double entry bookkeeping

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pages: 274 words: 66,721

Double Entry: How the Merchants of Venice Shaped the Modern World - and How Their Invention Could Make or Break the Planet by Jane Gleeson-White

Affordable Care Act / Obamacare, Bernie Madoff, Black Swan, British Empire, business cycle, carbon footprint, corporate governance, credit crunch, double entry bookkeeping, full employment, Gordon Gekko, income inequality, invention of movable type, invention of writing, Islamic Golden Age, Johann Wolfgang von Goethe, Johannes Kepler, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, means of production, Naomi Klein, Nelson Mandela, Ponzi scheme, shareholder value, Silicon Valley, Simon Kuznets, source of truth, spice trade, spinning jenny, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, traveling salesman, upwardly mobile

It was proposed by a German economist, Werner Sombart (1863–1941), in his six-volume work on capitalism, Der moderne Kapitalismus. In six pages Sombart set out his belief that the emergence of capitalism and the appearance of double-entry bookkeeping in the thirteenth century are causally related. He wrote: ‘It is simply impossible to imagine capitalism without double-entry bookkeeping; they are like form and content.’ In Sombart’s view, capitalism and double entry are so intimately connected it is difficult to tell which was cause and which effect: ‘one may indeed doubt whether capitalism has procured in double-entry book-keeping a tool which activates its forces, or whether double-entry book-keeping has first given rise to capitalism out of its own spirit.’ Sombart defines capitalism as a particular economic system, recognisable as an organisation of trade, consisting invariably of two collaborating sections of the population, the owners of the means of production, who also manage them, and property-less workers, bound to the markets which they serve; which displays the two dominant principles of wealth creation and economic rationalism.

And so, the story goes, the Florentine record-keepers developed a style of account-keeping which allowed them to classify, record and cross-check their accounts—and, most importantly, to calculate their profits, which allowed them to see not just what they owned but also how well their business was doing. This new form of business recording was double-entry bookkeeping. It is also possible, however, given the timing, that the new mathematics and double-entry bookkeeping evolved together in Asia as part of a coherent commercial system developed by the Hindus or Arabs, or both. Research into the possible Islamic or Hindu origins of double-entry bookkeeping has found suggestive but no conclusive evidence. Some researchers have traced the new bookkeeping to Fibonacci’s Liber abaci and to the Islamic universities of Muslim Spain. Others argue that accounting practices in the early Islamic State (founded in 622) were similar to those later used in northern Italy and may have been their source.

The most innovative Dutch writer on bookkeeping was the celebrated mathematician, engineer, inventor and bureaucrat Simon Stevin (1548–1620), who learnt double-entry bookkeeping as an apprentice in Antwerp. Stevin became minister of finances and chief engineer of the Netherlands, as well as the tutor and advisor to its governor Prince Maurice of Orange. At Stevin’s instigation, Prince Maurice introduced double-entry bookkeeping to the administration of every local government in his territory and learnt mathematics and commerce from the two-volume work Stevin wrote for his instruction. The second volume (1605) contains a bookkeeping treatise, Account-keeping for princes after the Italian Manner, which Stevin wrote in the form of questions and answers that actually arose during the arguments Stevin had with the prince while teaching him the often counter-intuitive art of double-entry bookkeeping. (The first volume appeared three years later, in 1608.)


pages: 382 words: 105,166

The Reckoning: Financial Accountability and the Rise and Fall of Nations by Jacob Soll

accounting loophole / creative accounting, bank run, Bonfire of the Vanities, British Empire, collapse of Lehman Brothers, computer age, corporate governance, creative destruction, Credit Default Swap, delayed gratification, demand response, discounted cash flows, double entry bookkeeping, financial independence, Frederick Winslow Taylor, God and Mammon, High speed trading, Honoré de Balzac, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, joint-stock company, Joseph Schumpeter, new economy, New Urbanism, Nick Leeson, Ponzi scheme, Ralph Waldo Emerson, Scientific racism, South Sea Bubble, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade route

Quotation from Louis Goldberg in Journey into Accounting Thought, ed. Stewart A. Leech (London: Routledge, 2001), 217. 5. Pacioli’s text is reproduced in John B. Geijsbeek, Ancient Double-Entry Bookkeeping: Luca Pacioli’s Treatise 1494 (Denver, 1914), 33. 6. Ibid., 39. 7. Ibid.; Brown, A History of Accounting and Accountants, 40, 111. 8. Grendler, Schooling in Renaissance Italy, 321. 9. Pacioli citations from Geijsbeek, Ancient Double-Entry Bookkeeping, 27, 37. 10. Ibid., 41, 51–53. 11. Ibid., 41, 75. 12. Bruce G. Carruthers and Wendy Nelson Espeland, “Accounting for Rationality: Double-Entry Bookkeeping and the Rhetoric of Economic Rationality,” American Journal of Sociology 97, no. 1 (1991): 30–67; Mary Poovey, A History of the Modern Fact: Problems of Knowledge in the Sciences of Wealth and Society (Chicago: University of Chicago Press, 1998), 31. 13.

They taught applied mathematics and other subjects, such as the alphabet, prose instruction, and the catechism.25 The medieval Italian merchants did what the ancient Greeks, Persians, and Romans, the great Asian kingdoms, and the feudal lords could not: Without fanfare or public recognition, they invented double-entry bookkeeping, making the revolutionary leap into the calculation of profit. The only explanation for this is that Italian merchants needed double entry to calculate multipartner firms, equity and profits, and so, in a demand-response process, they developed it. Although we do not know for sure who first did it, Tuscan merchants began developing double-entry bookkeeping. The records are of some debate, but the earliest recognized use of double entry appears in the documents of the ledgers of either the Rinieri Fini brother firm (1296), which traded in fairs across Europe, or the Farolfi merchant house (1299–1300), which traded between Florence and Provence.

He ignored the noble Neo-Platonic warnings of Pico della Mirandola and mixed high learning with the merchant arts. That a prince and a lowborn (indeed, bastard) engineer would meet at a university and become friends was already a European anomaly. That Stevin would teach the prince double-entry bookkeeping was another.14 Stevin excelled in linguistics, cosmography, perspective, algebra, the study of decimal fractions, the theory of numbers, physics, navigation, and astronomy. He also made a careful study of double-entry bookkeeping. Stevin was a civic humanist whose achievements far surpassed those of Pacioli. His learning had practical applications, especially in the management of water, and he was given the most sensitive positions in civil administration. He became the inspector of dikes and the chief administrator of the Dutch army.15 Stevin was attuned to the connection between mathematics and government.


pages: 398 words: 105,917

Bean Counters: The Triumph of the Accountants and How They Broke Capitalism by Richard Brooks

accounting loophole / creative accounting, asset-backed security, banking crisis, Big bang: deregulation of the City of London, blockchain, BRICs, British Empire, business process, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Strachan, Deng Xiaoping, Donald Trump, double entry bookkeeping, Double Irish / Dutch Sandwich, energy security, Etonian, eurozone crisis, financial deregulation, forensic accounting, Frederick Winslow Taylor, G4S, intangible asset, Internet of things, James Watt: steam engine, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, light touch regulation, Long Term Capital Management, low cost airline, new economy, Northern Rock, offshore financial centre, oil shale / tar sands, On the Economy of Machinery and Manufactures, Ponzi scheme, post-oil, principal–agent problem, profit motive, race to the bottom, railway mania, regulatory arbitrage, risk/return, Ronald Reagan, savings glut, short selling, Silicon Valley, South Sea Bubble, statistical model, supply-chain management, The Chicago School, too big to fail, transaction costs, transfer pricing, Upton Sinclair, WikiLeaks

But nowhere were the new methods to prove more revolutionary than in commerce, where they made possible an ingenious new way of accounting called double-entry bookkeeping.4 As economist Werner Sombart would later write of the method’s origins: ‘Double-entry bookkeeping was born out of the same spirits as the systems of Galileo and Newton, as the theories of modern physics and chemistry’; it ‘discloses to us the cosmos of the economic world’.5 First used by Florentine merchants at the end of the thirteenth century, the system allows not just for the recording of a transaction; it simultaneously registers its financial consequences and thus automatically keeps a tab on the things that matter: sales and purchases, debtors and creditors, and so on. The state of an enterprise – its profits, its assets, its debts and much else – can be readily judged. The golden rule of double-entry bookkeeping is that every transaction is recorded by debiting one account, or ledger, and crediting another.

The growth of merchant trade, the arrival of Arabic mathematics and the influence of the Catholic Church (which had a few things to say on the vexed question of making money) came together to transform accounting. A system of ‘double-entry bookkeeping’ enabled traders to measure their performance and gauge their financial position at any given time. By recording assets and liabilities such as stocks and debts rather than simply tracking movements of goods and cash, it allowed a truer picture of an enterprise’s profit to be measured. This greater insight in turn encouraged investment and partnerships with others, perhaps in foreign lands. As the centre of world economic gravity moved north and west in the sixteenth and seventeenth centuries, the new method of accounting facilitated international trade, and then industrialization, on an ever greater scale. Some early-twentieth-century thinkers went so far as to ascribe the rise of capitalism itself to double-entry bookkeeping. When he coined the term ‘Protestant work ethic’ in 1904, the German philosopher Max Weber also wrote: ‘The most generous presupposition for the existence of this present-day capitalism is that of rational capital accounting as the norm for all large industrial undertakings which are concerned with the provision of everyday wants.’3 The ‘capital accounting’ to which he referred was in fact the double-entry bookkeeping system, which introduced the concept of ‘capital’ as the measure of an owner’s interest in an enterprise (centuries before Karl Marx expounded his theory in Das Kapital in 1867).

When he coined the term ‘Protestant work ethic’ in 1904, the German philosopher Max Weber also wrote: ‘The most generous presupposition for the existence of this present-day capitalism is that of rational capital accounting as the norm for all large industrial undertakings which are concerned with the provision of everyday wants.’3 The ‘capital accounting’ to which he referred was in fact the double-entry bookkeeping system, which introduced the concept of ‘capital’ as the measure of an owner’s interest in an enterprise (centuries before Karl Marx expounded his theory in Das Kapital in 1867). Weber’s near-contemporary, Austrian-American economist Joseph Schumpeter, saw the accounting method as ‘the towering monument’ of what he called the ‘cost–profit calculus’, which itself ‘powerfully propels the logic of enterprise’. Another German economist, Werner Sombart, was more categorical still. ‘It is impossible to imagine capitalism without double-entry bookkeeping,’ he claimed. ‘They are like form and content.’4 None of which makes accounting an unalloyed force for good, of course.


Bookkeeping the Easy Way by Wallace W. Kravitz

double entry bookkeeping, information retrieval, post-work, profit motive

A partial ledger for the accounts involved and the debits and credits for (1), (2), (3), and (4) above is shown as follows: Cash 1450 (3) 1000 (1) 2500 (4) 100 (2) 5000 Island National Bank (3) 1000 6200 (1) 2500 Supplies 645 (4) 100 Thomas Morales, Capital 14720 (2) 5000 Notice that each numbered transaction identifies a debit and a credit of equal amount. This is helpful in order to follow the system of double-entry bookkeeping. For every transaction, debits must equal credits. YOU SHOULD REMEMBER In every transaction debits equal credits. Assets increase by debits and decrease by credits. Liabilities increase by credits and decrease by debits. Owner's equity increases by credits and decreases by debits. Know Your Vocabulary Use each of the following words or terms in a statement relating to bookkeeping/accounting: Account form Balance Credit (cr.) Debit (dr.) Double-entry bookkeeping Ledger Rules of debits and credits T-account Questions 1. Which of the following statements is true? a) For every transaction, the account(s) debited equal the account(s) credited. b) For every transaction, the account(s) increased equal the account(s) decreased. 2.

It found that 70 percent of successful owners understood bookkeeping procedures, while only 10 percent of failed business owners shared that understanding. This indicates that a knowledge of the fundamentals of bookkeeping is essential to the success of small businesses. Understanding basic bookkeeping procedures is vital to developing an understanding of more advanced accounting theory and practice. Therefore, mastering the concepts of double-entry bookkeeping is a prerequisite to any further study. This text is designed to be used in a variety of ways, depending on the need of the learner. (1) Those who wish to study independently, at their own pace, will find this presentation clear and concise, without distractions. (2) Those enrolled in adult education or continuing education courses will find that this text is designed for a relaxed, successful learning experience. (3) Those who wish to study this subject in a one-semester course will find this work ideally arranged to coincide with most school half-year time schedules. (4) Those who are having difficulty in grasping the fundamentals in a traditional introductory course in bookkeeping or accounting will find the text ideal for review or for remedial study.

< previous page page_21 next page > < previous page page_23 next page > Page 23 Chapter 4 The Ledger WORDS TO REMEMBER Account Form the arrangement of each item in a ledger; debits entered on the left side and credits entered on the right side Balance the value of an account at any given time, as at the end of a fiscal period Credit (cr.) entries on the right side of any account Debit (dr.) entries on the left side of any account Ledger all accounts, taken together as a group, for the same individual or business Double-Entry Bookkeeping a method of bookkeeping in which, for every transaction, the amounts debited must equal the amounts credited (Debits = Credits) T-Account an accountant's device, in the form of a large "T," used to analyze debit and credit entries for each transaction It is possible to record the changes each transaction causes by continually preparing new balance sheets. This "direct balance sheet" approach is not reasonable, however, because of the frequency of transactions and the amount of bookkeeping work involved.


pages: 306 words: 58,984

Mastering Spreadsheet Bookkeeping by Peter Marshall

accounting loophole / creative accounting, double entry bookkeeping

These require that the personal data shall: • be obtained only for specified and lawful purposes and must not be used in any manner incompatible with such purposes; • be relevant and adequate but not excessive for the purpose for which it has been collected; • be accurate and kept up to date; • not be kept for any longer than necessary for the purpose for which it was collected; • only be processed in accordance with the subject’s rights under the Act; • be protected by appropriate organizational and technical measures against unauthorized and unlawful use, or accidental loss or damage; • not be taken outside of the country to any country where there is not adequate legal protection of the rights and freedom of data subjects in respect of the processing of their personal data. In most businesses today, accounting information will be used for non-accounting purposes, so it is very likely that anyone who controls such data will need to register and comply with the Act. 4 Double entry bookkeeping Let’s just remind ourselves of the essential principle of double entry bookkeeping because we have to keep this in mind as we construct and use our spreadsheet system. Debit and credit Transactions have two sides, a debt and a credit. When a firm sells goods to a customer a debit entry is made in that customer’s ledger account because they have become our debtor (for the sake of simplicity, in this example we’ll assume the sale was VAT exempt).

A check on accuracy There is another important advantage of double entry bookkeeping. If both sides of each transaction have been recorded then, at any time, if the sums have been done correctly the debit entries will equal the credit entries. It provides a check of accuracy. An example is as follows: Assets – liabilities = Capital Having reminded yourself of the crucial importance of maintaining the double entry, keep this in mind as you configure and use your spreadsheet system. Figure 2 An MS Excel spreadsheet page Figure 3 The control section of an Excel page known as the ribbon 5 Configuring spreadsheets within the traditional daybook format This chapter contains guidance for those who are already knowledgeable and skilled in double entry bookkeeping, but not in the use of spreadsheets for the purpose.

A copy of the British Library Cataloguing in Publication Data is available from the British Library ISBN 978-1-84528-501-2 (paperback) ISBN 978-1-84528-556-2 (ebook) Printed and bound in the UK 1 3 5 7 9 10 8 6 4 2 Cover by Simon Levy Contents List of figures Preface Acknowledgements PART ONE An Introduction to Spreadsheet Bookkeeping 1 A period of transition 2 The role and significance of professional associations 3 Data security and the Data Protection Act 1998 4 Double entry bookkeeping 5 Configuring spreadsheets within the traditional daybook format 6 Speeding up traditional ledger posting 7 Depreciation calculations PART TWO Basic Spreadsheet Bookkeeping 8 Recording daily transactions: books of prime entry 9 The purchase daybook 10 The purchase returns daybook 11 The sales daybook 12 The sales returns daybook 13 The cash book 14 Setting up your spreadsheet for recording money paid in 15 The cash book: recording money paid in, step by step 16 The cash book: recording money paid out, step by step 17 Disagreeing with the bank 18 The bank reconciliation 19 The petty cash book 20 The journal 21 The ledger 22 Posting to the ledger from the daybook 23 Posting to the ledger from the cash book 24 Balancing the ledger 25 Discounts 26 Control accounts 27 Preparing control accounts, step by step 28 The trial balance 29 How to extract a trial balance 30 The trial balance: errors 31 Accruals and prepayments 32 Revenue accounts 33 Stock in the final accounts 34 How to compile revenue accounts 35 Configuring a spreadsheet for revenue accounts, step by step 36 Compiling a spreadsheet for revenue accounts, step by step 37 The balance sheet 38 Compiling a balance sheet, step by step 39 Manufacturing accounts 40 Compiling a manufacturing account, step by step 41 Depreciation: the straight line method 42 Depreciation: the diminishing balance method 43 Depreciation, step by step 44 Accounting for bad and doubtful debts 45 Accounting for bad and doubtful debts, step by step 46 Partnerships: appropriation accounts 47 Partnership accounts, step by step 48 Amalgamating sole proprietorships into a partnership 49 How to consolidate two balance sheets 50 Limited companies 51 Format of company accounts PART THREE Advanced Spreadsheet Bookkeeping 52 Fully automated spreadsheet bookkeeping 53 Opening balances spreadsheet 54 Incomings analysis sheet 55 Outgoings analysis sheet 56 Annual incomings summary 57 Annual outgoings summary 58 Automatic completion of the VAT return 59 Compiling the assets summary 60 Compiling the liabilities summary 61 The trial balance 62 The profit and loss account 63 The balance sheet 64 Adding additional columns to the incomings and outgoings analysis sheets 65 Creating an index to the accounts 66 Protecting your spreadsheets PART FOUR Examination Papers, Answers and Associated Material Further Resources Index List of figures 1 www.bookkeepers.org.uk homepage 2 An MS Excel spreadsheet page 3 The control section of an Excel page known as the ribbon 4 Example of a traditional purchase daybook page written up on a spreadsheet 5 Traditional purchase daybook spreadsheet (Figure 4) with the formulae revealed 6 Example of a traditional sales daybook page written up on a spreadsheet 7 Traditional sales daybook spreadsheet (Figure 6) with the formulae revealed 8 Example of a traditional cash book page written up on a spreadsheet 9 Traditional cash book spreadsheet (Figure 8) with the formulae revealed 10 Example of a traditional petty cash book page written up on a spreadsheet 11 Traditional petty cash book spreadsheet (Figure 10) with the formulae revealed 12 Example of a traditional nominal ledger page written up on a spreadsheet 13 Traditional nominal ledger page spreadsheet (Figure 12) with the formulae revealed 14 Spreadsheet configured for journal 15 Extract from A.


Mastering Book-Keeping: A Complete Guide to the Principles and Practice of Business Accounting by Peter Marshall

accounting loophole / creative accounting, asset allocation, double entry bookkeeping, information retrieval, intangible asset, the market place

An illustration of the flow of documents and the processes which each triggers in a transaction between two businesses. 8 5 What is double entry book-keeping? Debit and credit All transactions have two sides, a debit and a credit. When a firm sells a TV and sends a bill for payment, for example, on the one hand it has made a sale (which is a credit entry). On the other hand it has gained a liability from the customer (debit entry). That customer is liable to the firm for the money. The need for two records Both these transactions need recording separately, because we need: . a total of sales figures for tax computation and management purposes (to make sure the business is working to plan) . a cumulative total of money owed by each customer. A check of accuracy There is another important advantage of double entry book-keeping. If both sides of each transaction have been recorded then, at any time, if the sums have been done correctly the debit entries will equal the credit entries.

British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN 978 1 84803 324 5 Produced for How To Books by Deer Park Productions, Tavistock, Devon Typeset by PDQ Typesetting, Newcastle-under-Lyme, Staffordshire Cover design by Baseline Arts Ltd, Oxford NOTE: The material contained in this book is set out in good faith for general guidance and no liability can be accepted for loss or expense incurred as a result of relying in particular circumstances on statements made in the book. The laws and regulations are complex and liable to change, and readers should check the current position with the relevant authorities before making personal arrangements. Contents Preface 1 A period of transition 2 The role and significance of the professional association 3 Data security and the Data Protection Act 1998 4 The flow of documents and processes 5 What is double entry book-keeping? 6 Opening the books of account 7 The day books 8 The purchase day book 9 The purchase returns day book 10 The sales day book 11 The sales returns day book 12 The cash book 13 The cash book: money paid in 14 The cash book: money paid out 15 Disagreeing with the bank 16 The bank reconciliation 17 The petty cash book 18 How to write up the petty cash book 19 The journal 20 How to write up the journal 21 The postage book 22 The ledger 23 Posting to the ledger from the day books 24 Posting to the ledger from the cash book 25 Balancing the ledger 26 Discounts 27 Control accounts 28 Preparing control accounts step by step 29 The trial balance v ix 1 2 3 4 9 11 13 17 19 21 23 25 27 29 31 33 41 43 47 49 51 53 57 59 61 65 69 73 75 Contents 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 How to extract a trial balance The trial balance: errors Accruals and prepayments Revenue accounts Stock in the final accounts How to compile revenue accounts Compiling revenue accounts step by step The balance sheet Compiling a balance sheet step by step Manufacturing accounts Compiling a manufacturing account step by step Depreciation: the straight line method Depreciation: the diminishing balance method Other methods of depreciation Depreciation step by step Accounting for bad and doubtful debts Accounting for bad and doubtful debts step by step Partnership accounts Partnerships: appropriation accounts Partnership accounts step by step Amalgamating sole proprietorships into a partnership How to consolidate two balance sheets Limited companies Limited companies’ books and accounts Format of company accounts Revenue accounts of limited companies Balance sheets of limited companies Going limited Going limited: worked example Club accounts Club accounts: income and expenditure Fixed asset register Asset disposals Asset disposals step by step Correction of errors Correcting errors step by step vi 77 81 83 87 89 91 93 95 99 101 103 105 107 108 111 113 115 116 117 119 121 123 130 133 135 137 145 149 150 151 153 161 163 165 167 169 Contents 66 67 68 69 70 71 72 73 74 75 76 77 78 79 Value Added Tax Accounting for VAT Incomplete records Capital comparison method step by step Bank account analysis step by step Interpreting accounts Interpreting accounts: example Wages: basic principles Coin analysis and wages book Stock records and valuation Encountering deviations from standard methods Using spreadsheet pages New developments in electronic book-keeping More advanced accounting 173 179 186 189 193 197 201 203 205 207 211 213 217 221 Sample examination papers – Level I Model answers – Level I Sample examination papers – Level II Model answers – Level II Sample examination papers – Level III Model answers – Level III More sample examination papers 229 241 248 257 266 275 284 Glossary 316 Index 321 vii This page intentionally left blank Preface This book was inspired as much by educational science as by book-keeping.

If the cheque for £195.50 takes into account a 2½% discount then the discount figure will be £5.01, since if £195.50 = 97.5% then 1% = £195.50 97.5 = £2.00½ and 100% = £2.00½ 6 100 = £200.50, of which 2½% = £5.01 3. It has been regarded as unnecessary to debit the £800 drawn from the bank to cash since it went straight out again in wages; the debit entry has, thus, been made directly to wages account. 28 14 The cash book: money paid out Posting to the credit page Now we need to do our first piece of double entry book-keeping. Since the bank has been debited with the money the cashier paid in, the cashier must be credited with the same amount. Otherwise, the cashier will appear to remain indebted for a sum he/she no longer has. Step by step 1. Enter the date of the paying-in slip in the date column of the right hand (credit page) of the cash book. 2. In the second (name) column, enter the word ‘bank’, since it is the bank which is taking the money from the cashier. 3.


pages: 348 words: 97,277

The Truth Machine: The Blockchain and the Future of Everything by Paul Vigna, Michael J. Casey

3D printing, additive manufacturing, Airbnb, altcoin, Amazon Web Services, barriers to entry, basic income, Berlin Wall, Bernie Madoff, bitcoin, blockchain, blood diamonds, Blythe Masters, business process, buy and hold, carbon footprint, cashless society, cloud computing, computer age, computerized trading, conceptual framework, Credit Default Swap, crowdsourcing, cryptocurrency, cyber-physical system, dematerialisation, disintermediation, distributed ledger, Donald Trump, double entry bookkeeping, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, failed state, fault tolerance, fiat currency, financial innovation, financial intermediation, global supply chain, Hernando de Soto, hive mind, informal economy, intangible asset, Internet of things, Joi Ito, Kickstarter, linked data, litecoin, longitudinal study, Lyft, M-Pesa, Marc Andreessen, market clearing, mobile money, money: store of value / unit of account / medium of exchange, Network effects, off grid, pets.com, prediction markets, pre–internet, price mechanism, profit maximization, profit motive, ransomware, rent-seeking, RFID, ride hailing / ride sharing, Ross Ulbricht, Satoshi Nakamoto, self-driving car, sharing economy, Silicon Valley, smart contracts, smart meter, Snapchat, social web, software is eating the world, supply-chain management, Ted Nelson, the market place, too big to fail, trade route, transaction costs, Travis Kalanick, Turing complete, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, universal basic income, web of trust, zero-sum game

“I submit to you that there is no answer to the quiz,” he wrote. “It is not possible for a human to know whether Bank of America made money or lost money last quarter.” A bank’s balance sheet, he said, is essentially a series of “reasonable guesses about valuation.” Make the wrong guesses, as Lehman and other troubled banks did, and you end up out of business. Our goal here is not to trash double-entry bookkeeping or the banks. Were we to, you know, add up all the debits and credits, double-entry bookkeeping has done more good than harm. The goal really is to show the deep historical and cultural roots behind why we trusted this kind of accounting. The question now, in the wake of our fall, is whether a particular technology that allows a different kind of bookkeeping will help us renew our trust in our economic system. Can a blockchain, which is continuously open to public inspection and guaranteed not by a single bank but by a series of mathematically secured entries into a ledger that’s shared and maintained by many different computers, help us rebuild our lost social capital?

That token is communally recognized as conveying some right to goods or services that the bearer has earned from tasks performed in the past. Once human beings started to engage in exchanges of money across distances, tokens’ capacity to play this record-keeping function broke down. There was no way for the payer to physically deliver the tokens to the payee without having to trust a courier who might well steal it. The solution came with the advent of a new form of ledger-keeping known as double-entry bookkeeping, an approach that was pioneered, as we’ll discuss lower down, by a clique of Renaissance bankers. In adopting this bookkeeping, they thrust banking into the payments business and, for centuries, helped to greatly expand the capacity for human exchange. It’s not an overstatement to say that this idea of banking built the modern world. But it also amplified a problem that had always dogged ledgers: can society trust the record-keeper?

Before Fibonacci, European merchants simply couldn’t calculate the things we take for granted today; he taught them how to measure proportions, how to divide, say, a bale of hay and charge accurate prices. He taught them how to divide profits in an enterprise. Fibonacci’s math gave them precision in business matters that people did not previously have. Fibonacci’s new numbering system became a hit with the merchant class and for centuries was the preeminent source for mathematical knowledge in Europe. But something equally important also happened around this time: Europeans learned of double-entry bookkeeping, picking it up from the Arabians, who’d been using it since the seventh century. Merchants in Florence and other Italian cities began applying these new accounting measures to their daily businesses. Where Fibonacci gave them new measurement methods for business, double-entry accounting gave them a way to record it all. Then came a seminal moment: in 1494, two years after Christopher Columbus first set foot in the Americas, a Franciscan friar named Luca Pacioli wrote the first comprehensive manual for using this accounting system.


pages: 333 words: 64,581

Clean Agile: Back to Basics by Robert C. Martin

Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, c2.com, continuous integration, DevOps, double entry bookkeeping, en.wikipedia.org, failed state, Frederick Winslow Taylor, index card, iterative process, Kubernetes, loose coupling, microservices, remote working, revision control, Turing machine

Every symbol written into their documents must be correct lest fortunes, and possibly even lives, be lost. How do accountants ensure that every symbol is correct? Double-Entry Bookkeeping Accountants have a discipline that was invented 1000 years ago. It’s called double-entry bookkeeping.1 Every transaction they enter into their books is entered twice: once as a credit in one set of accounts, and again as a complementary debit in another set of accounts. These accounts eventually flow into a single document called the balance sheet, which subtracts the sum of liabilities and equities from the sum of assets. That difference must be zero. If it is not zero, then an error has been made.2 1. https://en.wikipedia.org/wiki/Double-entry_bookkeeping_system 2. If you have studied accounting, your hair is likely now on fire. Yes, this was a gross simplification.

Continuous Technical Readiness Stable Productivity Inexpensive Adaptability Continuous Improvement Fearless Competence QA Should Find Nothing Test Automation We Cover for Each Other Honest Estimates You Need to Say “No” Continuous Aggressive Learning Mentoring The Bill of Rights Customer Bill of Rights Developer Bill of Rights Customers Developers Conclusion Chapter 3 Business Practices Planning Trivariate Analysis Stories and Points ATM Stories Stories Story Estimation Managing the Iteration The Demo Velocity Small Releases A Brief History of Source Code Control Tapes Disks and SCCS Subversion Git and Tests Acceptance Tests Tools and Methodologies Behavior-Driven Development The Practice Whole Team Co-Location Conclusion Chapter 4 Team Practices Metaphor Domain-Driven Design Sustainable Pace Overtime Marathon Dedication Sleep Collective Ownership The X Files Continuous Integration Then Came Continuous Build The Continuous Build Discipline Standup Meetings Pigs and Chickens? Shout-out Conclusion Chapter 5 Technical Practices Test-Driven Development Double-Entry Bookkeeping The Three Rules of TDD Debugging Documentation Fun Completeness Design Courage Refactoring Red/Green/Refactor Bigger Refactorings Simple Design Design Weight Pair Programming What Is Pairing? Why Pair? Pairing as Code Review What about the Cost? Just Two? Management Conclusion Chapter 6 Becoming Agile Agile Values Courage Communication Feedback Simplicity The Menagerie Transformation The Subterfuge The Lion Cubs Weeping Moral Faking It Success in Smaller Organizations Individual Success and Migration Creating Agile Organizations Coaching Scrum Masters Certification Real Certification Agile in the Large Agile Tools Software Tools What Makes for an Effective Tool?

When executed together, the two entries produce a zero result: Zero tests failed. Programmers who learn TDD are taught to enter every behavior one at a time—once as a failing test, and then again as production code that passes the test. This allows them to catch errors quickly. They are taught to avoid writing a lot of production code and then adding a batch of tests, since errors would then be hard to find. These two disciplines, double-entry bookkeeping and TDD, are equivalent. They both serve the same function: to prevent errors in critically important documents where every symbol must be correct. Despite how essential programming has become to our society, we have not yet imbued TDD with the force of law. But given that lives and fortunes have already been lost to the vagaries of poorly written software, can that law be far away? The Three Rules of TDD TDD can be described with three simple rules.


pages: 404 words: 110,942

A Place for Everything: The Curious History of Alphabetical Order by Judith Flanders

computer age, double entry bookkeeping, en.wikipedia.org, index card, Index librorum prohibitorum, invention of movable type, invention of the wheel, invention of writing, trade route, Y2K

The chests used to store papers for most of history – the arks – subliminally return us to the Bible, to the Ark of the Covenant and to Noah’s Ark, containers of God’s word and of humanity and the animal kingdom. Arks are mere wooden boxes to hold books and documents, and yet as such they symbolize the wisdom of the ages, of God’s promise for humanity.12 Bill Gates once identified the development of the transistor in 1947 as ‘a key transitional event in the advent of the information age’. Other key moments, according to historians, include the invention of writing, of double-entry bookkeeping, printing, the telegraph and the computer. What is notable in this list is that none of these are inventions that created new knowledge themselves, but are instead inventions that created new ways of accessing knowledge. It was not the machines – not the telegraph, not the printing-press, nor even the computer – that revolutionized the world, but the processes behind those machines: they were the software to the hardware of the printing-press or the telegraph or the computer.

As trade increased, however, and as businesses became more complex, crossing borders and engaging with a multitude of partners and currencies, so the need arose for a system where assets were no longer recorded indiscriminately alongside liabilities, where suppliers were distinguished from customers and, importantly, where a single client, shipment or purchase could be located with ease. The solution was double-entry bookkeeping, a method whereby each transaction is entered at least twice, as a credit or as a debit, in separate columns which must, at the end of the day, reconcile. By the early fourteenth century some northern Italian merchants, many of them trading in the southern reaches of France, were independently feeling their way to this possibility. Ledgers dating from 1299/1300 and belonging to the Florentine merchant Amatino Manucci, based in Provence, display a clear knowledge of a double-entry system, while surviving account books of the agent to a Florentine banker living in Champagne, and those of a number of Tuscan merchants in Nîmes, show that they too had begun to maintain separate ledgers for their incomings and outgoings.

