece on the experience of constructing a set of accounts and what this can teach us in relation to the preparation of future budgets, not just the recording of historic transactions.