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Double Entry: How the Merchants of Venice Created Modern Finance
“Lively history. . . . Show[s] double entry’s role in the creation of the accounting profession, and even of capitalism itself.”― The New Yorker
Filled with colorful characters and history, Double Entry takes us from the ancient origins of accounting in Mesopotamia to the frontiers of modern finance. At the heart of the story is double-entry bookkeeping: the first system that allowed merchants to actually measure the worth of their businesses. Luca Pacioli―monk, mathematician, alchemist, and friend of Leonardo da Vinci―incorporated Arabic mathematics to formulate a system that could work across all trades and nations. As Jane Gleeson-White reveals, double-entry accounting was nothing short of revolutionary: it fueled the Renaissance, enabled capitalism to flourish, and created the global economy. John Maynard Keynes would use it to calculate GDP, the measure of a nation’s wealth. Yet double-entry accounting has had its failures. With the costs of sudden corporate collapses such as Enron and Lehman Brothers, and its disregard of environmental and human costs, the time may have come to re-create it for the future.
Filled with colorful characters and history, Double Entry takes us from the ancient origins of accounting in Mesopotamia to the frontiers of modern finance. At the heart of the story is double-entry bookkeeping: the first system that allowed merchants to actually measure the worth of their businesses. Luca Pacioli―monk, mathematician, alchemist, and friend of Leonardo da Vinci―incorporated Arabic mathematics to formulate a system that could work across all trades and nations. As Jane Gleeson-White reveals, double-entry accounting was nothing short of revolutionary: it fueled the Renaissance, enabled capitalism to flourish, and created the global economy. John Maynard Keynes would use it to calculate GDP, the measure of a nation’s wealth. Yet double-entry accounting has had its failures. With the costs of sudden corporate collapses such as Enron and Lehman Brothers, and its disregard of environmental and human costs, the time may have come to re-create it for the future.
304 pages, Paperback
First published January 1, 2011
183 people are currently reading
1487 people want to read
About the author
Jane Gleeson-White
12 books16 followersJane Gleeson-White is a writer, editor and speaker, and is well known for her work on literature, economics and the natural world. She is the author of the bestselling, internationally acclaimed Double Entry: How the merchants of Venice shaped the modern world (2011) and its sequel Six Capitals: The revolution capitalism has to have (2015). Her first two books are about literature: Classics (2005) and Australian Classics (2007).
Jane is a regular commentator on economics and sustainability, including for the Sundance Film Festival, United Nations and European Union. She has written for the Wall Street Journal, The Guardian, Bloomberg, Wired, The Age, Sydney Morning Herald, The Australian, Meanjin, Overland, Wellbeing and Good Reading magazine. She is a former fiction editor of Overland literary journal and wrote a blog about books, bookishgirl.com.au, from 2010 to 2016. Jane has a PhD in creative writing, which included work on country in the novels of Alexis Wright and Kim Scott, and is currently working on a project about the emerging rights of nature movement in Australia.
Jane is a regular commentator on economics and sustainability, including for the Sundance Film Festival, United Nations and European Union. She has written for the Wall Street Journal, The Guardian, Bloomberg, Wired, The Age, Sydney Morning Herald, The Australian, Meanjin, Overland, Wellbeing and Good Reading magazine. She is a former fiction editor of Overland literary journal and wrote a blog about books, bookishgirl.com.au, from 2010 to 2016. Jane has a PhD in creative writing, which included work on country in the novels of Alexis Wright and Kim Scott, and is currently working on a project about the emerging rights of nature movement in Australia.
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February 21, 2013
Double Entry has not long been available, but I have been looking forward to reading it since I first heard of its impending publication. A blend of accounting and Renaissance Italian history; Jane Gleeson-White could have been writing for an audience of me.
The author starts poorly, however, patronising her audience a number of times with declarations that Renaissance Venice was ‘the New York of its age’ or ‘the Silicon Valley’ of its age. It is hard to see how these comparisons help anyone, and dumb the text down to the level of a moderately interesting BBC documentary. Anyone who has read the first seventy pages will understand that Venice had been transformed into a great business centre by the end of the fifteenth century, and had adopted Johan Gutenburg’s printing press before many other places, and will thus not need such childless parallels.
