Double Entry

Double Entry: How the merchants of Venice shaped the modern world – and how their invention could make or break the planet

WON the Nib Waverley Library Award for Literature 2012

Shortlisted for the New South Wales Premier’s Awards 2013

Shortlisted for the Age Book of the Year Awards 2012

Shortlisted for the Queensland Literary Awards 2012

‘What advantages does the merchant derive from Book-keeping by double entry? It is amongst the finest inventions of the human mind.’ Goethe, 1795

‘Historians often forget. Even the most mundane professions have their history, and those mundane professions increasingly run the capitalist world.’ Norman Davies, 1996

‘The rise and metamorphosis of double-entry bookkeeping is one of history’s best-kept secrets and most important untold tales … Through its logic we have let the planet go to ruin – and through its logic we now have a chance to avert that ruin.’

Our world is governed by the numbers generated by the accounts of nations and corporations. We depend upon these numbers to direct our governments, organisations, economies, societies. But where did they come from – and how did they become so powerful?

The answer to these questions begins in the Dark Ages, with the emergence in northern Italy of a new form of accounting called double-entry bookkeeping. The story of double entry reaches from the Crusades through Renaissance Venice to the factories of industrial Britain and the policymakers of the Great Depression and the Second World War. At its heart stands a Renaissance monk, mathematician and magician, colleague of Piero della Francesca and Leonardo da Vinci, and his celebrated treatise for merchants. With double entry came the wealth and cultural efflorescence that was the Renaissance; a new, scientific worldview; and a new economic system: capitalism.

Over the past one hundred years accounting has flourished to an astonishing degree, despite the many scandals it has left in its wake. The figures double entry generates have become a sophisticated system of numbers which in the 21st century rules the global economy, manipulated by governments, financial institutions and the quant nerds of Wall Street.

And the story of double entry is still unfolding – because today it might be our last hope for life on earth.

Double Entry tells this remarkable story for the first time.

What the critics say about Double Entry:

‘A timely, topical, readable, and thought-provoking look at the history and legacy of double-entry bookkeeping.’ Elif Batuman, author of The Possessed

‘The invention of double-entry bookkeeping provided the foundation for an ordered modern economy. This elegantly written account of its invention and progress charts the epic journey of the humble device that showed how to count the cost of everything, from the Doge’s Palace to the acrobatics of John Maynard Keynes’s General Theory.’ Nicholas Wapshott, author of Keynes Hayek: The Clash That Defined Modern Economics

‘Gleeson-White’s small but perfectly formed Double Entry was my unexpected pleasure of the year. What a pleasure to read an Australian telling of a global story.’ Gideon Haigh, The Australian‘s Books of the Year

Double Entry is published by Allen & Unwin. The paperback edition was published in February 2012. You can buy the kindle version here and find information about buying other ebook versions here.

Double Entry: How the merchants of Venice created modern finance is published by Allen & Unwin UK in the United Kingdom and by WW Norton in North America.


Preface: Bobby Kennedy and the wealth of nations and corporations

1  Accounting: our first communications technology

2  Merchants and mathematics

3  Luca Pacioli: from Sansepolcro to celebrity

4  Pacioli’s landmark bookkeeping treatise of 1494

5  Venetian double entry goes viral

6  Double entry morphs: the industrial revolution and the birth of a profession

7  Double entry and capitalism – chicken and egg?

8  John Maynard Keynes, double entry and the wealth of nations

9  The rise and scandalous rise of a profession

10 Gross Domestic Product and how accounting could make or break the planet



98 Responses to Double Entry

  1. Daniel Osmer says:

    What a wonderful intro to Double Entry Accounting! I am assembling an accounting in a nutshell that is an accelerated method for learning d. e. accounting as part of the financial drivers license for teens. Can you share more of your book and how can I get a copy?
    Best Wishes,
    Daniel Osmer, Sebastopol, California
    Associative Economics Cafe

  2. Thanks Daniel, that’s great to hear. My book’s out in Australia at the end of next month and according to my publisher at Allen & Unwin you’ll be able to order it online. So far it’s not being published in US. And yes, I can share more of my book – a chapter outline might be best thing? I don’t have it to hand but I’ll post it here soon.
    Thanks for your interest. I like the sound of what you’re doing too. More anon.
    cheers, Jane

  3. Daniel Osmer says:

    Thanks for the reply. I’ll look forward to your post about double entry. I am curious as to how you came to your conclusions about the essential importance of accounting and the perspective it brings? Thanks Daniel Osmer Sebastopol, CA

  4. Hi Daniel – I’ve just put the contents of my book up (see above) which should give you a better idea of how I’m approaching the subject. I’m not planning to write more about it just yet but probably will when the book’s out in November.
    As for how I came to my conclusions, I’m not sure I could put it in a sentence or two, it’s just a sense I had when first studied accounting and nothing I’ve read since has convinced me otherwise – especially while researching the book. It seems to me this is where value is, if not created, then crystallised or quantified.

  5. Daniel Osmer says:

    Hello Jane, Thanks for the outline. I look forward to reading the book when it comes out. I have been writing about Luca Pacioli since 1998 when I first learned of his story from a Marc Desaules presentation when he was visiting California from Switzerland. The new perspective in art was compared to the new perspective possible in double entry accounting as new ‘organ of perception’.
    I am currently attempting to synthesize d. e. accounting into a form that can be presented to middle school/high school students. Best of luck to you. Daniel O.

  6. Wow how interesting, Daniel, that you’ve been writing about Pacioli since 1998! I first heard the name Luca Pacioli in an aside from my accounting lecturer and was intrigued. Yes, the connection between perspective in art in 15th century Italy and DEB is very thought provoking.
    From what I can gather online, what you’re doing sounds fascinating and important. (I’ve just googled Marc Desaules too, he seems to be involved with your work in California, is that right?) All the best to you too. I’ll be following your work with interest. cheers, Jane

  7. Daniel Osmer says:

    Hello Jane. Yes, our little group will be very interested in your book when it comes out. If you don’t mind, I would like to write a book review for the economics journal ‘Associate’ and the yahoo user group. Christopher Houghton Budd and Arthur Edwards are the editors and my son who lives in Switzerland hosts their website. Daniel O.

  8. Hello again Daniel – I’d certainly not mind if you reviewed my book! That would be wonderful. I wonder if there’s a way of sending you a review copy? I believe finished copies are due this week. cheers, Jane

  9. Daniel Osmer says:

    That would be terrific! I’d get right on it.

    Daniel Osmer
    Box 2557
    Sebastopol, CA 95473
    (707) 292-5281
    I am currently a real estate professional, weekly science buzz cafe host and a former educator trained in standard elementary teacher training as well as Waldorf training. I also have articles printed in an economics journal from England (31 years old) over the course of the last 8 years.

  10. james says:

    this is an interesting book.
    modern accounting is always thought to be originated from the western world, i.e. Venice merchants. how about the history of accounting in the oriental world, e.g. ancient China.
    i hope that it shall be an interesting topic for your next book

  11. Thanks James.
    And yes, you’re absolutely right to mention the non-western origins of modern accounting. In my book I do trace the possible origins of Venetian/northern Italian accounting to the Arab world and India (there’s anecdotal but not much documentary evidence supporting this) but the contributions of China to modern accounting do not come into my book.
    If I were to continue to write about accounting I’d certainly pursue this line of enquiry (especially as by pure chance my father had a passing involvement with the economist who set up the Chinese national accounts in the 1950s).

  12. Daniel Osmer says:

    Hi Jane and James,
    I would agree that there is early evidence of advanced accounting practice in other cultures including South America, the Near East, India and China. However, a book about the history of accounting in China or any other country would fall flat in comparison to the unique confluence of events and world story that the book ‘Double Entry’ documents. Luca Pacioli did not invent Double Entry Accounting but he was in the peculiar position of being alive soon after Gutenberg’s Press made it possible for mass distribution of a complete description of an already existing accounting technique, now codified for the first time. In addition, Pacioli’s pedagogical brilliance should not be underestimated, for he was a brilliant and innovative educator at a time and place in history where the creative intelligence of the individual human being was beginning to be celebrated and emancipated. For whatever reason, this did not occur in other cultures to the extent that it did beginning with the Renaissance centered in Northern Italy.

    In economics, it is a well-known phenomenon that any route that leads to the temple will experience heightened economic activity from the increase in traffic. Jane rightly points out that the fact of the Crusades and its focus on Jerusalem inaugurated hyper economic activity in Northern Italy that set in train an unprecedented accumulation of surplus capital that continues today. I would also like to suggest that there was a change in human consciousness that is indicated in the new found technique of perspective in art, perspective in accounting, the new science of optics and the sea change occurring in mathematics. Ironically, many of the necessary elements needed for this great story were provided by the brilliance of previous Arab and Indian accomplishments, including the Arab translations of Aristotle and Euclid.