.*11 As with so much to do with organization, it was printing that taught clerks and merchants across Europe how to keep accounts in this manner. In 1494, Luca Pacioli, tutor to the children of a Venetian merchant (and later mathematical teacher, and collaborator with Leonardo da Vinci), published a textbook on mathematics and geometry that included a chapter entitled De computis et scripturis, On Computation and Writing, describing double-entry bookkeeping as it was practised at that period. Within a few years the chapter was published separately as an instructional pamphlet, translated into English, German, French and Dutch. As late as the nineteenth century, Russian and American editions were still commercially viable. Pacioli’s system was laborious but straightforward: the merchant was to begin by inventorying his business, listing all of its assets, whether merchandise, cash currently on hand or already expended; then he was to list all his debts.


pages: 244 words: 66,977

Subscribed: Why the Subscription Model Will Be Your Company's Future - and What to Do About It by Tien Tzuo, Gabe Weisert

3D printing, Airbnb, airport security, Amazon Web Services, augmented reality, autonomous vehicles, blockchain, Build a better mousetrap, business cycle, business intelligence, business process, call centre, cloud computing, cognitive dissonance, connected car, death of newspapers, digital twin, double entry bookkeeping, Elon Musk, factory automation, fiat currency, Internet of things, inventory management, iterative process, Jeff Bezos, Kevin Kelly, Lean Startup, Lyft, manufacturing employment, minimum viable product, natural language processing, Network effects, Nicholas Carr, nuclear winter, pets.com, profit maximization, race to the bottom, ride hailing / ride sharing, Sand Hill Road, shareholder value, Silicon Valley, skunkworks, smart meter, social graph, software as a service, spice trade, Steve Ballmer, Steve Jobs, subscription business, Tim Cook: Apple, transport as a service, Uber and Lyft, uber lyft, Y2K, Zipcar

If that sounds like total bunk, just stay with me, but first we have to do some time-traveling. Let’s go back around five hundred years. Let’s visit Venice. LUCA PACIOLI AND THE WORLD OF DOUBLE-ENTRY BOOKKEEPING Our whole financial system today—our ability to generate financial statements, create “books” that can be audited, and compare companies against one another—rests on a concept called double-entry bookkeeping. The basic premise is that your credits have to match your debits. Every time somebody in a grocery store checks their sales figures against the cash they have in their register, that’s a form of double-entry bookkeeping. The guy who first formalized this system, also known as “the father of accounting” (they still have CPA conventions in his hometown!), was a Franciscan friar named Luca Pacioli.

By the time he moved to Venice to tutor the children of a well-known merchant, he was a sharp, canny young man. This was during the height of the spice trade, when merchants from the Venetian city-state journeyed to the Middle East and Asia to source rare incenses, herbs, and opiates. Because of the time and distances involved, they often dealt with credits and debits, and it was easy to make mistakes, to lose track of who owed what to whom. Early versions of double-entry bookkeeping date back to the 1300s, but Pacioli was the first to formally codify it. His book was modestly titled Summary of Arithmetic, Geometry, Proportions and Proportionality. Here was Pacioli’s great maxim—you don’t go to bed until the debits equal the credits. For every financial transaction, both column entries have to match. When you record these entries accurately and punctually, you have an audit trail, which lets people get paid fairly.

Superman (film), 41 Baxter, Robbie Kellman, 29 Ben Hur (film), 38 Benioff, Marc, 5–6, 165 Berg, Björn, 110–11 Berger, Edgar, 47 Bezos, Jeff, 26 Birchbox, 23, 28, 34 Bishop, Bill, 66 BlaBlaCar, 62–63 Blockbuster, 3, 17 blockbuster business model, 38 Boll & Branch, 23 Bonnington, Christina, 52 Bonobos, 33 Borders, 17 Born to Run (album), 38 Bowie, David, 47 BowieNet, 47 Box, 2, 13–14, 167–68, 185, 190, 192 brick and mortar retail, 22–24 Budget, 3 budgeting for recurring expenses, 185 BuzzFeed, 66, 67, 71 cable industry, opportunity cord cutting presents for, 44–46 Cadillac, 52 capability-driven growth, and packaging, 153–54 Carey, Mariah, 38 Carr, Nicholas, 83, 96 Casablanca (film), 37 Casper, 23 Caterpillar, 99–100 channels, 146, 147–48 Chegg, 117 Chrono Therapeutics, 107 Chrysler, 57 churn accounting for, 181 reducing, 161–62 subscription churn rate statistics, 218–20 Circuit City, 17 Cisco, 93–96 CLEAR, 167 Columbia House, 28–29 Columbia Records, 38 Comcast, 46 Concur, 190 construction industry, 98–100 consumption-driven growth, and pricing, 153 content creation, 41 continuous innovation, 133–42 Gmail and, 133–35 Graze and, 137–38 Manifesto for Agile Software Development and, 135–36 market research as element of service, 137–38 Netflix and, 138–40 never-ending products and, 135 Starbucks’ subscriber IDs and, 140–42 sustainable development, creating environment to support, 135–36 user data and, 138–40 West’s The Life of Pablo album and, 136–37 cost plus pricing, 151 costs, recurring, 181 Cowboy Bebop (anime), 42 Cox, 46 cross-selling, 164–67 Crunchyroll, 42–43 customer-centric organizational mindset, 19–21 customer-first focus, 18 customer relationship management (CRM) databases, 18, 193 customers, 17–21 business model shift to circular, dynamic relationship with, 19–21 direct ongoing relationship with, establishing, 18 initial customers, acquisition of, 159–61 mindset of, 17 ownership not important to, 17 customer service departments, 16 CVS, 115 Daily Beast, The, 66 Daily Mail, 169 DAZN, 43–44 Dediu, Horace, 56 delivery service, 34 Dell, Michael, 16 Deploy element, of PADRE operating model, 203 DeRamus, Reid, 43 Digital Equipment Corporation, 56 digital transformation, 11–14, 19–21 digital twins of physical machinery, 104–6 Disney, 13, 107 Doctor, Ken, 69–70, 71 DocuSign, 163–64 Dollar Shave Club, 28, 33 double-entry bookkeeping, 176–79 Dragon Ball Z (anime), 42 Dropbox, 2 Drucker, Peter, 16 Economist, The, 63, 74, 79, 119 education, 116–17 Elgan, Mike, 32 EMEA growth, 220–21 ENGIE, 119 enterprise resource planning (ERP) systems, 15–16, 189–95 enthusiast networks, 72–73 Enthusiast Network (TEN), 72–73 ESPN, 44–45 Expand element, of PADRE operating model, 204 Fabletics, 28 Facebook, 13, 67–68, 77 Fender, 30–32 Fender Play, 31 Fender Tune, 31 Field, Marshall, 18 finance, 129, 174–89 budgeting for recurring expenses, 185 finance team, role of, 129, 187–88 Growth Efficiency Index (GEI), 186 growth versus profitability, 182–84 subscription economy income statements, 179–82 trade-off between recurring expenses and growth expenses, managing, 185–86 traditional financial model income statements, problems with, 176–79 finance industry, 120–21 Financial Times, 73–74, 79, 198 fish model, 85–86 Fletcher, Anthony, 137 flexible consumption models, 118 FloorInMotion, 108, 112 Fluidware, 171 Ford, 52, 58–59 Ford, Henry, 14–15, 58–59 Forrester Research, 17 Fortune, 1 Fortune 500 companies, 11–13 characteristics of successful, 12–13 life expectancy of, 11 freemium model, 76 Freshly, 28 Friedland, Jonathan, 139 gaming industry, 125–27 Garrett, Mark, 80, 81, 82, 87–88 Gartner, 55, 84, 130, 209 General Electric (GE), 12, 104–6 General Motors (GM), 55–56, 57, 148 Gerber Technology, 112 Gilette, 33 Girouard, Mike, 94–95 Glow (show), 41 Gmail, 2, 133–35 Godless (show), 41 Gold, Carl, 114, 210 Goldman Sachs, 27 Google, 13, 67–68, 77, 133–35, 145 government, 116 Graze, 28, 137–38 Greenberg, Reid, 24 Grossman-Cohen, Rebecca, 77 growth costs, 182 Growth Efficiency Index (GEI), 186 growth hackers, 145 Guardian, The, 65–66 guided selling model, 164 Hajman, Pavel, 36 hardware technology companies, 93–96 Harry’s, 33 Hastings, Reed, 3, 40 HBR, 121 health care industry, 115 HealthIQ, 117 Heidelberg Druckmaschinen, 112 Hertz, 3 Heston, Charlton, 38 Hive, 106 HomeAway, 120 Honeywell, 108 Houghton Mifflin Harcourt, 117 House of Cards (show), 139–40 “How Investors React When Companies Announce They’re Moving to a SaaS Model” (HBR), 93 HP Enterprise, 90 Husqvarna, 35–36 hybrid sales model, 163 Hyundai, 51 IBM, 12, 56, 90 ID for customers, 26–27, 140–42, 146 Iger, Bob, 13 income statements for subscription economy (See income statements for subscription economy) traditional, 176–79 income statements for subscription economy, 179–82 annual recurring revenue, 179–81 churn, 181 growth costs, 182 recurring costs, 181 recurring profit margins, 182 industrial internet, 105 The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future (Kelly), 111 Information, The, 66 innovation.


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Big Data: A Revolution That Will Transform How We Live, Work, and Think by Viktor Mayer-Schonberger, Kenneth Cukier

23andMe, Affordable Care Act / Obamacare, airport security, barriers to entry, Berlin Wall, big data - Walmart - Pop Tarts, Black Swan, book scanning, business intelligence, business process, call centre, cloud computing, computer age, correlation does not imply causation, dark matter, double entry bookkeeping, Eratosthenes, Erik Brynjolfsson, game design, IBM and the Holocaust, index card, informal economy, intangible asset, Internet of things, invention of the printing press, Jeff Bezos, Joi Ito, lifelogging, Louis Pasteur, Mark Zuckerberg, Menlo Park, Moneyball by Michael Lewis explains big data, Nate Silver, natural language processing, Netflix Prize, Network effects, obamacare, optical character recognition, PageRank, paypal mafia, performance metric, Peter Thiel, post-materialism, random walk, recommendation engine, self-driving car, sentiment analysis, Silicon Valley, Silicon Valley startup, smart grid, smart meter, social graph, speech recognition, Steve Jobs, Steven Levy, the scientific method, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, Thomas Davenport, Turing test, Watson beat the top human players on Jeopardy!

What finally helped make Arabic numerals a success was the evolution of another tool of datafication: double-entry bookkeeping. Accountants invented script in the third millennium B.C. While bookkeeping evolved over the centuries that followed, by and large it remained a system of recording a particular transaction in one place. What it failed to do was to show easily at any given time what bookkeepers and their merchant employers care about most: whether a particular account or an entire venture was profitable or not. That began to change in the fourteenth century, when accountants in Italy started recording transactions using two entries, one for credits and one for debits, so that overall the accounts are in balance. The beauty of this system was that it made it easy to see profits and losses. And suddenly dull data began to speak. Today double-entry bookkeeping is usually considered only for its consequences for accounting and finance.

It was organized to make a particular type of data query—calculating profits or losses for each account—quick and straightforward. And it provided an audit trail of transactions so that the data was more easily retraceable. Technology geeks can appreciate it today: it had “error correction” built in as a design feature. If one side of the ledger looked amiss, one could check the corresponding entry. Still, like Arabic numerals, double-entry bookkeeping was not an instant success. Two hundred years after this method had first been devised, it would take a mathematician and a merchant family to alter the history of datafication. The mathematician was a Franciscan monk named Luca Pacioli. In 1494 he published a textbook, written for the layperson, on mathematics and its commercial application. The book was a great success and became the de facto mathematics textbook of its time.

Over the following decades the material on bookkeeping was separately published in six languages, and it remained the standard reference on the subject for centuries. As for the merchant family, it was the famous Venetian traders and patrons of the arts, the Medici. In the sixteenth century they became the most influential bankers in Europe, in no small part because they used a superior method of data recording, the double-entry system. Together, Pacioli’s textbook and the Medici’s success in applying it sealed the victory of double-entry bookkeeping—and by extension established the use of Arabic numerals in the West. Parallel to advances in the recording of data, ways of measuring the world—denoting time, distance, area, volume, and weight—continued to gain ever increasing precision. The zeal to understand nature through quantification defined science in the nineteenth century, as scholars invented new tools and units to measure and record electric currents, air pressure, temperature, sound frequency, and the like.


pages: 254 words: 69,276

The Metric Society: On the Quantification of the Social by Steffen Mau

Airbnb, cognitive bias, collaborative consumption, connected car, crowdsourcing, double entry bookkeeping, future of work, income inequality, informal economy, invisible hand, knowledge economy, labour market flexibility, lifelogging, Mark Zuckerberg, mittelstand, moral hazard, personalized medicine, positional goods, principal–agent problem, profit motive, QR code, reserve currency, school choice, selection bias, sharing economy, smart cities, the scientific method, Uber for X, web of trust, Wolfgang Streeck

For Weber, the establishment of business accounting was a central premise of Western capitalism, along with the rationalization of production and the separation of the domestic and business spheres. At the same time, Weber's contemporary, the economist and sociologist Werner Sombart, identified the introduction of double-entry bookkeeping as a decisive step towards a modern capitalist economic order. In his magnum opus Der Moderne Kapitalismus [Modern Capitalism] (1919), Sombart looked at how a rational ‘economic mentality’ came into being. According to Sombart, it was the ability to balance assets and liabilities that essentially allowed economic rationalism and the instinct of acquisition to develop fully. Double-entry bookkeeping, he argued, should be seen not as a purely technical achievement, but as a cultural one which is necessarily reflected in a society's mentality. Sombart and Weber recognized early on that an economic system is characterized by socially evolved calculative practices which condition economic activity and guide it along particular paths (Vormbusch 2012).

Like entrepreneurs, individuals must invest and deploy their resources and competencies strategically in order to ensure numerical returns. And they must cultivate an entrepreneurial mindset: risk-conscious, forward-looking, market-aware, flexible and self-reliant. These three things – individual worth accounting, investment activity and an entrepreneurial approach to one's own data – turn people into ‘capitalists of the self’ (Fourcade 2016). Just as double-entry bookkeeping was instrumental to the development of capitalist economics, so the quantification of social assets could foster a new rationalization of everyday life based on numbers. In the age of the metric society, as we have seen, individuals constitute bundles of data in which their personal worth is encoded. Once these data are ‘out there’, and stored somewhere, it becomes possible to exploit them using data mining techniques such as pattern analysis.

Index ‘20-70-10’ rule 155 academics 139 and altmetrics 77–8 and h-index 75–6, 139, 144 self-documentation and self-presentation 76–7 status markers 74–8 accountability 3, 91, 115, 120, 134, 147, 159 accounting, rise of modern 17 activism alliance with statistics 127 Acxiom 164–5 ADM (automated decision-making) 63 Aenta 108 Airbnb 88 airlines and status miles 71–2 algorithms 7, 64, 127, 167 and nomination power 123–5, 126, 141–2 AlgorithmWatch 127 altmetrics 77–8 Amazon 96, 150, 156 American Consumers Union 167 apps 99, 105, 150 finance 66–7 fitness and health 68, 102–3, 104, 107 Moven 65–6 Asian crisis (1997) 57 audit society 24–5 automated decision-making (ADM) 63 averages, regime of 155–7 Barlösius, Eva 113 Baty, Phil 48 Bauman, Zygmunt 143 behavioural reactivity 131 benchmarks, regime of 155–7 Berlin, television tower 40 Better Life Index 20 Big Data 2, 79, 123 biopolitics 19 of the market 70 biopower 19 Boam, Eric 104 body images, regime of 156–7 Boltanzki, Luc 125–6 border controls 73–4 borders, smart 74 Bourdieu, Pierre 111, 114, 115, 162 BP 108 Bude, Heinz 37 bureaucracy 18 calculative practices 11, 124 expansion of 11, 115 and the market 15–17 Campbell, Donald T. 130–1 Campbell's Law 130–1 capitalism 15, 54, 55 digital 150 capitalists of the self 163 Carter, Allan 48 Chiapello, Ève 125–6 Chief Financial Officer (CFO) 17 China Sesame Credit 67 Social Credit System 1, 166 choice revolution 118–19 class and status 33 class conflict switch to individual competition 168–70 classification 60–80 see also scoring; screening collective body 104–6 collective of non-equals 166–8 commensurability 31–3, 44, 159 Committee of Inquiry on ‘Growth, Wealth and Quality of Life’ (Germany) 127 commodification 163, 164 Community (sitcom) 96 companies 16–17 comparison 7, 26–39, 159 and commensurability/incommensurability 31–3 and competition 28 dispositive(s) of 7, 28–31, 159, 169 new horizons of 33–5 part of everyday life 27 prerequisites for social 35–6 registers of 135–9 and self-esteem 30 shifts in class structure of 33 and status 29–30, 36–7 universalization of 27–8 COMPAS (Correctional Offender Management Profiling or Alternative Sanctions) 79 competition 6, 7, 115–19, 159–60 and comparison 28 increasing glorification of 159 and neoliberalism 23 and performance measurement 115–19 and quantification 116–17 and rankings 45 switch from class conflict to individual 168–70 competitive singularities 169 consumer generated content (CGC) 85–6 control datafication and increased 143, 147, 169 individualization of social 143 levers of social 144 relationship between quantification and 78 conventionalization 128 Cordray, Julia 97 Correctional Offender Management Profiling or Alternative Sanctions (COMPAS) 79 Corruption Perceptions Index 26 cosmetic indicators 135 Couchsurfing 88 credit risk colonialization 64 credit scoring 63–7 and social status 67 criminal recidivism, scoring and assessment of 62–3, 79 criteria reductionism 22 cumulative advantages, theory of 174 CureTogether 106 customer reviews 82–6, 87, 88 Dacadoo 68 Daily Telegraph 149 darknet 87 data behaviourism 171 data leaks 152 data literacy 21 data mining 4, 22, 163 data protection 72, 142 data repositories 62, 73–4 data storage 22, 73, 135 data voluntarism 4, 152, 153, 159 dating markets and health scores 70 de Botton, Alain 30 decoupling 133, 136, 174–5 democratization and digitalization 166 difference 2 visibilization and the creation of 40–3 ‘difference revolution’ digitalization giving rise to 166–7 digital capitalism 150 digital disenfranchisement of citizens 151 digital health plans 70 digital medical records 67 digitalization 2, 7, 21–2, 25, 63, 73, 80, 111, 123, 180 and democratization 166 giving rise to ‘difference revolution’ 166–7 as ‘great leveller’ 166 quantitative bias of 124 disembedding 13 distance, technology of 23–4 diversity versus monoculture 137–40 doctors, evaluation of by patients 92–3 Doganova, Liliana 5–6 double-entry bookkeeping 15, 163 e-recruitment 61 eBay 87 economic valuation theory 5 economization 22–4, 38, 115, 117 and rise of rankings 46 education and evaluation 89–91 evaluation of tutors by students 89–90 law schools 44, 138–9 output indicators and resource allocation in higher 132 and Pisa system 122, 145–6 Eggers, Dave The Circle 41, 82–3 employer review sites 83 entrepreneurial self 3, 154 epistemic communities 121 equivalence 16, 27 Espeland, Wendy 44, 139 esteem 29, 30 and estimation 15, 38 see also self-esteem Etzioni, Amitai The Active Society 20 European Union 122 evaluation 81–98 connection with recognition 38 cult and spread of 7, 97–8, 134 education sector 89–91 loss of time and energy 136 and medical sector 91–3 peer-to-peer ratings 87–8 portals as selectors 84–6 pressure exerted by reviews 147–8 and professions 89–93 qualitative 117 satisfaction surveys 82–4 and social media 93–8 of tutors by students 89–90 evidence-basing 3 exercise and self-tracking 101–4 expert systems 7 transnational 121–2 experts, nomination power of 119–23, 126 Facebook 94 FanSlave 95 Federal Foreign Office (Germany) 53 feedback power of 147–8 and social media 93–4 Fertik, Michael 66 Fitch 56 fitness apps 68, 102–3, 104, 107 Floridi, Luciano 105 Foucault, Michel 19 Fourcade, Marion 163–4 Franck, Georg 29 fraud 137 Frey, Bruno ‘Publishing as Prostitution’ 146 ‘gaming the system’ 132 GDP (gross domestic product) 14 dispute over alternatives to 127–8 General Electric 155 Germany Excellence Initiative 51 higher education institutes 52–3 Gerstner, Louis V. 130 Glassdoor.com 83 global governance 122 globalization 34, 73 governance 12 self- 19, 37, 105 state as data manager 17–20 ‘government at a distance’ 145 governmentality 112 GPS systems 150 Granovetter, Mark ‘The strength of weak ties’ 147 gross domestic product see GDP h-index 75–6, 139, 144 halo effect 90 Han, Byung-Chul 154 Hanoi, rat infestation of 130 happiness and comparison 30 Hawthorne effect 107 health and self-tracking 101–4 health apps 68, 102–3, 104, 107 health scores 67–71 health status, quantified 67–71 Healy, Kieran 163–4 Heintz, Bettina 14, 33, 34 hierarchization/hierarchies 1, 5, 6, 11, 33, 39, 40–59, 174 and rankings 41–2, 43, 44, 48 higher education, output indicators and resource allocation 132 Hirsch, Jorge E. 75 home nursing care 135–6 hospitals and performance indicators 131 Human Development Index 14 hyperindividualization 167–8 identity theory 29 incommensurability 31–3 indicators 2, 3, 5, 20, 23–4, 34, 114, 159 and competition 116–17 and concept of reactive measurements 129–33 cosmetic 135 economic 7 governance by 24 politics of 14 status 35, 75 see also performance indicators individualization of social control 143 industrial revolution 19 inequality 6, 8, 158–76 collectives of non-equals 166–8 establishment of worth 160–2 inescapability and status fluidity 170–4 reputation management 162–6 switch from class conflict to individual competition 168–70 inescapability of status 170–4 information economy 2 information transmission interfaces, between social subsystems 165–6 institutional theory 113 insurance companies 72, 108, 151, 152, 167 International Labour Organization 122 investive status work 36–7 Italian Job, The (film) 138 justice 126 Kaube, Jürgen 2 Kula, Witold 16 Latour, Bruno 34 law schools 44, 138–9 league tables 35, 43, 46, 47, 51, 52, 53, 91, 138, 139, 146, 162, 175 legitimate test, concept of 125–6 Lenin, Vladimir 116 lifelogging 99, 109, 153 Luhmann, Niklas 166 Lyon, David 142 McClusky, Mark 101 McCullough, Nicole 97 Mann, Steve 153 market(s) calculative practices of 15–17 and neoliberalism 23 and rating agencies 55–6 Marron, Donncha 65 Matthew effect 174–5 measurement, meaning 10 media reporting 33 medical sector and evaluation 91–3 hospitals and performance indicators 131–2 MedXSafe 70 meritocracy 23, 161 Merton, Robert K. 161, 174 ‘metric revolution’ 16 Miller, Peter 112 mobility 71–4 border controls 73 digital monitoring of 72 and scoring 71–4 smart cars 72 and status miles 71–2 money as means of exchange 16 monoculture versus diversity 137–40 mood, self-tracking of 101–4 Moody's 56 motivation 106–10 and rankings 45 Moven 65–6 Münch, Richard 145 Nachtwey, Oliver 150 naturalization 113 neoliberalism 3, 12, 23, 25 basic tenets of 23 New Public Management 3, 117, 136, 155 NHS (National Health Service) 118 nomination power 111–28 and algorithms 123–5, 126, 141–2 critique of 125–8 and economization 115 of experts 119–23, 126 performance measurement and the framing of competition 115–19 and the state 112–15 non-equals, collectives of 166–8 normative pressure 144–6 North Korea 144 ‘number rush’ 2 numbers 13–14, 15 numerical medium 8, 14, 16, 18, 28, 33, 113, 160, 166 objectivization 35, 154, 160 OECD 122 Offe, Claus 175 Old Testament 17 omnimetrics 9 O’Neil, Cathy Weapons of Math Destruction 79 optimization 12, 25 Oral Roberts University (Oklahoma) 108 Peeple app 96–7 peer-to-peer ratings 87–8 Pentland, Alex 151 people analytics 150–1 performance enhancement 12 performance indicators 12, 38, 53, 74, 118, 119, 120, 129, 155 and hospitals 131–2 performance measurement 23, 38, 115–19 performance-oriented funding allocation 22 performance paradox 132 performance targets 4 Personicx 165 Pisa system 122, 145–6 politicians 14, 120 politics 114 portals 84–6, 88, 90–1 power of nomination see nomination power prestige 8, 29, 67, 144 principal–agent problem 147–8 private consultancy services 117 professional control, loss of 133–4 professionalization 19, 133 professions and evaluation 89–93 publicity 33 QS ranking 52 qualitative evaluation 117 quantification advantages of 8 engines of 21–5 history 11 impact and consequences of 5, 6 meaning 10, 12–15 risks and side-effects 7, 129–40 role of 35 quantified self 99–110 Quantified Self (network) 99–100 quantitative evaluation see evaluation quantitative mentality 11–12 quasi-markets 116, 118–19 race and assessment of criminal recidivism risk 79 rankings 47–53, 58–9, 60, 144 and competition 45 and compliance 44 differences between ratings and 42–3 disadvantage of 43–4 economization and rise of 46 and evaluation portals 84–6 and hierarchies 41–2, 43, 44, 48 and image fetishization 47 and motivation 45 as objectivity generators 41 performance-enhancing role 46 popularity of 41 as positional goods 45 purpose of 45 and reputation 48, 49, 50, 52 as social ushers 42 and status anxiety 46–7 university 6, 7, 43, 47–53, 144, 175 Welch's forced 155–6 rating agencies, market power of 53–9 ratings 41–3, 53–9, 60 definition 54 differences between rankings and 42–3 and evaluation portals 84–6 as objectivity generators 41 peer-to-peer 87–8 as social ushers 42 rationalization 5, 11, 12, 14, 15, 16, 19, 105, 110, 154, 163 Raz, Joseph 31–2 reactive measurements 129–33 recommendation marketing 85 recruitment, e- 61 reference group theory 29 reputation 29, 39, 66, 74, 121 academic 75–6 cultivating good 47 and rankings 48, 49, 50, 52 rating of 87–8 signal value of 87 social media and like-based 93–8 reputation management 4, 50, 162–6 reputation scoring 87–8 research community 146 and evaluation system 146 and review system 146–7 ResearchGate 77 reviews 136 customer 82–6, 87, 88 doctor 92 high demand for 136 lecturers/tutors 90 performance 25, 149 pressure exerted by popular 147 Riesman, David 37 risks of quantification 129–40 loss of professional control 133–5 loss of time and energy 135–7 monoculture versus diversity 137–40 reactive measurements 129–33 Rosa, Hartmut 94, 173 Rose, Nikolas 112 Rousseau, Jean-Jacques 28–9 running apps 107 Runtastic app 107 satisfaction surveys 82–4 Sauder, Michael 44, 139 Schimank, Uwe 134 Schirrmacher, Frank 152 Schmidt, Eric 147 schools and choice 118–19 evaluation of 90–1 league tables 46 and Pisa system 122, 145–6 scoring 7, 60, 61, 78–80 academic status markers 74–8 and assessment of criminal recidivism 62–3 credit 63–7 health 67–71 mobility value 71–4 pitfalls 79 screening 7, 60–1, 78–9 border controls 73–4 e-recruitment 61–2 function 60–1 smart cars 72 self-direction 105, 121, 143 self-documentation 153 and academic world 76–7 self-enhancement 3, 137 self-esteem 29, 37, 170 and comparison 29, 30 rankings and university staff 50–1 self-governance 19, 37, 105 self-image 37, 47, 50, 89 self-management 3, 20, 25 self-observation 25, 42 quantified 99–110 self-optimization 3, 19, 104, 109, 163 self-quantification/quantifiers 4, 13, 25, 101, 154–5, 156 self-reification 105 self-responsibility 25, 110 self-tracking 4, 7, 99, 100, 106, 109–10 collective body 104–6 as duty or social expectation 108 emotions provoked 109 health, exercise and mood 101–4 and motivation 106–10 problems with wearable technologies 103–4 running and fitness apps 68, 102–3, 104, 107 and sousveillance 153 as third-party tracking 154 self-worth 29, 36, 38, 47, 51, 170 and market value 67 Sesame Credit (China) 67 Shanghai ranking 47 ‘shared body’ 105 shared data 142, 152–3 Simmel, Georg 28 ‘small improvement argument’ 32 smart borders 74 smart cars 72 smart cities 21 smart homes 21 ‘social accounts’ 20 Social Credit System (China) 1, 166 social engineering 20 social management 20 social media 93–8, 153, 166 drivers of activity 93 and feedback 93–4 forms of connection 93 likes 93–5 and online disinhibition 153 and reputation building 95 resonance generated by 94 and running/fitness apps 107 social research 19–20 social security systems 19 social status see status social worth see worth socio-psychological rank theory 46 sociometrics/sociometers 2, 5, 36, 74, 141, 150–1 Sombart, Werner Modern Capitalism 15–16 sousveillance 153 sport 33 rise of world 35 Staab, Philipp 149–50 Stalder, Felix 124 Standard & Poor's 54, 56 statactivism 127 state as data manager 17–20 nomination power of the 112–15 statistics 14 origins of word 17 status and class 33 and comparison 29–30, 36–7 and credit scoring 67 inescapability from 170–4 and life satisfaction 30 seeking of 36 status anxiety 30 and rankings 46–7 status competition 26–39 status data 2, 80, 159, 161–2, 169, 174 functioning as symbolic data 8, 162 status fluidity 170–4 status insecurity 4 status miles 71–2 status sets 161–2 status symbols 158 status work 4, 36–7, 174 Stiglitz-Sen-Fitoussi Commission (France) 127 Streeck, Wolfgang 171–2 subprime crisis (2007) 57, 64 surveillance 8, 142, 152 interdependence of self- and external 153–5 and neoliberalism 23 workplace and technological 149–51 surveys, satisfaction 82–4 symbolic capital 174 status data as 8, 162 target setting 22 tariff models 152–3 technological surveillance, in the workplace 149–51 technologies of the self 25 tertium comparationis 32 Thomas theorem 59 Thompson, David C. 66 Times Higher Education ranking 47, 48, 53 tourism portals 85 tracking as double-edged sword 142 see also self-tracking trade relations 16 transnational expert systems 121–2 transparency 3, 91, 141–3, 144, 147 Transparency International 26 ‘transparent body’ 105 TripAdvisor 85 Trustpilot 86 Turkey 54 tutors evaluation of by students 89–90 Uber 156 űbercapital 163–4 UN Sustainable Development Goals 20 United Nations 122 university lecturers evaluation of 89–90 object of online reviews 90 university rankings 6, 7, 43, 47–53, 144, 175 valorization 5, 58, 124, 161 valuation 5–6 value registration 161 Vietnam War 131 visibilization, and the creation of difference 40–3 Webb, Jarrett 104 Weber, Max 15, 16, 154 Weiß, Manfred 119 Welch, Jack 155 ‘winner-take-all society’ 136 Wolf, Gary 99–100 Woolgar, Steve 34 workplace technological surveillance in the 149–51 World Bank 122 worth 5–6, 7, 11, 78–80, 170 assessments of 27 establishment of 160–2 orders of 11, 15, 29 self- 29, 36, 38, 47, 51, 67, 170 Young, Michael 161 The Rise of Meritocracy 23, 161 Zillien, Nicole 105 Zuckerberg, Mark 158 POLITY END USER LICENSE AGREEMENT Go to www.politybooks.com/eula to access Polity's ebook EULA.


pages: 466 words: 146,982

Venice: A New History by Thomas F. Madden

big-box store, buy low sell high, centre right, colonial rule, Columbine, Costa Concordia, double entry bookkeeping, facts on the ground, financial innovation, indoor plumbing, invention of movable type, Johann Wolfgang von Goethe, Murano, Venice glass, spice trade, trade route, upwardly mobile, urban planning

However, when there are numerous investors, it is imperative to be able to demonstrate that all are receiving their due. Furthermore, the Venetian government had strict laws regarding what could or could not be shipped, stored, or charged against profits. The need for maintaining clear records of complex transactions led to one of Venice’s most profound financial inventions: double-entry bookkeeping. While it may not seem exciting, the development of double-entry bookkeeping fundamentally changed business in the West. Indeed, without it, the later Industrial Revolution could not have been sustained, and modern corporations would be unthinkable. The technique was first described by Fra Luca Pacioli, a Franciscan mathematician who lived and taught in Venice between 1465 and 1475. Although he is sometimes credited with its invention, Pacioli insisted that he was merely describing a common practice among Venetian merchants.

The foundational concept of this form of record keeping is that all transactions are dual in nature. There is always a credit and always a debit to be recorded, and these two must balance at all times. So, for example, rather than recording a payment received for services rendered, a Venetian merchant would record a movement from cash to revenue. Double-entry bookkeeping may well have developed precisely to deal with the complexities of the multiple-investor colleganza. Because it records both assets and liabilities and the effect of transactions on them, double-entry bookkeeping allowed merchants to easily calculate profit and loss in otherwise complex systems. Just as importantly, it makes the detection of error or fraud much simpler, since everything must balance every day. (Pacioli himself warned that a merchant must not go to sleep before the day’s accounts were fully balanced.)