The First section of the book is a biography of Luca Pacioli, the first man to set down the alla viniziana, or ‘Venetian way’ of (double entry accounting). Gleeson-White should be given credit here for her thorough research on the subject. The drawing together of the strands of mathematics and of the other famous people with whom Pacioli shared his time is extremely interesting.
By the end of the second section, however, Gleeson-White has moved away from the development of double entry accounting and has begun to make some pretty radical claims. Following the analysis of the German economist Werner Sombart and others surrounding the origins of the word ‘capitalism’, the author asserts that double entry accounting was responsible for the birth of our modern commercial system. She goes on to claim, really rather ludicrously, that “the accounts it generates are… designed to convince an audience of something: for example, of a business’s solidity, as with saw with the Royal Bank of Scotland, or of its ongoing success, as in the case of Enron.” This is absurd; ignoring the fact that private wealth has existed for millennia – can double entry accounting be blamed for the famously unscrupulous manner in which Pompey Magnus accumulated his wealth? – there are thousands, millions even, of examples of the results of double entry accounting helping managers to make decisions. Though the rational markets hypothesis has been widely discredited, the accounting system which began in Italy in the fourteenth century has provided untold numbers of balanced accounts which, while not providing anyone with as sensational a story as RBS or Enron, have underpinned the business decisions which have led to modern prosperity. The depths of the authors ‘analysis’ come when she asserts that “this profit-driven way of thinking encouraged by double entry is… destroying the world beneath our feet.” By this point I was sorely tempted to abandon a work that had promised so much and was delivering nothing but a straw man to beat down; but I persisted, if only to see if the author could redeem the book.
The third section includes a chapter called ‘The Rise and Rise of a Scandalous Profession’. The evidence Gleeson-White uses to damn the entire accounting profession is thin at best. In retaliation, perhaps we could claim that a few poor authors damn the entire profession? Nonsense. Accounting, it could be argued, is a more important vocation, and failings within more damaging to society, but whatever number of accounting scandals Gleeson-White can draw on there are thousands and thousands of cases in which double entry accounting has been used and no scandal or failure was the result. The author even states that, “Section 1102 of the [Sabanes-Oxley] Act [regulating financial practice and corporate governance in the United States] outlines fines and prison terms for those who tamper with the transactional records of a firm.” So the method of accounting is innocent indeed; it is the tampering with statements that is to blame.
Gleeson-White then goes on to berate the use of GDP as a cover-all for the measurement of economic health and growth, a subject about which myriad papers have been written. Economists generally accept that this measure is inadequate at doing the job that it has been given, and, it is economists, not accountants, who introduced and continue to promote and use GDP.
Man has sought profit since the beginning of days. Capitalism has its own set of unique failings, the majority of which are well known and abundantly documented. That a few companies should abuse an accounting system to further their goals – fine for Enron, but something which RBS simply did not do, it simply did not know how to accurately value what it owned – is natural, if wrong. Blaming an accounting system for the fact that in many countries financial statements are inadequately regulated, however, is as absurd as blaming either the inventor of writing or Johannes Gutenburg for the fact that Gleeson-White makes such utterly ludicrous claims in print.
That Jane Gleeson-White’s ‘Double Entry’ is a weak attack on modern capitalism wearing the thinnest of veils in the form of a work of history can be no better demonstrated than the fact that the front cover gives the sub-title “how the merchants of Venice created modern finance,” while the back cover claims that “a simple system of measuring profit… underpins modern finance, with destructive consequences.” The author’s claim that “the collapse of massive enterprises… raises serious questions about the culture” that exists in such organisations is much closer to the truth; few would argue that the culture of some large corporations was damaging. To implicate double entry accounting simply because Pacioli’s system simplifies financial recording and reporting and made accounting easier, however, is a flight of fancy and nothing more. It would be difficult to argue that capitalism is not destructive; it is nigh-on impossible to argue that double entry accounting is the root cause of that: Gleeson-White has tried, but she has failed dismally. Yes, the complexity in modern finance needs to be guarded against, regulated, and better audited; no, the basic accounting system cannot be held responsible.