    With little exception, the fact of generally accepted accounting practice is virtually a universal language used in most every culture of the world. From one point of view it is the language of capital and modern finance. As was pointed out on page 11, accounting does not just refer to ‘counting’ but also to story telling. Those individuals who know how to ‘read’ and ‘write’ the language are able to perceive the ‘story’ behind the numbers, the tale told in the relationships of the various figures in the financial statements (past insight) and the financial forecasts (future foresight).

    I am still in the midst of reading the book and I look forward to the comments and insights of other enthusiastic readers.
    Daniel O.
    N. California

  13. Thanks Daniel for your fascinating comments. Yes, I think you’re right to argue that the unique conditions in 15th century Italy and especially the printing press made the Italian/Venetian contribution to the history of accounting the most significant of all, because it is this system that shaped our contemporary accounting practices.
    And I also completely agree that for whatever reason (some attribute it to the rise of the merchant class itself) there was a change in consciousness around the 14th century which was associated by a new spirit of measurement and counting, as you say, manifested in perspective painting, optics (the first spectacles for correcting eyesight), time telling (clocks), maritime charts, etc. It’s fascinating!

  14. I caught your interview this morning with Geraldine Doogue on Saturday Extra, Jane. I must look for “Double Entry”. It sounds fascinating. However, to me, the highlight of your interview was at the end when you said something to the effect that it is becoming clearer we don’t factor the value of our natural resources into account.

    Amen to that! And the world is now paying in spades for economists failing to realise the quantum of the publicly-generated rent of our land and natural resources in the economy. Of course, this leaves it open to the 1% to privatise this value owed equally to all of us.

  15. Thanks for your comments Bryan. I too am especially interested in the valuing of natural resources. And how fascinating, the way you put it, your point about the world now paying for economists failing to realise the quantum of publicly-generated rent of our land and natural resources. Thanks for your link, I’m going to study this more over there. And yes, that’s always the danger, that the 1% will privatise this value.
    I’ve been following the work being done in Bolivia (and elsewhere) on enshrining the rights of nature in law, which the Bolivian parliament did earlier this year. It seems a very hopeful avenue to me. At least it gives nature similar legal rights to corporations, etc. Anyway, will now check out your link! Thank you.

  16. Maybe there’s a book in it for you, Jane! 🙂
    Hey! But I’m still going to get “Double Entry”.

  17. PeterLondon says:

    Hi – can I buy an eBook version of this wonderful looking book? I can’t find it on iTunes. Thanks, Peter

  18. Thanks Peter.
    Here’s the link to the publisher’s website. It has a list of the ebook outlets, which include Booktopia, gleebooks and Readings. It also says this, about reading it on apple devices:

    ‘You can find and read Allen & Unwin ebooks on your iPhone, iPad or iPod through the Borders, Ebook Reader, Kindle and Kobo apps. These apps can be downloaded at no charge from the Apple App Store on iTunes.’

  19. PeterLondon says:

    Many thank – alas I am in the UK, and all those sites are saying the book in not available in the UK. Do you know when the UK release will be?

    Need a worldwide release in this internet age I think! 🙂

  20. Oh right, I didn’t realise that. I’ve just heard from Allen & Unwin that arrangements for UK are still in progress. But in the meantime, apparently you can order the hard copy from the A&U website.
    And yes, totally agree with you about worldwide releases in internet age – think that day is fast approaching, if not already arrived.

  21. Just finished it, Jane – and just had to blog about it.
    Despite the last line in my blog, I’m not really setting you homework, Jane, but if I can ever help? 🙂

    Buy “Double Entry” folks – it’s a great read!

  22. Thanks for a great review of ‘Double Entry’ Bryan, which I’ve just read and commented on over at your blog. As I say there, I can see your thinking on economic rent is an incredibly fruitful way to approach the costing anomalies I’m trying to get at in my book and I’ll be reading your blog and mulling over your thinking over the next month or so. Stay tuned!
    Thanks again so much. best, Jane

  23. Alfred Gans says:

    I am a disillusioned accountant – not with double entry – but with its MISUSE.

    Your book, “Double Entry,” is great. Your description of the life and work of Luca Pacioli is fascinating. He truly changed the way commerce grew from 15th century on. He produced order and that is what accountants in the 19th and the first half of the 20th century thrived on. “Double Entry” reveals much about my chosen profession of accounting and the development of capitalism that should be better known to all my colleagues. Thank you!
    As you say, the story of double entry is still unfolding. However, I can’t agree with your conclusion that today “it might be our last hope for life on earth.” Not for commerce and not for the national accounts of governments. I come to a different conclusion using the evidence in your book.
    Let me discuss that misuse of double entry with some very good examples straight from your book.
    You show the development of double entry when the Venetians first used it in the 15th century for business ventures. These ventures all had a beginning and an end in time. You show how double entry was adapted by businesses that were ongoing. Until the 19th century, and even now, the value of double entry is that it substantially reduces clerical error through the need to balance the books with a trial balance. It is a record that reduces fraud. Furthermore, double entry not only inspires confidence, it was instrumental in overcoming the religious objection to usury.
    But double entry lost its way. For the past half century, the misuse of double entry continues to hold back the accounting profession. Here are some of your examples that show that we accountants continue to let our profession down:
    Page 143 – “Ironically, if Hudson and other nineteenth-century railways tycoons had been obliged to comply with today’s more comprehensive accounting standards, it is possible the vast railway systems of the nineteenth century would never have been built.”
    Page 198 – “The collapse of massive enterprises like Enron and the Royal Bank of Scotland raises serious questions . . . In particular, especially given that the Enron case was followed by the demise of its accountant and auditor Arthur Anderson, it raises questions about the accounting and auditing of corporations in general, particularly of large multinational companies whose complex and exotic accounting practices obscure their true financial state and make possible these sudden and spectacular failures.”
    Page 199 – “However, not only has no such fall ensued” (i.e. the predicted fall of the accounting profession because of this and other problems) “but it turns out that these accounting scandals are a regular feature in the landscape of accounting. They are as old as the profession itself, dating back to the earliest days of the formalised use of collective capital: the corporation. Corporations and accounting scandals go together like Gordon Gekko and greed. The nineteenth and early twentieth centuries are rife with corporate collapses of the magnitude of Enron’s and comparable in their elements. And they all stem from significant accounting misstatements orchestrated by senior managers.”
    Pages 200/1 – “The requirement that company accounts be audited was a chief component of this regulation. It seems, however, that in the nineteenth century a culture of ‘auditing excuses’ was created, which permitted accountants to deny a primary responsibility for detecting accounting irregularities perpetrated by management, and this culture continues today. Auditors were required by law to focus exclusively on accounting records and the balance sheet, and not to question the honesty of senior managers or tell them how to manage.”
    Page 209 – “The demise of ABC Learning is similar to the cases of HIH and One-Tel. All three companies attempted to expand their market share as rapidly as possible, a strategy which entailed significant risks which were not clearly reflected in their financial statements.”

    You also quote Howard Ross (page 194) when he says “It would be interesting to know how many of those whose hearts leap up at the announcement of an increase in earnings per share have any idea of the estimates, judgments, and conventions that must go into all such calculations.”
    When the economy falters, misleading figures come to light. Companies that mislead the public, intentionally or otherwise, come crashing down. As Warren Buffett is reported as saying: “It is only at low tide, before we know who is naked.”

    Doesn’t all this go a long way to demonstrate that double entry has been misused? Why don’t the accountants, financial analysts, economists and indeed governments, who all recognise the deficiency of annual profit reporting, throw it out? Instead, as you say on pages 199/200:
    “Equally, the responses of lawmakers and watchdogs have been the same over the past one hundred years: Tinker around the edges of the law, found new watchdogs, proclaim a new era of greater scrutiny and let accountants and auditors out to play with the managers of vast sums of other people’s money. Never are the fundamentals of this arrangement questioned – the corporate structure itself or the role of accountants as its referees.”

    Why is that? When I first learnt double entry in high school, I was fascinated by its promise of certainty and accuracy, its apparent ability to tax fairly and prevent fraud. Probably all students of accountancy accept this. Yet two decades later, I was so disillusioned with financial statements, I returned to university to strengthen my belief in our profession. Even though I earned a Masters degree, I was then even more concerned that we accountants had lost our way. I was concerned that my professors and my colleagues only wanted to, as you say above, tinker around the edges of the law. They refused to consider that reporting annual profits for large complex organisations in the present form was arbitrary and ineffective. They all know this, yet they persist.