Thus, when a ship’s captain returned to Venice, his investors and the state need not take his word for how much profit he had obtained. Every penny of every expense or income was accounted for in his ledgers, and auditors were careful to make certain that it all balanced. Even in today’s infinitely more complex corporate systems, embezzlement and theft are still usually detected because the books do not balance. Double-entry bookkeeping was itself a major reason for the adoption in Europe of something that one can find on this very page—Arabic numerals. Originally developed in India, this system of numerical notation was adopted in Persia and then spread into Arab North Africa, from whence it entered medieval Europe in the eleventh century. However, Arabic numerals, like Arabic letters, were foreign and therefore not understood or adopted by most Europeans.


pages: 436 words: 76

Culture and Prosperity: The Truth About Markets - Why Some Nations Are Rich but Most Remain Poor by John Kay

"Robert Solow", Albert Einstein, Asian financial crisis, Barry Marshall: ulcers, Berlin Wall, Big bang: deregulation of the City of London, business cycle, California gold rush, complexity theory, computer age, constrained optimization, corporate governance, corporate social responsibility, correlation does not imply causation, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Donald Trump, double entry bookkeeping, double helix, Edward Lloyd's coffeehouse, equity premium, Ernest Rutherford, European colonialism, experimental economics, Exxon Valdez, failed state, financial innovation, Francis Fukuyama: the end of history, George Akerlof, George Gilder, greed is good, Gunnar Myrdal, haute couture, illegal immigration, income inequality, industrial cluster, information asymmetry, intangible asset, invention of the telephone, invention of the wheel, invisible hand, John Meriwether, John Nash: game theory, John von Neumann, Kenneth Arrow, Kevin Kelly, knowledge economy, light touch regulation, Long Term Capital Management, loss aversion, Mahatma Gandhi, market bubble, market clearing, market fundamentalism, means of production, Menlo Park, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Naomi Klein, Nash equilibrium, new economy, oil shale / tar sands, oil shock, Pareto efficiency, Paul Samuelson, pets.com, popular electronics, price discrimination, price mechanism, prisoner's dilemma, profit maximization, purchasing power parity, QWERTY keyboard, Ralph Nader, RAND corporation, random walk, rent-seeking, Right to Buy, risk tolerance, road to serfdom, Ronald Coase, Ronald Reagan, second-price auction, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, Steve Jobs, telemarketer, The Chicago School, The Market for Lemons, The Nature of the Firm, the new new thing, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, tulip mania, urban decay, Vilfredo Pareto, Washington Consensus, women in the workforce, yield curve, yield management

In a coordinated system, the position of the last piece is predetermined by the position of all the others. 1 The economic analogue is Walras's law. Walras's law is an economic application ofbookkeeping principles. Double-entry bookkeeping is not as exciting an invention as railroads or the Internet. But double-entry bookkeeping was as important as these innovations to the development of modern market economies. Every expenditure must be matched by a receipt. By keeping track of all entries in a ledger, the activities of a household or business can be regulated and controlled. Double-entry bookkeeping put the discipline in disciplined pluralism. Double-entry bookkeeping is to economic and commercial life what the second law of thermodynamics is to the physical world, and it has the same role in deflating pretensions of dreamers and fantasists.

But that pluralism and experiment extended to economic organization, economic institutions, and new ventures. Markets for risk and for capital developed, and with them the idea that you can trade paper rights to commodities as well as commodities themselves. These are the beginnings of modern securities markets. Businesses develop that are distinguishable from the individuals who run them, such as trading companies and banks. Their records are maintained through double-entry bookkeeping. 7 From the Reformation to the Industrial Revolution ••••••••••••••••••••••••••••••••••••• The Reformation followed the Renaissance: revolts, centered in England and in Germany, rejected the established authority of the Catholic Church. And the focus of economic development in Europe moved north. The architectural legacies ofltaly and Spain are a demon- {56} John Kay stration, in stone, of the difference between the relative economic positions of countries at the time of the Reformation, and today.

See supply and demand democracy accountability in, 114,314 central planning in, 110-11, 114 as rich state factor, 51, 69, 322 dependencytheor~60,284-86 derivatives, 160-61, 237 design, order without, 125-26, 129 development economics, 277-88, 355 Diamond,Jared, 76 diamond market, 150 disciplined pluralism, 18-19,21,56, 120-24, 199,306,308,345-46 dividends, 170, 171 division oflabor, 1, 18, 19, 82, 84, 92, 198, 355 as competitive advantage, 88-89 and complexity, 181 coordination of, 126 as gainful exchange, 85-87 specialization as, 19, 85-86, 181 in teams, 252,291,293,301,302-10 divorce insurance, 238-40 DIY (do-it-yourself) economics, 21, 176-78, 346-47 DNA structure, 83, 267 dot.com bubble, 78, 123-24, 175,218, 243-44,348 double-entry bookkeeping, 55 application to whole economy, 175-78 Douglas, Roger, 61 Duhem-Quine problem, 326-27 Dunlap, Al, 315 Dworkin, Ronald, 190 Easterly, William, 212, 213 Eastern Europe, 29, 51,287-88, 335 econometrics, 357 economic development/growth, 54-69,277-88 dependencytheory,60,284-86 and division oflabor, 85-89 factors in, 25, 26, 52, 55-57, 60, 66-68, 283,285 and GOP movements, 39 United States (1990s), 10 See also Asia; Eastern Europe; statistics economic lives, 3-8, 22-30 dimensions of, 37-41,44-49 GOP as measure of, 42-45 and happiness, 51,286-87 transactions/rules, 73-82 and "veil of ignorance," 202 See also income/wealth distribution economic models, 15-16, 325, 330-33, 339 economic rent, 145,230-31,273,290-301 definition of, 292, 295 { 413} distribution of, 290-91,303-5,309-10 rentseeking,295-96,307,346-47 See also teams economics, 323-39 branches of, 323-24 constraints of, 175-76 definitions of, 83, 324 DIY, 21, 176-78,346-47 mathematical tools, 174-75, 179 methodology, 84, 325-27 popular understanding of, 21, 323 See also neoclassical economics economic systems, 73-134 choices between, 103-4 constraints of, 175-78 effectiveness measures, 84 evolution of, 54-69 and living standards, 28-30 and welfare economics, 197-202 See also central planning; embedded market; market economy Economic Value Added, 273 economies of scale, 118,181,182-83 economists, 329, 334-35, 342 images of, 323, 324, 326-27, 334 influential (twentieth-century), 178-79 male-female disparity, 337 rationality emphasis, 210-13,218-19 Eddystone lighthouse, 248-49 Edgeworth, F.


pages: 1,197 words: 304,245

The Invention of Science: A New History of the Scientific Revolution by David Wootton

agricultural Revolution, Albert Einstein, British Empire, clockwork universe, Commentariolus, commoditize, conceptual framework, Dava Sobel, double entry bookkeeping, double helix, en.wikipedia.org, Ernest Rutherford, Fellow of the Royal Society, fudge factor, germ theory of disease, Google X / Alphabet X, Hans Lippershey, interchangeable parts, invention of gunpowder, invention of the steam engine, invention of the telescope, Isaac Newton, Jacques de Vaucanson, James Watt: steam engine, Johannes Kepler, John Harrison: Longitude, knowledge economy, lateral thinking, lone genius, Mercator projection, On the Revolutions of the Heavenly Spheres, Philip Mirowski, placebo effect, QWERTY keyboard, Republic of Letters, social intelligence, spice trade, spinning jenny, the scientific method, Thomas Kuhn: the structure of scientific revolutions

The errors, then, lie not in the abstractness or concreteness, not in geometry or physics, but in a calculator who does not know how to make a true accounting.3 Double-entry bookkeeping thus represents an attempt to make the real world, the world of bolts of silk, bales of wool and bags of sugar, mathematically legible. The process of abstraction it teaches is an essential precondition for the new science. § 2 Another source of income for mathematicians in Galileo’s day was teaching the geometrical principles of perspective representation.4 Galileo’s own mathematics teacher, Ostilio Ricci, taught perspective to painters. Perspective painting was a more recent invention than double-entry bookkeeping. It began sometime between 1401 and 1413 when Filippo Brunelleschi produced a most peculiar work of art.5 The object itself no longer survives; we last hear of it in 1494, when it is listed among the effects of Lorenzo the Magnificent, the Medici ruler of Florence, on his death.6 Our only half-decent description of it was written in the 1480s, by Antonio Manetti, who was twenty-three years old when Brunelleschi died.7 Manetti’s account is puzzling and unsatisfactory, but it is all we have.

The second chapter, Chapter 6, looks at the impact of telescopes and microscopes on people’s sense of scale: human beings suddenly came to seem insignificant in the vast spaces which the telescope opened up, while the microscope exposed a world in which complexity seemed to reach right down to the smallest imaginable creatures, so that it became commonplace to imagine that fleas might have fleas, and so on, ad infinitum. 5 The Mathematization of the World Philosophy is written in this very great book which always lies open before our eyes (I mean the universe), but one cannot understand it unless one first learns to understand the language and recognize the characters in which it is written. It is written in mathematical language and the characters are triangles, circles and other geometrical figures; without these means it is humanly impossible to understand a word of it; without these there is only clueless scrabbling around in a dark labyrinth. – Galileo, The Assayer (1623)1 § 1 Double-entry bookkeeping goes back at least to the thirteenth century. The principle of double entry is simple: every transaction is entered twice, as a credit and as a debit. So if I buy a bar of gold worth £500, I debit £500 from my current account, and I credit £500 to my list of assets. If I borrow £500, then £500 is a credit to my current account, and a debit to my list of liabilities. In the Renaissance the standard system involved three books.

He was not himself an artist, but On Divine Proportion discusses the golden section, the principles of architecture and the design of typefaces. Pacioli is now known primarily for the fat book on which the dodecahedron sits: A Compendium of Arithmetic, Geometry, Proportions and Proportionality (1494). This was a textbook of applied mathematics, and included within it was the first published account of double-entry bookkeeping – double entry was not new, but printing was, so Pacioli was taking advantage of an obvious opportunity.33 § 4 Perspective painting generally involves a peculiar form of abstraction: the construction of a vanishing point. It is worth noting that the term itself is relatively modern: in English it dates to 1715. Alberti calls it the centric point (il punto del centro), and in many early texts it is simply referred to as the horizon.34 But Alberti is perfectly clear that the image in a one-point-perspective painting extends ‘to an almost infinite distance’.35 This, to a Renaissance intellectual, is a deeply puzzling concept.


The End of Accounting and the Path Forward for Investors and Managers (Wiley Finance) by Feng Gu

active measures, Affordable Care Act / Obamacare, barriers to entry, business cycle, business process, buy and hold, Claude Shannon: information theory, Clayton Christensen, commoditize, conceptual framework, corporate governance, creative destruction, Daniel Kahneman / Amos Tversky, discounted cash flows, disruptive innovation, diversified portfolio, double entry bookkeeping, Exxon Valdez, financial innovation, fixed income, hydraulic fracturing, index fund, information asymmetry, intangible asset, inventory management, Joseph Schumpeter, Kenneth Arrow, knowledge economy, moral hazard, new economy, obamacare, quantitative easing, quantitative trading / quantitative finance, QWERTY keyboard, race to the bottom, risk/return, Robert Shiller, Robert Shiller, shareholder value, Steve Jobs, The Great Moderation, value at risk

Similarly, the profound changes over the past 110 years in the demand for financial information have not been met with commensurate improvements in the financial reports released by public companies to their shareholders.5 This is the case, despite investors’ sophistication (primarily hedge funds and private equity, in recent decades), vast improvement in communication technologies (XBRL, Internet chat rooms), increases in the extent of competition among investors, and in the number of alternative investments available to them worldwide. The consequence of this disclosure ossification, as we will demonstrate empirically in the following chapters, is the inevitably fast and continuous deterioration in the usefulness of financial information to investors. A DEVIL’S ADVOCATE Perhaps, you may say, this is inevitable. Corporate financial reporting reached its technological apogee 110 years ago, as did double-entry bookkeeping 550 years ago, and cannot be further improved, like the QWERTY keyboard layout introduced in 1878 in the Remington No. 2 typewriter and still on keyboards today. Absurd as this sounds, it would have made some sense if suggestions for accounting change were seriously tried and found to fail. But there wasn’t any serious trial and error in accounting structure over the past century. Even worthwhile suggestions for structural change, like the one by a leading accounting thinker, Yuji Ijiri, a now retired Carnegie Mellon professor, who proposed in 1989 the triple entry bookkeeping, which, to the best of our knowledge, was never seriously discussed by accounting regulators.6 In essence, Ijiri suggested that, in addition to the balance sheet (a static report of assets and liabilities), and the income statement (a report on the “distance” the firm traveled from beginning to end of period), there should be a third report, akin to acceleration or momentum of operations, informing on the pace of change over the period in sales, expenses, and earnings.

But why do accountants recognize some business events while ignoring others? Excuse the brief tutorial below. ACCOUNTING AND NONACCOUNTING EVENTS With all the shortcomings of the accounting system, and there are quite a few as we point out throughout the book, there is one thing accounting excels in—the meticulous recording of business transactions. In fact, Luca Pacioli (1445–1517), the Renaissance mathematician who formalized and promulgated “double-entry bookkeeping” to the general public in his classic book (1494) Summa de Arithmetica, Geometria, Proportioni, et Proportionalita, warned readers that nothing could be omitted from the accounting records and that comprehensive recording of transactions is essential to successful business operations and corporate governance.1 But the business events captured so meticulously by the accounting system, and subsequently summarized in corporate financial reports, are primarily transactions with third parties: purchases from suppliers and sales to customers; payments of wages, rent, and interest; stocks and bond issues; as well as investments in long-term assets and securities.

There is no shortage of criticism of the accounting model and the financial information derived from it, and a whole host of proposed remedies: disclosure of nonfinancial variables (key performance indicators, or KPIs); reporting on the impact of firms’ operations on people and the planet, in addition to profits (the “triple bottom line, or the three Ps”); or reporting on the intellectual capital of companies (intellectual capital reports), to name a few. While gathering a limited following, none of these criticisms and proposals had a noticeable effect on corporate reporting worldwide, and definitely not in the United States. The fact is, as shown vividly in Chapter 1, corporate reports today are practically identical to those published a century ago, mirroring the 600-year survival of double-entry bookkeeping. Accounting seems resistant to change. The reason for the limited success of previous reform proposals is not lack of effort (some change proposals are vigorously pushed by worldwide organizations) or the absence of good ideas—there are definitely some useful suggestions in these proposals. It’s, we believe, the lack of a compelling case for change, and the scarcity of workable change proposals that satisfy investors’ needs.


pages: 267 words: 72,552

Reinventing Capitalism in the Age of Big Data by Viktor Mayer-Schönberger, Thomas Ramge

accounting loophole / creative accounting, Air France Flight 447, Airbnb, Alvin Roth, Atul Gawande, augmented reality, banking crisis, basic income, Bayesian statistics, bitcoin, blockchain, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Cass Sunstein, centralized clearinghouse, Checklist Manifesto, cloud computing, cognitive bias, conceptual framework, creative destruction, Daniel Kahneman / Amos Tversky, disruptive innovation, Donald Trump, double entry bookkeeping, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ford paid five dollars a day, Frederick Winslow Taylor, fundamental attribution error, George Akerlof, gig economy, Google Glasses, information asymmetry, interchangeable parts, invention of the telegraph, inventory management, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, job satisfaction, joint-stock company, Joseph Schumpeter, Kickstarter, knowledge worker, labor-force participation, land reform, lone genius, low cost airline, low cost carrier, Marc Andreessen, market bubble, market design, market fundamentalism, means of production, meta analysis, meta-analysis, Moneyball by Michael Lewis explains big data, multi-sided market, natural language processing, Network effects, Norbert Wiener, offshore financial centre, Parag Khanna, payday loans, peer-to-peer lending, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price mechanism, purchasing power parity, random walk, recommendation engine, Richard Thaler, ride hailing / ride sharing, Sam Altman, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, Snapchat, statistical model, Steve Jobs, technoutopianism, The Future of Employment, The Market for Lemons, The Nature of the Firm, transaction costs, universal basic income, William Langewiesche, Y Combinator

In his masterful history of accounting, Jacob Soll suggests that reporting within a firm took off when its leaders realized that more information flowing to them could be translated into better control over the activities within their enterprise, as evidenced by the ascent of a number of Italian merchant families—the Medici, the Bardi, the Peruzzi, and others—to the heights of commercial success, establishing them as the preeminent bankers of fifteenth-century Europe. First among them was Cosimo de’ Medici the Elder, who took over the family firm after his father’s death, in 1429. When Cosimo inherited the business, double-entry bookkeeping, the idea that every business transaction should be represented twice in an accounting system, as an influx and outflow of value, was no longer a novel idea; in fact, all merchants in Florence were required to maintain such records for the calculation of their tax bills. But bookkeeping was seen as a duty owed to the state, not as a mechanism for internal control. Cosimo turned that around and made bookkeeping into a powerful tool of informational oversight that became an integral part of his firm’s daily practice.

Merchants could also keep tabs on their agents—by looking for discrepancies in the data—and discover whether an agent was trying to embezzle monies or hide unpleasant news about the performance of his office. With accounting, the head of a firm could determine whether his agent’s actions were successes or failures and act accordingly. There was a material reckoning. But good accounting also laid the groundwork for steady information flows that allowed firms to extend the scale and scope of their operations. Double-entry bookkeeping did not become the norm in most firms for the next several centuries. The generation of Medici after Cosimo, as well as other wealthy Italians, discarded the practice of accounting in favor of more “intellectual” pursuits, such as politics and the arts. Accounting was deemed to be below their elite status. The modern conception of a company was also still in its infancy, and many executives—including at the storied East India joint-stock companies set up under the auspices of Europe’s crowns—were more concerned with share prices and market speculation than with internal control, efficiency, and the steady generation of profits.

See progressive data-sharing mandate dating websites, 49, 82–84, 163 decentralization, 7, 11, 13, 32, 90, 121 automation and, 80 bad decisions mitigated by, 38–39 of communicative coordination, 26 dyadic information exchange and, 72 firms and, 125, 127 matching and, 74, 127 decentralization with coordinated control, 101 decision-making automation overextension in, 116–120 centralized vs. decentralized (see centralization; decentralization) in firms, 95–107 irrational, 42–44 in markets, 42–44, 49, 161, 169–171 money and price simplification of, 49 delegation, 97–101, 106, 117, 218–219 Deloitte, 75, 126 Descartes, René, 223 Didi Chuxing, 163 digital Taylorism, 89 Distillers, 42 distributive policy measures, 186–187, 189, 190, 193, 197–200 See also taxes Doriot, Georges, 216 dotcom bubble, 6, 142–143 double-entry bookkeeping, 92–93 driving systems, autonomous, 78, 181–183, 213 Durant, William, 98 East India joint-stock companies, 93 eBay, 9, 69, 70, 75, 209, 215 decline in, 1–3 network effects and, 163 worth of goods traded on, 1 Economist, 89 education sector, 6–7, 199, 214 Ek, Daniel, 122–123 Embark, 182 Emergency Economic Stabilization Act of 2008, 134 Encyclopédie, 21 energy markets, 213 enterprise resource planning (ERP), 100 ESPN, 67, 69 eToro, 152 Europe, 135, 136, 164, 196, 198 European Parliament, 187 European Union, 140 evolution, 20–21, 22 Expedia, 70 Expertmaker, 70 externalities, 73, 74 Ezrachi, Ariel, 166 Facebook, 30, 148, 178, 196 feedback effects and, 169 market concentration in, 161 network effects and, 163, 166 fair value, 172–173 feedback effects, 78–80, 104, 157–179, 210, 211 development of theory, 159–160 government control via, 175–179 market concentration and, 161–169, 171 regulatory measures proposed for, 171–175 threat posed by, 166–167 Ferguson, Niall, 45 Ferrucci, David, 115 finance capital.


pages: 823 words: 220,581

Debunking Economics - Revised, Expanded and Integrated Edition: The Naked Emperor Dethroned? by Steve Keen

"Robert Solow", accounting loophole / creative accounting, banking crisis, banks create money, barriers to entry, Benoit Mandelbrot, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, business cycle, butterfly effect, capital asset pricing model, cellular automata, central bank independence, citizen journalism, clockwork universe, collective bargaining, complexity theory, correlation coefficient, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, diversification, double entry bookkeeping, en.wikipedia.org, Eugene Fama: efficient market hypothesis, experimental subject, Financial Instability Hypothesis, fixed income, Fractional reserve banking, full employment, Henri Poincaré, housing crisis, Hyman Minsky, income inequality, information asymmetry, invisible hand, iterative process, John von Neumann, Kickstarter, laissez-faire capitalism, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, market clearing, market microstructure, means of production, minimum wage unemployment, money market fund, open economy, Pareto efficiency, Paul Samuelson, place-making, Ponzi scheme, profit maximization, quantitative easing, RAND corporation, random walk, risk tolerance, risk/return, Robert Shiller, Robert Shiller, Ronald Coase, Schrödinger's Cat, scientific mainstream, seigniorage, six sigma, South Sea Bubble, stochastic process, The Great Moderation, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, total factor productivity, tulip mania, wage slave, zero-sum game

But again, the qualitative similarity between the model and the empirical data is striking – see Figure 14.20. 14.19 Debt and GDP in the model 14.20 Debt and GDP during the Great Depression Making monetary modeling accessible: QED I originally developed the models in this chapter using differential equations, and I found it very difficult to extend them, or explain them to other economists who weren’t familiar with this approach to mathematics. Then a chance challenge to the accuracy of my models – Scott Fullwiler asserted that there must be errors in my models from the point of view of double-entry bookkeeping – inspired me to see whether I could in fact explain my models using double-entry bookkeeping. Not only did that prove possible, it also transpired that a double-entry bookkeeping layout of financial flows could be used to generate the models in the first place. This overcame a major problem that I had with using system dynamics programs like Vissim (www.vissim.com) and Simulink (www.mathworks.com/products/simulink/) to build models of the financial sector. While these technologies were brilliant for designing engineering products like cars, computers and airplanes, they were poorly suited to modeling financial flows.

.: 4; emphasis in original). 14.2 The nature of exchange in the real world This simple but profound perspective on what is the essence of a monetary capitalist economy yielded two essential requirements for a model of capitalism: • all transactions involve transfer of funds between bank accounts; • the minimum number of classes5 in a model of capitalism is three: capitalists, workers and bankers. It also implied that the best structure for modeling the financial side of capitalism is a double-entry system of bank accounts. This led me to develop a means to derive dynamic monetary models of capitalism from a system of double-entry bookkeeping accounts (Keen 2008, 2009b, 2010, 2011), and a remarkable amount of the Marx-Schumpeter-Keynes-Minsky perspective on capitalism arose naturally out of this approach. I’ll outline the simplest possible version of this model before expanding it to provide a monetary version of the Minsky model outlined in Chapter 13. A ‘pure credit’ economy Our modern monetary economy is a system of such complexity that it makes the outrageous contraptions of Rube Goldberg, Heath Robinson and Bruce Petty appear trite by comparison: the Bank of International Settlements, central banks, commercial banks; merchant banks, hedge funds, superannuation funds, building societies; fiat money, credit money, multiple measures of money (base money, M0, M1, M2, M3, broad money); reserve ratios, Taylor Rules, Basel Rules … Many of these components were instituted to try to control bank lending after the catastrophe of the Great Depression; many others were responses by the financial system to evade the intentions of these controls.

These programs use ‘wires’ to link one variable to another, and this is fine for physical processes where, for example, a wire from the fuel injector module to the cylinder module indicates a flow of gas from one point to another, and only one such link exists per cylinder. However, in a model of financial flows, the same term could turn up as often as three times in one diagram: once for the source account for some monetary transfer, once for its destination, and once to record it on a ledger. This resulted in almost incomprehensible models, and made ‘wiring up’ such a model extremely tedious. I now use my double-entry bookkeeping methodology to develop models like the one in this chapter, and a simulation tool has also been developed for me to showcase this method. It’s free, fairly easy to use, and you can both simulate the models I’ve shown in this chapter and build your own using it. It’s called QED – which stands for Quesnay Economic Dynamics – and can be downloaded from my blog at www.debtdeflation.com/blogs/qed/.


pages: 159 words: 45,073

GDP: A Brief but Affectionate History by Diane Coyle

"Robert Solow", Asian financial crisis, Berlin Wall, big-box store, Bretton Woods, BRICs, business cycle, clean water, computer age, conceptual framework, crowdsourcing, Diane Coyle, double entry bookkeeping, en.wikipedia.org, endogenous growth, Erik Brynjolfsson, Fall of the Berlin Wall, falling living standards, financial intermediation, global supply chain, happiness index / gross national happiness, hedonic treadmill, income inequality, income per capita, informal economy, Johannes Kepler, John von Neumann, Kevin Kelly, Long Term Capital Management, mutually assured destruction, Nathan Meyer Rothschild: antibiotics, new economy, Occupy movement, purchasing power parity, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thorstein Veblen, University of East Anglia, working-age population

Petty wanted to prove not only that the country could bear a higher burden of taxes but also that it was capable of taking on its powerful neighbors, Holland and France.1 There was no need for it to win more land or increase the size of the population to ensure victory, because the available land and capital and labor could be used to better effect. This was a significant economic insight. Also significant was Petty’s introduction of the tool of double-entry bookkeeping to keep records for the nation as a whole. Another early set of estimates, by Charles Davenant in 1695, had the title An Essay upon the Ways and Means of Supplying the War, making his aim perfectly clear. The word statistics has the same origin as state, and originally referred to the collection of figures concerning the state, specifically taxes. It proved to be a major advantage for England to have consolidated national income statistics, enabling calculations about the scope for increased output and tax revenues, when its larger and seemingly more powerful neighbor France lacked such information.

Abramowitz, Moses, 113 Africa, 31–33, 72, 93, 138 Anders, William, 68 art, 127–28, 132 assets, contributing to sustainability, 134–35, 137 austerity measures, 23 Australia, 73, 109, 118 automation, 128–29 Bangladesh, 53 base year, in GDP calculations, 31, 33–34 Baumol, William, 127 Benford’s Law, 3, 143n3 Berners-Lee, Tim, 81 Bhalla, Surjit, 53 Bhutan, 112 Bos, Frits, 47–48 Boskin Commission, 35, 88 Brazil, 94, 125 Bretton Woods system, 48 BRIC economies, 94, 96 Brynjolfsson, Erik, 128–30 Burundi, 73 business, purpose of, 95 Campaign for Happiness, 112 Canada, 73, 89, 109 capabilities, 72–73, 134 capital consumption, 131 capitalism: 1970s crisis of, 59–75; 2008 crisis of, 93–118; achievements of, 5–6; innovation as hallmark of, 91; investment and depreciation, 131–33 capital widening, 132 Carson, Rachel, Silent Spring, 69 centrally planned economies, 46–47, 56, 60, 66–68 Central Statistical Office (United Kingdom), 18 Chad, 73 chain-weighted price indexes, 33–34 China: economic growth of, 94, 96–97; economic limitations of, 96–97; GDP of, 51–53, 96, 97; living standards in, 51, 57, 96; manufacturing and exporting in, 82, 97, 125; U.S. relations with, 97 Christophers, Brett, 104, 105 circular flow, 26–27, 27f, 57, 63 Clark, Colin, 12, 13, 17, 50, 84 Clean Water Act (1972), 69 Clegg, Nick, 110 Cobb, John, 116 Cold War, 46–47, 60, 66 communications technology, 81–82 communism, 46–47, 60, 66–68, 96 compound arithmetic, 64, 83, 130–31 comprehensive wealth, 133, 135 computers, 80–82, 87–88 conspicuous consumption, 112 consumerism, 45, 112 consumer spending (C), 27–28, 45 consumer surplus, 130 customization, of goods and services, 123–25 Cuyahoga River, 69 Daly, Herman, 116 Darling, Alastair, 102 dashboard approach, 118, 136 data collection, 33, 37, 51–53, 137–38 Data Resources, Incorporated (DRI), 21 Davenant, Charles, 8 David, Paul, 79 Defense Advanced Research Projects Agency (DARPA), 81 defense spending, 14–16 deferred stock options, 37 deflators, 31 Defoe, Daniel, 9 DeLong, Brad, 86, 117 Democratic Republic of Congo, 54, 73 Deng Xiao Ping, 96 depreciation, 25, 30, 131–33 developed/high-income countries: GDP of, 72, 93; informal economy in, 107 developing/low-income countries: economic growth/stagnation in, 61, 71–72; GDP of, 32–33, 51, 71–72; informal economy in, 107, 109; and PPP, 50–53 development aid, 72, 74 digital products and services, 129–31 disasters, GDP growth after, 43 Domar, Evsey, 55 double-entry bookkeeping, 8 Easterlin, Richard, 111 Eckstein, Otto, 21 econometric models, 20–21, 23 economic growth: critiques of, 60; in eighteenth and nineteenth centuries, 12; lack of, in developing countries, 61; meanings and measures of, 15; meanings of, 123; potential rate of, 82–83; problems arising from, 63–64; real, 30–31; significance of, 135–36; sustainable, 71, 116, 137; theories/models of, 55–57, 78–81; virtuous circle of, 57, 59, 64, 73, 79; well-being and welfare aided by, 135 economics, challenges to conventional, 59–61 economic welfare.


pages: 462 words: 150,129

The Rational Optimist: How Prosperity Evolves by Matt Ridley

"Robert Solow", 23andMe, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon footprint, Cesare Marchetti: Marchetti’s constant, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, creative destruction, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Edward Glaeser, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, Flynn Effect, food miles, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, hedonic treadmill, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, Kickstarter, knowledge worker, Kula ring, Mark Zuckerberg, meta analysis, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, plutocrats, Plutocrats, Ponzi scheme, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, Thales and the olive presses, Thales of Miletus, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, Vilfredo Pareto, wage slave, working poor, working-age population, Y2K, Yogi Berra, zero-sum game

Tools are in effect a measure of the extent of the division of labour and, as Adam Smith argued, the division of labour is limited by the extent of the market. The Tasmanian market was too small to sustain many specialised skills. Imagine if 4,000 people from your home town were plonked on an island and left in total isolation for ten millennia. How many skills and tools do you think they could preserve? Wireless telephony? Double-entry book-keeping? Suppose one of the people in your town was an accountant. He could teach double-entry book-keeping to a youth, but would the youth or the youth’s youth pass it on – for ever? On other Australian islands much the same thing happened as on Tasmania. On Kangaroo Island and Flinders Island, human occupation petered out, probably by extinction, a few thousand years after isolation. Flinders is a fertile island that should be a paradise. But the hundred or so people it could support were far too small a human population to sustain the technology of hunter-gathering.

Ironically, the plague may have been one of the sparks that lit the Renaissance, because the shortage of labour shifted income from rents to wages as landlords struggled to find both tenants and employees. With rising wages, some of the surviving peasantry could once more just afford the oriental luxuries and fine cloth that Lombard and Hanseatic merchants supplied. There was a rash of financial innovation: bills of credit to solve the problem of how to pay for goods without transporting silver through bandit country, double-entry book-keeping, insurance. Italian bankers began to appear all across the continent, financing kings and their wars, sometimes at a profit, sometimes at a disastrous loss. The wealth that the Italian trading towns had generated soon found its way into scholarship, art or science, or in the case of Leonardo da Vinci, all three. Per capita income in England was probably higher in 1450 than it would be again before 1820.

Although the human race as a whole has experienced incessant change, individual peoples saw a much more intermittent flickering progress because the pace and place of that change was itself always changing. Innovation is like a bush fire that burns brightly for a short time, then dies down before flaring up somewhere else. At 50,000 years ago, the hottest hot-spot was west Asia (ovens, bows-and-arrows), at 10,000 the Fertile Crescent (farming, pottery), at 5,000 Mesopotamia (metal, cities), at 2,000 India (textiles, zero), at 1,000 China (porcelain, printing), at 500 Italy (double-entry book-keeping, Leonardo), at 400 the Low Countries (the Amsterdam Exchange Bank), at 300 France (Canal du Midi), at 200 England (steam), at 100 Germany (fertiliser); at 75 America (mass production), at 50 California (credit card), at 25 Japan (Walkman). No country remains for long the leader in knowledge creation. At first blush, this is surprising, especially if increasing returns to innovation are possible.


pages: 470 words: 144,455

Secrets and Lies: Digital Security in a Networked World by Bruce Schneier

Ayatollah Khomeini, barriers to entry, business process, butterfly effect, cashless society, Columbine, defense in depth, double entry bookkeeping, fault tolerance, game design, IFF: identification friend or foe, John von Neumann, knapsack problem, MITM: man-in-the-middle, moral panic, mutually assured destruction, pez dispenser, pirate software, profit motive, Richard Feynman, risk tolerance, Silicon Valley, Simon Singh, slashdot, statistical model, Steve Ballmer, Steven Levy, the payments system, Y2K, Yogi Berra

Cons this involved were popular around the time of the Depression; for all I know it’s still done today. The mark is taken because he can’t imagine that what he’s seeing—the rooms, the people, the noise, the action—is really only a performance enacted solely for his benefit. On the Net, this is easy to do. In a world without physical cues, people need some new way to verify the integrity of what they see. AUDIT Double-entry bookkeeping was codified by 1497 by Luca Pacioli of Borgo San Sepolcro, although the concept is as much as 200 years older. The basic idea is that every transaction will affect two or more accounts. One account is debited by an amount exactly equal to what the other is credited. Thus, all transactions are always transfers between two accounts, and since they always appear with a plus sign in one account and a minus sign in the other, the total over all accounts will always be zero.

This balancing process was an audit: If one clerk tried to commit fraud—or simply made a mistake—it would be caught in the balancing process, because someone other than the clerk would be checking the work. Additionally, there would be outside audits, where accountants would come in and check the books over again ... just to make sure. Audit is vital wherever security is taken seriously. Double-entry bookkeeping is just the beginning; banks have complex and comprehensive audit requirements. So do prisons, nuclear missile silos, and grocery stores. A prison might keep a record of everyone who goes in and out the doors, and balance the record regularly to make sure that no one unexpectedly left (or unexpectedly stayed). A missile silo might go even further and audit every box and package that enters and leaves, comparing shipping and receiving records with another record of what was expected.

(Well, there are some attacks: blocking the writing, simulating running out of ink, disabling the writing for a single transaction, forging an entire tape, and so forth.) On the other hand, computer files can easily be erased or modified; this makes the job of verifying audit records more difficult. And most system designers don’t think about audit when building their systems. Recall the built-in audit property of double-entry bookkeeping. That auditability fails when both books are stored on the same computer system, with the same person having access to both. But this is exactly how all computer bookkeeping programs work. ELECTRONIC CURRENCY Back in the old days (1995 or so), everyone thought that we would have to develop new forms of money to deal with electronic commerce. Many companies died, trying to redefine money.