‘Double Entry’ began as a history of how an accounting system developed and the effect that it had on Renaissance Italy, and insomuch as that was the aim of the author, the first third of the book succeeds absolutely. Lucid, interesting, and thoroughly researched, section one is a joy to read. However, it rapidly descends into a shambling criticism of capitalism as whole which, while not without merit, approaches the topic from the narrowest of angles, introduces nothing new whatsoever to the debate, and attacks a whole profession based on the failings of a few. How anyone can seriously write a book that sets out to investigate ‘how the merchants of Venice created modern finance’ and have the subject matter career off into environmentalism while blaming an accounting method for the world’s ills is baffling. As a history lover, especially of Renaissance Italy, as someone interested in economics, and as an accountant, nobody can be more disappointed with how this book turned out than me.
The author starts poorly, however, patronising her audience a number of times with declarations that Renaissance Venice was ‘the New York of its age’ or ‘the Silicon Valley’ of its age. It is hard to see how these comparisons help anyone, and dumb the text down to the level of a moderately interesting BBC documentary. Anyone who has read the first seventy pages will understand that Venice had been transformed into a great business centre by the end of the fifteenth century, and had adopted Johan Gutenburg’s printing press before many other places, and will thus not need such childless parallels.
The First section of the book is a biography of Luca Pacioli, the first man to set down the alla viniziana, or ‘Venetian way’ of (double entry accounting). Gleeson-White should be given credit here for her thorough research on the subject. The drawing together of the strands of mathematics and of the other famous people with whom Pacioli shared his time is extremely interesting.
By the end of the second section, however, Gleeson-White has moved away from the development of double entry accounting and has begun to make some pretty radical claims. Following the analysis of the German economist Werner Sombart and others surrounding the origins of the word ‘capitalism’, the author asserts that double entry accounting was responsible for the birth of our modern commercial system. She goes on to claim, really rather ludicrously, that “the accounts it generates are… designed to convince an audience of something: for example, of a business’s solidity, as with saw with the Royal Bank of Scotland, or of its ongoing success, as in the case of Enron.” This is absurd; ignoring the fact that private wealth has existed for millennia – can double entry accounting be blamed for the famously unscrupulous manner in which Pompey Magnus accumulated his wealth? – there are thousands, millions even, of examples of the results of double entry accounting helping managers to make decisions. Though the rational markets hypothesis has been widely discredited, the accounting system which began in Italy in the fourteenth century has provided untold numbers of balanced accounts which, while not providing anyone with as sensational a story as RBS or Enron, have underpinned the business decisions which have led to modern prosperity. The depths of the authors ‘analysis’ come when she asserts that “this profit-driven way of thinking encouraged by double entry is… destroying the world beneath our feet.” By this point I was sorely tempted to abandon a work that had promised so much and was delivering nothing but a straw man to beat down; but I persisted, if only to see if the author could redeem the book.
The third section includes a chapter called ‘The Rise and Rise of a Scandalous Profession’. The evidence Gleeson-White uses to damn the entire accounting profession is thin at best. In retaliation, perhaps we could claim that a few poor authors damn the entire profession? Nonsense. Accounting, it could be argued, is a more important vocation, and failings within more damaging to society, but whatever number of accounting scandals Gleeson-White can draw on there are thousands and thousands of cases in which double entry accounting has been used and no scandal or failure was the result. The author even states that, “Section 1102 of the [Sabanes-Oxley] Act [regulating financial practice and corporate governance in the United States] outlines fines and prison terms for those who tamper with the transactional records of a firm.” So the method of accounting is innocent indeed; it is the tampering with statements that is to blame.
Gleeson-White then goes on to berate the use of GDP as a cover-all for the measurement of economic health and growth, a subject about which myriad papers have been written. Economists generally accept that this measure is inadequate at doing the job that it has been given, and, it is economists, not accountants, who introduced and continue to promote and use GDP.
Man has sought profit since the beginning of days. Capitalism has its own set of unique failings, the majority of which are well known and abundantly documented. That a few companies should abuse an accounting system to further their goals – fine for Enron, but something which RBS simply did not do, it simply did not know how to accurately value what it owned – is natural, if wrong. Blaming an accounting system for the fact that in many countries financial statements are inadequately regulated, however, is as absurd as blaming either the inventor of writing or Johannes Gutenburg for the fact that Gleeson-White makes such utterly ludicrous claims in print.