    One quote from my studies summed up my concern because it approximates the true situation that I saw all the time:
    “Annual reported profit of a corporation is what the CFO says it is unless the CEO can persuade the CFO that it is something different.”
    Unfortunately, I have lost the exact words of the quote and its author but that was the gist of it. I believe annual profit reports are as simple as that. Despite strict arbitrary rules, they reflect the conscious or unconscious biases of those in control.

    The reason why accountants persist in reporting these misleading, unreliable figures is the same reason as almost all religious faiths persist. There must be several million accountants in the world all educated in a similar way and all have devoted their working life to these procedures. Hugh Mackay in his book “What Makes Us Tick” sums it up (page 88/9):

    “Once we’ve embraced a particular set of convictions – religious, astrological, political or scientific – we constantly seek reinforcement of them. We love to hear people saying things that confirm them. We even enjoy, in a limited way, being attacked, because the experience of defending ourselves against attack is itself a reinforcing, affirming experience.”

    On the last point, I remember a speaker being ridiculed by the audience at an accounting conference by suggesting that the profession should concentrate more on forecasting. Looking forward instead of always looking back!

    However, I am not throwing double entry out. It is still very useful to maintain accuracy, reduce fraud and to provide historical cash flow statements. But in today’s world, double entry produces annual profit and loss statements and balance sheets that do not (except in a narrow legal sense) give a true and fair view of the Company’s financial position and of its performance for the year.
    As the accounting profession is shown to be wrong so often, why do governments, economists and even other financial professionals base decisions on these misleading profit reports? For example, examine these five discussion points:
    1. What was useful for financial reports for small businesses such as tradesmen, small shops and professions is now being used for large corporations with massive fuzzy figures in their balance sheets. When you examine the valuation of huge plant and equipment, mines, inventories, goodwill, to name a few – accountants all know that the values rarely represent their current market or potential values at the date of balance sheets. These values may be considerably higher or lower and, in the case of goodwill, often left out altogether.
    2. My accounting and auditing education emphasised the need for using verifiable figures. Forecasts were derided. However, just what is verifiable in the value of a depreciating cost of a Building that everybody knows is going up in value year by year? What is verifiable in the value of inventory that can be valued in any one of several different ways? And why is there no Goodwill on a balance sheet simply because the company developed goodwill over many years and did not purchase it outright? And what is the value of Accounts Receivable in a bank’s balance sheet when a financial institution can juggle the Provision for Bad or Doubtful Debts and the resultant annual profit?
    3. What about dividends? We want to be sure that the value of the company is not degraded by the distribution of too much dividend. Do we really need this arbitrary profit figure to guide us? Already most companies pay out only a proportion of their profits in dividends. Trusts often ignore actual profits in their distributions. What is important is that the payment of dividends is limited to the amount that can be paid out without denigrating the company’s ability to carry on business. This can be determined more easily by cash forecasts.
    4. What about income tax? Show me an accountant who does not look at the way income tax affects decisions and I’ll show you an incompetent accountant. Yet the rules of taxable income have locked the accounting profession into accommodating the arbitrary rules of income tax. Yes, I know there are adjustments made in the financial accounts to overcome this – but the income tax rules generally inhibit the profession changing its own rules.
    Politicians and bureaucrats will say we need income tax and therefore we need the annual profit figure. Surely taxing consumption sends better signals to the economy than taxing effort and income. More importantly, the very rich can choose (legally or otherwise) whether they pay any income tax and, if so, how much. This really means income tax has become a tax on the middle class only and has lost its economic utility when compared to consumption tax.
    5. Finally, the auditor arrived – and following GAAP they certify the records and the profit reports even though they cover themselves in legal exceptions – but this gives the appearance of certainty to a very vague profit figure.

    Double entry will show the net gain or loss for a corporation over its whole life. What it can’t do is divide the profit into annual or monthly portions except by applying estimates and arbitrary rules. Income tax departments, corporate regulators as well as auditors force accountants to produce an arbitrary dissection of profit or loss into years – but the greater the value of the balance sheet, the greater is the arbitrary irrelevance of the annual profit.

    You can argue that using known figures is better than forecasting. Really? If the only verifiable temperature you have is the one for Hawaii – would you use that to estimate the temperature in Auckland? A silly example, maybe. But any analyst can tell you that the audited profit of a highly capitalised complex corporation is a long way from telling you if this is a company whose shares should be bought or sold.

    When I studied accounting, there were many standards that were needed for financial statements. These included consistency, conservatism, verifiability, quantifiability and relevance.
    Unfortunately, necessary as they appeared to be, some harmful effects developed including –
    • the use of the consistency concept to retard new accounting developments;
    • the use of the doctrine of conservatism to hide resources;
    • the use of verifiability to keep our direction firmly on the recorded past; and
    • the use of quantifiability to ensure we ignore the influence of inflation on values.
    Yet, as discussed, these standards have been already been eroded in Balance Sheets. The fourth standard – relevance – is being constantly updated in the Balance Sheet with estimates – but these estimates are mostly irrelevant to the calculation of reported annual profit.
    The more capital intensive a corporation and the longer the time frame for investments, the fuzzier are its Balance Sheet figures. With the distortions caused by mergers, inflation and technological change, the figures are even more meaningless. For example, how meaningful are reported annual profit figures for:
    • A large commercial skyscraper subject to depreciation or appreciation over many years.
    • The development and long term value of a mine, especially in a foreign country.
    • The development, production and sale of a new pharmaceutical drug.

    The same problems apply fully to all capital-intensive industries and to a lesser but yet significant extent to all other projects. It becomes even more complicated in multi-product and multi-national companies. All this applies without deliberate fraud. It happens in companies that act in good faith who try to be as honest as they can be with their figures.

    What do investors and analysts do with fuzzy figures now reported? They turn them into P/E ratios and use them to fuzzily value the worth of the company. Of course, analysts may adjust them with their own fuzzy numbers, but without internal knowledge these can be even further from reality. Analysts then take their fuzzy figures and attempt to forecast future cash flows and use present value estimates to determine the worth of each company.

    As the profit reports are awash with estimates, for what are we waiting? Why not go all the way and have forward estimates that are directly meaningful, produced by company staff?
    Well-managed companies already forecast their future cash flows – why not use their figures? They exist already. The company could list its assumptions as well as provide figures indicating how sensitive the future cash flow is to variations in their assumptions. The company could also declare how various risk factors would affect the future cash flow and the net present value derived from these forecasts.
    Auditors would still be necessary – not to certify the figures (how do you certify a forecast?) – but to provide their view on the suitability of the systems used for forecasting and their agreement that the sensitivities of the assumptions are fair.

    Even with all these checks, the results are still forecasts – so nobody will make the mistake that now occurs of thinking the figures are exactly right.

    Each year, the auditors can also report on how the previous forecasts varied from what actually occurred, explain why and suggest improvements in the forecasting methods.
    Reported annual profits are too arbitrary, too easily manipulated and nowadays not directly relevant to investors. Can’t we see, it can’t be done? Instead the accountancy profession should adopt a new direction and determine ways to improve company forecasts to make sure they are relevant and useful and have those forecasts published.

    There is no perfect answer but at least let us work towards one. Let us use double entry the way it was designed – for accuracy, for reporting past events and to provide historical cash flow statements.

    Let us scrap these failed fuzzy annual profit reports. Substitute the best cash flow forecasts the company can produce and calculate the net present value accordingly.

    One final thought unrelated to the discussion above. Your extension of double entry to GDP puzzles me. Probably as an accountant, I find it hard to mix financial transactions with vague feelings for environmental assets, the value of health and education. I believe GDP should stick to monetary transactions. These other economic issues should be dealt with separately comparing the costs of fixing them with the losses if you don’t.

    Finally, thank you very much for your book. It explained my profession better than I have seen elsewhere and made me think more deeply about accounting.

    • Thank you so much, Alfred Gans, for your fascinating comments and queries about my book. You have given me much to think about! I suspect it will take me some time to consider all you say about reforming corporate accounting.
      In the meantime, in answer to your query about why I say – or quote a Guardian journalist who said – that accounting may be our last hope for life on earth: I included that quote because I think it demonstrates how crucial it is that we rethink the way we account for national wealth. The way we currently account at a national level encourages us to run down resources and treat nature as free, among other things. Unless we address what I consider to be these fundamental issues of measurement and value at a national level there is a systemic incentive to destroy the planet.
      As for my extension of double entry to GDP – I didn’t extend it to GDP. Maynard Keynes, Simon Kuznets and the other economists who constructed the national accounts for USA and Britain during the 1930s and 40s did. And I agree: I too find it hard to mix financial transactions with things like the value of health and education (although we give them monetary value all the time).
      I do think it’s possible to value environmental assets in monetary terms, eg in terms of rent. I think that giving a monetary value to environmental assets is as arbitrary, or not, as valuing human labour in monetary terms. I think we’re just not used to doing it; it does not go along with our particular current set of convictions (to extend your quote from Hugh Mackay) about money, nature and value.
      I will read your comments about corporate/business accounting more closely over the next week or so and hope to have more to say here in reply. In the meantime, after speaking to some accounting professors who also gave me some feedback, I’m very inspired by the idea of questioning the corporation itself, as business and management thinker Charles Handy does here:
      I so appreciate all your thoughts – they are extremely stimulating and thought provoking. Thank you very much.