Payback: Debt and the Shadow Side of Wealth by Margaret Atwood

carbon footprint, delayed gratification, double entry bookkeeping, epigenetics, financial independence, illegal immigration, Jane Jacobs, Monkeys Reject Unequal Pay, Nelson Mandela, plutocrats, Plutocrats, trickle-down economics, wage slave

LET’S EXAMINE THE case for the latter. In order for a mental construct such as “debt” to exist — you owe me something that will balance the books once it is transferred to me — there are some preconditions. One of them, as I’ve said, is the notion of fairness. Attached to that is the notion of equivalent values: what does it take to make both sides of the mental score sheet or grudge tally or double-entry bookkeeping program we’re all constantly running add up to the same thing? If Johnny has three apples and Suzie has a pencil, is one apple for one pencil an acceptable exchange, or will there be an apple or a pencil remaining to be paid? That all depends on what values Johnny and Suzie place on their respective trading items, which in turn depend on how hungry and/or in need of communication devices they may be.

We might start by investigating Flaubert’s 1857 novel, Madame Bovary, the story of a provincial wife who takes to romantic love, extramarital sex, and overspending as an escape from boredom, but then poisons herself when her double life catches up with her and her unpaid creditor threatens to expose her. This book was put on trial for obscenity, and Flaubert defended it by brandishing Emma’s hideous-looking corpse as an example of the book’s inherent morality — the wages of sexual sin is arsenic, and not only does it kill you, it wrecks your looks — but that’s a red herring. Emma isn’t really punished for sex but for shopaholicism. Had she but learned double-entry bookkeeping and drawn up a budget, she could easily have gone on with her hobby of adultery forever — or at least until she got saggy — though she’d have done it in a more frugal manner. Or perhaps we should cross the Atlantic and trace the pitiful career of Lily Bart in Edith Wharton’s House of Mirth, who, had she known more about debt management, need not have ended up similarly selfpoisoned. Rash Lily had not thought deeply enough about the principles of tit-for-tat: if a man lends you money and charges no interest, he’s going to want payment of some other kind.


pages: 204 words: 60,319

Finding Zero: A Mathematician's Odyssey to Uncover the Origins of Numbers by Amir D. Aczel

colonial rule, double entry bookkeeping, Georg Cantor, offshore financial centre, Y2K

During the Han Dynasty in China (206 BCE to 220 CE), a mathematical work titled Nine Chapters on the Mathematical Art appeared, employing both positive numbers, colored red, and negative ones, colored black. And in Egypt of the third century, a leading Greek mathematician named Diophantus obtained negative answers to some of his equations but immediately dismissed them as unrealistic. So the idea for negative numbers is quite old, but people did not understand such numbers. The double-entry bookkeeping system used in accounting today was developed in Europe in the thirteenth century in part to avoid using negative numbers. To define negative numbers requires the concept of zero. Negative numbers are, in a sense, a reflection across zero of the positive numbers. You can see this if you draw the number line, starting at zero and going to the right to 1, 2, 3, and so on; and then extending the numbers to the left of zero to –1, –2, –3, and onward.

., 43–4 çaka (dynasty), 95–7, 209–10, 214 Cambodia Cambodian National Museum, 102, 128–9, 165, 203–4, 218–19 Khmer Rouge, 98–9, 107–8, 125, 129, 150, 163, 166, 173, 176, 200, 202–3, 210, 219, 222 See also Angkor (Cambodian empire); Phnom Penh (Cambodian capital); Sambor on Mekong, Cambodia; Siem Reap, Cambodia Cantor, Georg (mathematician), 145–8 Cantor, Moritz, 74–5, 77 cargo ships, 18–19 Carnac stones, 22 Cartier, Pierre, 59 Casselman, Bill, 83, 186–8, 191, 197 catuskoti (four corners/possibilities, also tetralemma), 57, 60–1, 105–6, 137, 139–42, 148, 152 Chamroeun Chhan, 116–17, 166, 171–2, 189 Chandra (Hindu god), 103 Chao Phraya River, 113–15, 164 Chatur-bhuja temple, 78, 210 Chenla (ancient region, later Burma and Myanmar), 91–3, 205 China Chou Ta-kuan, 101–2 Cultural Revolution, 98 Fu Nan kingdom, 91–3, 205 Han Dynasty, 23 Nine Chapters on the Mathematical Art, 23 three-by-three squares, 48 Chou Ta-kuan (also Zhou Daguan), 101–2 Cœdès, Georges (archaeologist), 83–4, 100, 102, 106–8, 124, 150, 187, 204 Angkor, 92 birth and education, 85–9 career and life, 114–15, 117, 119–20, 128, 150, 156, 176 death and final years, 108, 216–17 on Khmer number system, 214–15 translation of K-127, 93–7, 107, 166, 176, 207–8, 210 Communism, 98, 118, 120, 131, 216 Khmer Rouge, 98–9, 107–8, 125, 129, 150, 163, 166, 173, 176, 200, 202–3, 210, 222 Copernicus, 194 counting, 20–2, 137, 216 cruise ships, 1–2, 7, 10, 15, 18, 52 Cultural Revolution, 98 Cunningham, Alexander (archaeologist), 45–6 Dalida (French-Italian singer), 3–4 decimals nonrepeating, 146 number systems, 23, 63, 212, 215 Dedekind, Richard (mathematician), 146 Descartes, René, 194–5 Devi (Hindu god), 102 Dieu, Eric, 115–16, 189–93 digamma (archaic Greek letter), 14 Diophantus (mathematician), 23 double-entry bookkeeping, 23 Dreyfus trial, 86 Dürer, Albrecht (artist), 49–50 Durga (Hindu goddess, also Parvati), 35, 45 École Française d’Extrême-Orient (EFEO), 118–19 École Pratique des Hautes Études, 87–8 Egypt, 63, 66, 103 Egyptian numbers, 25, 209, 213 Etruscan numbers, 82–3 Euclid (mathematician), 39, 56, 69 Evans, Arthur (archaeologist), 183–4, 186 Fermat’s Last Theorem, 83 Fibonacci sequence, 13, 19 Ford, Harrison, 179 fractions, 25, 147 French Colonial architecture, 115 French colonialism, 87, 114, 119, 133, 216 Fu Nan, Chinese Kingdom of, 91–3, 205 Galileo, 36, 194 Ganesha (Hindu god), 103 Garuda (mythical bird), 102, 139 Ghosh, B.


Financial Statement Analysis: A Practitioner's Guide by Martin S. Fridson, Fernando Alvarez

business cycle, corporate governance, credit crunch, discounted cash flows, diversification, Donald Trump, double entry bookkeeping, Elon Musk, fixed income, information trail, intangible asset, interest rate derivative, interest rate swap, negative equity, new economy, offshore financial centre, postindustrial economy, profit maximization, profit motive, Richard Thaler, shareholder value, speech recognition, statistical model, time value of money, transaction costs, Y2K, zero-coupon bond

Form Type: 10-K Filed On: 9/11/2009 Years Ended July 25, 2009 Cash flows from operating activities: Net income $6,134 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization, and other noncash items 1,768 Employee share-based compensation expense 1,140 Share-based compensation expense related to acquisitions and investments 91 Provision for doubtful accounts 54 Deferred income taxes (574) Excess tax benefits from share-based compensation (22) In-process research and development 63 Net losses (gains) on investments 80 Change in operating assets and liabilities, net of effects of acquisitions: Accounts receivable 610 Inventories 187 Lease receivables, net (222) Accounts payable (208) Income taxes payable and receivable 768 Accrued compensation 175 Deferred revenue 572 Other assets (780) Other liabilities 61 Net cash provided by operating activities 9,897 Cash flows from investing activities: Purchases of investments (41,225) Proceeds from sales of investments 20,473 Proceeds from maturities of investments 12,352 Acquisition of property and equipment (1,005) Acquisition of businesses, net of cash and cash equivalents acquired (426) Change in investments in privately held companies (89) Other (39) Net cash used in investing activities $(9,959) Cash flows from financing activities: Issuance of common stock 863 Repurchase of common stock (3,611) Issuance of long-term debt 3,991 Repayment of long-term debt (500) Settlement of interest rate derivatives related to long-term debt (42) Excess tax benefits from share-based compensation 22 Other (134) Net cash provided by (used in) financing activities 589 Net increase in cash and cash equivalents 527 Cash and cash equivalents, beginning of fiscal year 5,191 Cash and cash equivalents, end of fiscal year 5,718 Prior to that time, going as far back as the introduction of double-entry bookkeeping in Italy during the fifteenth century, financial analysts had muddled through with only the balance sheet and the income statement. Anyone with a sense of history will surely conclude that the introduction of the cash flow statement must have been premised by expectations of great new analytical insights. Such an inference is in fact well founded. The advantages of a cash flow statement correspond to the shortcomings of the income statement and, more specifically, the concept of profit.

In portfolio management, the technique of reducing risk by dividing one's assets among a number of different securities or types of investments. Applied to corporate strategy, the term refers to participation in several unrelated businesses. The underlying premise is often countercyclicality, or the stabilization of earnings over time through the tendency of profits in certain business segments to be rising at times when they are falling in others. double-entry bookkeeping. A system of keeping accounts in which each entry requires an offsetting entry. For example, a payment to a trade creditor causes both cash and accounts payable to decline. Dow Jones Industrial Average. A widely followed index of the U.S. stock market composed of the common stocks of 30 major industrial corporations. EBIT. Earnings before deduction of interest expense and income taxes.

Tice Associates Death duties Debt: management's attitude toward return on equity and total, constitution of total-debt-to-cash-flow ratio Debt restriction disclosures Declining growth, rationalizations: diversification, mature markets and growth back on track, new products and year-over-year comparisons distorted Defaulting on debt Default risk models Deferred profit plan: accounting discrepancies background on from bad to worse lessons learned Deferred taxes, capital and Denari, Stephen Depreciation schedules Derivatives Dex One Corporation Dilution Disclosure/audits: artful deal death duties generally systematic problems, auditing and Discount rate Discretionary uses of cash Diversification Dividend discount model: dividends and future appreciation earning or cash flow future dividends/present stock price growing company, valuing Dividends Dooner, John J. Double-entry bookkeeping Dow Jones Industrial Average Downgrading of debt Drug business. See Channel-stuffing Dunn, Frank Du Pont formula, equity analysis and Dynegy Earnings: manipulation or cash flow, dividend discount model rainy day reserves and second take on Earnings multiple. See Price-earnings ratio (P/E ratio) Earnings per share (EPS) Earnings-smoother EBITDA: EBIT, total enterprise value and peer-group multiple based on predictability of, near term restructuring and EBITDA, applications/limitations: abusing EBITDA cash flow, more comprehensive measure credit analysis and EBIT, total enterprise value and generally working capital and Economic conditions, volatility and Economies of scale Economies of scope Elkind, Peter Energy, economic conditions and Enforcement Division Enron: media sensation: analysts, fraud detection and company background lessons learned magazines/books and misleading of investors EPS.


pages: 295 words: 66,824

A Mathematician Plays the Stock Market by John Allen Paulos

Benoit Mandelbrot, Black-Scholes formula, Brownian motion, business climate, business cycle, butter production in bangladesh, butterfly effect, capital asset pricing model, correlation coefficient, correlation does not imply causation, Daniel Kahneman / Amos Tversky, diversified portfolio, dogs of the Dow, Donald Trump, double entry bookkeeping, Elliott wave, endowment effect, Erdős number, Eugene Fama: efficient market hypothesis, four colour theorem, George Gilder, global village, greed is good, index fund, intangible asset, invisible hand, Isaac Newton, John Nash: game theory, Long Term Capital Management, loss aversion, Louis Bachelier, mandelbrot fractal, margin call, mental accounting, Myron Scholes, Nash equilibrium, Network effects, passive investing, Paul Erdős, Paul Samuelson, Ponzi scheme, price anchoring, Ralph Nelson Elliott, random walk, Richard Thaler, Robert Shiller, Robert Shiller, short selling, six sigma, Stephen Hawking, stocks for the long run, survivorship bias, transaction costs, ultimatum game, Vanguard fund, Yogi Berra

The situation is analogous to that in applied mathematics where the appropriateness of a mathematical model is always vulnerable to criticism. Is this model the right one for this situation? Are these assumptions warranted? Once the assumptions are made and the model is adopted, however, the numbers and organizational clarity that result have an irresistible appeal. Responding to this appeal two hundred years ago, the German poet Goethe rapturously described accounting this way: “Double entry bookkeeping is one of the most beautiful discoveries of the human spirit.” Focusing only on the bookkeeping and the numerical output, however, and refusing to examine the legitimacy of the assumptions made, can be disastrous, both in mathematics and accounting. Recall the tribe of bear hunters who became extinct once they became expert in the complex calculations of vector analysis. Before they encountered mathematics, the tribesmen killed, with their bows and arrows, all the bears they could eat.

Brian auditors Aumann, Robert availability error average values compared with distribution of incomes risk as variance from averages average return compared with median return average value compared with distribution of incomes buy-sell rules and outguessing average guess risk as variance from average value averaging down Bachelier, Louis Bak, Per Barabasi, Albert-Lazló Bartiromo, Maria bear markets investor self-descriptions and shorting and distorting strategy in Benford, Frank Benford’s Law applying to corporate fraud background of frequent occurrence of numbers governed by Bernoulli, Daniel Beta (B) values causes of variations in comparing market against individual stocks or funds strengths and weaknesses of technique for finding volatility and Big Bang billiards, as example of nonlinear system binary system biorhythm theory Black, Fischer Black-Scholes option formula blackjack strategies Blackledge, Todd “blow up,” investor blue chip companies, P/E ratio of Bogle, John bonds Greenspan’s impact on bond market history of stocks outperforming will not necessarily continue to be outperformed by stocks Bonds, Barry bookkeeping. see accounting practices bottom-line investing Brock, William brokers. see stock brokers Buffett, Warren bull markets investor self-descriptions and pump and dump strategy in Butterfly Economics (Ormerod) “butterfly effect,” of nonlinear systems buy-sell rules buying on the margin. see also margin investments calendar effects call options. see also stock options covering how they work selling strategies valuation tools campaign contributions Capital Asset Pricing Model capital gains vs. dividends Central Limit Theorem CEOs arrogance of benefits in manipulating stock prices remuneration compared with that of average employee volatility due to malfeasance of chain letters Chaitin, Gregory chance. see also whim trading strategies and as undeniable factor in market chaos theory. see also nonlinear systems charity Clayman, Michelle cognitive illusions availability error confirmation bias heuristics rules of thumb for saving time mental accounts status quo bias Cohen, Abby Joseph coin flipping common knowledge accounting scandals and definition and importance to investors dynamic with private knowledge insider trading and parable illustrating private information becoming companies/corporations adjusting results to meet expectations applying Benford’s Law to corporate fraud comparing corporate and personal accounting financial health and P/E ratio of blue chips competition vs. cooperation, prisoner’s dilemma complexity changing over time horizon of sequences (mathematics) of trading strategies compound interest as basis of wealth doubling time and formulas for future value and present value and confirmation bias definition of investments reflecting stock-picking and connectedness. see also networks European market causing reaction on Wall Street interactions based on whim interactions between technical traders and value traders irrational interactions between traders Wolfram model of interactions between traders Consumer Confidence Index (CCI) contrarian investing dogs of the Dow measures of excellence and rate of return and cooperation vs. competition, prisoner’s dilemma correlation coefficient. see also statistical correlations counter-intuitive investment counterproductive behavior, psychology of covariance calculation of portfolio diversification based on portfolio volatility and stock selection and Cramer, James crowd following or not herd-like nature of price movements dart throwing, stock-picking contest in the Wall Street Journal data mining illustrated by online chatrooms moving averages and survivorship bias and trading strategies and DeBondt, Werner Deciding What’s News (Gans) decimalization reforms decision making minimizing regret selling WCOM depression of derivatives trading, Enron despair and guilt over market losses deviation from the mean. see also mean value covariance standard deviation (d) variance dice, probability and Digex discounting process, present value of future money distribution of incomes distribution of wealth dynamic of concentration UN report on diversified portfolios. see stock portfolios, diversifying dividends earnings and proposals benefitting returns from Dodd, David dogs of the Dow strategy “dominance” principle, game theory dot com IPOs, as a pyramid scheme double-bottom trend reversal “double-dip” recession double entry bookkeeping doubling time, compound interest and Dow dogs of the Dow strategy percentages of gains and losses e (exponential growth) compound interest and higher mathematics and earnings anchoring effect and complications with determination of inflating (WCOM) P/E ratio and stock valuation and East, Steven H. Ebbers, Bernie acquisition appetite of arrogance of author emails offer of help Digex purchase down-home style of forced to sell WCOM stock fraud by pump and dump strategy and purchase of WorldCom stock by economics, human behavior and The Education of a Speculator (Niederhoffer) “efficient frontier” of portfolios (Markowitz) Efficient Market Hypothesis background of impact of accounting scandals on increased efficiency results in decreased predictability investors beliefs impacting moving averages and paradoxes of randomness and rationale for resistance and support levels and versions of Elliott, Ralph Nelson Ellison, Larry employee remuneration vs.


pages: 272 words: 71,487

Getting Better: Why Global Development Is Succeeding--And How We Can Improve the World Even More by Charles Kenny

"Robert Solow", agricultural Revolution, Berlin Wall, British Empire, Charles Lindbergh, clean water, demographic transition, double entry bookkeeping, experimental subject, Fall of the Berlin Wall, germ theory of disease, Gunnar Myrdal, income inequality, income per capita, Indoor air pollution, inventory management, Kickstarter, Milgram experiment, off grid, open borders, purchasing power parity, randomized controlled trial, structural adjustment programs, The Wealth of Nations by Adam Smith, total factor productivity, Toyota Production System, trade liberalization, transaction costs, very high income, Washington Consensus, X Prize

Solow’s model predicted that long-term growth rates were primarily dependent on technological change rather than on investment. Economists define “technology” broadly—as anything that isn’t capital that might affect per-worker growth rates. For example, it can include inventions as usually imagined, like the steam engine or the transistor, but also new processes, like the assembly line, or new ways of doing business, like double-entry bookkeeping. Solow suggested that as these technologies spread across countries, workers and capital could be used more effectively to produce goods and services. This, he argued, was the secret to growth. He also assumed that technology spread across countries at a constant rate. So, every year, the gap between advanced and backward countries in terms of technological prowess shrank by a similar amount.

“One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top.” In such a system, Smith estimated that each small manufactory could make upward of forty-eight hundred pins per person, where one unskilled worker alone could make a single pin a day. The vital technology here is a “process” technology—the assembly line. Other such process technologies—a.k.a. institutions—might include double-entry bookkeeping, just-in-time management systems, transparent regulation, or even democracy. Paul Romer, a father of “endogenous” theories that emphasize barriers to technology adoption as the reason for slow growth, suggests that it is process technologies that are the key to the story. He argues that systems like Walmart’s management of inventory data have had a bigger impact on economic growth than inventions such as the transistor, for example.


pages: 218 words: 68,648

Confessions of a Crypto Millionaire: My Unlikely Escape From Corporate America by Dan Conway

Affordable Care Act / Obamacare, Airbnb, bank run, basic income, bitcoin, blockchain, buy and hold, cloud computing, cognitive dissonance, corporate governance, crowdsourcing, cryptocurrency, disruptive innovation, distributed ledger, double entry bookkeeping, Ethereum, ethereum blockchain, fault tolerance, financial independence, gig economy, Gordon Gekko, Haight Ashbury, high net worth, job satisfaction, litecoin, Marc Andreessen, Mitch Kapor, obamacare, offshore financial centre, Ponzi scheme, prediction markets, rent control, reserve currency, Ronald Coase, Satoshi Nakamoto, Silicon Valley, smart contracts, Steve Jobs, supercomputer in your pocket, Turing complete, Uber for X, universal basic income, upwardly mobile

The Internet was supposed to be free, but even it has been captured. The FAANG companies (Facebook, Apple, Amazon, Netflix, and Google) have made it a gated community. Blockchain is an opportunity to organize in a different way. It has the potential to weaken the gatekeepers, rule makers, and monopolies through decentralization. In the years and decades ahead, it gives us a shot to revolutionize institutions the way double-entry bookkeeping did seven hundred years ago. And it might let outsiders like me storm the castle. Now, to the fucking money. My story involves large sums of money. When the boom was on, I felt like Pablo Escobar, with a chirpy attitude and a closet full of dad jeans. But my story is messy and unconventional. I’m not a traditional tech bro who struck it rich by getting in early. I had a lot more to lose when I went down the rabbit hole.

He says, “An economy run by markets/blockchains instead of middlemen/authorities would make our current society look like a communist bureaucracy.” Techcrunch summed up the revolutionary potential of Ethereum in the article “Business in the Age of Ethereum”: “Blockchain technology provides a platform for people to work together with the persistence and stability of an organization but without the hierarchy.” In an article titled “Disrupting the Trust Business,” The Economist placed this invention in its historical context: “If double-entry bookkeeping freed accounting from the merchant’s head, the blockchain frees it from the confines of an organisation.” Eventually, over time, as The Economist asserts, “Some companies could be no more than a bundle of smart contracts, forming true virtual firms that live only on a blockchain.” Chapter Seven Taking the Edge Off It was clear that this job was more difficult than I’d imagined it would be.


pages: 415 words: 125,089

Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein

"Robert Solow", Albert Einstein, Alvin Roth, Andrew Wiles, Antoine Gombaud: Chevalier de Méré, Bayesian statistics, Big bang: deregulation of the City of London, Bretton Woods, business cycle, buttonwood tree, buy and hold, capital asset pricing model, cognitive dissonance, computerized trading, Daniel Kahneman / Amos Tversky, diversified portfolio, double entry bookkeeping, Edmond Halley, Edward Lloyd's coffeehouse, endowment effect, experimental economics, fear of failure, Fellow of the Royal Society, Fermat's Last Theorem, financial deregulation, financial innovation, full employment, index fund, invention of movable type, Isaac Newton, John Nash: game theory, John von Neumann, Kenneth Arrow, linear programming, loss aversion, Louis Bachelier, mental accounting, moral hazard, Myron Scholes, Nash equilibrium, Norman Macrae, Paul Samuelson, Philip Mirowski, probability theory / Blaise Pascal / Pierre de Fermat, random walk, Richard Thaler, Robert Shiller, Robert Shiller, spectrum auction, statistical model, stocks for the long run, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thomas Bayes, trade route, transaction costs, tulip mania, Vanguard fund, zero-sum game

Written in praise of the "very great abstraction and subtlety of mathematics," the Summa acknowledges Paccioli's debt to Fibonacci's Liber Abaci, written nearly three hundred years earlier. The Summa sets out the basic principles of algebra and contains multiplication tables all the way up to 60 x 60-a useful feature at a time when printing was spreading the use of the new numbering system. One of the book's most durable contributions was its presentation of double-entry bookkeeping. This was not Paccioli's invention, though his treatment of it was the most extensive to date. The notion of double-entry bookkeeping was apparent in Fibonacci's Liber Abaci and had shown up in a book published about 1305 by the London branch of an Italian firm. Whatever its source, this revolutionary innovation in accounting methods had significant economic consequences, comparable to the discovery of the steam engine three hundred years later. While in Milan, Paccioli met Leonardo da Vinci, who became a close friend.

In 1654, a time when the Renaissance was in full flower, the Chevalier de Mere, a French nobleman with a taste for both gambling and mathematics, challenged the famed French mathematician Blaise Pascal to solve a puzzle. The question was how to divide the stakes of an unfinished game of chance between two players when one of them is ahead. The puzzle had confounded mathematicians since it was posed some two hundred years earlier by the monk Luca Paccioli. This was the man who brought double-entry bookkeeping to the attention of the business managers of his day-and tutored Leonardo da Vinci in the multiplication tables. Pascal turned for help to Pierre de Fermat, a lawyer who was also a brilliant mathematician. The outcome of their collaboration was intellectual dynamite. What might appear to have been a seventeenth-century version of the game of Trivial Pursuit led to the discovery of the theory of probability, the mathematical heart of the concept of risk.


pages: 275 words: 82,640

Money Mischief: Episodes in Monetary History by Milton Friedman

Bretton Woods, British Empire, business cycle, currency peg, double entry bookkeeping, fiat currency, financial innovation, fixed income, floating exchange rates, full employment, German hyperinflation, income per capita, law of one price, money market fund, oil shock, price anchoring, price stability, transaction costs

In current usage, the item has come to be interpreted as referring to purchases of final goods and services only, and the notation has been changed accordingly, T being replaced by y, as corresponding to real income. As written, the equation is an identity, a truism. Every purchase can be viewed in two ways: the amount of money spent and the quantity of a good or service purchased multiplied by the price paid. Entering the amount of money on the left side and quantity times price on the right, and adding up those sums for all purchases, we have a standard case of double-entry bookkeeping. As in double-entry bookkeeping in general, the truism is highly useful. Consider once more our original question: What determines how much you can buy with the greenbacked five-dollar bill we started with? Nothing can affect P except as it changes one or more of the other items in the equation. Will a boom in the stock market, for example, change how much you can buy with a five-dollar bill? It will reduce the amount you can buy (raise P) only if it leads the Fed to create more money (increases M), or induces people to hold lower real cash balances, perhaps because they think the alternatives have become more attractive (raises V), or reduces the quantity of goods and services available for purchase, perhaps because workers are paying less attention to their work and more to the stock ticker (lowers T).


pages: 284 words: 79,265

The Half-Life of Facts: Why Everything We Know Has an Expiration Date by Samuel Arbesman

Albert Einstein, Alfred Russel Wallace, Amazon Mechanical Turk, Andrew Wiles, bioinformatics, British Empire, Cesare Marchetti: Marchetti’s constant, Chelsea Manning, Clayton Christensen, cognitive bias, cognitive dissonance, conceptual framework, David Brooks, demographic transition, double entry bookkeeping, double helix, Galaxy Zoo, guest worker program, Gödel, Escher, Bach, Ignaz Semmelweis: hand washing, index fund, invention of movable type, Isaac Newton, John Harrison: Longitude, Kevin Kelly, life extension, Marc Andreessen, meta analysis, meta-analysis, Milgram experiment, Nicholas Carr, P = NP, p-value, Paul Erdős, Pluto: dwarf planet, publication bias, randomized controlled trial, Richard Feynman, Rodney Brooks, scientific worldview, social graph, social web, text mining, the scientific method, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Tyler Cowen: Great Stagnation

While focusing on algebra and other aspects of math, there also was a significant section on accounting. Pacioli chronicled double-entry bookkeeping—entering each entry twice, both as a debit and a credit, in order to reduce errors—which was the first time this method had been codified in print. This error-checking methodology, which was being used by Italian merchants, finally could be spread far and wide. Mary Poovey, an English professor at New York University and the author of the monograph History of the Modern Fact, has argued that the modern conception of the fact, with its notion of objective reality that often goes hand in hand with a certain quantifiable quality, was first seen during the Middle Ages. Specifically, Poovey identified the “invention” of the fact with the advent of double-entry bookkeeping. Only with the introduction of this methodology in the fifteenth century or so, Poovey argued, did humans become accustomed to thinking in terms of bits of information in quite this way.


pages: 695 words: 194,693

Money Changes Everything: How Finance Made Civilization Possible by William N. Goetzmann

Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, banking crisis, Benoit Mandelbrot, Black Swan, Black-Scholes formula, Bretton Woods, Brownian motion, business cycle, capital asset pricing model, Cass Sunstein, collective bargaining, colonial exploitation, compound rate of return, conceptual framework, corporate governance, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, delayed gratification, Detroit bankruptcy, disintermediation, diversified portfolio, double entry bookkeeping, Edmond Halley, en.wikipedia.org, equity premium, financial independence, financial innovation, financial intermediation, fixed income, frictionless, frictionless market, full employment, high net worth, income inequality, index fund, invention of the steam engine, invention of writing, invisible hand, James Watt: steam engine, joint-stock company, joint-stock limited liability company, laissez-faire capitalism, Louis Bachelier, mandelbrot fractal, market bubble, means of production, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, new economy, passive investing, Paul Lévy, Ponzi scheme, price stability, principal–agent problem, profit maximization, profit motive, quantitative trading / quantitative finance, random walk, Richard Thaler, Robert Shiller, Robert Shiller, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, spice trade, stochastic process, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, time value of money, too big to fail, trade liberalization, trade route, transatlantic slave trade, tulip mania, wage slave

An Italian monk, friend of Leonardo da Vinci, mathematician, and the “father” of accounting, Lucca Pacioli published his most famous work of mathematics in 1494. Although much of the book was devoted to geometry, one section described the “Italian” technique of double-entry bookkeeping—a seemingly prosaic topic compared to the other subjects in his treatise. Yet this section immortalized Pacioli. Pacioli based his bookkeeping method on a journal, a documentary record through time of the monetary inflows and outflows of the business. Each transaction is captured by two entries—a debit from one account and a credit to another. Debits and credits thus track the progress of the business through time, and they must balance each other when the accounts are periodically settled up—or else a mistake has been made. The genius of double-entry bookkeeping is that it was a means to reduce errors in documentation. But it also has a subtle effect. Once you begin to use it, you start to think of the world in terms of accounts.

The following illustrations are from the author’s private collection: PARTS I and IV CHAPTERS 7, 8, 11, 12, 21, and 23 FIGURES 2, 14, 15, 17, 19, and 22 INDEX abacus, 83, 248 abacus schools, 246, 248. See also Liber Abaci (Fibonacci) abstract thought, monetization leading to, 95 abstract (intangible) wealth: in ancient Greece, 81, 82, 90; in second-millennium Ur, 51 accounting: in ancient Near East, 27–28; Chinese tools for, 199, 200, 201, 272; double-entry bookkeeping in, 246–47; by Templars, 211; Zhouli on, 173 Adams, Samuel: father of, 387, 388 Aeschylus, 87 agency problem, 167, 169; Chinese Legalism and, 170; incentives and, 171–72, 174; modern economic theory on, 171–72, 188; monitoring and, 167, 169, 171, 172–74; with publicly owned corporation, 303 agricultural societies: of ancient Near East, 21, 27, 30, 69; idea of interest in, 44 Aida (Verdi), 419, 420 Akkadian, 46, 49 Alexander the Great, 69–70 al-Khwārizmi, 241 Allen, Robert, 198 alternative use of capital: money fief and, 243; return on investment and, 237 American Bond & Mortgage Company, 478 American Revolution: Chinese revolution of 1911 and, 437; Dutch and French investors in financing of, 386, 390; land-backed certificates for veterans of, 394; land speculation and, 388–90, 399 Amiet, Pierre, 25 Amsterdam: The Great Mirror of Folly printed in, 375; insurance business in, 365, 366; negotiatie of 1774 floated in, 384–85 Amsterdam Exchange, 317–18 Anatolia: Mesopotamian trade with, 59, 60, 61, 64; Roman taxes imposed on, 123 Andersson, J.

See also mutual funds dividend futures, of Casa di San Giorgio, 292 dividends: of Casa di San Giorgio, 291–92; of China Merchants Steamship Navigation Company, 431, 432; of Dutch East India Company, 317, 318; of Honor del Bazacle, 297, 298, 299; in Marxist analysis, 408; from Smith’s investment funds, 473; of South Sea Company, 339, 340 divination, Chinese, 146–47, 271 Dodd, David, 473, 489–90, 507 double-entry bookkeeping, 246–47 Dow, Charles Henry, 486 Dow Theory, 486–88 Drehem tablet, 37–40, 44, 70, 71 Drew, Daniel, 470 Dunhuang, 177 Dutch canal and dike system, 249–52 Dutch East India Company (VOC), 305, 316–19, 331; Rotterdam and, 363; stock prices in 1720, 369; tradable shares of, 316, 317–18 Dutch finance. See Netherlands Dutch invasion of England in 1688, 320, 322 Dutch mutual funds, 382–86, 390, 398–99 Dutch plantation loans, 384, 386, 393, 399 Dutch West India Company (WIC), 331, 335, 369, 372, 376 Easterly, William, 459–60 East India Company.


pages: 369 words: 80,355

Too Big to Know: Rethinking Knowledge Now That the Facts Aren't the Facts, Experts Are Everywhere, and the Smartest Person in the Room Is the Room by David Weinberger

airport security, Alfred Russel Wallace, Amazon Mechanical Turk, Berlin Wall, Black Swan, book scanning, Cass Sunstein, commoditize, corporate social responsibility, crowdsourcing, Danny Hillis, David Brooks, Debian, double entry bookkeeping, double helix, en.wikipedia.org, Exxon Valdez, Fall of the Berlin Wall, future of journalism, Galaxy Zoo, Hacker Ethic, Haight Ashbury, hive mind, Howard Rheingold, invention of the telegraph, jimmy wales, Johannes Kepler, John Harrison: Longitude, Kevin Kelly, linked data, Netflix Prize, New Journalism, Nicholas Carr, Norbert Wiener, openstreetmap, P = NP, Pluto: dwarf planet, profit motive, Ralph Waldo Emerson, RAND corporation, Ray Kurzweil, Republic of Letters, RFID, Richard Feynman, Ronald Reagan, semantic web, slashdot, social graph, Steven Pinker, Stewart Brand, technological singularity, Ted Nelson, the scientific method, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Whole Earth Catalog, X Prize

Whereas perception sees individual items (this berry, that cat), knowledge discerns what this cat has in common with all other cats that makes it into a cat; knowledge sees its essence as a cat. For our ancestors, knowledge was of universals—not of facts about this or that cat. The idea that knowledge was a slew of facts about particulars would have struck them as a misuse of our God-given instrument. So what happened in the nineteenth century to make facts the bedrock of knowledge? The path is twisty. Mary Poovey cites the invention in Italy of double-entry bookkeeping, which in the sixteenth century provided a process by which ledger entries could be proved accurate to anyone who, regardless of status, followed the proper procedure. 11 But most historians look to the seventeenth century, when the philosopher and statesman Francis Bacon, seeking to put knowledge on a more certain basis, invented the scientific method. Like Aristotle, he sought knowledge of universals.12 But he proposed getting to them through careful experiments on particulars.