That Jane Gleeson-White’s ‘Double Entry’ is a weak attack on modern capitalism wearing the thinnest of veils in the form of a work of history can be no better demonstrated than the fact that the front cover gives the sub-title “how the merchants of Venice created modern finance,” while the back cover claims that “a simple system of measuring profit… underpins modern finance, with destructive consequences.” The author’s claim that “the collapse of massive enterprises… raises serious questions about the culture” that exists in such organisations is much closer to the truth; few would argue that the culture of some large corporations was damaging. To implicate double entry accounting simply because Pacioli’s system simplifies financial recording and reporting and made accounting easier, however, is a flight of fancy and nothing more. It would be difficult to argue that capitalism is not destructive; it is nigh-on impossible to argue that double entry accounting is the root cause of that: Gleeson-White has tried, but she has failed dismally. Yes, the complexity in modern finance needs to be guarded against, regulated, and better audited; no, the basic accounting system cannot be held responsible.
‘Double Entry’ began as a history of how an accounting system developed and the effect that it had on Renaissance Italy, and insomuch as that was the aim of the author, the first third of the book succeeds absolutely. Lucid, interesting, and thoroughly researched, section one is a joy to read. However, it rapidly descends into a shambling criticism of capitalism as whole which, while not without merit, approaches the topic from the narrowest of angles, introduces nothing new whatsoever to the debate, and attacks a whole profession based on the failings of a few. How anyone can seriously write a book that sets out to investigate ‘how the merchants of Venice created modern finance’ and have the subject matter career off into environmentalism while blaming an accounting method for the world’s ills is baffling. As a history lover, especially of Renaissance Italy, as someone interested in economics, and as an accountant, nobody can be more disappointed with how this book turned out than me.
November 12, 2020
Moved to gwern.net.
May 28, 2023
Please excuse me while I geek out a little bit here. I listened to an episode of the Planet Money podcast several years ago titled A Mathematician, The Last Supper, and the Birth of Accounting. Jane Gleeson-White was the guest, and she shared stories from her book about Luca Pacioli, the father of double-entry accounting. I'm a career accountant, and while I like a lot of things about my chosen field, above all I appreciate the balance of accounting - there has to be a credit for every debit. And as a meticulously organized person, the sight of columns of balanced numbers formatted into readable financial results always makes me happy. The podcast episode was great (how could it not be? Economists talking about the history of double-entry accounting!) but then I thought, "A book about the history of debits and credits…set in Renaissance Italy?" Yes, please! This is something I had to read.
[Side note: Apparently my excitement waned shortly afterwards as I got busy with other things…probably working long hours while auditing financial statements during busy season since I was still working for a public accounting firm at the time. I didn't get around to reading the book until now, about 10 years later, when I stumbled upon it again in my Kindle library. As they say, better late than never!]
The first half of the book details the invention of double-entry bookkeeping. Roman numerals were used into the Renaissance (to understand how challenging this had to be for merchants, just think about adding up your grocery bill using Roman numerals), and even when merchants started adopting Arabic numerals, they simply made notes in their diary about daily transactions. Since I deal with financials all day, it's pretty much impossible for me to imagine a world where there is no way to measure what's going on in a business, no way to measure profit and loss…insanity. The Venice merchants solved the problem with their new trailblazing accounting system (there needs to be a credit for every debit!), Luca Pacioli wrote it down in a hefty how-to manual, and double-entry accounting revolutionized the business world.
The topics in the second half aren't really captured in the title of the book, but the content was a fun surprise for me (reminder: I'm still geeking out!). Double-entry accounting grew into a sophisticated system of numbers over the centuries, and bookkeeping now governs the global economy. The author details the evolution of the accounting profession and explores the root causes of the major accounting scandals throughout history (I'm guessing the word 'Enron' just popped into your head!). She uses the last chapter to connect accounting to the current complex challenges of sustainability and climate change and to make the case that "bookkeeping now has the potential to make or break the planet." It sounds dramatic, I know, but to her point, "accounting reduces everything to its monetary value" but our systems have not been built to account for the supposedly free resources of the planet. Gleeson-White's ideas and conclusions about the current accounting profession and accountants' role in the future may not resonate with everyone, but I thought she shared an interesting take on some complex problems and offered up some good food for thought.