    • sonywarsono says:

      Hi Alfred, Right now there is an explanation of the double entry. If you want to know it, please read the paper titled “Solving the Mystery of Double Entry Bookkeeping” that is available at

  24. A most intriguing run-down, Alfred! I tend to agree with you that GDP is a good measure and will never be able to value some imponderables. However, it would be an excellent start (for we and the planet) if we are able to acknowledge that almost 50% of GDP is represented by the imputed rent of land and natural resources, but the economics textbooks claim this is only 1% to 2% of the economy. This is surely where we start to go wrong, because these unearned economic rents, generated by the community, are owed back to the community instead of being largely captured by the 0.1% so that we have to pay taxes on our EARNED incomes.

    Sorry to go on about it, but this piece by Steve Keen and the comments that follow are also starting to get to the heart of the matter. Jane may be interested too:

  25. Think we posted simultaneously, Bryan. I’m definitely interested in your link above and also, as I’ve said, in trying to work your thinking into mine, so to speak. (You’ll note I use the word ‘rent’ above. A very superficial incorporation of your ideas but your concept and language are v useful.) I’m interested in your idea of unearned economic rents.
    I’ve just started reading ‘Green Economics’, which goes beyond concepts of measuring and valuations, obv very radical economics but fascinating to me and where my thinking is heading. Slowly evolving, as part of my PhD.
    Thanks for this discussion – I’m loving it. Esp good to have strong intelligent criticisms, very good for my thinking.

  26. Daniel Osmer says:

    A synopsis and review by Daniel Osmer for Associative Economics Cafe of the new book by Jane Gleeson-White – ‘Double Entry’. March 7, 2012

    Double Take
    It is difficult not do a double take when reading that an invention is so significant that it can ‘make or break’ the planet! But that is just what Ausie Jane Gleeson-White claims in her new book, “Double Entry” published by Allen & Unwin this past autumn. Not only that, she calls it history’s best-kept secret and most important untold story that has at its heart a Renaissance monk, mathematician and magician – Luca Pacioli. The invention she is talking about, double entry accounting, began in its simplest form with the first settlements around Jericho when agriculture, salt mining and an economic surplus arose. The long evolution of bookkeeping (accounting) went through a major metamorphosis during the Middle Ages when some of the northern Italian city-states practiced a rudimentary form of the new Double Entry. This technique was first codified and published by the mathematician monk, Luca Pacioli (1494), who was also friend and collaborator of Leonardo da Vinci, Piero della Francesca and Albrecht Durer.

    In the preface, the author refers to her economist hero John M. Keynes and his theory of the system of national accounting developed in the 20th century as one of the reasons for writing the book. The research revealed that his system was influenced by Pacioli’s Venetian bookkeeping. It is proposed that double entry bookkeeping made the wealth and rise of the Renaissance possible, enabled capitalism to flourish and evolved into a sophisticated system of numbers that now governs the global economy. Thus, this ancient technique is still in daily use throughout the world today. In ten packed chapters Gleeson-White attempts to make the case that, through this worldwide technique relied on by most nations, the planet is being ruined. She is also convinced that the reverse is true! Is there more to double entry than accuracy, measuring and ordering the world’s resources for consumption and profit?

    Through a fascinating and diverse historical cast of characters almost rivaling the cast of thousands in the Ten Commandments film, Gleeson-White weaves an intricate tale from Jericho, Mesopotamia and the Renaissance to the Industrial Revolution, the World Wars to Wall Street and the modern global economy. She reminds us that accounting isn’t just about numbers; it is also a form of storytelling that reveals the intentions and economic actions of the entity that is being accounted for.
    Ancient Origins; Modern Practice
    Over 10,000 years ago writing derived from counting according to the cited research of French archaeologist Denise Schmandt-Besserat. She also discovered that ancient accountants used fired clay tokens shaped as cones, cylinders, ovoids and spheres representing grains, animals and commodities that were placed in clay envelopes imprinted with signature seals to record possessions. Early accountants learned to press the token shapes into the wet clay of the envelopes and eventually flattened them into the first clay tablets.
    Pacioli became the leading mathematician of the Renaissance by studying under Francesca and discovering a copy of Fibonacci’s Liber Abaci. He popularized, in the vernacular, the new Hindu-Arabic numbers and algebra to a wide audience, leaving behind the Abbaco method of algebra. The newly available Guttenberg press made all the difference! His Summa of 1494 not only contained the 27 pages of Double Entry but also laid the foundation for the use of mathematics for solving abstract arguments and prepared the way for modern science. As a teacher, Pacioli was known as an innovative and effective educator who introduced many students to double entry bookkeeping as well as the new mathematics of the day. Over two centuries later accounting enthusiast John Mair in 1765 commented on the value of accounting: “The theory of this art or science is beautiful and curious, very fit for improving the minds of youth, exercising their wit and invention, and disposing them to a close and accurate way of thinking.”

    As Venice moved to the background, the center of commerce and accounting moved to the Netherlands, which acted as a training ground for future accountants as commerce traveled further west from Britain and eventually to America. Richard Dafforne’s ‘The Merchant’s Mirror’ published in London in 1636 was written as a series of questions, answers and ‘rules of thumb’ that included: “Whatsoever cometh unto us for Proper, Factorage, or Company account, is … Debitor. Whatsoever goeth from us … is Creditor.” Even the German writer, poet and scientist Johann W. von Goethe in ‘Wilhelm Meister’s Apprenticeship’ published in 1796 through the character of Werner, makes reference to Double Entry Bookkeeping: “By means of this he can at any time survey the general whole, without needing to perplex himself in the details. What advantages does he derive from the system of bookkeeping by double entry? It is among the finest inventions of the human mind; every prudent master of a house should introduce it into his economy.”

    Chapter six documents the effect of double entry on the Industrial Revolution. Fast-forward to the large factories and the rise of the joint stock companies established in England toward the end of the 18th century. In 1772 Josiah Wedgewood’s industrial pottery factory was so successful it was difficult to meet demand and serious cash flow issues arose, prompting the adoption of double entry bookkeeping. From this process he discovered the importance of distinguishing between fixed and variable expenses, as the company created a significant surplus allowing him to invest in the voyage of his grandson Charles Darwin on the Beagle. By 1900 America became the largest economy in the world from the fortunes created by du Pont, Morgan, Carnegie and Rockefeller. This was in part due to their reliance on double entry. Rockefeller began as a bookkeeper and attributed his wealth and success to his mastery of double entry bookkeeping.

    In chapter seven, Double Entry and Capitalism, German economist Werner Sombart is cited as describing the emergence of capitalism and the appearance of double-entry bookkeeping in the thirteenth century as causally related. From his 1902 six-volume work on capitalism: “It is simply impossible to imagine capitalism without double entry bookkeeping; they are like form and content.” The usefulness of capital is confused with capitalism, which is the appropriation of capital by a few to the exclusion of others. The advent of the corporation also influenced and was influenced by double entry, as the role of the auditor turned bookkeeping into a full-fledged accounting profession. Gleeson-White cites the origins of auditing from detailed research and her keen sense of a ‘good story’. Fourteenth century Chamberlains in London had to be audited (from the Latin ‘to hear’) or heard, because very few people could read or write. Written records only came into use later, in the seventeenth century.
    Double Edged Sword
    Gleeson-White identifies and emphasizes Keynes ‘theory of effective demand’ from his 1936 publication “The General Theory of Employment, Interest and Money” as providing the theoretical basis for a new ‘System of National Accounts’ (SNA) based on Double Entry Accounting. With the help of Stone and Kuznets it became the foundation of international accounting that introduced the Gross National Product (GNP) as the key economic indicator for a nations economy (now GDP). Keynes ‘demand management’, the international clearing house idea and hoarding avoidance was, according to his biographer Robert Skidelsky, at the “heart of the matter” for preventing unemployment. The idea was to close the ‘output gap’ created by decreasing employment, by increasing demand (spending) in the right amount. How all this was ultimately implemented under the influence of Washington, DC made the architects of these innovations question the validity of their own work. According to the author, the increased reliance on mathematical equations and statistics turned their innovations into a beast rather than the blessing it could have been.
    A Financial Ecology
    In summary, her premise: capitalism, corporations and nations depend on double entry accounting in order to guide economic activity, yet the all important GNP and GDP are flawed numbers that now govern the modern world. Our transactions with the earth and the well being of people are not taken into account. Is it accounting that has not learned to account for the value of everyone on the planet as well as earths resources like the rivers, oceans & air, or is it the lack of a true understanding by double entry accounting practitioners?
    An important unexamined detail is the fact that nations do not attend to the balance sheet like corporations tend to do. They only focus on the flow, the income and expense, and not on the stock or resources and agreements needed – the balance sheet. Overseeing the cash moving between the two types of accounts, I & E and B/S, then becomes all the more useful for guiding economic actions and making more perceptive decisions. Thus, universal accounting practice and sharing replaces econometrics as the guiding light for modern economics. The new perspective art and mathematics of the Renaissance were accompanied by the newly acquired perspective and perception of double entry accounting (bookkeeping). This remarkably simple yet profound technique and practice is a two-way street. Past financial statements and future forecasting statements together enable penetrating and precise insight and foresight – the story behind the numbers.