See Science at Creative Commons Crick, Francis Crisis of knowledge CrisisCommons.org Crowds Crowdsourcing information amateur scientists British Parliamentarians’ use of expertise and leadership effectiveness Netflix contest open-notebook science Culture, information overload and Cybercascades Cyberchiefs: Autonomy and Authority in Online Tribes (O’Neil) Darnton, Robert DARPA (Defense Advanced Research Projects Agency) Darwin, Charles amateur scientists’ contributions barnacle studies Hunch.com and insight and leap of thought long-form thinking science and publishing Data accuracy of published data crowdsourcing scientific and medical information data commons evaluating metadata information and overaccumulation of scientific data scientific knowledge Data.gov Data-information-knowledge-wisdom (DIKW) hierarchy Davis, John Debian Decision-making advantages of networked corporate and government networked decision-making Debian community Dickover’s social solutions facing reality Wikipedia policy Defaults Democracy echo chambers hiding knowledge and increasing group polarization reason, truth, and knowledge Denney, Reuel Deolalikar, Vinay Derrida, Jacques Descartes, René Dialogue, exploring diversity through Dickens, Charles Dickover, Noel Diderot, Denis The Difference (Page) Discourses Diversity appropriate scoping decreasing intelligence echo chambers forking moderating negative effects of of expertise race and gender respectful conversations over DNA Dr. Strangelove, Or How I Learned to Stop Worrying and Love the Bomb (film) Doctorow, Cory Dogger Bank Incident The Double Helix (Watson) Double-entry bookkeeping Dublin Core standard Dwarf planets eBird.org E-books Echo chambers Edge.org Ehrlich, Paul Einstein@Home Eliot, T.S. Embodied thought Emerson, Ralph Waldo Enders, John Engadget Environmental niche modeling Environmental Protection Agency (EPA) Eureqa computer program Evolutionary science Experiments, scientific method and Expert Labs Expertise Challenger investigation crowdsourcing diversity in networking knowledge networks outperforming individuals professionalization of scaling knowledge and networking sub-networks Extremism: group polarization Exxon Valdez oil disaster Facebook Fact-based knowledge as foundation of knowledge British backlash against British chimney sweep reform Darwin’s work on barnacles Hunch.com international dispute settlement See also Data Fact-finding missions Facts Linked Data standard Malthusian theory of population growth networked Failed science Fear, information overload and Federal Advisory Committees (FACs) Federal Highway Administration Feminism Filters information overload as filter failure knowledge management FoldIt Food, extending shelf life of Foodies Ford Motors Forking Forscher, Bernard K.


pages: 519 words: 148,131

An Empire of Wealth: Rise of American Economy Power 1607-2000 by John Steele Gordon

accounting loophole / creative accounting, bank run, banking crisis, Bretton Woods, British Empire, business cycle, buttonwood tree, California gold rush, clean water, collective bargaining, Corn Laws, corporate governance, cuban missile crisis, disintermediation, double entry bookkeeping, failed state, financial independence, Frederick Winslow Taylor, full employment, global village, imperial preference, informal economy, interchangeable parts, invisible hand, Isaac Newton, Jacquard loom, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, lone genius, Louis Pasteur, margin call, Marshall McLuhan, means of production, Menlo Park, Mikhail Gorbachev, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, new economy, New Urbanism, postindustrial economy, price mechanism, Ralph Waldo Emerson, RAND corporation, rent control, rent-seeking, reserve currency, rolodex, Ronald Reagan, spinning jenny, The Wealth of Nations by Adam Smith, trade route, transaction costs, transcontinental railway, undersea cable, Yom Kippur War

Tangible inventions, such as the printing press and the full-rigged ship, usually get far more attention from historians, but intellectual inventions are often just as important. And two intellectual inventions of the Renaissance, double-entry bookkeeping and the corporation, proved vital to the development of European civilization in the New World and particularly in what is now the United States. Accounting had been known since civilization arose in Mesopotamia. Indeed, writing, the defining attribute of civilization, was in all likelihood invented to help keep the books. But accounting did not advance much for several thousand years thereafter, until double-entry bookkeeping was developed in Italy in the fifteenth century. Double entry makes it much easier to detect errors and allows a far more dynamic financial picture of an enterprise to emerge from the raw numbers. Because of double-entry bookkeeping, it became possible for people to invest in distant enterprises and still keep track of how their investment was doing.


Ellul, Jacques-The Technological Society-Vintage Books (1964) by Unknown

Bretton Woods, conceptual framework, do-ocracy, double entry bookkeeping, Frederick Winslow Taylor, full employment, James Hargreaves, James Watt: steam engine, John Maynard Keynes: technological unemployment, liberal capitalism, means of production, Norbert Wiener, price mechanism, profit motive, rising living standards, road to serfdom, spinning jenny, Thorstein Veblen, urban planning, Vilfredo Pareto

Three new kinds of technique emerged: commercial, industrial, and transportational. Commercial techniques developed at the beginning of the nineteenth century with the same velocity as industrial techniques. These commercial techniques exploited all the old systems which had previously existed sporadically and The Technological Society (113 without much vigor. Bills of exchange, banks, clearing houses, double-entry bookkeeping, and the like, were further developed. The need to distribute manufactured goods thus acted to produce a powerful commercial technique, which, however, proved to be incapable of assuring proper distribution. The accumulation of capital (produced by the machine and also necessitated by it) be­ came tlie source of an international financial organization, with its systems of great firms, insurance, credit, and the corporation with limited liabilities.

A financial technique, corresponding to the financial function, had likewise evolved and by the time of the Revolution was al­ ready of great age and comparatively highly developed. In fact, of all techniques, financial technique had evolved most rapidly; it had already arrived at a stage at which no further improvement was thought necessary. Here, too, the state was the prime mover. Philip IV had initiated a number of financial techniques which were completed between the fourteenth and the sixteenth centuries. Among Philip's innovations were double-entry bookkeeping, budg­ etary management and forecasting, separation of the services of the Budget and the Treasury, and the theory of loan management. The state, however, did not play an exclusive role in matters re­ lating to financial techniques. There were financiers who were also merchants and who used for their own ends a merchandising tech­ nique they helped to develop. But although the role of the state was not exclusive, it was decisive: it was in connection with the state that these techniques reached their apex.

Every organization, we are told, must in principle establish a valid relation among men, ends, and means in respect to their productive efficiency. Productivity, which seemed heretofore to be a purely economic concept, has made its appearance in the last few years in the political framework. It is necessary to evaluate the cost of every administrative operation and to apply the law of marginal yield. Funds are assigned to each department on the basis of a standard cost established through service. By introducing modern double-entry bookkeeping, it is possible to carry out a constant inspection of activities on every level and to establish the relation between actual and standard expenses. In this way, the law of the technician transforms the administrative perspective. Every administration becomes an object, as formerly the worker became an object in Taylor’s hands. Politics assigns the goal; but the technician dictates the means to the last dot.


pages: 476 words: 132,042

What Technology Wants by Kevin Kelly

Albert Einstein, Alfred Russel Wallace, Buckminster Fuller, c2.com, carbon-based life, Cass Sunstein, charter city, Clayton Christensen, cloud computing, computer vision, Danny Hillis, dematerialisation, demographic transition, double entry bookkeeping, Douglas Engelbart, en.wikipedia.org, Exxon Valdez, George Gilder, gravity well, hive mind, Howard Rheingold, interchangeable parts, invention of air conditioning, invention of writing, Isaac Newton, Jaron Lanier, Joan Didion, John Conway, John Markoff, John von Neumann, Kevin Kelly, knowledge economy, Lao Tzu, life extension, Louis Daguerre, Marshall McLuhan, megacity, meta analysis, meta-analysis, new economy, off grid, out of africa, performance metric, personalized medicine, phenotype, Picturephone, planetary scale, RAND corporation, random walk, Ray Kurzweil, recommendation engine, refrigerator car, Richard Florida, Rubik’s Cube, Silicon Valley, silicon-based life, Skype, speech recognition, Stephen Hawking, Steve Jobs, Stewart Brand, Ted Kaczynski, the built environment, the scientific method, Thomas Malthus, Vernor Vinge, wealth creators, Whole Earth Catalog, Y2K

In White’s view, the adoption of the lowly foot stirrup for horse saddles enabled riders to use weapons on horseback, which gave an advantage to the cavalry over infantry and to the lords who could afford horses, and so nurtured the rise of aristocratic feudalism in Europe. The stirrup is not the only technology that has been blamed for feudalism. As Karl Marx famously claimed, “The hand-mill gives you society with the feudal lord; the steam-mill, society with the industrial capitalist.” Double-entry bookkeeping, invented in 1494 by a Franciscan monk, enabled companies to monitor their cash flow and for the first time to steer complex business. Double-entry accounting unleashed the banking industry in Venice and launched a global economy. The invention of moveable-type printing in Europe encouraged Christians to read their religion’s founding text themselves and make their own interpretations, and that launched the very idea of “protest” within and against religion.

clocks clothing cloud computing coal power coevolution Cole, John Colonial America compass, magnetic complex adaptive systems complexity future scenarios of as long-term trend specialization and computer chips transistors in see also Moore’s Law computers digital storage in DNA increased software complexity of invention of multiple functions of obsolete specialty computer simulations computer viruses contingency choices in in convergent inventions convergence see also inventions, convergence of “Convergent Evolution” (McGhee) conviviality Conway, John Cooke, William corals Bryozoa cornets Correns, Karl Erich crafts Crichton, Michael Cro-Magnons, see Sapiens crossbows cryptochromes customization, personal Daguerre, Louis Darwin, Charles Davies, Paul Davis, Mike Dawkins, Richard DDT Dean, Bashford decentralization de Duve, Christian deforestation demographic transition Dennett, Daniel Denton, Michael desert environments de Vries, Hugo Diamond, Jared Didion, Joan dinosaurs convergent lineages of diversity cultural differences in of ethnic and social preferences excessive choices offered by fringe of intelligence as long-term trend uniformity in DNA invented alternatives to mutation rate in mysterious origins of self-organization of synthesis of DNA sequencing Dobe tribe dolphins intelligence of domestication animal crop independent inventions of double-entry bookkeeping du Chaillu, Paul Dunn, Mark Dyson, Freeman Earth First! Journal Earth Summit (1992) Easterbrook, Gregg Easterlin, Richard Economist economy consumer spending in dematerialization of free market global Moore’s Law and nongrowth population growth and and prohibited technology of slums ecosystems ecumenopolis Edison, Thomas Edison’s Electric Light: Biography of an Invention (Friedel, Israel, and Finn) education efficiency Egypt, ancient Eigen, Manfred Einstein, Albert relativity theories of Einstein: His Life and Universe (Isaacson) Eisely, Loren Eldredge, Niles electric incandescent lightbulb electricity Amish and electric motors Ellington, A.


pages: 422 words: 131,666

Life Inc.: How the World Became a Corporation and How to Take It Back by Douglas Rushkoff

addicted to oil, affirmative action, Amazon Mechanical Turk, anti-globalists, banks create money, big-box store, Bretton Woods, car-free, Charles Lindbergh, colonial exploitation, Community Supported Agriculture, complexity theory, computer age, corporate governance, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, death of newspapers, don't be evil, Donald Trump, double entry bookkeeping, easy for humans, difficult for computers, financial innovation, Firefox, full employment, global village, Google Earth, greed is good, Howard Rheingold, income per capita, invention of the printing press, invisible hand, Jane Jacobs, John Nash: game theory, joint-stock company, Kevin Kelly, Kickstarter, laissez-faire capitalism, loss aversion, market bubble, market design, Marshall McLuhan, Milgram experiment, moral hazard, mutually assured destruction, Naomi Klein, negative equity, new economy, New Urbanism, Norbert Wiener, peak oil, peer-to-peer, place-making, placebo effect, Ponzi scheme, price mechanism, price stability, principal–agent problem, private military company, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, RFID, road to serfdom, Ronald Reagan, short selling, Silicon Valley, Simon Kuznets, social software, Steve Jobs, Telecommunications Act of 1996, telemarketer, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade route, trickle-down economics, union organizing, urban decay, urban planning, urban renewal, Vannevar Bush, Victor Gruen, white flight, working poor, Works Progress Administration, Y2K, young professional, zero-sum game

The more such corporations came to dominate business and finance, the more that legal and social systems evolved to serve them. Most of the business and finance innovations of the early corporate era—inventions we still look on fondly today—were really just ways of preserving and extending the reach of this new business entity. The health of a corporation was understood purely in terms of money, as measured by the new accounting technique of double-entry bookkeeping. Any transaction resulted in the debiting of one account and the crediting of another. This made achieving a favorable balance of trade the highest priority, and fostered a zero-sum-game mentality among all participants. International trade became a fierce competition between states for positive balances, which led to wars unlike any seen before. Where armies and navies had for most countries consisted of temporary forces raised to wage a specific conflict, the emergence of corporations with long-term agendas now necessitated full-time professional armed forces.

In both historical cases, central currency was a means of control, taxation, and centralization of authority during expansive dictatorships. And, in both cases, after a few hundred years, the continual debasement of currency led to the fall of the empire. We’re fast approaching the limits of our own currency system, instated to benefit corporate interests and adjusted over time to do it ever more efficiently and automatically. If double-entry bookkeeping can be thought of as the spreadsheet software on which businesses learned to reconcile their debits and credits, central currency was the operating system on which this accounting took place. Like any operating system, it has faded into the background now that a program is running, and it is seemingly uninvolved in whatever is taking place. In reality, it defines what can happen and what can’t.


The Rules of Work, Expanded Edition: A Definitive Code for Personal Success (The Rules by Richard Templar) by Richard Templar

double entry bookkeeping, hiring and firing, job satisfaction, supply-chain management

Your boss is coming up for appraisal time and needs to look good, needs to appear as if there is some drive, initiative, and motivation. So you’ll all troop off and do the course and try to take it all in and practice your smile. What for? Your boss couldn’t give two monkeys whether you smile at the customers or not. All he wants is to shine at his appraisal. This sort of thing goes on a lot more at work than most people like to think. Once, I volunteered to attend college every Monday to do a course in payroll and double entry bookkeeping. My boss thought I was keen, self-motivated, and very enthusiastic. Nonsense. I wanted to get out of the office every Monday because that was the day we had to do all the filing and I hated it. Going to college seemed a good cop-out. Question the motives of everyone and everything. This doesn’t mean you have to become paranoid. No one is out to get you. All you need to do is watch out for the hidden agenda.


pages: 665 words: 146,542

Money: 5,000 Years of Debt and Power by Michel Aglietta

bank run, banking crisis, Basel III, Berlin Wall, bitcoin, blockchain, Bretton Woods, British Empire, business cycle, capital asset pricing model, capital controls, cashless society, central bank independence, collapse of Lehman Brothers, collective bargaining, corporate governance, David Graeber, debt deflation, dematerialisation, Deng Xiaoping, double entry bookkeeping, energy transition, eurozone crisis, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, forward guidance, Francis Fukuyama: the end of history, full employment, German hyperinflation, income inequality, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, joint-stock company, Kenneth Arrow, Kickstarter, liquidity trap, margin call, means of production, money market fund, moral hazard, Nash equilibrium, Network effects, Northern Rock, oil shock, planetary scale, plutocrats, Plutocrats, price stability, purchasing power parity, quantitative easing, race to the bottom, reserve currency, secular stagnation, seigniorage, shareholder value, special drawing rights, special economic zone, stochastic process, the payments system, the scientific method, too big to fail, trade route, transaction costs, transcontinental railway, Washington Consensus

This balance is added algebraically to the stock of assets and debts that existed at the start of the accounting period. The balances of payments that result from the double-entry recordings link the operating accounts of the period concerned to balance sheets, which both bear the memory of the past and lead onto the future. Together, the accounts of all actors constitute a system. This owes to the mirrored recording of the decentralised exchanges between actors, following the principle of double-entry bookkeeping. Each exchange has a double record: a record of the flow of payment, and a record of the equivalent value of the object transferred. It follows from this that agents’ accounts balance out. Exchanges are decentralised, but at the same time they have a unity. This owes not to prices, but to the flows of money that circulate between accounts. The bookkeeping of the system records the memory of all the exchanges made during a given period of time, by way of the payment system.

See also Great Depression d’Estaing, Valéry Giscard, 324 de Tocqueville, Alexis, 134 Deutsche Mark, 365 discord, as state of relations among states, 358, 359 disequilibria, 16, 257, 263, 295, 333, 336, 337, 390, 393 dokima money, 90, 91, 96 dokimon, 94 dollar, 150, 311–41, 342–3, 348, 357, 374, 380, 385, 386 dollar cycle and its trend (real effective exchange rate), 337f dollar semi-standard, 10, 336–41, 345, 377, 385, 392 double-entry bookkeeping, 33, 34 dualist system, 109–10, 113–15, 117, 120–5, 135, 195–200, 208, 316, 384 Dumont, Louis, 105n26, 129 Dupuy, Jean-Pierre, 20, 64 dynamic vulnerabilities, 273, 275 E ECB (European Central Bank), 348, 362, 363, 365, 367 Economic Consequences of the Peace (Keynes), 306t Economic Cooperation Administration (ECA), 318 economic coordination, 5, 6, 7, 17, 20, 54 economic fluctuations, 27, 390 economic indicators of stability, comparison of for UK and USA, 302t economics.


pages: 498 words: 145,708

Consumed: How Markets Corrupt Children, Infantilize Adults, and Swallow Citizens Whole by Benjamin R. Barber

addicted to oil, AltaVista, American ideology, Berlin Wall, Bertrand Russell: In Praise of Idleness, Bill Gates: Altair 8800, business cycle, Celebration, Florida, collective bargaining, creative destruction, David Brooks, delayed gratification, Donald Trump, double entry bookkeeping, G4S, game design, George Gilder, Gordon Gekko, greed is good, Hernando de Soto, illegal immigration, informal economy, invisible hand, Joseph Schumpeter, laissez-faire capitalism, late capitalism, liberal capitalism, Marc Andreessen, McJob, microcredit, Naomi Klein, new economy, New Journalism, Norbert Wiener, nuclear winter, Panopticon Jeremy Bentham, pattern recognition, presumed consent, profit motive, race to the bottom, Ralph Nader, road to serfdom, Robert Bork, Ronald Reagan, Saturday Night Live, Silicon Valley, spice trade, Steve Jobs, telemarketer, The Fortune at the Bottom of the Pyramid, the market place, The Wisdom of Crowds, Thomas L Friedman, Thorstein Veblen, trade route, X Prize

For all of this, the Fuggers remained faithful Catholics, and Jacob Fugger actually drew the ire of Martin Luther (if also a certain grudging admiration).58 But Fugger’s business practices and experience as “a manager of modern character” whose “advanced knowledge and innovations, forbidden transactions involving interest and monopolies and the giving and taking between himself and the great powers of his time” suggested what Weber would see as a Protestant mentality that both absorbed and helped generate the new ethos Weber would later celebrate—an ethos that made it possible for the Fuggers to capture, control, and deploy the fantastic new energy of monopoly capital.59 The secret weapons of the Fuggers, along with cartelism, were double entry bookkeeping and Giro credit transfers that allowed commodities to be converted into cash and cash into the cashless moving and accumulation of wealth. The Fuggers had learned their bookkeeping secrets in the great Renaissance trading port of Venice and then, propelled by their mining and trading interests, put them into practice in Germany and the rest of Europe with consequences that were to impact profoundly European capitalism.

When, for example, he introduced rational bookkeeping into large-scale businesses, he not only tamed the wild capitalist adventure that was the Pennsylvania oil boom but managed to sacralize accounting and ennoble the most quotidian moments in his mundane commercial life. The day on which he got his first appointment as an assistant bookkeeper to the firm of Hewitt and Tuttle (September 26, 1855) he commemorated as “job day.” The double entry bookkeeping ledgers that enabled him to impose rational control over the chaos of early capitalist oil and commodity markets became “sacred books that guided decisions and saved one from fallible emotions.” His first ledger in time took on the aspect of a “sacred relic.”61 We do not then need to read Protestantism into Rockefeller’s life. What Chernow calls “the close mesh of Christianity and capitalism in his early career” is already apparent in the leadership role he played at the Erie Street Baptist Mission Church in Cleveland, in his commitment to charity work even before he became enormously wealthy, as well as in the way in which he read his capitalist successes as a part of a providential design: “These vast stores of wealth were,” he was certain, “…the bountiful gifts of the great Creator.”62 His creed was simple: “I believe the power to make money is a gift from God…to be developed to the best of our ability for the good of mankind.


pages: 196 words: 57,974

Company: A Short History of a Revolutionary Idea by John Micklethwait, Adrian Wooldridge

affirmative action, barriers to entry, Bonfire of the Vanities, borderless world, business process, Charles Lindbergh, Corn Laws, corporate governance, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, double entry bookkeeping, Etonian, hiring and firing, industrial cluster, invisible hand, James Watt: steam engine, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, knowledge worker, laissez-faire capitalism, manufacturing employment, market bubble, mittelstand, new economy, North Sea oil, race to the bottom, railway mania, Ronald Coase, Silicon Valley, six sigma, South Sea Bubble, Steve Jobs, Steve Wozniak, strikebreaker, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, tulip mania, wage slave, William Shockley: the traitorous eight

Given that the punishment for bankruptcy could be imprisonment or even servitude, it was vital that all the members of the organization should trust each other absolutely. The word compagnia is a compound of two Latin words (cum and panis) meaning “breaking bread together.” Like their Venetian equivalents, the compagnie became more sophisticated as time went by, trying to attract investment from outside the family circle. Perhaps as early as 1340, they introduced double-entry bookkeeping, largely to keep their foreign offices honest. A Genoese merchant would record money sent to his agent in Bruges as “paid” in his accounts, while the latter put down the amount as “received.” And rather than sending coins, the bigger merchants began to trust each other with letters of exchange—a business that Italian banks would dominate. Indeed, the compagnie were closely intertwined with the banchi (named after the banco, or bench, behind which Italian money lenders used to sit).


pages: 223 words: 58,732

The Retreat of Western Liberalism by Edward Luce

"Robert Solow", 3D printing, affirmative action, Airbnb, basic income, Berlin Wall, Bernie Sanders, Boris Johnson, Branko Milanovic, Bretton Woods, business cycle, call centre, carried interest, centre right, Charles Lindbergh, cognitive dissonance, colonial exploitation, colonial rule, computer age, corporate raider, cuban missile crisis, currency manipulation / currency intervention, Dissolution of the Soviet Union, Doha Development Round, Donald Trump, double entry bookkeeping, Erik Brynjolfsson, European colonialism, everywhere but in the productivity statistics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, future of work, George Santayana, gig economy, Gini coefficient, global pandemic, global supply chain, illegal immigration, imperial preference, income inequality, informal economy, Internet of things, Jaron Lanier, knowledge economy, lateral thinking, liberal capitalism, Marc Andreessen, Mark Zuckerberg, Martin Wolf, mass immigration, means of production, Monroe Doctrine, moral panic, more computing power than Apollo, mutually assured destruction, new economy, New Urbanism, Norman Mailer, offshore financial centre, one-China policy, Peace of Westphalia, Peter Thiel, plutocrats, Plutocrats, precariat, purchasing power parity, reserve currency, reshoring, Richard Florida, Robert Gordon, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, Snapchat, software is eating the world, South China Sea, Steve Jobs, superstar cities, telepresence, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tyler Cowen: Great Stagnation, universal basic income, unpaid internship, Washington Consensus, We are the 99%, We wanted flying cars, instead we got 140 characters, white flight, World Values Survey, Yogi Berra

What most would be unlikely to know is the degree to which Chinese technology provided critical sparks to the Industrial Revolution. Among other techniques and inventions, Europe took far-superior iron and steel production; the printing press; navigational tools, including the compass; gunpowder; and paper money from China. From Islam, Europe took binary mathematics (originally from India), astronomy, double-entry bookkeeping and much of its own forgotten knowledge from classical Greece and Rome. ‘[Much] of the European revival was based on the ideas, institutions, and technologies borrowed from the advanced civilizations in the Middle and Far East,’ notes Richard Baldwin, whose book on today’s Great Convergence is rightly acclaimed.9 The shift of power from the Islamic world to the Christian in the late Middle Ages had, in turn, been enabled by the destructive westward sweep of Genghis Khan’s Mongol hordes in the thirteenth century.


pages: 222 words: 74,587

Paper Machines: About Cards & Catalogs, 1548-1929 by Markus Krajewski, Peter Krapp

business process, continuation of politics by other means, double entry bookkeeping, Frederick Winslow Taylor, Gödel, Escher, Bach, index card, Index librorum prohibitorum, information retrieval, invention of movable type, invention of the printing press, Jacques de Vaucanson, Johann Wolfgang von Goethe, Joseph-Marie Jacquard, knowledge worker, means of production, new economy, paper trading, Turing machine

Complemented by copying procedures that transfer card entries into ledgers and thereby prevent errors, the permanent accounting book comes to dominate bookkeeping, subverting the law by means of widespread practical application.59 “The chamber has agreed to the admissibility of loose-leaf bookkeeping under the condition of the preservation of the principle of order and completeness,” reads a commentary in perfect Nominalstil in the journal Rationelle Betriebsführung.60 By 1929, it becomes clear that the use of permanent accounting books and consequently of index card registers will have no legal consequences. Already by the following year, Büroorganisation trumpets in anticipation of a possible storage area for discarded accounting media: “Bound accounting books for double entry bookkeeping will be relegated to book museums and accounting museums. They shall be replaced by loose sheets of paper in folders, index cards and index card books, etc.”61 The tacitly subverted law grants a fragmented, distributed, and highly adaptable space to the basic accounting technique, whereby the psychotechnically optimized organization of the universal card index machine can rule. “Today no field of application can be imagined for which the use of a card index would not be of assistance.”62 Thus, although the German term denotes sheer disarray, business literally and comprehensively becomes a Zettelwirtschaft, a “paper slip economy.”


pages: 799 words: 187,221

Leonardo Da Vinci by Walter Isaacson

Ada Lovelace, Albert Einstein, Bonfire of the Vanities, Commentariolus, crowdsourcing, double entry bookkeeping, double helix, en.wikipedia.org, game design, iterative process, lone genius, New Journalism, Steve Jobs, the scientific method, urban planning, wikimedia commons

It featured artisans working with silk makers and merchants to create fabrics that were works of art. In 1472 there were eighty-four wood-carvers, eighty-three silk workers, thirty master painters, and forty-four goldsmiths and jewelry craftsmen working in Florence. It was also a center of banking; the florin, noted for its gold purity, was the dominant standard currency in all of Europe, and the adoption of double-entry bookkeeping that recorded debits and credits permitted commerce to flourish. Its leading thinkers embraced a Renaissance humanism that put its faith in the dignity of the individual and in the aspiration to find happiness on this earth through knowledge. Fully a third of Florence’s population was literate, the highest rate in Europe. By embracing trade, it became a center of finance and a cauldron of ideas.

For example, he used triangles and pyramids to represent rates of change in the velocity of falling objects, the volume of sounds, and the perspective view of distant objects. “Proportion is not only to be found in number and measure, but also in sounds, weights, times and places and every force that exists,” he wrote.6 LUCA PACIOLI One of Leonardo’s close friends at Milan’s court was Luca Pacioli, a mathematician who developed the first widely published system for double-entry bookkeeping. Like Leonardo, he was born in Tuscany and attended only an abacus school, which provided a trade education in arithmetic but no Latin. He worked as a wandering tutor to boys from wealthy families and then became a Franciscan friar who never moved into a monastery. He wrote a math textbook in Italian, rather than Latin, which was published in Venice in 1494; it thus became part of the explosive spread of learning in vernacular languages triggered by the printing press in the late fifteenth century.


pages: 322 words: 77,341

I.O.U.: Why Everyone Owes Everyone and No One Can Pay by John Lanchester

asset-backed security, bank run, banking crisis, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black-Scholes formula, Blythe Masters, Celtic Tiger, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, diversified portfolio, double entry bookkeeping, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, fixed income, George Akerlof, greed is good, hedonic treadmill, hindsight bias, housing crisis, Hyman Minsky, intangible asset, interest rate swap, invisible hand, Jane Jacobs, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, Kickstarter, laissez-faire capitalism, light touch regulation, liquidity trap, Long Term Capital Management, loss aversion, Martin Wolf, money market fund, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, negative equity, new economy, Nick Leeson, Norman Mailer, Northern Rock, Own Your Own Home, Ponzi scheme, quantitative easing, reserve currency, Right to Buy, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, South Sea Bubble, statistical model, The Great Moderation, the payments system, too big to fail, tulip mania, value at risk

But we do know who wrote down the method behind them and in the process invented modern accounting, which relies on four financial statements to provide a full picture of any given business: the balance sheet, the income statement, the cash flow statement, and the statement of retained earnings. The man who wrote down the method for gathering and recording the relevant information was Luca Pacioli, a Franciscan monk and friend of both Piero della Francesca and Leonardo da Vinci, whose assistant he was for many years. Pacioli wrote Summa de Arithmetica, the book which laid out the method of double-entry bookkeeping which is still in use in more or less every business in the world. (He also wrote about magic, in the sense of conjuring. I’d like to think he would have enjoyed the old joke about accountants: “What’s two plus two?” “What would you like it to be?”) There’s something amazing about the fact that a method used in Venice in the thirteenth century and written down in Tuscany in the fifteenth should still be in daily use in every financial enterprise in the developed world.


pages: 251 words: 76,868

How to Run the World: Charting a Course to the Next Renaissance by Parag Khanna

Albert Einstein, Asian financial crisis, back-to-the-land, bank run, blood diamonds, Bob Geldof, borderless world, BRICs, British Empire, call centre, carbon footprint, charter city, clean water, cleantech, cloud computing, commoditize, continuation of politics by other means, corporate governance, corporate social responsibility, Deng Xiaoping, Doha Development Round, don't be evil, double entry bookkeeping, energy security, European colonialism, facts on the ground, failed state, friendly fire, global village, Google Earth, high net worth, index fund, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Kickstarter, laissez-faire capitalism, Live Aid, Masdar, mass immigration, megacity, microcredit, mutually assured destruction, Naomi Klein, Nelson Mandela, New Urbanism, off grid, offshore financial centre, oil shock, open economy, out of africa, Parag Khanna, private military company, Productivity paradox, race to the bottom, RAND corporation, reserve currency, Silicon Valley, smart grid, South China Sea, sovereign wealth fund, special economic zone, sustainable-tourism, The Fortune at the Bottom of the Pyramid, The Wisdom of Crowds, too big to fail, trade liberalization, trickle-down economics, UNCLOS, uranium enrichment, Washington Consensus, X Prize

Even as his Oration on the Dignity of Man was taken as a secular manifesto, in fact his true effort was to reconcile the church with classical strains of logic such as Aristotle’s. His lesson for today’s age is that our fruitless debates between the West and Islam should instead become a more inclusive discourse on achieving spiritually and morally informed governance. Similarly, the Renaissance witnessed innovations such as double-entry bookkeeping and large-scale credit, bringing new commercial opportunities to Europeans whose geographic and cultural horizons were gradually opening as Crusaders returned home. The manner in which the current economic turbulence has shaken up our financial architecture could do the same. Chastened bankers from Lehman Brothers are actually leading an effort to revise models of financial analytics to emphasize value creation, not just wealth creation.


pages: 264 words: 76,643

The Growth Delusion: Wealth, Poverty, and the Well-Being of Nations by David Pilling

Airbnb, banking crisis, Bernie Sanders, Big bang: deregulation of the City of London, Branko Milanovic, call centre, centre right, clean water, collapse of Lehman Brothers, collateralized debt obligation, commoditize, Credit Default Swap, credit default swaps / collateralized debt obligations, dark matter, Deng Xiaoping, Diane Coyle, Donald Trump, double entry bookkeeping, Erik Brynjolfsson, falling living standards, financial deregulation, financial intermediation, financial repression, Gini coefficient, Goldman Sachs: Vampire Squid, Google Hangouts, Hans Rosling, happiness index / gross national happiness, income inequality, income per capita, informal economy, invisible hand, job satisfaction, Mahatma Gandhi, market fundamentalism, Martin Wolf, means of production, Monkeys Reject Unequal Pay, mortgage debt, off grid, old-boy network, Panopticon Jeremy Bentham, peak oil, performance metric, pez dispenser, profit motive, purchasing power parity, race to the bottom, rent-seeking, Robert Gordon, Ronald Reagan, Rory Sutherland, science of happiness, shareholder value, sharing economy, Simon Kuznets, sovereign wealth fund, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, transaction costs, transfer pricing, trickle-down economics, urban sprawl, women in the workforce, World Values Survey

Though almost everyone has heard of GDP, few know it was invented as recently as the 1930s as a tool to counter the Great Depression and then reworked as a means to prepare for the Second World War. The first thing to understand is that the economy is not a natural phenomenon, a truth to be discovered. Before 1930 it practically didn’t exist. It is a man-made thing, like cotton candy or car insurance or double-entry bookkeeping. If GDP were a person, it would be indifferent, blind even, to morality. It measures production of whatever kind, good or bad. GDP likes pollution, particularly if you have to spend money clearing it up. It likes crime because it is fond of large police forces and repairing broken windows. GDP likes Hurricane Katrina and is quite OK with wars. It likes to measure the buildup to conflict in guns, planes, and warheads, then it likes to count all the effort in reconstructing shattered cities from the smoldering ruins.


pages: 716 words: 192,143

The Enlightened Capitalists by James O'Toole

activist fund / activist shareholder / activist investor, anti-communist, Ayatollah Khomeini, Bernie Madoff, British Empire, business cycle, business process, California gold rush, carbon footprint, City Beautiful movement, collective bargaining, corporate governance, corporate social responsibility, Credit Default Swap, crowdsourcing, cryptocurrency, desegregation, Donald Trump, double entry bookkeeping, end world poverty, equal pay for equal work, Frederick Winslow Taylor, full employment, garden city movement, germ theory of disease, glass ceiling, God and Mammon, greed is good, hiring and firing, income inequality, indoor plumbing, inventory management, invisible hand, James Hargreaves, job satisfaction, joint-stock company, Kickstarter, knowledge worker, Lao Tzu, longitudinal study, Louis Pasteur, Lyft, means of production, Menlo Park, North Sea oil, passive investing, Ponzi scheme, profit maximization, profit motive, Ralph Waldo Emerson, rolodex, Ronald Reagan, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, Socratic dialogue, sovereign wealth fund, spinning jenny, Steve Jobs, Steve Wozniak, stocks for the long run, stocks for the long term, The Fortune at the Bottom of the Pyramid, The Wealth of Nations by Adam Smith, Tim Cook: Apple, traveling salesman, Uber and Lyft, uber lyft, union organizing, Vanguard fund, white flight, women in the workforce, young professional

The record confirms that those two concerns were the only deep, abiding ones in his life—with a strong accent on the latter.1 Datini’s documents have been an invaluable resource for business historians since they were discovered in the 1870s, providing insights into accounting, finance, marketing, and strategic methods of the distant past—a past that looks remarkably like the present. What his vast archive demonstrates is that Datini was quite nearly a modern businessman. According to Charles Handy, Datini used double-entry bookkeeping a century before it is said to have been invented by an Italian monk.2 Datini began his career as an importer in his Tuscan hometown of Prato, eventually expanding his operations internationally with offices as far away as France, Spain, Belgium, and England. For most of his career he was a workaholic. An astute, shrewd, ambitious, ruthless, and greedy entrepreneur, he was filled throughout his life with constant anxiety: fear that the ships carrying his silks from Venice, wool from England, spices from the Black Sea, wine from Catalonia, salt from Ibiza, and pilgrim’s robes from Romania would sink or be captured by pirates; worry about paying too much in taxes, about the soundness of his investments, and about collecting money from his debtors.