When Gleeson-White wrote this book, the momentum in the business world for new environmental, social, and governance (ESG) requirements and disclosures was just getting started, and it has been a super hot topic in the accounting world over the last several years. I found myself wondering if the author believed recent developments in the industry were effectively addressing her call to action, so I made a note to do some research online to see if I could find anything more recent from her. To my delight, I learned she wrote a sequel (more geeking out!). Six Capitals, or Can Accountants Save the Planet?: Rethinking Capitalism for the Twenty-First Century (published in 2014; revised and updated in 2020) is described as telling "the story of a twenty-first-century revolution being led by the most unlikely of rebels: accountants." Clearly this is being added to my TBR.
I realize some of you may feel like you just re-lived the nightmares from your high school or college accounting classes, so I know this book probably doesn't appeal to everyone. If you're not interested in the accounting profession but the history part still sounds really interesting to you, I highly recommend that you listen to the podcast episode I referenced above. It's a brief, entertaining summary of the first half of the book and hits all the highlights. Overall though, in the book, I thought the writing was a little scattered at times, particularly during the first half in the history chapters, and I sometimes had to backtrack to follow the thread or remind myself how certain historical figures were connected. However, if you're interested in the topics covered, this is still a fascinating and pretty unique read. Highly recommended for my fellow accountants out there!
[Side note: Apparently my excitement waned shortly afterwards as I got busy with other things…probably working long hours while auditing financial statements during busy season since I was still working for a public accounting firm at the time. I didn't get around to reading the book until now, about 10 years later, when I stumbled upon it again in my Kindle library. As they say, better late than never!]
The first half of the book details the invention of double-entry bookkeeping. Roman numerals were used into the Renaissance (to understand how challenging this had to be for merchants, just think about adding up your grocery bill using Roman numerals), and even when merchants started adopting Arabic numerals, they simply made notes in their diary about daily transactions. Since I deal with financials all day, it's pretty much impossible for me to imagine a world where there is no way to measure what's going on in a business, no way to measure profit and loss…insanity. The Venice merchants solved the problem with their new trailblazing accounting system (there needs to be a credit for every debit!), Luca Pacioli wrote it down in a hefty how-to manual, and double-entry accounting revolutionized the business world.
The topics in the second half aren't really captured in the title of the book, but the content was a fun surprise for me (reminder: I'm still geeking out!). Double-entry accounting grew into a sophisticated system of numbers over the centuries, and bookkeeping now governs the global economy. The author details the evolution of the accounting profession and explores the root causes of the major accounting scandals throughout history (I'm guessing the word 'Enron' just popped into your head!). She uses the last chapter to connect accounting to the current complex challenges of sustainability and climate change and to make the case that "bookkeeping now has the potential to make or break the planet." It sounds dramatic, I know, but to her point, "accounting reduces everything to its monetary value" but our systems have not been built to account for the supposedly free resources of the planet. Gleeson-White's ideas and conclusions about the current accounting profession and accountants' role in the future may not resonate with everyone, but I thought she shared an interesting take on some complex problems and offered up some good food for thought.
When Gleeson-White wrote this book, the momentum in the business world for new environmental, social, and governance (ESG) requirements and disclosures was just getting started, and it has been a super hot topic in the accounting world over the last several years. I found myself wondering if the author believed recent developments in the industry were effectively addressing her call to action, so I made a note to do some research online to see if I could find anything more recent from her. To my delight, I learned she wrote a sequel (more geeking out!). Six Capitals, or Can Accountants Save the Planet?: Rethinking Capitalism for the Twenty-First Century (published in 2014; revised and updated in 2020) is described as telling "the story of a twenty-first-century revolution being led by the most unlikely of rebels: accountants." Clearly this is being added to my TBR.
I realize some of you may feel like you just re-lived the nightmares from your high school or college accounting classes, so I know this book probably doesn't appeal to everyone. If you're not interested in the accounting profession but the history part still sounds really interesting to you, I highly recommend that you listen to the podcast episode I referenced above. It's a brief, entertaining summary of the first half of the book and hits all the highlights. Overall though, in the book, I thought the writing was a little scattered at times, particularly during the first half in the history chapters, and I sometimes had to backtrack to follow the thread or remind myself how certain historical figures were connected. However, if you're interested in the topics covered, this is still a fascinating and pretty unique read. Highly recommended for my fellow accountants out there!