    Perhaps another book is in the offing? In the further adventures and secrets of double entry accounting the deeper nature of this universal language may still be revealed. Accounting does not really need to treat land (the planet), labor (people), capital (profit) and money (token) as commodities, they can be considered tools and boundaries of the economy. What would double entry accounting look like with this new financial ecology? Rather than looking to create a new kind of green or eco-accountant, all that may be needed is to make the universal language more universally known. Rather than just focusing on the accounts of nations and corporations, the next fruitful step could be accounting literacy for all, especially young people that are just beginning to make their way into the economy. The story accounting can tell has to do with guidance and economic perception toward the future, whether for a whole nation, a company or any individual. How else can we accurately see each other’s needs without transparently sharing are accounts? Thanks to Jane Gleeson-White’s fascinating and engaging book the conversation has begun.

    Jane Gleeson-White has a Bachelor’s degree in economics and accounting and is a writer living in Sydney, Australia. She was also an intern at the Peggy Guggenheim Museum in Venice.

    Daniel Osmer is a real estate professional in northern California and hosts Associative Economics Café. He is a founding participant, Economics Conference of the Goetheanum, Dornach, Switzerland (Associative-Economics).

  27. Dan Palanza says:

    Hi Jane,
    I have been a student of computer-driven bookkeeping for the past 32 years. I learned a sophisticated bookkeeping that included cost-accounting and time tracking when I was an apprentice at a large manufacturing organization 50 years ago. My daughter and I created a small business experiment that was run by a computer driven bookkeeping system that I programmed modelled on the system I learned as a young apprentice. In the store experience run by my daughter, and with other studies since, I learned that a proper book-of-accounts is a natural phenomena. And that the book is complete only when it records a reusable history. I have, in my thirty years, not located a single computer driven bookkeeping program that generates a proper book-of-accounts. In fact, none that even come close.

    Have you written anything on the topic of what constitutes a proper book-of-accounts? Proper in the sense that it yields a complete set of audit-trails, does an internal cost accounting, and can include the accounting of time contributed by individual contributors to the bottom line.

    • Hi Dan – thanks for your question, it’s extremely interesting and pertinent in this age of electronic accounting.
      I’ve not written anything specifically on the topic of what constitutes a proper book of accounts. My interest in accounting is more general, more historical.
      Perhaps someone visiting this blog will be able to answer your question.
      best, Jane

  28. Paul Larkin says:

    Hi, Jane.
    I have just finished your wonderful book. What a fascinating and brilliantly researched and written piece of work! As a studier and teacher of Systems Thinking, you explain so well how this (simple) starting point has influenced not only the structures we put in place to manage our world but how it has so influenced our thinking about the world and our place in it. The environmental and social problems we continue to create for ourselves can be traced to the essentially unconscious beliefs (mental models) we hold about things. Sadly, I suspect that we are now so much in the grip of this ‘economic’ metaphor that we cannot change and that it will utlimately be our undoing. Even the potential ‘solutions’ hinge on a continuance of this same metaphor, i.e. finding ways to value things differently/better within this same system. I think you have presented this dilemma extremely well and I do hope that your book enteres the shelves and minds and thinking of many.
    Thanks so much again, Jane.
    Paul (Melbourne)

  29. Hi Paul – thank you for your wonderful comment. I agree with all you say about environmental and social problems, especially your concern that any potential solutions to these problems hinge on ‘a continuance of this same metaphor’ (I love this phrase). I’d be extremely interested to hear more about your work on Systems Theory, which is something I’m currently exploring (kind of tangentially, for my PhD).
    very best wishes, Jane

  30. Brian East says:

    I recall that British-born, but Australian by adoption, Colin Clark was involved in measuring the foreruner of GDP well before the Second World War. I have a copy of his “The Conditions of Economic Progress” in my library (I confess largely unread) but it shows the early approaches
    in formulation what was to be measured and how. He was of an age to have ‘mixed it’ with Keynes and in fact was teaching (statistics) at Cambridge while Keynes was there (see Wikipedia entry) and produced early studies on National Income Accounting during the 1930s.
    I met Dr Clark during the 1970s while he was at Monash and attending a conference of economists, where he gave a presentation of great lucidity.
    So work was under way to derive a measure of national activity well before the Second World War, and I suspect Clark was aware of the shortcoming of producing a single numerical measure as a summary of a nation’s progress.
    Locally, discussion of the virtues or otherwise of a pulp mill are leading to (or have led to) a focus on what might a generation ago have been strictly collateral issues (a useful Americanism), but are now accepted as factors that need consideration alongside the more strictly economic aspects of the project.

    • Thanks for your comment Brian, very interesting. Yes, Colin Clark also came up in my conversation with Prof Geoff Harcourt on 4 April. The work was underway to construct national accounts in UK before WWII and in US they were constructed during the Depression. I’m interested to hear you think Clark would also have been aware of the shortcomings of producing a single numerical measure for a nation’s progress. It seems all those involved in those early days were, including Simon Kuznets who led the US account construction. It’s just that most of us – especially politicians and markets – forget this now.
      Also very interested to hear your local example of what might a generation ago have been called ‘collateral issues’ (or ‘externalities’) now being accepted as factors that need to be considered. Change is happening.

  31. Anonymous says:

    There is a very interesting article on the specifics of Bahi Khata as a double-entry accounting system in existence in India long before books were written about it in Europe. If you are not into accounting details the history discussion is very interesting.

    The title is “Baji-Khata: The Pre-Pacioli Indian Double-entry System of Bookkeeping” by B.M. Lall Nigam. It is in the Journal ABACUS Volume 22, no. 2, 1986.

    • Thanks for mentioning the Lall Nigam article. Yes, I’ve read it and discuss it in ‘Double Entry’ – it’s a fascinating possibility, more like a probability, that our accounting systems ultimately come from India, as does our mathematics.

  32. Davide Angelo says:

    HI Jane – I am about halfway into Double Entry…it’s quite an achievement and I find myself looking forward to the journey each night with these intriguing figures when I take it to bed with me! – Congratulations.
    Davide Angelo

  33. Irene says:

    Hi Jane,

    My lecturer has recommended reading your book, but I’m having a hard time finding it. I prefer to read hardcopy (old fashioned…!) can I just confirm that your book is published not only on-line in Australia? I live in Sydney so am happy to pressure the bookstores but just wanted to check first.

    Thank you and kind regards, Irene.

    • Hi Irene – I’m sorry to hear you’re having trouble finding a copy of ‘Double Entry’. Yes, it’s definitely published in hard copy, the paperback only came out last February. I wonder where in Sydney you are? I think it’s stocked in gleebooks, Abbey’s and in some of the university bookshops, but perhaps not in yours. It should definitely be available so if you can’t find it do, as you say, pressure the bookstores! I’m curious: what are you studying? all good wishes to you, Jane

  34. Irene says:

    Perfect, thank you, Jane. Will go to Abbey’s on Friday, if unsuccessful will order it in, looking forward to reading it over the break! Studying Political Economy (mature age student!) at Sydney Uni and your book was mentioned by Joseph Halevi before commencing one of our lectures, spoke very highly of your work, congratulations and thanks for the fast reply. Kind regards, Irene.

  35. Thanks for letting me know what you’re studying and where, Irene. Fascinating to hear my book’s being mentioned in political economy at USyd. Wishing you all the best with it, Jane

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  38. Hi Jane,

    I’m a retired professor of ag economics and really enjoyed your book.

    On page 97 of Double Entry, while quoting the 15th century author named Pacioli, you say:

    “The first thing a merchant must do, says Pacioli, is to make an inventory of everything he owns. A merchant must always put down on a sheet of paper or in a separate book whatever he has in this world, personal property or real estate, beginning with the things that are most valuable and most likely to be lost, such as cash, jewels, silver, etc.”