., 315 hiring practices, 316, 317–18 labor unions and, 316 minority hiring at, 316 “organizational entropy” and, 319 profitability and, 315 Schacht as CEO, 318 test of values (2010), 319 customers Body Shop and, 352–53 corporate social responsibility and, xxxviii–xxxix Herman Miller Company and, 237 John Lewis Partnership and, 128 Lewis and, 122 Lincoln’s philosophy and, 96 Marks & Spencer and, 210, 211–12, 213–17 no consumer demand for virtue, 429 Nucor and, 275 Owen’s ethical practices and, 8, 19 Penney and Penney Principles, 33, 37–39, 45–46 SWA and, 293–94 Dale, David, 11–12, 27 Dalton, John, 10 Dana, 424 D’Antonio, Michael, 80, 92, 489n Hershey, 489n Datini, Francesco (the Merchant of Prato), xxii, xxiii–xxv, xxxvii, xlii, 362, 396, 444 double-entry bookkeeping, xxiii foundation established by, xxv historical record of, xxiii motto of, xxiii Davids, Bob, 285–86 Davis, Jacob, 176–77, 179 Davis, Simon, 179–80 “Davos Conscience,” xii Davos World Economic Forum, 461 2018: social responsibility discussion, xiv Dayton-Hudson (now Target), 424 Deere, 424 Deere, John, xxxiii Defoe, Daniel, 3, 4 Della Femina, Jerry, 172 Del Monte, 470 De Pree, Dirk Jan (D.J.), 227–30 entrepreneurial skills, 228 founding of Herman Miller Company, 227 human-centered organizational culture and, 229–30 legacy of, 228–30 religious motivation for virtuous practices, 227–28 De Pree, Hugh, 230 De Pree, Max, 318, 323, 427 Chappell compared to, 365–66 Christian values and managerial philosophy, 227–28, 231, 360, 365 employee relationships as “covenantal,” 231 ethical principle of respect, 235–36 Herman Miller Company and, 227–42 institutionalization of practices, 435 intellectual influences on, 430 Leadership Is an Art, 231 “organizational entropy” and, 242, 319, 426 retirement from the Herman Miller board, 240 “servant leadership” and, 233, 317 “theory fastball” (philosophy of enlightened leadership), 228, 231–38 “tribal story telling,” 231, 365, 366 Dewhirst, I.


pages: 298 words: 81,200

Where Good Ideas Come from: The Natural History of Innovation by Steven Johnson

Ada Lovelace, Albert Einstein, Alfred Russel Wallace, carbon-based life, Cass Sunstein, cleantech, complexity theory, conceptual framework, cosmic microwave background, creative destruction, crowdsourcing, data acquisition, digital Maoism, digital map, discovery of DNA, Dmitri Mendeleev, double entry bookkeeping, double helix, Douglas Engelbart, Douglas Engelbart, Drosophila, Edmond Halley, Edward Lloyd's coffeehouse, Ernest Rutherford, Geoffrey West, Santa Fe Institute, greed is good, Hans Lippershey, Henri Poincaré, hive mind, Howard Rheingold, hypertext link, invention of air conditioning, invention of movable type, invention of the printing press, invention of the telephone, Isaac Newton, Islamic Golden Age, James Hargreaves, James Watt: steam engine, Jane Jacobs, Jaron Lanier, Johannes Kepler, John Snow's cholera map, Joseph Schumpeter, Joseph-Marie Jacquard, Kevin Kelly, lone genius, Louis Daguerre, Louis Pasteur, Mason jar, mass immigration, Mercator projection, On the Revolutions of the Heavenly Spheres, online collectivism, packet switching, PageRank, patent troll, pattern recognition, price mechanism, profit motive, Ray Oldenburg, Richard Florida, Richard Thaler, Ronald Reagan, side project, Silicon Valley, silicon-based life, six sigma, Solar eclipse in 1919, spinning jenny, Steve Jobs, Steve Wozniak, Stewart Brand, The Death and Life of Great American Cities, The Great Good Place, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, transaction costs, urban planning

Not surprisingly, this period marks the birth of the modern notion of the inventive genius, the rogue visionary who somehow sees beyond the horizon that limits his contemporaries—da Vinci, Copernicus, Galileo. Some of those solo artists (Galileo most famously) worked outside of broader groups because their research posed a significant security threat to the established powers of the day. The few innovations that did emerge out of networks—the portable, spring-loaded watches that first appeared in Nuremberg in 1480, the double-entry bookkeeping system developed by Italian merchants—have their geographic origins in cities, where information networks were more robust. First-quadrant solo entrepreneurs, crafting their products in secret to ensure their eventual payday, turn out to be practically nonexistent. Gutenberg was the exception, not the rule. 1600-1800 Scanning the next two centuries, we see that the pattern changes dramatically (see page 229).


pages: 273 words: 83,186

The botany of desire: a plant's-eye view of the world by Michael Pollan

back-to-the-land, clean water, David Attenborough, double entry bookkeeping, double helix, Francisco Pizarro, invention of agriculture, Joseph Schumpeter, mandatory minimum, Maui Hawaii, means of production, paper trading, Ralph Waldo Emerson, Steven Pinker

The memes that prove themselves best adapted to their “environment”—that is, the ones that are most helpful for people to keep in their brains—are the ones most likely to survive and replicate and become widely regarded as good, true, or beautiful. Culture at any given moment is the “meme pool” in which we all swim—or rather, that swims through us. Cultural change occurs whenever a new meme is introduced and catches on. It might be romanticism or double-entry bookkeeping, chaos theory or Pokémon. (Or the notion of memes itself, which seems to be catching on today.) So where in the world do new memes come from? Sometimes they spring full-blown from the brains of artists or scientists, advertising copywriters or teenagers. Often a process of mutation is involved in the creation of a new meme, in much the same way that mutations in the natural environment can lead to useful new genetic traits.


pages: 237 words: 72,716

The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality by Roland Berger, David Grusky, Tobias Raffel, Geoffrey Samuels, Chris Wimer

Branko Milanovic, business cycle, Celtic Tiger, collective bargaining, corporate governance, corporate social responsibility, double entry bookkeeping, equal pay for equal work, fear of failure, financial innovation, full employment, Gini coefficient, hiring and firing, illegal immigration, income inequality, invisible hand, Long Term Capital Management, microcredit, offshore financial centre, principal–agent problem, profit maximization, rent-seeking, shareholder value, Silicon Valley, Silicon Valley startup, time value of money, very high income

Again, going back to the comments I just made, if you list the top one hundred or five hundred CEOs’ compensation in the last five to ten years, I would be very surprised if a disproportionate number of the ones who have received the eye popping packages are not in the financial sector. Second, the Black-Scholes model for the value of stock options makes compensation reports often misleading. For the first time since double-entry bookkeeping, you have an expense that is dragged through the profit-and-loss statement, and if the value of the options goes south, you never reverse the entry. That’s never been done. The thing that bothers me about it is that the man who came up with this formula is one of the architects of Long-Term Capital Management, so I’m not sure I really have a lot of confidence in this valuation formula.


pages: 791 words: 85,159

Social Life of Information by John Seely Brown, Paul Duguid

business process, Claude Shannon: information theory, computer age, cross-subsidies, disintermediation, double entry bookkeeping, Frank Gehry, frictionless, frictionless market, future of work, George Gilder, George Santayana, global village, Howard Rheingold, informal economy, information retrieval, invisible hand, Isaac Newton, John Markoff, Just-in-time delivery, Kenneth Arrow, Kevin Kelly, knowledge economy, knowledge worker, lateral thinking, loose coupling, Marshall McLuhan, medical malpractice, moral hazard, Network effects, new economy, Productivity paradox, Robert Metcalfe, rolodex, Ronald Coase, shareholder value, Shoshana Zuboff, Silicon Valley, Steve Jobs, Superbowl ad, Ted Nelson, telepresence, the medium is the message, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, Turing test, Vannevar Bush, Y2K

Consequently, it is important to understand them. When people are championing the decline of old institutions and the rise of new ones, for example, it's always worthwhile to look around to see if there are any old ones that sweeping visions take for granted. For instance, while many people talk about the new landscape of business and finance, it's worth noting that the "bottom line" is a 600-year-old relic from double-entry bookkeeping. The institutions of profit-and-loss accounting still exert remarkable influence over our thinking. Reengineers may have told us all to "forget all we know," but few of those caught up in reengineering were allowed to forget the bottom line. Or, again, while people rightly talk so enthusiastically about the new economics of e-business, the power of the Web, and the emerging markets, it's worth noticing how much is predicated on the continuation of advertising.


pages: 275 words: 84,980

Before Babylon, Beyond Bitcoin: From Money That We Understand to Money That Understands Us (Perspectives) by David Birch

agricultural Revolution, Airbnb, bank run, banks create money, bitcoin, blockchain, Bretton Woods, British Empire, Broken windows theory, Burning Man, business cycle, capital controls, cashless society, Clayton Christensen, clockwork universe, creative destruction, credit crunch, cross-subsidies, crowdsourcing, cryptocurrency, David Graeber, dematerialisation, Diane Coyle, disruptive innovation, distributed ledger, double entry bookkeeping, Ethereum, ethereum blockchain, facts on the ground, fault tolerance, fiat currency, financial exclusion, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, index card, informal economy, Internet of things, invention of the printing press, invention of the telegraph, invention of the telephone, invisible hand, Irish bank strikes, Isaac Newton, Jane Jacobs, Kenneth Rogoff, knowledge economy, Kuwabatake Sanjuro: assassination market, large denomination, M-Pesa, market clearing, market fundamentalism, Marshall McLuhan, Martin Wolf, mobile money, money: store of value / unit of account / medium of exchange, new economy, Northern Rock, Pingit, prediction markets, price stability, QR code, quantitative easing, railway mania, Ralph Waldo Emerson, Real Time Gross Settlement, reserve currency, Satoshi Nakamoto, seigniorage, Silicon Valley, smart contracts, social graph, special drawing rights, technoutopianism, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, wage slave, Washington Consensus, wikimedia commons

The distributed ledger technology of the tally had been used to convert a means for deferred payment into a store of value and then into a means of exchange, and the sticks remained in widespread use for hundreds of years. The Bank of England, being a sensible and conservative institution naturally suspicious of new technologies, continued to use wooden tally sticks until 1826: some 500 years after the invention of double-entry bookkeeping and 400 years after Johannes Gutenberg’s invention of the printing press. At this time, the Bank came up with a wonderful British compromise: they would switch to paper but they would keep the tallies as a backup (who knew whether the whole ‘printing’ thing would work out, after all) until the last person who knew how to use them had died. Medieval tally sticks. (Source: Winchester City Council Museums (Flickr), via Wikimedia Commons.)


pages: 261 words: 86,905

How to Speak Money: What the Money People Say--And What It Really Means by John Lanchester

asset allocation, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, blood diamonds, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collective bargaining, commoditize, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Dava Sobel, David Graeber, disintermediation, double entry bookkeeping, en.wikipedia.org, estate planning, financial innovation, Flash crash, forward guidance, Gini coefficient, global reserve currency, high net worth, High speed trading, hindsight bias, income inequality, inflation targeting, interest rate swap, Isaac Newton, Jaron Lanier, joint-stock company, joint-stock limited liability company, Kodak vs Instagram, liquidity trap, London Interbank Offered Rate, London Whale, loss aversion, margin call, McJob, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, negative equity, neoliberal agenda, New Urbanism, Nick Leeson, Nikolai Kondratiev, Nixon shock, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, plutocrats, Plutocrats, Ponzi scheme, purchasing power parity, pushing on a string, quantitative easing, random walk, rent-seeking, reserve currency, Richard Feynman, Right to Buy, road to serfdom, Ronald Reagan, Satoshi Nakamoto, security theater, shareholder value, Silicon Valley, six sigma, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Jobs, survivorship bias, The Chicago School, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trickle-down economics, Washington Consensus, wealth creators, working poor, yield curve

balance sheet An accounting convention, first recorded by the Franciscan friar Dominic Luca Pacioli in his 1494 blockbuster, Summa de arithmetica, geometria, proportioni et proportionalità. Pacioli didn’t invent the set of accounting techniques he described, which were in use in mainly Venetian banking circles, but he was the first person to write them down. It’s a remarkable fact that every business in the world uses them on a daily basis more than five hundred years later. The fundamental feature of Pacioli’s system, known as double-entry bookkeeping, is that everything is recorded twice, as an asset in one place and a liability in another, and that the two sides of the balance sheet are always equal: assets = liabilities + equity. There’s a beautiful descripton of the system’s impact in James Buchan’s book Frozen Desire: To be able to keep books in double-entry is to have a machine for calculating the world. Understanding the technique is the work of a few days—practising it no doubt requires longer—but one feels one has mastered an ancient and far-flung language: one seems to see better into the nature of things.


pages: 1,106 words: 335,322

Titan: The Life of John D. Rockefeller, Sr. by Ron Chernow

business cycle, California gold rush, collective bargaining, death of newspapers, delayed gratification, double entry bookkeeping, endowment effect, family office, financial independence, Frederick Winslow Taylor, George Santayana, God and Mammon, income inequality, invisible hand, Joseph Schumpeter, Louis Pasteur, Mahatma Gandhi, Menlo Park, New Journalism, oil rush, oil shale / tar sands, passive investing, plutocrats, Plutocrats, price discrimination, profit motive, Ralph Waldo Emerson, refrigerator car, The Chicago School, Thorstein Veblen, transcontinental railway, traveling salesman, union organizing, Upton Sinclair, white picket fence, yellow journalism

Young men on the make were more likely to attend so-called business colleges or to take correspondence courses to supplement their education. Following his father’s suggestion, John paid forty dollars for a three-month course of study at E. G. Folsom’s Commercial College, a chain college with branches in seven cities. The Cleveland branch occupied the top floor of the Rouse Building, the town’s premier office building, which overlooked the Public Square. It taught double-entry bookkeeping, clear penmanship, and the essentials of banking, exchange, and commercial law—the sort of purposeful courses that appealed to John. By the time his studies ended in the summer of 1855, he had turned sixteen and was ready to flee the traumas of his family life by focusing his energies on a promising business situation. Perhaps no job search in American history has been so mythologized as that begun by sixteen-year-old John D.

I had a passion for detail which afterward I was forced to strive to modify.”35 Business historians and sociologists have stressed the centrality of accounting to capitalist enterprise. In The Protestant Ethic and the Spirit of Capitalism, Max Weber identified “rational bookkeeping” as integral to capitalism’s spirit and organization.36 For Joseph Schumpeter, capitalism “turns the unit of money into a tool of rational cost-profit calculations, of which the towering monument is double-entry bookkeeping.”37 It thus seems fitting that John D. Rockefeller, the archetypal capitalist, betrayed a special affinity for accounting and an almost mystic faith in numbers. For Rockefeller, ledgers were sacred books that guided decisions and saved one from fallible emotion. They gauged performance, exposed fraud, and ferreted out hidden inefficiencies. In an imprecise world, they rooted things in a solid empirical reality.

“I remember clearly when the financial plan—if I may call it so—of my life was formed. It was out in Ohio, under the ministration of a dear old minister, who preached, ‘Get money; get it honestly and then give it wisely.’ I wrote that down in a little book.”74 This echoed John Wesley’s dictum, “If those who ‘gain all they can’ and ‘save all they can,’ will likewise ‘give all they can,’ then the more they will grow in grace.”75 Rockefeller operated by such spiritual double-entry bookkeeping, with his charity serving, in time, as incontestable proof of his fortune’s purity. It might well be that his early commitment to charity gave him some inner license needed to pursue wealth with unparalleled—and at times unprincipled—vigor. As Max Weber observed, ascetic Christianity was a matchless breeding ground for would-be businessmen. The practice of tithing, for instance, instilled habits of thrift, self-denial, and careful budgeting that were invaluable assets for any aspiring capitalist.


pages: 250 words: 88,762

The Logic of Life: The Rational Economics of an Irrational World by Tim Harford

activist fund / activist shareholder / activist investor, affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, Berlin Wall, business cycle, colonial rule, Daniel Kahneman / Amos Tversky, double entry bookkeeping, Edward Glaeser, en.wikipedia.org, endowment effect, European colonialism, experimental economics, experimental subject, George Akerlof, income per capita, invention of the telephone, Jane Jacobs, John von Neumann, law of one price, Martin Wolf, mutually assured destruction, New Economic Geography, new economy, plutocrats, Plutocrats, Richard Florida, Richard Thaler, Ronald Reagan, Silicon Valley, spinning jenny, Steve Jobs, The Death and Life of Great American Cities, the market place, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, women in the workforce, zero-sum game

Assuming one really brilliant idea per billion people per year, then the million-strong Homo erectus population in 300,000 B.C. would have been coming up with one such idea every thousand years. By 1800, the dawn of the Industrial Revolution, with a billion people in the world, the innovation rate would have risen to one stunning idea every year. By 1930 it would be one world-changing idea every six months. With six billion minds on the planet we should now be producing this kind of idea every two months; such ideas could be anything from double-entry bookkeeping to crop rotation. It’s an absurd, grotesquely oversimplified model; it also fits the data perfectly. Kremer suggests simply taking population growth as a measure of technological progress: The faster the human population is able to grow, the more advanced technology must have become. It turns out that these eminently Malthusian assumptions fit very nicely indeed, at least until 1960 and the pill.


pages: 287 words: 44,739

Guide to business modelling by John Tennent, Graham Friend, Economist Group

business cycle, correlation coefficient, discounted cash flows, double entry bookkeeping, G4S, intangible asset, iterative process, purchasing power parity, RAND corporation, shareholder value, the market place, time value of money

The model development process 33 THE MODEL DEVELOPMENT PROCESS Set up output and input templates The first stage of the model development process is to set up sheets containing templates for all the outputs. The content of the output sheets was the subject of Chapter 3. Templates for the profit and loss, balance sheet and cash flow can also be created if these form part of the solution. During the model-building process the financial statement templates can be completed continuously, as if performing double-entry book-keeping. The modeller can ensure the accuracy of the work by checking that the balance sheet continues to balance throughout the development of the model. Sheets containing the input templates should also be created at the start of the process. Populate input templates with base or test data The input templates must be populated with data to allow model development to continue. Without input data the modeller will be unable to gauge the effectiveness and accuracy of the work done on the model.


The Map of Knowledge: How Classical Ideas Were Lost and Found: A History in Seven Cities by Violet Moller

Book of Ingenious Devices, British Empire, double entry bookkeeping, Johannes Kepler, Murano, Venice glass, Republic of Letters, spice trade, the market place, trade route, wikimedia commons

His itinerant lifestyle made him one of the best-connected men of his time, at home in every noble court and university in northern Italy. He stayed with the architect Leon Battista Alberti in Rome, visited Naples and, in Florence, lived with Leonardo da Vinci for a time. He holds the important, if unexciting, epithet, ‘the father of accounting’, thanks to his lucid explanation of the ‘method of Venice’ (now known as double-entry bookkeeping), which was used by generations of merchants. Pacioli’s mathematical interests were especially broad; he wrote on arithmetic, was an expert on Euclid and regularly lectured on The Elements, producing new editions in both Latin and Italian. He brought all his knowledge together in his magnum opus, the Summa de arithmetica, written in Italian so as to be accessible to as many people as possible, and published in Venice, in 1494.


pages: 305 words: 89,103

Scarcity: The True Cost of Not Having Enough by Sendhil Mullainathan

American Society of Civil Engineers: Report Card, Andrei Shleifer, Cass Sunstein, clean water, computer vision, delayed gratification, double entry bookkeeping, Exxon Valdez, fault tolerance, happiness index / gross national happiness, impulse control, indoor plumbing, inventory management, knowledge worker, late fees, linear programming, mental accounting, microcredit, p-value, payday loans, purchasing power parity, randomized controlled trial, Report Card for America’s Infrastructure, Richard Thaler, Saturday Night Live, Walter Mischel, Yogi Berra

For example, several would put the cash from their store in one register and pay themselves a fixed salary. This prevented the commingling of home money and business money that makes it difficult to determine how much they were spending at home versus how much the business was earning. (Some of the women kept one wad of cash in their bra’s left cup, and the other in the right cup.) This is not quite double-entry bookkeeping, but it was effective and simple. It economized on bandwidth and preserved most of the benefits. Schoar collected the best rules of thumb and designed a different “financial education” class based on them. Her class was shorter and much easier to grasp. It used a lot less bandwidth, and this showed up in the data. Attendance was much higher, and at the end of the rules-of-thumb class, clients were ecstatic and asking for more; many even said they would pay for another class themselves.


pages: 344 words: 93,858

The Post-American World: Release 2.0 by Fareed Zakaria

affirmative action, agricultural Revolution, airport security, anti-communist, Asian financial crisis, battle of ideas, Berlin Wall, Bretton Woods, BRICs, British Empire, call centre, capital controls, central bank independence, centre right, collapse of Lehman Brothers, conceptual framework, Credit Default Swap, currency manipulation / currency intervention, delayed gratification, Deng Xiaoping, double entry bookkeeping, failed state, Fall of the Berlin Wall, financial innovation, global reserve currency, global supply chain, illegal immigration, interest rate derivative, Intergovernmental Panel on Climate Change (IPCC), knowledge economy, Mahatma Gandhi, Martin Wolf, mutually assured destruction, new economy, oil shock, open economy, out of africa, Parag Khanna, postindustrial economy, purchasing power parity, race to the bottom, reserve currency, Ronald Reagan, Silicon Valley, Silicon Valley startup, South China Sea, Steven Pinker, The Great Moderation, Thomas L Friedman, Thomas Malthus, trade route, Washington Consensus, working-age population, young professional, zero-sum game

This, too, has caught on in some other countries, especially with younger people in technology-based industries. The pattern remains the same. Western styles have become the standard mode of work dress for men, signifying modernity. The Death of the Old Order Westernization is not merely about appearances. Executives all over the world manage their companies by means of what we could call “standard” business practices. The truth is that these standards, from double-entry bookkeeping to dividends, are all Western in origin. And it’s not just true of business. Over the last two centuries, and especially the last two decades, government institutions everywhere have also become more alike, encompassing parliaments, regulatory agencies, and central banks. Surveying several countries in Europe and Latin America, two scholars found that the number of independent regulatory agencies (American-style bodies) rose sevenfold between 1986 and 2002.16 Even politics has an increasingly familiar feel across the globe.


The Age of Turbulence: Adventures in a New World (Hardback) - Common by Alan Greenspan

"Robert Solow", addicted to oil, air freight, airline deregulation, Albert Einstein, asset-backed security, bank run, Berlin Wall, Bretton Woods, business cycle, business process, buy and hold, call centre, capital controls, central bank independence, collateralized debt obligation, collective bargaining, conceptual framework, Corn Laws, corporate governance, corporate raider, correlation coefficient, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, currency peg, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, double entry bookkeeping, equity premium, everywhere but in the productivity statistics, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, full employment, Gini coefficient, Hernando de Soto, income inequality, income per capita, invisible hand, Joseph Schumpeter, labor-force participation, laissez-faire capitalism, land reform, Long Term Capital Management, Mahatma Gandhi, manufacturing employment, market bubble, means of production, Mikhail Gorbachev, moral hazard, mortgage debt, Myron Scholes, Nelson Mandela, new economy, North Sea oil, oil shock, open economy, Pearl River Delta, pets.com, Potemkin village, price mechanism, price stability, Productivity paradox, profit maximization, purchasing power parity, random walk, reserve currency, Right to Buy, risk tolerance, Ronald Reagan, shareholder value, short selling, Silicon Valley, special economic zone, stocks for the long run, the payments system, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, trade liberalization, trade route, transaction costs, transcontinental railway, urban renewal, working-age population, Y2K, zero-sum game

I cannot count how many letters I received from Capitol Hill in the 1990s outlining one scheme or another to spend more or tax less, with the pay-go requirement 233 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright. T H E AGE OF T U R B U L E N C E satisfied by some sleight-of-hand financing obscurity, the purpose of which was to hide the cost of the scheme. In the Congress, double-entry bookkeeping had become a lost art. It finally dropped the pretense. During the final year of the Clinton administration, Congress had ignored its self-imposed discretionary spending caps to legislate an estimated $ 1 trillion of additional spending over ten years. Without this spending, the record $237 billion surplus in 2000 would have been even larger. Then with George Bush came the tax cuts, unmatched by decreased spending, and, in the wake of September 11, still more openhanded spending.

If you put a price ceiling on gasoline, shortages emerge and long lines at filling stations develop, as became all too apparent to Americans in 1974. The beauty of a market system is that when it is functioning well, as it does almost all the time, it tends to create its own balance. The populist view is equivalent to single-entry bookkeeping. It scores only credits, such as the immediate benefits of lower gasoline prices. Economists, I trust, practice double-entry bookkeeping. Burdened by its dearth of meaningful economic policy specifics, populism, to attract a following, has to claim a moral justification. Accordingly, 338 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright. LATIN AMERICA AND POPULISM populist leaders must be charismatic and exhibit a take-charge aura, even an authoritarian competence.


pages: 353 words: 97,352

The Importance of Being Seven by Alexander McCall Smith

double entry bookkeeping, Malacca Straits, moral panic, working poor

Anything good, anything positive, was seen by him as a dubious privilege that would be paid for dearly; even a fine day – in Scotland a rare gift of those most fickle local weather gods – would be paid for by cold and damp later on. The bill for a warm spring was a miserable, rain-sodden summer; the bill for happiness was subsequent anxiety about the loss of exactly that happiness – it was a bleak system of double-entry book-keeping, but one that had a firm root in the Scottish psyche. And was that what she was like, she asked herself. The egg boiled, and Elspeth sat down to eat it. Matthew sat at the table opposite her. He was jumpy – she could tell that. And this nervousness increased until the telephone rang and he shot up from his chair to answer it. It was his lawyer. ‘I’ve spoken to Lesley Kerr,’ she said.


pages: 370 words: 102,823

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth by Michael Jacobs, Mariana Mazzucato

balance sheet recession, banking crisis, basic income, Bernie Sanders, Bretton Woods, business climate, business cycle, Carmen Reinhart, central bank independence, collaborative economy, complexity theory, conceptual framework, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, decarbonisation, deindustrialization, dematerialisation, Detroit bankruptcy, double entry bookkeeping, Elon Musk, endogenous growth, energy security, eurozone crisis, factory automation, facts on the ground, fiat currency, Financial Instability Hypothesis, financial intermediation, forward guidance, full employment, G4S, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Internet of things, investor state dispute settlement, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, labour market flexibility, low skilled workers, Martin Wolf, mass incarceration, Mont Pelerin Society, neoliberal agenda, Network effects, new economy, non-tariff barriers, paradox of thrift, Paul Samuelson, price stability, private sector deleveraging, quantitative easing, QWERTY keyboard, railway mania, rent-seeking, road to serfdom, savings glut, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Steve Jobs, the built environment, The Great Moderation, The Spirit Level, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, trickle-down economics, universal basic income, very high income

Moreover, we are accustomed to thinking of deficits as something that requires borrowing, which we presume takes financial resources away from savers, thereby ‘crowding out’ other forms of economic activity. But, as anyone who understands monetary operations knows, this gets things completely backwards.20 To see this, one can run through the balance sheet entries, tracing the debits and credits that arise as the government spends, taxes and issues bonds.21 Or, perhaps more straightforwardly, one can rely on the internal logic of double-entry bookkeeping and simply interpret the sector balance model. Either way, careful analysts will discover that deficits add to (rather than subtract from) the financial balances of other economic agents. Simply put, government deficits are a flow of funds that increases the stock of net financial assets to the non-government sector.22 The government’s deficits (flow) accumulate to financial debt (stock).


pages: 330 words: 99,044

Reimagining Capitalism in a World on Fire by Rebecca Henderson

Airbnb, asset allocation, Berlin Wall, Bernie Sanders, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, collaborative economy, collective bargaining, commoditize, corporate governance, corporate social responsibility, crony capitalism, dark matter, decarbonisation, disruptive innovation, double entry bookkeeping, Elon Musk, Erik Brynjolfsson, Exxon Valdez, Fall of the Berlin Wall, family office, fixed income, George Akerlof, Gini coefficient, global supply chain, greed is good, Hans Rosling, Howard Zinn, Hyman Minsky, income inequality, index fund, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, Kickstarter, Lyft, Mark Zuckerberg, means of production, meta analysis, meta-analysis, microcredit, mittelstand, Mont Pelerin Society, Nelson Mandela, passive investing, Paul Samuelson, Philip Mirowski, profit maximization, race to the bottom, ride hailing / ride sharing, Ronald Reagan, Rosa Parks, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Snapchat, sovereign wealth fund, Steven Pinker, stocks for the long run, Tim Cook: Apple, total factor productivity, Toyota Production System, uber lyft, urban planning, Washington Consensus, working-age population, Zipcar

Walmart’s stock might have fallen on Doug’s announcement because investors had no idea how to measure the impact of the investments he was making, and as a result simply didn’t believe that they were likely to increase long-term returns. It turns out that reimagining capitalism requires reimagining accounting. Give Investors Better Data It took me a surprisingly long time to embrace the idea that accountants hold the key to saving civilization. Even after I’d read Jacob Soll’s wonderful book, The Reckoning: Financial Accountability and the Rise and Fall of Nations—a blow by blow account of how the invention of double entry bookkeeping enabled the creation of the modern state—I secretly thought of accounting as the dusty, dry part of business—about as interesting as plumbing. But then I noticed a strange thing. I knew plenty of businesspeople who were only mildly worried about the fact that we were running our entire economy on the basis of the idea that generating massive amounts of CO2 typically doesn’t cost firms a dime, or that it was equally costless (to the firm) to hollow out a community, pay one’s employees bottom dollar, and push for tax cuts.


pages: 459 words: 103,153

Adapt: Why Success Always Starts With Failure by Tim Harford

Andrew Wiles, banking crisis, Basel III, Berlin Wall, Bernie Madoff, Black Swan, car-free, carbon footprint, Cass Sunstein, charter city, Clayton Christensen, clean water, cloud computing, cognitive dissonance, complexity theory, corporate governance, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, Dava Sobel, Deep Water Horizon, Deng Xiaoping, disruptive innovation, double entry bookkeeping, Edmond Halley, en.wikipedia.org, Erik Brynjolfsson, experimental subject, Fall of the Berlin Wall, Fermat's Last Theorem, Firefox, food miles, Gerolamo Cardano, global supply chain, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, Jane Jacobs, Jarndyce and Jarndyce, Jarndyce and Jarndyce, John Harrison: Longitude, knowledge worker, loose coupling, Martin Wolf, mass immigration, Menlo Park, Mikhail Gorbachev, mutually assured destruction, Netflix Prize, New Urbanism, Nick Leeson, PageRank, Piper Alpha, profit motive, Richard Florida, Richard Thaler, rolodex, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, South China Sea, special economic zone, spectrum auction, Steve Jobs, supply-chain management, the market place, The Wisdom of Crowds, too big to fail, trade route, Tyler Cowen: Great Stagnation, web application, X Prize, zero-sum game

Evolution is effective because, rather than engaging in an exhaustive, time-consuming search for the highest peak – a peak that may not even be there tomorrow – it produces ongoing, ‘works for now’ solutions to a complex and ever-changing set of problems. In biological evolution, solutions include photosynthesis, pairs of eyes and mothers’ milk. In economic evolution, solutions include double-entry book-keeping, supply-chain management and ‘buy one, get one free’. Some of what works seems to be perennial. The rest, such as being a Tyrannosaurus rex or the world’s most efficient manufacturer of VHS video cassettes, is rooted in a particular place and time. We know that the evolutionary process is driven by variation and selection. In biology, variation emerges from mutations and from sexual reproduction, which mixes the genes from two parents.


pages: 363 words: 107,817

Modernising Money: Why Our Monetary System Is Broken and How It Can Be Fixed by Andrew Jackson (economist), Ben Dyson (economist)

bank run, banking crisis, banks create money, Basel III, Bretton Woods, business cycle, call centre, capital controls, cashless society, central bank independence, credit crunch, David Graeber, debt deflation, double entry bookkeeping, eurozone crisis, financial exclusion, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, Fractional reserve banking, full employment, Hyman Minsky, inflation targeting, informal economy, information asymmetry, intangible asset, land reform, London Interbank Offered Rate, market bubble, market clearing, Martin Wolf, means of production, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, negative equity, Northern Rock, price stability, profit motive, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, risk-adjusted returns, seigniorage, shareholder value, short selling, South Sea Bubble, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, unorthodox policies

When the harvests failed the loans would not be repaid: everyone would start falling into debt traps (and debt slavery). The social unrest this created would be so great that the only way to stop society breaking down (or the rulers being overturned) would be to periodically forgive everyone their debts – a debt jubilee. 4. These innovations included: courier services to convey messages; carrier services for the transport of goods; double entry bookkeeping; the extension of joint enterprises for longer durations (previously these had been established for single ventures and then dissolved); the accepting of deposits by businesses for funding purposes and the payment of interest on them (rather than a share in the profits); and bills of exchange (which allowed local payments to be made without the need to transport coins or bullion). 5.


pages: 368 words: 32,950

How the City Really Works: The Definitive Guide to Money and Investing in London's Square Mile by Alexander Davidson

accounting loophole / creative accounting, algorithmic trading, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, Big bang: deregulation of the City of London, buy and hold, capital asset pricing model, central bank independence, corporate governance, Credit Default Swap, dematerialisation, discounted cash flows, diversified portfolio, double entry bookkeeping, Edward Lloyd's coffeehouse, Elliott wave, Exxon Valdez, forensic accounting, global reserve currency, high net worth, index fund, inflation targeting, intangible asset, interest rate derivative, interest rate swap, John Meriwether, London Interbank Offered Rate, Long Term Capital Management, margin call, market fundamentalism, Nick Leeson, North Sea oil, Northern Rock, pension reform, Piper Alpha, price stability, purchasing power parity, Real Time Gross Settlement, reserve currency, Right to Buy, shareholder value, short selling, The Wealth of Nations by Adam Smith, transaction costs, value at risk, yield curve, zero-coupon bond

Investment bankers have been more likely to have a public school background and commercial bankers a grammar school education, but the dividing line has blurred. Commercial banks today Commercial banks are mainly involved in deposit taking and lending. Deposits build up when people leave surplus money in saving accounts. When banks lend money to their clients, it comes from other banking clients. In effect, what goes into one person’s account as a loan must come out of another’s. The banking system is said to be like double-entry bookkeeping.  20 HOW THE CITY REALLY WORKS __________________________________ Banks pay a small rate of interest on cash deposited, and lend out much of it at a much higher rate, making a margin on the difference. In common alone with the government, they keep bank accounts with the Bank of England. A bank must retain a required level of liquidity, and it can borrow or lend money wholesale on the money markets (see Chapter 11), dealing with other banks or perhaps multinational companies.