    My question is, How is the value measured? Is it what the present owner paid for it? Or, is it an appraised value of expected selling price now?

    Any perspective or ideas out of that time period? Thank you!

    • Thanks so much for your comment, Howard – and for your question. It’s an excellent one. Pacioli says (and this is mentioned later in the same chapter, on p. 102) that when entering the inventory the merchant must give ‘each thing a customary price’. And advises the merchant to make the prices ‘rather higher than lower; for instance, if it seems to you that they are worth 20, you put down 24, so that you can make a larger profit’.
      Which suggests to me that the problem of valuation was as intractable in Pacioli’s day as it is in ours. What do you think?
      cheers, Jane

  39. Brian East is certainly correct about Colin Clark. He was indeed a great man. His “Population Growth and Land Use” [Macmillan, London, 1968] mentioned that land rents have ranged from 50% down to as little as 26% of the value of agricultural product (pp 65, 66), yet our modern economics textbooks try to tell us that our TOTAL land rents–i.e. agricultural, residential, and commercial/industrial, the latter obviously being significant–are only in the order of 1%-4% of the economy. It comes as no surprise then that land and natural resource rents are also accordingly vastly understated in the national accounts: they don’t really exist anymore.

    That little fabrication has left the field open to the big rent-seekers to make themselves billionaires out of our land and natural resource rents without much interference from government. Colin Clark wouldn’t have stood for such nonsense!

    • Thanks so much for your thoughts on this Bryan. I can see that your focus on land use, natural resources, rent is of major importance. It keeps coming up in my researches/thinking, too. Now that you’ve drawn my attention to it.

  40. Howard Doster says:

    Hi, This is my first particpation in such correspondance.
    Thanks for pointing out Pacioli’s later remark.
    Am I to conclude that he was thinking of estimating a current value, and not merely recording the price the present owner paid for an asset?
    If Yes, when/why did the accounting profession switch to recording and carrying assets at cost?
    Is that now the practice in most countries?
    What fun,
    Howard Doster

  41. Hi Howard – well I’m glad you’ve joined the conversation.
    Yes, reading between the lines I do think Pacioli seems to be suggesting that merchants estimate current value, rather than recording the price the present owner paid.
    Off the top of my head I’m not sure when/why historical cost became the standard way to value assets, but now you’ve asked, I’m now keen to know the answers to when and why.
    Although in the USA at least, mark-to-market valuing has been increasingly used since the 1980s.
    The whole area of valuation (especially fact it’s so arbitrary, contested) is fascinating to me – I guess because, ultimately, that’s what accounting is all about.
    cheers, Jane

  42. Howard Doster says:

    Hi Jane, is accounting all about value? I hope that disturbed accountant who commented here earlier will respond on this. I want help on this question.

    Oh, in perhaps 1966, after staring at the five questions for an hour, I started my PhD prelims in accounting with a poem:
    Value, Value, Value.
    Cost, Cost, Cost.
    Economist, Accountant.
    Who is lost?

    I then preceeded to answer each of the five questions, written by my cost accounting professor,
    but I tended to answer as an economist. (I was working on a degree in Agricultural Economics)

    I passed the written exam, and got no hard questions on the accounting part of my oral exam.
    I graduated, and accepted a position teaching farm management at Purdue University,a great school where I had a good career, before retiring twelve years or so ago.

    At various times, I’ve remembered my poem, including now, after reading your book, and buying 12 copies, so as to gift a copy to each of oour four kids and eight grandkids.

    Now, I may, or may not, write something on this for farmers and their HS kids.
    Reading your book has motivated me to consider this again. Thanks much.

    Oh, in USA, while there’s talk about marking to market, I don’t think I’ve seen any publicly traded corporations with all their assets at market on their balance sheet. Who does this?

    What fun,
    Howard Doster

    • Pyrite says:

      Yes, Pacioli did say to mark up trade items to the intended sale price, when making the opening balance entries.

      I may not be up to coming up with a great or expansive answer but here might be a tidbit.

      Aka, Warren Buffet, value investing if you can find a really good secure investment hopefully in some thing that grows such that pays more that 30% per year hopefully for ever. [I’m thinking going concern accounting assumption] The idea would be to never sell it! Keep it for ever, pass it on, unless you can find some thing better to exchange it for (hard to do). If you needed liquidity it would be better to borrow at lower than 30%. It’s value is the income stream itself. In this case a present value doesn’t have much use. The historical price paid does, that shows what a deal you made.

      Of course the other way to value some thing is just the flow of income. It would be an assumption if one said the flow was constant, exponential, or and average.

      In present value analysis (PV) one comes up with a present value based on discounts of all future cash (value) flows which the first one might be the historical cost of the investment.* (Of course looking into the future every thing is a guess and often poor assumption. Since the discount is an exponential type term it is very sensitive to poor guessing. With time as the exponent)

      Now once the years pass the realized incomes, cash (value) flows, come to be and are recorded to Income and expense.

      By the way there is a back of the envelope formula for the present value of an investment that starts with a dividend, D1 that grows at a rate, g, in a even inflation, at rate, r.

      PV= D1/(r-g)

      As soon as g=r present value, PV, goes to infinity and only is better when g>r where this formula no longer applies giving a negative result. Better than infinity is infinity. It’s inflection is at g=r and the value would not be negative for g> r.

      Your never gonna put infinity on the balance sheet!

      • Pyrite says:

        Reference to Pacioli in first paragraph is from memory of the translation to English in “Ancient Double Entry Bookkeeping.”

      • Pyrite says:

        Quote of Pacioli’s starting entries crediting to capital for belongings. Where he enters current value (customary price) instead of accounting’s traditional historical cost.***

        ” THIRD. Per silver //. A ditto– by which capital is understood–for several kinds of silver which at present I possess–that is, wash basins so many, so many coppers, so many cups, so many prioni, and so many cosilier, etc. weighing in total so much.
        Their value is: L______, S_________, G___________, P__________.”

        ” You shall give all the details in entering these items for everything as you have them in the Inventory, giving to each thing a customary price. Make the prices rather higher than lower ; for instance, if it seems to you that they are worth 20, you put down 24, so that you can make a larger profit ***; and so you will enter everything, putting down for each thing its weight, number, value, etc. ”

        This section is the opening entries not the every day transactional entries.

        Pacioli, p. 45 , “Ancient Double-entry Bookkeeping: Lucas Pacioli’s Treatise….”

    • Pyrite says:

      Your poem is great.

  43. How fascinating, Howard, your poem. I think you’ve captured key ideas here, in a nutshell. Yes, I do think accounting is all about value – or, after researching and writing my book, the question of value seems to me to be one of accounting’s essential and most intractable problems.
    And I’m really intrigued by your comment that you answered the questions as an economist. Since my book came out I’ve had conversations with accounting and economics professors. Most of the former seem to think any conflation of accounting with economics is misguided (especially arguing that my discussion of national accounting has no place in a book about accounting), whereas the economists (mostly Marxists or Keynesians of some sort) understand that accounting and economics are inextricably linked, and welcome the inclusion of national accounting in my book. I think there should be more answering questions of accounting by economists and vice versa.
    And I really hope you do write something now that expands on your poem. And I’ll be extremely interested in reading it if you do.
    As for mark to market, Enron is one example of a corporation which used this form of valuation.
    (And wow, you bought 12 copies of my book – you are lovely. Thank you. You may just have bought my Christmas dinner!)
    best, Jane

    • Pyrite says:

      I think there can be unrealized gains and losses recorded for some liquid assets such as securities that are intended to be traded (usually as current assets). The historical costs wold still be in the journal and ledgers.
      section: Trading Securities {cntrl-f} Trading Securities, is your friend here.

    • Pyrite says:


      The fair value approach is in stark contrast to the historical cost approach. The rationale is that the market value for trading securities is readily determinable, and the periodic fluctuations have a definite economic impact that should be reported. Given the intent to dispose of the investments in the near future, the belief is that the changes in value likely have a corresponding effect on the ultimate cash flows of the company. As a result, the accounting rules recognize those changes as they happen.”

      Source is given in other comment:

    • Pyrite says:

      On price (cost) and value, by, great account statement, readers, Buffet and Graham.

      ‘Long ago, Ben Graham taught me [Warren Buffet] that “Price is what you pay; value is what you get.” Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down. ‘ –Warren Buffet *

      Here, I put it accounting terms after the purchase:
      Historical Cost is what you paid; value is what you get. (Get being past, present, and future.)

      All quoted from

      ‘Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life. The calculation of intrinsic value, though, is not so simple. As our definition suggests, intrinsic value is an estimate rather than a precise figure, and it is additionally an estimate that must be changed if interest rates move or forecasts of future cash flows are revised.

      Berkshire Hathaway Inc.: An Owner’s Manual (1999)

      ‘But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the “hamburgers” they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

      1997 Chairman’s Letter’

  44. mike Mitchell says:

    Hello Ms. Gleeson-White –
    I happen to be reading Double Entry and Wolf Hall at the same time, and how interesting that Thomas Cromwell received his portrait from Hans Holbein with none other than Pacioli’s Summa sitting on his desk in the foreground. Don’t you just love that kind of convergence?

    Thank you very much,
    Mike Mitchell

    • WOW! Thank you SO much for letting me know about this convergence, Mike. YES, I most certainly do love this kind of convergence. I have yet to read Wolf Hall, but will now put it at top of my reading list.
      And especially as, strangely enough, I’m currently writing a piece on the origins of national accounting and they go back to … Oliver Cromwell and his carving up of Ireland. So I’m also in Cromwell-Luca Pacioli territory, but from a completely (or not) different perspective, so this is doubly (heh) or perhaps triply interesting to me.

      Many many thanks to you for this note. best wishes, Jane GW

      • Bryan Kavanagh says:

        Early national accounting? Great stuff, Jane! Can’t wait.

        No doubt, then, you’ve come across Sir William Petty having conducted the ‘Down Survey’, the valuation of Ireland, for Cromwell in only 13 months in 1655-56? Not only was Petty a valuer, he was also a medico (having, amongst other things, revived the hanged corpse of Anne Green), a deviser of catamarans (not knowing they’d been invented in Polynesia), and a national accountant who assessed the national income of Britain at 40 million pounds .

        A quite amazing gent whose valuation techniques show he understood how to capitalise net rents 150 years before Ricardo is said to have ‘discovered’ the Law of Rent.

        – Bryan Kavanagh

      • Mike Mitchell says:

        Hello Jane – Just curious as to whether you ever had a chance to read Wolf Hall, or got to visit the Frick Museum to see Cromwell’s porttrait when you were in New York?

      • Hi Mike – lovely to hear from you. And no, sad to say I’ve done neither, mostly I guess because my mind is elsewhere, no longer on Luca Pacioli as top priority. But I do have Wolf Hall next in line for holiday reading and will definitely try to get to Frick next time I’m in NYC. Thanks for reminding me!
        cheers, Jane

  45. Good to hear from you Bryan – which reminds me that I must look more deeply into your work the second I have a moment, I hope later this week. As I’ve probably said before, your comments here keep coming to mind whenever I’m working on current thinking about ‘the environment’, economics, etc.

    And yes, you are quite right, I have come across William Petty and he’s the one I’m really interested in, not Cromwell so much (although completely fascinated and thrilled by the Pacioli-Cromwell connection in ‘Wolf Hall’ and in Holbein’s painting). Yes, Petty is an extraordinary man, polymath and I’d say THE proto-economist, long before Ricardo (and Smith et al), as you say.

  46. Mike Mitchell says:

    Not to look for connections where they don’t exist, the Frick Museum in New York (where the portrait of Thomas Cromwell with Pacioli’s book sits glaring at Thomas More across the hall) is having an exhibit of a rare group of Piero della Francesca’s paintings from the Church of Sant’Agostino in San Sepolcro. One of the paintings is of St. John, who is reading a book that looks suspiciously like the same book in Cromwell’s portrait. Since della Francesca knew Pacioli, do you think he would have had a copy of the Summa?

    Thanks much,
    Mike Mitchell

    • Wow, thanks Mike – I love this comment, the idea and symmetry of the glaring paintings across the hall, T Cromwell v T More, and the possibility that the Summa might appear in Piero’s St John. (And thanks for mentioning the Frick exhibition, I hope it’s still on when I’m in NYC in May, will be checking it out.)

      Much as I’d love to say that it could well be the Summa, Piero died in 1492, two years before the Summa was published. I wonder if there’s a date on his St John? I’m now very curious about the book in this painting and will look into it.

      Thanks again so much for your comment – I’m all for finding even the most unlikely connections and your suggested connections above are excellent and provocative.

      cheers, Jane

      • Pratik Thapa says:

        Hello Jane,
        I already have commented twice but when the page gets refreshed my comment is not updated so here I’m trying to let my thoughts to be shared.
        My name’s Pratik Thapa. I’m an Assistant Professor of Accounting at Salesian College, Sonada, Darjeeling (North Bengal University), West Bengal, India. I read your book and thank you very much for writing such a nice book. My interests were always classic and I believe it’s going to remain same as Accounting is so beautiful as fas as I can see. Actually I need some help with my research. Please mail me at

  47. Steve Chase says:

    Just finished reading the first three chapters! Love it! I look foward to much more content with the remaining chapters.

  48. Hi Jane, I see that you are presenting at Uni of Tasmania this coming Wednesday. Would love to be there, but unlikely to make it. Perhaps you, or others following this blog, might highlight others in Tasmania who are interested in these topics. As an accountant, tax agent, business adviser, owner of an eco-friendly retail shop and young father with quite a few years ahead of me in the profession, I’m keen to learn how us accountants can be more relevant in these challenging times.

    • Hi Joss – good to hear from you and interesting suggestion you make here about the possibility of connecting up with other like minded accountants in Tasmania. I’ll think about this some more and also bear it in mind on Wednesday night, if I discover such accountants in the audience at UTas. Thanks, you’ve got me thinking. best, Jane

      • Thanks Jane. Might not necessarily just be accountants. A mixture of professionals might be just as well equipped to work on such matters together. I’m also part of a group called Business Sustainability Round Table that meets monthly. It is a wide group of professionals and we have each of the political party leaders attend once a year or bi-annual, so this is another group with which I’d be keen to continue this conversation. Thanks for your reply and all the best for Wednesday!

      • Thanks so much, Joss. Sorry, I didn’t have time to reply to you before Wednesday – I’m sorry you weren’t able to make it but I hope to continue some discussion with you here or to keep thinking along the lines you suggest above. There seemed to be quite a few people from a range of backgrounds/disciplines wanting to think similarly in the audience on Wednesday night, it was very inspiring. I will blog about it – next week, I hope. cheers, Jane

  49. johnanderson says:

    Hi Jane,
    Saw your presentation tonight at UTAS. Really interesting and wonderful to make these connections between maths and well…. everything! Such a pleasure to have you visit Tasmania.

    I wished I could have stayed for the wine and canopes and really wanted to buy your book – and also get your autograph – but alas had no cash.

    Did manage to find it on Amazon tonight and its now sitting safely in my kindle. 🙂 Sans autograph I’m afraid but I’ll cope.

    Please continue to interview the most boring people on the planet (Accountants) and act as translator between them and the rest of us. And yes, lets continue the discussion about how we start to place real value on the soil and everything it nurtures. In the hope that one day we can argue with big business and counter the greed in their language – with double entry accounting!

    John Anderson.
    Sandy Bay

    • Hi John – what a lovely message, thank you so much. I’m sorry we didn’t get to exchange thoughts in person on Wednesday night. I laugh at and am inspired by your request that I continue to interview the most boring people on the planet! Although of course I’ve discovered that they and their work are actually rather fascinating.
      I like your suggestion that I might act as a their ‘translator’, I think it’s what I am hoping to do.
      All the best to you and thanks again very much for your message. Best wishes, Jane

  50. Paddy Byers, Hobart, Tasmania says:

    Hello Jane
    I really enjoyed your Hobart lecture.
    Since that time I’ve come across an expanded version of my husband Peter Byers’s article: 11 pages published by the Singapore Society of Accountants. He called it: How We Arrived At The Frontiers of Accountancy. It was one of a series of public lectures given by him and colleagues while he was the Colombo Plan Expert at the Singapore Polytechnic School of Accounting in 1966-67.
    If you would like a copy of the article, where might I send it?

    • Hello Paddy – how wonderful to hear from you! Especially because I’ve now read your husband’s article – THANK YOU so much for giving it to me. I enjoyed it very much, so clear, so authoritative, and fascinating to me, his point of view. I was wondering this morning how to contact you to thank you and say how much I loved receiving it and reading it – and meeting you. So … funny you should leave a message here tonight.
      Yes, please, I’d love to read the extended version, you are so lovely to offer to send it. Assuming you mean to send a hard copy, the address is c/o Level 1, 13-15 Levey Street, Chippendale NSW 2008.
      Thanks again so much, I’m thrilled! best wishes, Jane

  51. Tim Osborn says:

    Hello Jane,

    I also heard you speak in Hobart, and have now read your book. Fascinating – thank you.
    I believe you said toward the end of your talk that there was a nexus between ‘prophet’ and ‘profit’ – could you expand on that at all?