The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy by Bruce Katz, Jennifer Bradley

3D printing, additive manufacturing, Affordable Care Act / Obamacare, British Empire, business climate, carbon footprint, clean water, cleantech, collapse of Lehman Brothers, deindustrialization, demographic transition, desegregation, double entry bookkeeping, edge city, Edward Glaeser, global supply chain, immigration reform, income inequality, industrial cluster, intermodal, Jane Jacobs, jitney, Kickstarter, knowledge economy, lone genius, longitudinal study, Mark Zuckerberg, Masdar, megacity, Menlo Park, Moneyball by Michael Lewis explains big data, Network effects, new economy, New Urbanism, Occupy movement, place-making, postindustrial economy, purchasing power parity, race to the bottom, Richard Florida, Shenzhen was a fishing village, Silicon Valley, smart cities, smart grid, sovereign wealth fund, the built environment, The Death and Life of Great American Cities, the market place, The Spirit Level, Tony Hsieh, too big to fail, trade route, transit-oriented development, urban planning, white flight

But in general, casting a wider net makes it more likely that one person’s idea will interact usefully with another person’s idea and that something 02-2151-2 ch2.indd 37 5/20/13 6:48 PM 38 NYC: INNOVATION AND THE NEXT ECONOMY beneficial will emerge. Steven Johnson points to fourteenth-century Italian market cities as examples of networked economies: these were the places from which emerged double-entry bookkeeping—the notion of recording each transaction as a debit or a credit, which was one of financial accounting’s biggest innovations. This network effect applies to the game-changers approach as well: “They didn’t magically create some higher-level group consciousness. They simply widened the pool of minds that could come up with and share good ideas. This is not the wisdom of the crowd, but the wisdom of someone in the crowd.”66 Moreover, a half-year period of brainstorming sessions gave the NYCEDC time to discern common threads and connect different expressions or facets of the same idea.67 Cities and metropolitan areas concentrate the expertise of a vast range of people working in myriad sectors.


pages: 289 words: 113,211

A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation by Richard Bookstaber

"Robert Solow", affirmative action, Albert Einstein, asset allocation, backtesting, beat the dealer, Black Swan, Black-Scholes formula, Bonfire of the Vanities, butterfly effect, commoditize, commodity trading advisor, computer age, computerized trading, disintermediation, diversification, double entry bookkeeping, Edward Lorenz: Chaos theory, Edward Thorp, family office, financial innovation, fixed income, frictionless, frictionless market, George Akerlof, implied volatility, index arbitrage, intangible asset, Jeff Bezos, John Meriwether, London Interbank Offered Rate, Long Term Capital Management, loose coupling, margin call, market bubble, market design, merger arbitrage, Mexican peso crisis / tequila crisis, moral hazard, Myron Scholes, new economy, Nick Leeson, oil shock, Paul Samuelson, Pierre-Simon Laplace, quantitative trading / quantitative finance, random walk, Renaissance Technologies, risk tolerance, risk/return, Robert Shiller, Robert Shiller, rolodex, Saturday Night Live, selection bias, shareholder value, short selling, Silicon Valley, statistical arbitrage, The Market for Lemons, time value of money, too big to fail, transaction costs, tulip mania, uranium enrichment, William Langewiesche, yield curve, zero-coupon bond, zero-sum game

Leonardo provided illustrations for Pacioli’s work, De Divina Proportione, which applied the golden ratio, a topic that later became the object of study in his famous Vitruvian Man. As a favor to one of his patrons, Pacioli included in the Summa a discussion on the Venetian method of bookkeeping. The Venetian method recorded every business transaction in two parts, a debit (an account that received funds) and a credit (an account that provided funds). If that sounds familiar, it is; this is the source of double-entry bookkeeping, which makes up the core premise of accounting 500 years later. The propagation 136 ccc_demon_125-142_ch07.qxd 2/13/07 1:46 PM Page 137 COLOSSUS of the Venetian method through Pacioli’s work was a key ingredient in the voyages of discovery of the sixteenth century. It provided a reliable system to record investments and returns, essential in attracting wealthy merchants to provide the backing required for these voyages, which opened the way for trade with the New World and the Far East.8 DA VINCI’S ACCOUNTANT IS STILL KEEPING OUR BOOKS This approach has remained the foundation of accounting to the present, first blossoming in the United States with the building of railroads.


pages: 369 words: 121,161

Alistair Cooke's America by Alistair Cooke

Albert Einstein, Alistair Cooke, British Empire, Charles Lindbergh, double entry bookkeeping, full employment, Gunnar Myrdal, Hernando de Soto, imperial preference, interchangeable parts, joint-stock company, Maui Hawaii, Ralph Nader, Ralph Waldo Emerson, Spread Networks laid a new fibre optics cable between New York and Chicago, strikebreaker, The Wealth of Nations by Adam Smith, transcontinental railway, Triangle Shirtwaist Factory, urban sprawl, wage slave, Works Progress Administration

His responsibility to the Cleveland money men at an end, Rockefeller and his partner pooled their savings and invested all of $4,000 in the candlemaker’s refinery. Very soon, Rockefeller got richer men to build more refineries, and richer men still. Since his habits were more austere than theirs, he absorbed them. And then he sat back and he dreamed a dream. He was of the type of Columbus, and Fray Marcos, but with a gift for double-entry bookkeeping. There really wasn’t anything to stop him making his refinery business in Cleveland the biggest in Ohio, the biggest in the Midwest, in America. Why not the world? When he was thirty, he formed the Standard Oil Company of Ohio and bought twenty-five refineries. Rockefeller built a monopoly by means both genteel and ruthless, and it was rudely hinted that he had in the palm of his hands the best state legislatures and United States Senators that money could buy.


pages: 471 words: 124,585

The Ascent of Money: A Financial History of the World by Niall Ferguson

Admiral Zheng, Andrei Shleifer, Asian financial crisis, asset allocation, asset-backed security, Atahualpa, bank run, banking crisis, banks create money, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Bretton Woods, BRICs, British Empire, business cycle, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collateralized debt obligation, colonial exploitation, commoditize, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, deglobalization, diversification, diversified portfolio, double entry bookkeeping, Edmond Halley, Edward Glaeser, Edward Lloyd's coffeehouse, financial innovation, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, Francisco Pizarro, full employment, German hyperinflation, Hernando de Soto, high net worth, hindsight bias, Home mortgage interest deduction, Hyman Minsky, income inequality, information asymmetry, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, iterative process, John Meriwether, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour mobility, Landlord’s Game, liberal capitalism, London Interbank Offered Rate, Long Term Capital Management, market bubble, market fundamentalism, means of production, Mikhail Gorbachev, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, Naomi Klein, negative equity, Nelson Mandela, Nick Leeson, Northern Rock, Parag Khanna, pension reform, price anchoring, price stability, principal–agent problem, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, quantitative hedge fund, RAND corporation, random walk, rent control, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, seigniorage, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spice trade, stocks for the long run, structural adjustment programs, technology bubble, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Malthus, Thorstein Veblen, too big to fail, transaction costs, undersea cable, value at risk, Washington Consensus, Yom Kippur War

Munro, ‘The Medieval Origins of the Financial Revolution: Usury, Rentes, and Negotiability’, International History Review, 25, 3 (September 2003), pp. 505-62. 33 Richard A. Goldthwaite, ‘The Medici Bank and the World of Florentine Capitalism’, Past and Present, 114 (Feb. 1987), pp. 3-31. On the background to the Medicis’ rise, see Raymond de Roover, The Rise and Decline of the Medici Bank, 1397-1494 (Cambridge, MA, 1963), pp. 9-34. 34 Venetian State Archives, Mediceo Avanti Principato, MAP 133, 134, 153. 35 Franz-Josef Arlinghaus, ‘Bookkeeping, Double-entry Bookkeeping’, in Christopher Kleinhenz (ed.), Medieval Italy: An Encyclopedia, vol. 1 (New York, 2004). The first book to describe the method was Benedetto Cotrugli’s Il libro dell’arte di mercatura, published in 1458. 36 Raymond de Roover, ‘The Medici Bank: Organization and Management’, Journal of Economic History, 6, 1 (May 1946), pp. 24-52. 37 Venetian State Archives, Archivio del Monte, Catasto of 1427.


pages: 492 words: 118,882

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

accounting loophole / creative accounting, Ada Lovelace, Airbnb, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, Ben Bernanke: helicopter money, bitcoin, blockchain, Bretton Woods, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, David Graeber, deskilling, Diane Coyle, discrete time, disruptive innovation, distributed ledger, diversification, double entry bookkeeping, Ethereum, ethereum blockchain, fiat currency, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, large denomination, liquidity trap, London Whale, low skilled workers, M-Pesa, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, MITM: man-in-the-middle, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, Satoshi Nakamoto, Satyajit Das, savings glut, seigniorage, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Von Neumann architecture, Washington Consensus

As seen in the Enron scandal, investors were provided with relevant false information or bloated figures, which encouraged them to continue investing. But in the meantime the reliable data (i.e., precise information that is free of bias and manager manipulation) was kept in the hands of the executives and obscured from view. The dichotomy between the reliable and relevant reported data stems from the conflicting interests of businesses and investors. The source of the contradiction is not double-entry bookkeeping, but rather it is due to bias. Information producers, in this case managers and executives, are constantly faced with a conundrum: do they provide the most objective and true version of the information regarding their business (income and cash flow generation capability, assets and liabilities, etc.), or should they only provide the most relevant information that investors would normally seek?


pages: 1,205 words: 308,891

Bourgeois Dignity: Why Economics Can't Explain the Modern World by Deirdre N. McCloskey

Airbnb, Akira Okazaki, big-box store, Black Swan, book scanning, British Empire, business cycle, buy low sell high, Capital in the Twenty-First Century by Thomas Piketty, clean water, Columbian Exchange, conceptual framework, correlation does not imply causation, Costa Concordia, creative destruction, crony capitalism, dark matter, Dava Sobel, David Graeber, David Ricardo: comparative advantage, deindustrialization, demographic transition, Deng Xiaoping, Donald Trump, double entry bookkeeping, en.wikipedia.org, epigenetics, Erik Brynjolfsson, experimental economics, Ferguson, Missouri, fundamental attribution error, Georg Cantor, George Akerlof, George Gilder, germ theory of disease, Gini coefficient, God and Mammon, greed is good, Gunnar Myrdal, Hans Rosling, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, immigration reform, income inequality, interchangeable parts, invention of agriculture, invention of writing, invisible hand, Isaac Newton, Islamic Golden Age, James Watt: steam engine, Jane Jacobs, John Harrison: Longitude, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Arrow, knowledge economy, labor-force participation, lake wobegon effect, land reform, liberation theology, lone genius, Lyft, Mahatma Gandhi, Mark Zuckerberg, market fundamentalism, means of production, Naomi Klein, new economy, North Sea oil, Occupy movement, open economy, out of africa, Pareto efficiency, Paul Samuelson, Pax Mongolica, Peace of Westphalia, peak oil, Peter Singer: altruism, Philip Mirowski, pink-collar, plutocrats, Plutocrats, positional goods, profit maximization, profit motive, purchasing power parity, race to the bottom, refrigerator car, rent control, rent-seeking, Republic of Letters, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Scientific racism, Scramble for Africa, Second Machine Age, secular stagnation, Simon Kuznets, Social Responsibility of Business Is to Increase Its Profits, spinning jenny, stakhanovite, Steve Jobs, The Chicago School, The Market for Lemons, the rule of 72, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, total factor productivity, Toyota Production System, transaction costs, transatlantic slave trade, Tyler Cowen: Great Stagnation, uber lyft, union organizing, very high income, wage slave, Washington Consensus, working poor, Yogi Berra

For instance, the first person in Europe to suggest that accounting could be applied to the affairs of an entire nation, as though the nation were a business firm, appears to have been the popularizer of the decimal point and the discoverer of equal temperament in musical scales, the Dutch mathematician and statesman Simon Stevin(us) (1548–1620). Among other bourgeois schemes, Stevin persuaded the city of Amsterdam and the king of Sweden to adopt double-entry bookkeeping.2 Public calculation is characteristic of the bourgeois world, such as the political arithmeticians of the seventeenth century, first in Holland and then in England and then in France. The theory of probability came out of an aristocratic fascination with games of chance, but the fascination quickly became plebeian too, applied to thoroughly bourgeois projects such as fire insurance. In England, calculation had to be learned.

He continued to use Roman numerals for the years, because calendar years, like regnal years, or Elizabeth II or Superbowl XX, are not subject to calculation.19 English official accounts did not use Arabic numerals until the 1640s. “On the church at Chedworth in the Cotswolds,” Eric Jones notes, “there are dates of the 1490s carved in Arabic form, probably having been introduced by Italian merchants who came there to buy wool.”20 Fra Luca Pacioli of Venice popularized double-entry bookkeeping at the end of the fifteenth century, and such sophistications in accounting rapidly spread in bourgeois circles. The metaphor of a set of accounts was nothing new, as in God’s accounting of our sins, or the three servants in Jesus’s parable (Matt. 25:14–30) rendering their account of their uses of the talents—the Greek original uses logon, the word “word” being also the usual term for “commercial accounts”: “My soul more bent / To serve therewith my Maker, and present / My true account, lest he returning chide.”


pages: 446 words: 138,827

What Should I Do With My Life? by Po Bronson

back-to-the-land, Berlin Wall, clean water, double entry bookkeeping, Exxon Valdez, financial independence, high net worth, job satisfaction, Menlo Park, microcredit, new economy, Shoshana Zuboff, Silicon Valley, South of Market, San Francisco, special economic zone, Stanford marshmallow experiment, telemarketer, traffic fines, young professional

He was surrounded by “fat ugly women” who had made the school district their life, and there was a woman down the hall who was very upset that Mark wasn’t “getting it.” She was making his life hell. “How long have you been there?” I asked. “A few months. I was hired to handle their finance. I thought it would mean managing their investment portfolio. Turns out they needed a clerk to handle accounting on a prehistoric non-double-entry bookkeeping system. It sucks. I’m making twenty percent of what I was earning just two years ago. I can’t believe how badly I screwed up.” “You’re living your brother’s life,” I said. “Except for the wife and kids and house part.” “Are you still with that woman I met?” He laughed, like No way. “Nicole? You remember her?” “No, I’m being polite and pretending like I remember her. I only remember you were with someone.”


City: A Guidebook for the Urban Age by P. D. Smith

active transport: walking or cycling, Albert Einstein, Andrew Keen, augmented reality, banking crisis, Berlin Wall, British Empire, Broken windows theory, Buckminster Fuller, Burning Man, business cycle, car-free, carbon footprint, clean water, colonial rule, congestion charging, cosmological principle, crack epidemic, double entry bookkeeping, edge city, Edward Lloyd's coffeehouse, en.wikipedia.org, Enrique Peñalosa, Fall of the Berlin Wall, Frank Gehry, garden city movement, global village, haute cuisine, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of gunpowder, Jane Jacobs, John Snow's cholera map, Kevin Kelly, Kibera, Kickstarter, Kowloon Walled City, Masdar, megacity, megastructure, multicultural london english, mutually assured destruction, New Urbanism, Norman Mailer, peak oil, RFID, smart cities, starchitect, telepresence, the built environment, The Death and Life of Great American Cities, the High Line, Thomas Malthus, trade route, urban planning, urban renewal, urban sprawl, Victor Gruen, walkable city, white flight, white picket fence, young professional

Credit transactions became common, as did international banking, with many monarchs – and even entire cities, such as Venice – borrowing money. At the same time, domestic banking grew as people began depositing money, first in Genoa and then in Florence, Barcelona and Bruges. By the early fourteenth century, Florence had eighty banks. The Italians pioneered the bill of exchange, shipping insurance and double-entry book-keeping. According to Niall Ferguson, ‘banks and the bond market provided the material basis for the splendours of the Italian Renaissance’.15 By the seventeenth century, the dynamic commercial city of Amsterdam was the capital of banking and finance in Europe. London and Paris took over this role in the industrial age, with the City of London becoming increasingly dominant. By the second half of the nineteenth century, London’s stock market capitalisation was worth more than that of Paris and New York combined.


pages: 607 words: 133,452

Against Intellectual Monopoly by Michele Boldrin, David K. Levine

"Robert Solow", accounting loophole / creative accounting, agricultural Revolution, barriers to entry, business cycle, cognitive bias, creative destruction, David Ricardo: comparative advantage, Dean Kamen, Donald Trump, double entry bookkeeping, en.wikipedia.org, endogenous growth, Ernest Rutherford, experimental economics, financial innovation, informal economy, interchangeable parts, invention of radio, invention of the printing press, invisible hand, James Watt: steam engine, Jean Tirole, John Harrison: Longitude, Joseph Schumpeter, Kenneth Arrow, linear programming, market bubble, market design, mutually assured destruction, Nash equilibrium, new economy, open economy, peer-to-peer, pirate software, placebo effect, price discrimination, profit maximization, rent-seeking, Richard Stallman, Silicon Valley, Skype, slashdot, software patent, the market place, total factor productivity, trade liberalization, transaction costs, Y2K

Indeed, we find that knowledge is so embodied that craftsmen were bribed, and sometimes kidnapped and taken to an area where their skills were lacking: An inquiry by the Bergskollegium in the 1660s into the emigration of Swedish iron masters revealed that a number of workers sailed from Nykoping believing that they were being taken to some other part of Sweden. Instead they were brought to Lubeck, from there to Hamburg, and finally to France, where Colbert was determined to start an iron industry on the Swedish model.21 P1: KNP head margin: 1/2 gutter margin: 7/8 CUUS245-07 cuus245 978 0 521 87928 6 May 21, 2008 16:55 166 Against Intellectual Monopoly Yet another example of the slow spread of knowledge is the use of double-entry bookkeeping. This was invented in Italy at the end of the fourteenth century, and widely used in Venice in the fifteenth century. It did not reach the Hanseatic League cities in northern Europe until well into the sixteenth century. However, one does not have to turn to the Middle Ages to find examples of the difficulty in transferring ideas. The Economist of December 22, 2001, ran an amusing piece on the “search for a perfect cup” of espresso coffee.


pages: 442 words: 135,006

ZeroZeroZero by Roberto Saviano

Berlin Wall, Bernie Madoff, call centre, credit crunch, double entry bookkeeping, Fall of the Berlin Wall, illegal immigration, Julian Assange, London Interbank Offered Rate, Mikhail Gorbachev, new economy, open borders, planetary scale, Ponzi scheme, Ronald Reagan, Skype, Steve Jobs, uranium enrichment, WikiLeaks

Four years later an Englishman with impertinent blond hair crosses the threshold of Wachovia Bank, one of the giants of the American credit system: a man named Martin Woods. He’s just been hired as a senior money-laundering reporting officer in the bank’s London office. Punctilious and precise, maniacal about order. Just the right person for a bank aiming to adhere scrupulously to the new money-laundering protocols. But Martin isn’t merely a zealous employee who is good with numbers and loves double-entry bookkeeping. He is a former agent of the National Crime Squad. This gives him a huge advantage over his banking peers around the world: Martin understands people. He knows how to talk with them, how to read their gestures, how to weigh the nuances of their moods. Money is just one of the many variables, just one of the many color gradations, on his personal grid for evaluating people. There are already three actors onstage in this drama: a wounded country that’s reacting to attack; a measure that aims to stifle threats by fighting them on the financial front; and a man who wants to do his job.


pages: 505 words: 137,572

Dr. Johnson's London: Coffee-Houses and Climbing Boys, Medicine, Toothpaste and Gin, Poverty and Press-Gangs, Freakshows and Female Education by Liza Picard

A. Roger Ekirch, clean water, double entry bookkeeping, joint-stock company, New Urbanism, plutocrats, Plutocrats, South Sea Bubble

At eleven o’clock they came home (for luncheon?) or went to meetings, presumably in other coffee-houses. At two o’clock they went to the Exchange for an hour or so until it shut at 3 o’clock. At three or four o’clock they went to ‘lounge a little longer at the coffee house and then dine about four … dinner concluded the day, they give the rest of it to their friends’.8 M. Grosley was struck by English commercial methods. Although double-entry bookkeeping was now widely used, the record most relied on by a merchant was a ‘debt-book which [he] carries always in his pocket’, so he could carry on his business on the hoof, in coffeehouses or the Royal Exchange, which must have been an astonishing sight. It was open between one and three every day, not only to English merchants, but also to foreigners from as far away as Japan and Moscow.9 Each trade had its own spot, called a ‘walk’, in the courtyard, some under the arcades and some, including the stockbrokers, in the open space10 – no wonder they migrated to coffeehouses.


pages: 624 words: 127,987

The Personal MBA: A World-Class Business Education in a Single Volume by Josh Kaufman

Albert Einstein, Atul Gawande, Black Swan, business cycle, business process, buy low sell high, capital asset pricing model, Checklist Manifesto, cognitive bias, correlation does not imply causation, Credit Default Swap, Daniel Kahneman / Amos Tversky, David Heinemeier Hansson, David Ricardo: comparative advantage, Dean Kamen, delayed gratification, discounted cash flows, Donald Knuth, double entry bookkeeping, Douglas Hofstadter, en.wikipedia.org, Frederick Winslow Taylor, George Santayana, Gödel, Escher, Bach, high net worth, hindsight bias, index card, inventory management, iterative process, job satisfaction, Johann Wolfgang von Goethe, Kevin Kelly, Kickstarter, Lao Tzu, lateral thinking, loose coupling, loss aversion, Marc Andreessen, market bubble, Network effects, Parkinson's law, Paul Buchheit, Paul Graham, place-making, premature optimization, Ralph Waldo Emerson, rent control, side project, statistical model, stealth mode startup, Steve Jobs, Steve Wozniak, subscription business, telemarketer, the scientific method, time value of money, Toyota Production System, tulip mania, Upton Sinclair, Vilfredo Pareto, Walter Mischel, Y Combinator, Yogi Berra

The sheer enormity of integrating these gigantic, complex business systems was ignored or overlooked, leading most of the companies that attempted huge mergers to ruin. Playing with Fire Beware of geeks bearing formulas. —WARREN BUFFETT, CHAIRMAN AND CEO OF BERKSHIRE HATHAWAY AND ONE OF THE WEALTHIEST INDIVIDUALS IN THE WORLD Finance, in the meantime, was steadily increasing in complexity. Before the twentieth century, accounting and finance were a matter of common sense and relatively simple arithmetic. The widespread adoption of double-entry bookkeeping (a thirteenth-century innovation) brought many benefits, like increased accuracy and ease of detecting anomalies like theft, at the cost of simplicity. The introduction of statistics to financial practice simultaneously enhanced analytical capability at the cost of abstraction, increasing opportunities to fudge the numbers without anyone noticing. Over time, managers and executives began using statistics and analysis to forecast the future, relying on databases and spreadsheets in much the same way ancient seers relied on tea leaves and goat entrails.


pages: 409 words: 129,423

Mapping Mars: Science, Imagination and the Birth of a World by Oliver Morton

Colonization of Mars, computer age, double entry bookkeeping, Mars Rover, Menlo Park, Mercator projection, nuclear winter, planetary scale, RAND corporation, Richard Feynman, sexual politics, the scientific method, trade route, undersea cable, V2 rocket, Works Progress Administration

In 1884, at a conference in Washington, D.C., and over spirited French opposition, Greenwich was chosen. Airy’s transit circle came to define the world. Airy was, by all accounts, an uninspiring but meticulous man. He recorded his every thought and expenditure from the day he went up to Cambridge University to more or less the day he died, throwing no note away, delighting in doing his own double-entry book-keeping. He applied a similar thoroughness to his stewardship over the Royal Greenwich Observatory, bringing to its workings little interest in theory or discovery but a profound concern for order, which meant that the production of tables for the Admiralty (the core of the observatory’s job) was accomplished with mechanical accuracy. He looked at the heavens and the Earth with precision, not wonder, and though he had his fancies, they were fancies in a similar vein—ecstasies of exactitude such as calculating the date of the Roman invasion of Britain from Caesar’s account of the timing of the tides, or meticulously celebrating the geographical accuracy of Sir Walter Scott’s poem “The Lady of the Lake.”


pages: 515 words: 126,820

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World by Don Tapscott, Alex Tapscott

Airbnb, altcoin, asset-backed security, autonomous vehicles, barriers to entry, bitcoin, blockchain, Blythe Masters, Bretton Woods, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, cloud computing, cognitive dissonance, commoditize, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crowdsourcing, cryptocurrency, disintermediation, disruptive innovation, distributed ledger, Donald Trump, double entry bookkeeping, Edward Snowden, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, failed state, fiat currency, financial innovation, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, Galaxy Zoo, George Gilder, glass ceiling, Google bus, Hernando de Soto, income inequality, informal economy, information asymmetry, intangible asset, interest rate swap, Internet of things, Jeff Bezos, jimmy wales, Kickstarter, knowledge worker, Kodak vs Instagram, Lean Startup, litecoin, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, microcredit, mobile money, money market fund, Network effects, new economy, Oculus Rift, off grid, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, performance metric, Peter Thiel, planetary scale, Ponzi scheme, prediction markets, price mechanism, Productivity paradox, QR code, quantitative easing, ransomware, Ray Kurzweil, renewable energy credits, rent-seeking, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, seigniorage, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, smart grid, social graph, social intelligence, social software, standardized shipping container, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, supply-chain management, TaskRabbit, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, The Wisdom of Crowds, transaction costs, Turing complete, Turing test, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, unorthodox policies, wealth creators, X Prize, Y2K, Zipcar

If you wanted to steal a bitcoin, you’d have to rewrite the coin’s entire history on the blockchain in broad daylight. That’s practically impossible. So the blockchain is a distributed ledger representing a network consensus of every transaction that has ever occurred. Like the World Wide Web of information, it’s the World Wide Ledger of value—a distributed ledger that everyone can download and run on their personal computer. Some scholars have argued that the invention of double-entry bookkeeping enabled the rise of capitalism and the nation-state. This new digital ledger of economic transactions can be programmed to record virtually everything of value and importance to humankind: birth and death certificates, marriage licenses, deeds and titles of ownership, educational degrees, financial accounts, medical procedures, insurance claims, votes, provenance of food, and anything else that can be expressed in code.


Creating a Life Together: Practical Tools to Grow Ecovillages and Intentional Communities by Diana Leafe Christian

A Pattern Language, back-to-the-land, Community Supported Agriculture, double entry bookkeeping, land reform, off grid, sharing economy, Silicon Valley, the built environment, urban sprawl

Sowing Circle/ OAEC members do build equity however, since their property itself is owned as an LLC and their 501(c)3 owns nothing but simply manages their educational center project. Paper shuffling, number crunching. Like all corporations, a 501(c)3 requires ongoing record-keeping. This begins with the filing of the initial documents with the state, and continues with an annual report of activities and other mandatory forms. IRS requirements can also be intimidating. You must keep meticulous financial records with double-entry bookkeeping to prove that your 501(c)3 continues to deserve its tax-exempt status, prepare annual non-profit IF YOU’RE USING A TAX-EXEMPT NON-PROFIT informational tax returns, and, if it has employees, deal with payroll tax withholding and reporting. Often the idealists who want to set up 501(c)3s are unfamiliar with these business procedures, but if they fail to do these things the IRS can freeze their bank account and bring all their non-profit activities to a halt.


pages: 524 words: 143,993

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis by Martin Wolf

air freight, anti-communist, Asian financial crisis, asset allocation, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, Ben Bernanke: helicopter money, Berlin Wall, Black Swan, bonus culture, break the buck, Bretton Woods, business cycle, call centre, capital asset pricing model, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collateralized debt obligation, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, debt deflation, deglobalization, Deng Xiaoping, diversification, double entry bookkeeping, en.wikipedia.org, Erik Brynjolfsson, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, financial repression, floating exchange rates, forward guidance, Fractional reserve banking, full employment, global rebalancing, global reserve currency, Growth in a Time of Debt, Hyman Minsky, income inequality, inflation targeting, information asymmetry, invisible hand, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, mandatory minimum, margin call, market bubble, market clearing, market fragmentation, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mortgage debt, negative equity, new economy, North Sea oil, Northern Rock, open economy, paradox of thrift, Paul Samuelson, price stability, private sector deleveraging, purchasing power parity, pushing on a string, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, Richard Feynman, risk-adjusted returns, risk/return, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, shareholder value, short selling, sovereign wealth fund, special drawing rights, The Chicago School, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, too big to fail, Tyler Cowen: Great Stagnation, very high income, winner-take-all economy, zero-sum game

Banks cease to lend. This forces further de-leveraging on the rest of the economy. Moreover, banks automatically create money as a by-product of their normal lending (a point explained in full in Chapter Six below). That is a fundamental characteristic of banks. When they lend, they create a debt from their client to the bank and, simultaneously, a debt from the bank to the client. This is just double-entry bookkeeping. A debt from a bank to a client is a deposit and a deposit is money. So the growth of the stock of money in the hands of the public declines when the growth of bank lending falls. The fourth reason why post-crisis economies are weak is that inflation may become too low or, worse, deflation may set in. Deflation, or falling prices, creates the danger of what the great American economist Irving Fisher called ‘debt deflation’ in the 1930s – rising real level of debt and debt service within a collapsing economy.61 Such debt deflation is already, alas, in progress in parts of the Eurozone.


pages: 566 words: 155,428

After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead by Alan S. Blinder

"Robert Solow", Affordable Care Act / Obamacare, asset-backed security, bank run, banking crisis, banks create money, break the buck, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, conceptual framework, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, Detroit bankruptcy, diversification, double entry bookkeeping, eurozone crisis, facts on the ground, financial innovation, fixed income, friendly fire, full employment, hiring and firing, housing crisis, Hyman Minsky, illegal immigration, inflation targeting, interest rate swap, Isaac Newton, Kenneth Rogoff, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, market bubble, market clearing, market fundamentalism, McMansion, money market fund, moral hazard, naked short selling, new economy, Nick Leeson, Northern Rock, Occupy movement, offshore financial centre, price mechanism, quantitative easing, Ralph Waldo Emerson, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, short selling, South Sea Bubble, statistical model, the payments system, time value of money, too big to fail, working-age population, yield curve, Yogi Berra

Hope Now focused on outreach, counseling, and encouraging delinquent borrowers to talk to their mortgage servicers about ways to become current again. It was more about minimizing lenders’ prospective losses than about reducing homeowners’ financial burdens. Such a tilt is hardly surprising in a voluntary, industry-led effort. After all, any mortgage modification that reduces homeowners’ payments must, by the inexorable laws of double-entry bookkeeping, also reduce lenders’ receipts. For that simple reason, as Paulson’s aide Phill Swagel put it, “avoiding more foreclosures required someone—either the government or lenders—to write a check.” No one should expect lenders to volunteer for that honor with enthusiasm. Nonetheless, by now many of the mortgages modified voluntarily have reduced principal, interest payments, or both—and the program continues.


pages: 573 words: 157,767

From Bacteria to Bach and Back: The Evolution of Minds by Daniel C. Dennett

Ada Lovelace, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Andrew Wiles, Bayesian statistics, bioinformatics, bitcoin, Build a better mousetrap, Claude Shannon: information theory, computer age, computer vision, double entry bookkeeping, double helix, Douglas Hofstadter, Elon Musk, epigenetics, experimental subject, Fermat's Last Theorem, Gödel, Escher, Bach, information asymmetry, information retrieval, invention of writing, Isaac Newton, iterative process, John von Neumann, Menlo Park, Murray Gell-Mann, Necker cube, Norbert Wiener, pattern recognition, phenotype, Richard Feynman, Rodney Brooks, self-driving car, social intelligence, sorting algorithm, speech recognition, Stephen Hawking, Steven Pinker, strong AI, The Wealth of Nations by Adam Smith, theory of mind, Thomas Bayes, trickle-down economics, Turing machine, Turing test, Watson beat the top human players on Jeopardy!, Y2K

(The brains of domesticated animals are always smaller than the brains of their nearest wild kin; use it or lose it, and domesticated animals have a relatively unchallenging life, being protected from predators and starvation, and provided with mates at procreation time.) The corollary of this, of course, is that for something boring to spread, it has to be deemed by its hosts to be particularly useful, or particularly valuable, and hence worth breeding: inculcating via extensive training. Double-entry bookkeeping and trigonometry come to mind. Being-deemed-valuable-by-influential-hosts is itself a frequent adaptation among memes, and among the more extreme examples are soporific atonal “serious” music and some lineages of contemporary conceptual art that—like laying hens—are so domesticated that they would go extinct in a generation without the assistance of their well-heeled stewards. So even if it is true, as Richerson and Boyd and Sperber and others have noted, that many important areas of human culture exhibit change over time that is not just a direct effect of high-fidelity transmission systems of “discrete, genelike” informational entities, such systems—not only words, but music, dance, crafts, and other traditions of affordances—provide a variety of paths that can carry cultural information from generation to generation with enough fidelity for relatively mindless gradual mutation to accumulate improvements with minimal comprehension required.


pages: 497 words: 153,755

The Power of Gold: The History of an Obsession by Peter L. Bernstein

Albert Einstein, Atahualpa, Bretton Woods, British Empire, business cycle, California gold rush, central bank independence, double entry bookkeeping, Edward Glaeser, Everybody Ought to Be Rich, falling living standards, financial innovation, floating exchange rates, Francisco Pizarro, German hyperinflation, Hernando de Soto, Isaac Newton, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, large denomination, liquidity trap, long peace, money: store of value / unit of account / medium of exchange, old-boy network, Paul Samuelson, price stability, profit motive, random walk, rising living standards, Ronald Reagan, seigniorage, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade route

In spite of the continuous depredations of warfare and religious turmoil, these unpleasant developments played themselves against the background of the High Renaissance, when artistic and scientific achievements reached extraordinary levels. Leonardo, Tintoretto, Raphael, Palladio, Cellini, Michelangelo, Titian, Diirer, Cervantes, and El Greco were all active during the 1500s. The great cathedral of Saint Peter's rose up on the banks of the Tiber, well splashed with gold in its interior. Copernicus and Galileo were exploring the solar system, while businessmen for the first time took the giant step of using double-entry bookkeeping.22 This was also a period when Latin was being replaced by vernacular languages, which facilitated communication among the great mass of individuals, including some very rich ones, who had neither been to universities nor joined the clergy. The single most important event of the century occurred in 1517 when Martin Luther posted his 95 theses on the door of the church in Wittenberg. The Reformation tore through Europe like a hot poker, transforming beliefs and revolutionizing artistic styles while ripping across political and dynastic relationships.


pages: 421 words: 147,305

The Medical Detectives by Berton Roueche

Albert Einstein, double entry bookkeeping, germ theory of disease, Louis Pasteur

That, I've gathered from my reading about electric shock, is quite typical. The fog of amnesia increased as I came forward in time. The events of the past several years were the blurriest and the blankest. Another area that didn't seem to be affected was ingrained habits—repetitive acts and procedures. I mean, I hadn't lost my command of the English language, I still knew the multiplication tables, I could still do double-entry bookkeeping. And then there was an area that I call emotional. I could still remember experiences from any period of my life that had had a big emotional impact. Good and bad. I could remember pains and hurts. And I could also remember a trip we took to Spain only a few years ago. A wonderful trip. "But the worst of all my problems was that I couldn't seem to retain. I couldn't hang on to my relearning.