    With thanks,


    • Hi Tim – thanks for your message.

      Yes, I did mention the ‘prophet’ and ‘profit’ connection, one that fascinates me. I guess it’s implicit in my book rather than spelt out – from the brief discussion of the complex relationship between religion, business and bookkeeping (on p. 96); to the argument from Aho and Carruthers & Espeland that double entry accounts had a rhetorical function, to persuade readers that business in particular and commerce in general were legitimate pursuits, morally sound, in an era when they were supposedly outlawed by the Catholic church (pp. 172-173); to the section on the Wizards of Wall Street (p. 219) about the priestlike powers we vest in the quant nerds etc.

      It was one of the threads I watched develop almost from the corner of my eye as I wrote the book, but didn’t have the space to delve into as I’d have liked to. It was one of many threads (sidetracks) that were cut from the original manuscript. I’m sure I’ll revisit this idea some time, especially as it keeps coming up (the ‘religion of capitalism’ came up often in my talks in USA last year).

      I hope that helps? Do you have a particular interest in this nexus?

      best wishes, Jane

      • Tim Osborn says:

        Hi Jane,

        thank you so much. I do hope that you find time to pursue this one day – I suspect it could be a rich vein.

        My interest: I’m curious about the entwined histories of the western church and the scientific world view. Some thinkers (eg. John Polkinghorne) see the scientific world view as unavoidably verisimilitudinous, and I sometimes wonder if these odd homonyms are somehow evidence of that. It’s a bit of a stretch, I know.

        Kind regards,


  52. Jane (and Tim), I am also interested in that ‘thread/side-track’ of accounting/business/religion. Possibly another slightly different tangent, but I have recently been reading about the Quakers and business in the 1800s and early 1900s. Their ethics in business, meticulous record keeping, and strong network ties with other like-minded people helped ensure some rather sustainable (and profitable) businesses!

    • Hello again Tim and Joss – yes, I think I will have to pursue this profit/prophet line of enquiry – I agree it could be a rich vein and it’s great to think others (well, you two for a start) are interested in it too.
      I like your thinking on these homonyms, Tim, and agree they are suggestive. I’m also interested to hear you’re curious about the entwined histories of the western church and the scientific world view – me too. And I kept coming across this connection in my research too. Interestingly, Margaret Wertheim, who gave the Templeton Lecture at USyd last mont (which I’ve been blogging about) wrote a book about this very thing, the mix of western church (and philosophy from Plato) and science, called ‘Pythagoras’s Trousers’ – brilliant book.
      And Joss, good to hear you’re also interested in this thread – and that you’ve been reading about the Quakers and business in 1800s and 1900s. How fascinating. I’d love to hear more, especially as I’ve just finished a brilliant book by a Quaker – Alastair McIntosh’s Soil and Soul (which I wrote about here – and mentioned it to Danielle Wood when I was in Hobart (I did a workshop with her students) … and it turns out she knows you too (think she saw your name here). Such a small world. Circles within circles.
      Thanks for your comments Tim and Joss, inspiring and thought provoking.
      best wishes, Jane

  53. Paddy Byers, Hobart, Tasmania says:

    Having heard your lecture has given me a new lens through which to view aspects of contemporary life. Yesterday when having coffee I read an article on the banking crises in the past decade in a Time magazine from 2012. Remembering your lecture, I realised the importance of being ethical in the whole accounting / banking system: but is it dealt with in an obvious way during courses at university? It is assumed that people already have a good ethical perspective as they are being trained to work with the numbers. Maybe we need a compulsory subject on business ethics just to make sure that everyone has a clear understanding of that side of business. I suspect this line of thought also emerged when another poster referred to the role of Quakers in earlier times.

  54. Paddy Byers, Hobart, Tasmania says:

    At another recent lecture at UTas given by Etienne Wenger, a social theorist with an interest in the concept of communities of practice I came across ideas that link with your work. By observation he has come to the conclusion that most learning does not take place with the master, it takes place among the apprentices.
    Wenger holds that learning is an inherently social process and that it cannot be separated from the social context in which it happens. Among his current engagements are Communities of Practice for Accounting and Auditing Education as well as Audit and Oversight for the World Bank Centre for Financial Reporting Reform.

    • Paddy, good to see your couple of posts here – it touches on a couple of my more recent experiences.
      1) It appears that UTAS do now teach Ethics in business (or at least at the Post-Graduate MBA level), as I met the lecturer of ethics from the UTAS School of Business last week. I’m personally sceptical about the teaching of ethics as a separate subject – in my experience within the commercial world, people are either ethical, or not. Perhaps it could be more entwined in all subjects, as should all sustainability-type issues. I believe we need to help create a better environment and provide more encouragement for people to behave in an ethical and responsible manner.
      2) Communities of Practice – I had the great opportunity via tasCOSS last year of facilitating a monthly get together of Finance Officers from the Community sector. It proved to be a of good value for everyone, including myself. As you say, ‘apprentices’ often learn as much, or more, from their colleagues, rather than their ‘master’. Perhaps we need to try harder at creating better environments for such learning within workplaces – that sounds a bit like 1 above! 🙂
      Anyway, enough philosophizing for me tonight – I better get to bed!

  55. Hello again Paddy – thank you so much for your thoughts. Yes, very interesting question about ethics being taught in accounting/economics courses at university. It certainly wasn’t when I was at university and I suspect it’s not now. But what a great question and something I’ll keep my eye out for now you’ve raised it. And yes, I’m sure the Quakers are strong on this.
    And thanks so much for mentioning Etienne Wenger and his work with the Audit and Oversight for the World Bank Centre for Financial Reporting Reform! It sounds brilliant, thanks so much Paddy, I’ll be following it up immediately (yes, it ties in very much with where my thinking is heading), really appreciate you mentioning it here.
    Thanks again.
    all the best to you, Jane

  56. Pingback: It’s a wrap: Storytelling, accounting (aka storytelling) and the Sydney Writers’ Festival 2013 | bookish girl

  57. sonywarsono says:

    Dear Jane, I have read your book. The book is amazing, not only for accounting person but also other knowledge scholars. You mentioned that double entry bookkeeping is “one of history’s best-kept secrets and most important untold tales.” If you want to get the answer about the mystery, (from Pacioli’s expertise background) please read the paper titling “SOLVING THE MYSTERY OF DOUBLE ENTRY BOOKKEEPING” in

    • Dear Sony – Thank you so much for your comment. I love the way you’ve interpreted my talking about double entry as one of history’s best-kept secrets. I meant that it’s a tale that hasn’t been told, a story that’s not widely known, is secret.

      But you are right that its lasting relevance or power – its efficacy as you say – remains an unsolved mystery. So wow – if you’ve solved this mystery, how exciting. I will certainly read your paper. Thank you so much for letting me know about it and linking to it here.
      all best wishes, Jane

      • sonywarsono says:

        Thanks for the reply. I’ll look forward to your review about the paper whether it is correct to link double entry bookkeeping (DEB) to mathematics. If it so, then we can expect to develop accounting based on it (maths), not only based on rules.

  58. Terry says:

    Also check out her subsequent book Six Capitals. Accountants saving the world!

  59. Pratik Thapa says:

    I am really happy to areas such a nice book. However, there are some points missing as usual. Pacioli’s work dominated the entire history of Accounting and now we know him as Father of Accounting. But Jane, you and I know that he didn’t invent the double entry system actually though his work is to be considered great which was printed at Gutenberg press and published on 10th November, 1494. But literary review has revealed that before him Benedetto Cortugli’s manuscript (Della Mercatura) was completed in 1458 but remained unpublished till 1557. There are lot of works by others too. And talking about Indian system of accounting we can find Bahi Khata. There are lot more to discuss and I hope you will certainly help me find some answers to the questions which are still beyond the veil. Thanks, Pratik

    • Sony warsono says:

      Please read the book titling “Accounting and Mathematics: Revisiting the theory of Double Entry” (warsono, 2017). The author describes that Pacioli was documenting the double entry. In addition, the book try to solve the existing mystery of double entry.

  60. Pratik Thapa says:

    Dear Jane,
    I tried to find your mail ID but was unable to do so.
    I request all you guys to mail who have commented on this page.
    Please mail me at
    Pratik Thapa
    Assistant Professor
    Department of Commerce
    Salesian College, Sonada, Darjeeling
    North Bengal University

  61. Pingback: Purpose 2016—and signing off from bookishgirl | bookish girl

  62. Pyrite says:

    I just saw that Pacioli’s book, “Summa de Arithmetica geometria proportioni : et proportionalita…” is available on line.
    By Luca Pacioli, Paganini

    It s on google books with 448, photo quality, brown pages.

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