Bleeding Edge by Pynchon, Thomas

addicted to oil, AltaVista, anti-communist, Anton Chekhov, Bernie Madoff, big-box store, Burning Man, carried interest, Donald Trump, double entry bookkeeping, East Village, Hacker Ethic, index card, invisible hand, jitney, late capitalism, margin call, Network effects, Ponzi scheme, prediction markets, pre–internet, QWERTY keyboard, RAND corporation, rent control, rolodex, Ronald Reagan, Sand Hill Road, Silicon Valley, telemarketer, Y2K

Nodding hello at the edge of the frame is a middle-aged, out-of-shape party who from mug shots faxed up to her from John Street Maxine recognizes as Vip Epperdew. Fast zoom in on Vip’s face, with a look of undisguisable yearning, which he quickly tries to reset to standard party mode. Gusts of laughter from topside. Bruno’s hand comes into the shot with a butane lighter and a crack pipe, and the threesome now become affectionate. Jules and Jim (1962) it isn’t. Talk about double-entry bookkeeping! As erotic material, there are shortcomings, to be sure. Boy and girl quality could do with an upgrade, Shae is a jolly enough girl, maybe a little vacant around the eyes, Vip is years overdue for some gym time, and Bruno comes across as a horny little runt with a tendency to shriek and a dick, frankly, not big enough for the scenario, provoking expressions of annoyance from Shae and Vip whenever it approaches them for any purpose.


The Art of Computer Programming: Sorting and Searching by Donald Ervin Knuth

card file, Claude Shannon: information theory, complexity theory, correlation coefficient, Donald Knuth, double entry bookkeeping, Eratosthenes, Fermat's Last Theorem, G4S, information retrieval, iterative process, John von Neumann, linked data, locality of reference, Menlo Park, Norbert Wiener, NP-complete, p-value, Paul Erdős, RAND corporation, refrigerator car, sorting algorithm, Vilfredo Pareto, Yogi Berra, Zipf's Law

Instead of listing the attributes of a given record, we list the records having a given attribute. 6.5 RETRIEVAL ON SECONDARY KEYS 561 We encounter inverted files (under other names) quite often in our daily lives. For example, the inverted file corresponding to a Russian-English dictionary is an English-Russian dictionary. The inverted file corresponding to this book is the index that appears at the close of the book. Accountants traditionally use "double-entry bookkeeping," where all transactions are entered both in a cash account and in a customer account, so that the current cash position and the current customer liability are both readily accessible. In general, an inverted file usually doesn't stand by itself; it is to be used together with the original uninverted file. It provides duplicate, redundant information in order to speed up secondary key retrieval.

Distribution sorting, see Radix sorting. Distributive laws, 239. Divide and conquer, 175. recurrence, 168, 224, 674. 762 INDEX AND GLOSSARY Divisor function d(n), 138. Dixon, John Douglas, 611. DNA, 34, 72. Dobkin, David Paul, 583. Dobosiewicz, Wiodzimierz, 176, 266, 628, 680. Dodd, Marisue, 520. Dodgson, Charles Lutwidge, 207, see Carroll. Dor, Dorit ("in Jinn), 664. Doren, David Gerald, 212, 218. Dot product, 406. Double-entry bookkeeping, 561. Double hashing, 528-533, 546, 548, 551-552, 556, 557, 742. Double rotation, 461, 464, 477. Doubly exponential sequences, 467, 715. Doubly linked list, 393, 375, 543, 646, 713. Douglas, Alexander Shafto, 98, 388, 396. Dowd, Martin John, 673. Drake, Paul, 1. Driscoll, James Robert, 152, 583. Dromey, Robert Geoffrey, 634. Drum storage, 359-362. Drysdale, Robert Lewis (Scot), III, 228.


pages: 467 words: 503

The omnivore's dilemma: a natural history of four meals by Michael Pollan

additive manufacturing, back-to-the-land, clean water, cognitive dissonance, Community Supported Agriculture, double entry bookkeeping, Gary Taubes, Haber-Bosch Process, index card, informal economy, invention of agriculture, means of production, new economy, Steven Pinker, the scientific method, transaction costs, Upton Sinclair, Whole Earth Catalog

Corn is the hero of its own story, and though we humans played a crucial supporting role in its rise to world domination, it would be wrong to suggest we have been calling the shots, or acting always in our own best interests. Indeed, there is every reason to believe that corn has succeeded in domesticating us. To some extent this holds true for all of the plants and animals that take part in the grand coevolutionary bargain with humans we call agriculture. Though we insist on speaking of the "invention" of agriculture as if it were our idea, like double-entry bookkeeping or the lightbulb, in fact it makes just as much sense to regard agriculture as a brilliant (if unconscious) evolutionary strategy on the part of the plants and animals involved to get us to advance their interests. By evolving certain traits we happen to regard as desirable, these species got themselves noticed by the one mammal in a position not only to spread their 2 4 * THE OMNIVORE'S DILEMMA genes around the world, but to remake vast swathes of that world in the image of the plants' preferred habitat.


pages: 540 words: 168,921

The Relentless Revolution: A History of Capitalism by Joyce Appleby

1919 Motor Transport Corps convoy, agricultural Revolution, anti-communist, Asian financial crisis, asset-backed security, Bartolomé de las Casas, Bernie Madoff, Bretton Woods, BRICs, British Empire, call centre, Charles Lindbergh, collateralized debt obligation, collective bargaining, Columbian Exchange, commoditize, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, deskilling, Doha Development Round, double entry bookkeeping, epigenetics, equal pay for equal work, European colonialism, facts on the ground, failed state, Firefox, fixed income, Ford paid five dollars a day, Francisco Pizarro, Frederick Winslow Taylor, full employment, Gordon Gekko, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, hiring and firing, illegal immigration, informal economy, interchangeable parts, interest rate swap, invention of movable type, invention of the printing press, invention of the steam engine, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, Jeff Bezos, joint-stock company, Joseph Schumpeter, knowledge economy, land reform, Livingstone, I presume, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, moral hazard, Parag Khanna, Ponzi scheme, profit maximization, profit motive, race to the bottom, Ralph Nader, refrigerator car, Ronald Reagan, Scramble for Africa, Silicon Valley, Silicon Valley startup, South China Sea, South Sea Bubble, special economic zone, spice trade, spinning jenny, strikebreaker, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thorstein Veblen, total factor productivity, trade route, transatlantic slave trade, transcontinental railway, union organizing, Unsafe at Any Speed, Upton Sinclair, urban renewal, War on Poverty, working poor, Works Progress Administration, Yogi Berra, Yom Kippur War

Fresh intellectual interests, enhanced by a new vocabulary, became crucial to the modern transformation of traditional countries. Many mechanical devices and institutional procedures became useful to entrepreneurs without themselves being causes of the emergence of capitalism. The invention of movable type made printing cheaper, promoting a book trade that carried news of explorations throughout Europe. The Greek astrolabe and compass proved a great aid to navigating the waters of three oceans. Italian double-entry bookkeeping enabled merchants to keep better track of their profits. All these improvements contributed to industrial enterprise, but they didn’t cause capitalism to appear; they were propitious factors in its development. Capitalism required a different social dynamic and innovations that changed how food was grown and goods produced. Because traditional mores were thoroughly embedded in the literature, laws, religious rites, work rituals, and habits of people, they didn’t suddenly collapse; they crumbled slowly.


pages: 604 words: 161,455

The Moral Animal: Evolutionary Psychology and Everyday Life by Robert Wright

"Robert Solow", agricultural Revolution, Andrei Shleifer, Asian financial crisis, British Empire, centre right, cognitive dissonance, double entry bookkeeping, double helix, fault tolerance, Francis Fukuyama: the end of history, George Gilder, global village, invention of gunpowder, invention of movable type, invention of the telegraph, invention of writing, invisible hand, John Nash: game theory, John von Neumann, Marshall McLuhan, Norbert Wiener, planetary scale, pre–internet, profit motive, Ralph Waldo Emerson, random walk, Richard Thaler, rising living standards, Silicon Valley, social intelligence, social web, Steven Pinker, talking drums, the medium is the message, The Wealth of Nations by Adam Smith, trade route, your tax dollars at work, zero-sum game

(By the fourteenth century, Venetian bankers had realized that they could lend out a fraction of their deposits, since depositer were unlikely to all withdraw their cash at once. The rest is European banking history.) All such instruments had this in common: they were distinct steps toward modern capitalism. Europe had long had markets for goods and services. Now it had markets for capital. It also had new ancillary metatechnologies of capitalism, such as insurance and double-entry bookkeeping. All to the good. But does this really answer the question of why the economic complexity of the late Middle Ages had been so slow in coming? If the missing ingredients were the various metatechnologies of capitalism, then the question becomes: Why had they taken so long to evolve? After all, once you’ve got coins and writing, all that stands between you and capitalism is a little imagination.


pages: 585 words: 165,304

Trust: The Social Virtue and the Creation of Prosperity by Francis Fukuyama

barriers to entry, Berlin Wall, blue-collar work, business climate, business cycle, capital controls, collective bargaining, corporate governance, corporate raider, creative destruction, deindustrialization, Deng Xiaoping, deskilling, double entry bookkeeping, equal pay for equal work, European colonialism, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, global village, Gunnar Myrdal, hiring and firing, industrial robot, Jane Jacobs, job satisfaction, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, land reform, liberal capitalism, liberation theology, low skilled workers, manufacturing employment, mittelstand, price mechanism, profit maximization, RAND corporation, rent-seeking, Ronald Coase, Silicon Valley, Steve Jobs, Steve Wozniak, The Death and Life of Great American Cities, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, transfer pricing, traveling salesman, union organizing

It is in this context that the economic significance of the Protestant Reformation can be seen. The economic historians Nathan Rosenberg and L. E. Birdzell note that in the early capitalist period (from the late fifteenth century on) people had to outgrow firms based on kinship and separate their personal finances from their firm’s finances. In this respect, a technical innovation like double-entry bookkeeping was indispensable. But technical advances were not, in themselves, enough: The need for a form of enterprise which could command trust and loyalty on some basis other than kinship was only one facet of a broader need: the rising world of trade needed a moral system. It needed a morality to support reliance on its complex apparatus of representation and promise: credit, representations as to quality, promises to deliver goods, or to buy goods in the future, and agreements to share in the proceeds of voyages.


pages: 565 words: 164,405

A Splendid Exchange: How Trade Shaped the World by William J. Bernstein

Admiral Zheng, asset allocation, bank run, Benoit Mandelbrot, British Empire, call centre, clean water, Columbian Exchange, Corn Laws, David Ricardo: comparative advantage, deindustrialization, Doha Development Round, domestication of the camel, double entry bookkeeping, Eratosthenes, financial innovation, Gini coefficient, God and Mammon, ice-free Arctic, imperial preference, income inequality, intermodal, James Hargreaves, John Harrison: Longitude, Khyber Pass, low skilled workers, non-tariff barriers, Paul Samuelson, placebo effect, Port of Oakland, refrigerator car, Silicon Valley, South China Sea, South Sea Bubble, spice trade, spinning jenny, Steven Pinker, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade liberalization, trade route, transatlantic slave trade, transcontinental railway, upwardly mobile, working poor, zero-sum game

The islanders fell on the Dutchmen as soon as they landed and cut to pieces forty-seven soldiers and officers. A Dutch rescue party arrived too late. Among the members of that party was a young "junior merchant" whose name later became synonymous with Dutch efficiency and brutality: Jan Pieterszoon Coen. Before embarking for the Indies, he had spent his teenage years as an apprentice to a branch of a Dutch merchant company in Rome, where he learned the new science of double-entry bookkeeping, which was not yet in widespread use in Holland. Coen shipped out in 1607 to the East Indies for three years (during which he served on the unsuccessful Lonthor rescue party). He then returned to Holland for two years. In 1612 he was sent out again as a "senior merchant." In this capacity Coen submitted a brilliant analysis, based on the new bookkeeping techniques, of the VOC's operations, Discoers Touscherende den Nederlantsche Indischen Staet, which soon caught the attention of the Heeren XVII.


pages: 651 words: 180,162

Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb

Air France Flight 447, Andrei Shleifer, banking crisis, Benoit Mandelbrot, Berlin Wall, Black Swan, business cycle, Chuck Templeton: OpenTable:, commoditize, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discrete time, double entry bookkeeping, Emanuel Derman, epigenetics, financial independence, Flash crash, Gary Taubes, George Santayana, Gini coefficient, Henri Poincaré, high net worth, hygiene hypothesis, Ignaz Semmelweis: hand washing, informal economy, invention of the wheel, invisible hand, Isaac Newton, James Hargreaves, Jane Jacobs, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, knowledge economy, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, Marc Andreessen, meta analysis, meta-analysis, microbiome, money market fund, moral hazard, mouse model, Myron Scholes, Norbert Wiener, pattern recognition, Paul Samuelson, placebo effect, Ponzi scheme, principal–agent problem, purchasing power parity, quantitative trading / quantitative finance, Ralph Nader, random walk, Ray Kurzweil, rent control, Republic of Letters, Ronald Reagan, Rory Sutherland, selection bias, Silicon Valley, six sigma, spinning jenny, statistical model, Steve Jobs, Steven Pinker, Stewart Brand, stochastic process, stochastic volatility, Thales and the olive presses, Thales of Miletus, The Great Moderation, the new new thing, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Malthus, too big to fail, transaction costs, urban planning, Vilfredo Pareto, Yogi Berra, Zipf's Law

(This is not strictly true, the ancients were also obsessed with measurements, but they did not have the Arabic numerals to do proper calculations.) His idea was that we learned to be precise about things—and that was the precursor of the scientific revolution. He cites the first mechanical clock (which quantized time), marine charts and perspective painting (which quantized space), and double-entry bookkeeping (which quantized financial accounts). The obsession with measurement started with the right places, and progressively invaded the wrong ones. Now our problem is that such measurement started to be applied to elements that have a high measurement error—in some case infinitely high. (Recall Fukushima in the previous section.) Errors from Mediocristan are inconsequential, those from Extremistan are acute.


pages: 7,371 words: 186,208

The Long Twentieth Century: Money, Power, and the Origins of Our Times by Giovanni Arrighi

anti-communist, Asian financial crisis, barriers to entry, Bretton Woods, British Empire, business climate, business process, colonial rule, commoditize, Corn Laws, creative destruction, cuban missile crisis, David Ricardo: comparative advantage, declining real wages, deindustrialization, double entry bookkeeping, European colonialism, financial independence, financial intermediation, floating exchange rates, income inequality, informal economy, invisible hand, joint-stock company, Joseph Schumpeter, late capitalism, London Interbank Offered Rate, means of production, money: store of value / unit of account / medium of exchange, new economy, offshore financial centre, oil shock, Peace of Westphalia, profit maximization, Project for a New American Century, RAND corporation, reserve currency, spice trade, the market place, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, trade route, transaction costs, transatlantic slave trade, transcontinental railway, upwardly mobile, Yom Kippur War

Fourth and last, the state-making capabilities of the Dutch capitalist oligarchy were far greater than those of the Venetian oligarchy. The exclusiveness of capitalist interests in the organization and management 48 THE LONG TWENTIETH CENTURY of the Venetian state was the main source of its power but was also the main limit of that power. For this exclusiveness kept the political horizon of the Venetian oligarchy within the limits set by cost—benefit analysis and double-entry bookkeeping. That is to say, it kept Venetian rulers aloof from the political and social issues that were tearing apart the world within which they operated. The state-making capabilities of the Dutch capitalist oligarchy, in contrast, had been forged in a long struggle of emancipation from Spanish imperial rule. In order to succeed in this struggle, it had to forge an alliance and share power with dynastic interests (the House of Orange) and had to ride the tiger of popular rebellion (Calvinism).


pages: 725 words: 221,514

Debt: The First 5,000 Years by David Graeber

Admiral Zheng, anti-communist, back-to-the-land, banks create money, Bretton Woods, British Empire, carried interest, cashless society, central bank independence, colonial rule, commoditize, corporate governance, David Graeber, delayed gratification, dematerialisation, double entry bookkeeping, financial innovation, fixed income, full employment, George Gilder, informal economy, invention of writing, invisible hand, Isaac Newton, joint-stock company, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, oil shock, Panopticon Jeremy Bentham, Paul Samuelson, payday loans, place-making, Ponzi scheme, price stability, profit motive, reserve currency, Right to Buy, Ronald Reagan, seigniorage, sexual politics, short selling, Silicon Valley, South Sea Bubble, Thales of Miletus, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transatlantic slave trade, tulip mania, upwardly mobile, urban decay, working poor, zero-sum game

Yet it was said that its merchants shunned enforceable contracts, preferring to seal transactions “with a handshake and a glance at heaven.”78 In Islamic society, the merchant became not just a respected figure, but a kind of paragon: like the warrior, a man of honor able to pursue far-flung adventures; unlike him, able to do so in a fashion damaging to no one. The French historian Maurice Lombard draws a striking, if perhaps rather idealized, picture of him “in his stately town-house, surrounded by slaves and hangers-on, in the midst of his collections of books, travel souvenirs, and rare ornaments,” along with his ledgers, correspondence, and letters of credit, skilled in the arts of double-entry book-keeping along with secret codes and ciphers, giving alms to the poor, supporting places of worship, perhaps, dedicating himself to the writing of poetry, while still able to translate his general creditworthiness into great capital reserves by appealing to family and partners.79 Lombard’s picture is to some degree inspired by the famous Thousand and One Nights description of Sindbad, who, having spent his youth in perilous mercantile ventures to faraway lands, finally retired, rich beyond dreams, to spend the rest of his life amidst gardens and dancing girls, telling tall tales of his adventures.


pages: 740 words: 217,139

The Origins of Political Order: From Prehuman Times to the French Revolution by Francis Fukuyama

Admiral Zheng, agricultural Revolution, Andrei Shleifer, Asian financial crisis, Ayatollah Khomeini, barriers to entry, Berlin Wall, blood diamonds, California gold rush, cognitive dissonance, colonial rule, conceptual framework, correlation does not imply causation, currency manipulation / currency intervention, demographic transition, Deng Xiaoping, double entry bookkeeping, endogenous growth, equal pay for equal work, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Francisco Pizarro, Hernando de Soto, hiring and firing, invention of agriculture, invention of the printing press, Khyber Pass, land reform, land tenure, means of production, offshore financial centre, out of africa, Peace of Westphalia, principal–agent problem, RAND corporation, rent-seeking, Right to Buy, Scramble for Africa, selective serotonin reuptake inhibitor (SSRI), spice trade, Stephen Hawking, Steven Pinker, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade route, transaction costs, Washington Consensus, zero-sum game

Chinese per capita income was largely flat over this same period, but when it began to increase after 1978, it took off at an even faster rate than Europe’s. FIGURE 7 The reasons for the massive increase in post-1800 productivity have always been at the core of studies of growth. They have to do with changes in the intellectual environment that promoted the emergence of modern natural science, the application of science and technology to production, development of techniques like double-entry bookkeeping, and supportive microeconomic institutions like patent law and copyright that permitted and encouraged continuous innovation.6 7 But the understandable focus on developments of the last two hundred or so years has obscured our ability to comprehend the nature of political economy in premodern societies. The presumption that a high rate of continuous economic growth is possible puts a premium on investment in the sorts of institutions and conditions that facilitate such growth, like political stability, property rights, technology, and scientific research.


pages: 828 words: 232,188

Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy by Francis Fukuyama

Affordable Care Act / Obamacare, Andrei Shleifer, Asian financial crisis, Atahualpa, banking crisis, barriers to entry, Berlin Wall, blood diamonds, British Empire, centre right, clean water, collapse of Lehman Brothers, colonial rule, conceptual framework, crony capitalism, deindustrialization, Deng Xiaoping, disruptive innovation, double entry bookkeeping, Edward Snowden, Erik Brynjolfsson, European colonialism, facts on the ground, failed state, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, Francisco Pizarro, Frederick Winslow Taylor, full employment, Gini coefficient, Hernando de Soto, Home mortgage interest deduction, income inequality, information asymmetry, invention of the printing press, iterative process, Kickstarter, knowledge worker, labour management system, land reform, land tenure, life extension, low skilled workers, manufacturing employment, means of production, Menlo Park, Mohammed Bouazizi, Monroe Doctrine, moral hazard, Nelson Mandela, new economy, open economy, out of africa, Peace of Westphalia, Port of Oakland, post-industrial society, post-materialism, price discrimination, quantitative easing, RAND corporation, rent-seeking, road to serfdom, Ronald Reagan, Scientific racism, Scramble for Africa, Second Machine Age, Silicon Valley, special economic zone, stem cell, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, too big to fail, trade route, transaction costs, Tyler Cowen: Great Stagnation, Vilfredo Pareto, women in the workforce, World Values Survey, zero-sum game

What caused this sudden burst of economic growth? The Industrial Revolution had been preceded by a commercial revolution starting in the sixteenth century that vastly expanded the volume of trade both within Europe and across the Atlantic. This expansion, in turn, was driven by a host of political and institutional factors: the establishment of secure property rights, the rise of modern states, the invention of double-entry bookkeeping and the modern corporation, and new technologies of communications and transportation. The Industrial Revolution in turn rested on the systematic application of the scientific method and its incorporation into an institutional structure of universities and research organizations, which could then be translated into technological innovations.4 FIGURE 2. Real Income per Person in England, 1200–2000 SOURCE: Gregory Clark, A Farewell to Alms The sudden shift to a higher level of growth had a huge effect on societies via an expanding division of labor.


pages: 809 words: 237,921

The Narrow Corridor: States, Societies, and the Fate of Liberty by Daron Acemoglu, James A. Robinson

Affordable Care Act / Obamacare, agricultural Revolution, AltaVista, Andrei Shleifer, bank run, Berlin Wall, British Empire, California gold rush, central bank independence, centre right, collateralized debt obligation, collective bargaining, colonial rule, Computer Numeric Control, conceptual framework, Corn Laws, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Dava Sobel, David Ricardo: comparative advantage, Deng Xiaoping, discovery of the americas, double entry bookkeeping, Edward Snowden, en.wikipedia.org, equal pay for equal work, European colonialism, Ferguson, Missouri, financial deregulation, financial innovation, Francis Fukuyama: the end of history, full employment, income inequality, income per capita, industrial robot, information asymmetry, interest rate swap, invention of movable type, Isaac Newton, James Watt: steam engine, John Harrison: Longitude, joint-stock company, Kula ring, labor-force participation, land reform, Mahatma Gandhi, manufacturing employment, mass incarceration, Maui Hawaii, means of production, megacity, Mikhail Gorbachev, Nelson Mandela, obamacare, openstreetmap, out of africa, PageRank, pattern recognition, road to serfdom, Ronald Reagan, Skype, spinning jenny, Steven Pinker, the market place, transcontinental railway, War on Poverty, WikiLeaks

In the 1280s, in cities like Milan or Bologna, there were twenty-five notaries for every thousand inhabitants. All of this trade needed advanced accounting practices. It’s not a coincidence that it was an Italian from Pisa, Leonardo Fibonacci, who revolutionized accounting by adapting the Arabic numerical system in 1202. This made financial calculations much more straightforward. By the middle of the fourteenth century, double-entry bookkeeping appeared in Italy for the first time. The commercial revolution went along with a great deal of economic growth and stimulated innovation outside the financial sector too. Though we don’t have enough evidence to construct national income accounts for this period of history, we can proxy economic development by the extent of urbanization—the fraction of the population living in cities of at least 5,000 people.


Europe: A History by Norman Davies

agricultural Revolution, Albert Einstein, anti-communist, Berlin Wall, Bretton Woods, British Empire, business climate, centre right, charter city, clean water, Columbian Exchange, conceptual framework, continuation of politics by other means, Corn Laws, cuban missile crisis, Defenestration of Prague, discovery of DNA, double entry bookkeeping, Edmond Halley, Edward Lloyd's coffeehouse, equal pay for equal work, Eratosthenes, Etonian, European colonialism, experimental economics, financial independence, finite state, Francis Fukuyama: the end of history, Francisco Pizarro, full employment, global village, Honoré de Balzac, Index librorum prohibitorum, interchangeable parts, invention of agriculture, invention of movable type, Isaac Newton, James Hargreaves, James Watt: steam engine, Johann Wolfgang von Goethe, Johannes Kepler, John Harrison: Longitude, joint-stock company, Joseph-Marie Jacquard, land reform, liberation theology, long peace, Louis Blériot, Louis Daguerre, Mahatma Gandhi, mass immigration, Mikhail Gorbachev, Monroe Doctrine, Murano, Venice glass, music of the spheres, New Urbanism, North Sea oil, offshore financial centre, Peace of Westphalia, popular capitalism, Potemkin village, purchasing power parity, Ralph Waldo Emerson, road to serfdom, sceptred isle, Scramble for Africa, spinning jenny, Thales of Miletus, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transatlantic slave trade, Transnistria, urban planning, urban sprawl

In this work, the modern profession of accountancy received its first textbook. Pacioli (1447–1517), otherwise known by his religious name of Fra Luca di Borgo San Sepolcro, was a Franciscan friar and a prominent itinerant Florentine professor. His best-known treatise, De Divina Proportione (1509), was illustrated by Leonardo da Vinci. Recent authors have dubbed him the ‘Father of Accountancy’.1 The ‘Venetian method’ of double-entry book-keeping had grown up in the Italian cities some considerable time before Pacioli described it. It required three books—a memorial book, a journal, and a ledger. The memorial received a note of all transactions as they were made. The journal was made up from the memorial and summarised each day’s business in chronological order. It had a left-hand column for debts in dare, and a right-hand column for credits, in havere.

Comenius and the Concept of Universal Education (London, 1966). COMPOSTELA 1. See B. Tate, Guià del Camino de Santiago (Santiago); W. Starkie, The Road to Santiago: pilgrims of St James (London, 1957); H. Davies, Holy days and holidays: the mediaeval pilgrimage to Compostela (Lewisburg, PA, 1982); also James Bentley, The Way of St James: a pilgrimage to Santiago de Compostela (London, 1992). COMPUTATIO 1. See J. B. Geisbeek, Ancient Double-Entry Book-Keeping: Lucas Pacioli’s Treatise (Denver, 1914; repr. Osaka, 1975); also R. G. Brown and K. S. Johnston, Padoli on Accounting (New York, 1963). 2. See P. L. McMickle and R. G. Vanger-meersch, The Origins of a Great Profession: Catalogue to an Exhibition of Rare Accounting Books and Manuscripts from the Montgomery Collection (Memphis, 1987). 3. M. F. Bywater and B. Yamey, Historic Accounting Literature: A Companion Guide (London, 1982).


pages: 1,088 words: 297,362

The London Compendium by Ed Glinert

1960s counterculture, anti-communist, Big bang: deregulation of the City of London, Bob Geldof, British Empire, Brixton riot, Corn Laws, Dava Sobel, double entry bookkeeping, Edward Lloyd's coffeehouse, Exxon Valdez, hiring and firing, invention of the telegraph, Isaac Newton, John Harrison: Longitude, John Snow's cholera map, Khartoum Gordon, Kickstarter, Mahatma Gandhi, mass immigration, Nick Leeson, Panopticon Jeremy Bentham, price stability, Ronald Reagan, Sloane Ranger, South China Sea, South Sea Bubble, spice trade, the market place, trade route, union organizing, V2 rocket

It now contains a variety of shops, bars and restaurants, and much preserved period architecture, but is spoiled by an excess of faux Victoriana. • Smithfield meat market, p. 8. Lombard Street Once the Jews, the City’s moneylenders, had been expelled from England in 1290, Venetians and Lombardians, who had first arrived in London during the mid-thirteenth-century reign of Henry III to collect taxes due to the Pope, took up the same role, later introducing into England double-entry book-keeping, doppia scrittura, which had been invented by a fifteenth-century Italian monk. The Lombardians’ power base was challenged by the opening of the first Exchange in 1565. They responded by increasing their banking rates, which failed to win back custom. In 1692 Lloyd’s Insurance moved from (Great) Tower Street to Lombard Street, and began publishing Lloyd’s News, the forerunner of Lloyd’s List and Shipping Gazette, here four years later.


pages: 1,157 words: 379,558

Ashes to Ashes: America's Hundred-Year Cigarette War, the Public Health, and the Unabashed Triumph of Philip Morris by Richard Kluger

air freight, Albert Einstein, California gold rush, cognitive dissonance, corporate raider, desegregation, double entry bookkeeping, family office, feminist movement, full employment, ghettoisation, Indoor air pollution, medical malpractice, Mikhail Gorbachev, plutocrats, Plutocrats, publication bias, Ralph Nader, Ralph Waldo Emerson, RAND corporation, rent-seeking, risk tolerance, Ronald Reagan, selection bias, The Chicago School, the scientific method, Torches of Freedom, trade route, transaction costs, traveling salesman, union organizing, upwardly mobile, urban planning, urban renewal, War on Poverty

When not directing the hired help, he was repairing the machinery, labeling the burlap sacks with the Dukes’ brand name—Pro Bono Publico—or off on a far-flung wagon route to deliver goods to storekeepers and gather new orders. Sent with his siblings to a Quaker academy for some formal learning, the big boy found the Latin, poetry, and much else in the curriculum lacking in any vocational relevance and after a couple of months came squawking home. A stay at a business school in Poughkeepsie, New York, better suited to his aptitudes, allowed Buck to master double-entry bookkeeping and other practical skills. Back home again, he applied his fresh tools to the Duke factory books and by sundown each day knew to the penny how their operations were faring. Wash Duke knew an unpolished gem when he saw one and made Buck, just eighteen, his full partner in the business. The three-story, false-front Duke establishment with its little bell tower had become a Durham fixture by now, and under Buck it grew into a well-run, steadily expanding business, but always well within the shadow of the mighty Durham Bull, which was spreading the town name across America and overseas.