April 20, 2015
Eh.
The first half of the book is halfway decent as a retelling of how double entry accounting spread throughout Italy and eventually the world. The person of Lucas Picoli is somewhat interesting and more time could have been spent on his personal life beyond simply his treatise.
Then the book takes a left turn and becomes an anti-finance and accounting screed. I'm not sure if the book wasn't long enough with just the story on accounting or if the first half of the book was cover for the second half but whatever goodwill was built up was quickly lost.
I was willing to overlook some of the obvious factual errors that are easily made when a non-specialist is writing about a specialized topic. It's easy to rely too much on sources when you don't really know what you're talking about, I get it, but I doubt anyone that isn't already interested in Accounting is going to look at a 200 page book on the history of such. But to essentially launch an attack on your intended reader 150 pages into the book seems a little odd (but hey, you've got their money already, right?).
I really wouldn't recommend this book to anyone. The first half is three stars, the second half is one star so it gets two as an average. If you are interested in the history of accounting just stop when she gets to the modern day and you'll be good.
The first half of the book is halfway decent as a retelling of how double entry accounting spread throughout Italy and eventually the world. The person of Lucas Picoli is somewhat interesting and more time could have been spent on his personal life beyond simply his treatise.
Then the book takes a left turn and becomes an anti-finance and accounting screed. I'm not sure if the book wasn't long enough with just the story on accounting or if the first half of the book was cover for the second half but whatever goodwill was built up was quickly lost.
I was willing to overlook some of the obvious factual errors that are easily made when a non-specialist is writing about a specialized topic. It's easy to rely too much on sources when you don't really know what you're talking about, I get it, but I doubt anyone that isn't already interested in Accounting is going to look at a 200 page book on the history of such. But to essentially launch an attack on your intended reader 150 pages into the book seems a little odd (but hey, you've got their money already, right?).
I really wouldn't recommend this book to anyone. The first half is three stars, the second half is one star so it gets two as an average. If you are interested in the history of accounting just stop when she gets to the modern day and you'll be good.
Read
March 26, 2013The part that was history of double-entry accounting was interesting. The part that was weeping for mother earth was boring.
April 25, 2017
This book starts as a rather engaging history of how double-entry accounting came to be and a semi-biography of Fra Luca Pacioli, the Franciscan monk whose Summa de arithmetica, geometria, proportioni et proportionalità (Review of Arithmetic, Geometry, Proportions and Proportionality, 1494) contains a tract called Particularis de computes et scripturis (translation: Particulars of Reckonings and Writings, The Rules of Double-Entry Bookkeeping) which lays out the basic rules of double-entry* bookkeeping that stand to this day, more or less, and are the backbone of modern-day accounting methods.
The history is well-researched, well-organized and well-told.
We then tip-toe through history and the author show how the development of accounting helped fuel the tremendous advancements of humanity from the Renaissance through the industrial revolution.
She then brings economics into the mix and ties together the development of Gross Domestic Product (national accounting), flawed as it is, was made possible by the development of accounting.
Were it only that the book ended at or near Chapter Nine (The Rise and Scandalous Rise of a Profession). I will backtrack a little. The author begins the preface with a quote from Robert Kennedy on the failings of measuring a nation's wealth**. What Kennedy and the author miss entirely is that the relative wealth of all participants in an economy benefit as productivity increases. An easy example would be that a poor person born in 1970 is far better off than a wealthy person born in 1870. She also tips her hand by stating that John Maynard Keynes is one of her "economist heroes" (p.8). I should have known then where we were headed.
She points out the failure of accounting and its practitioners to prevent some glaring examples of accounting fraud such as the Enron and Worldcom scandals. What she fails to realize is that greed and theft predate accounting significantly (the former date to the rise of man, the latter dates to the 15th century). All of the prophylaxis in the world, past, present and yet to be will not prevent humans from developing and executing fraud and theft.
She then goes on to advocate for the development of "green" accounting. Humans are destroying the planet and unless we come up with a way to value and apportion our natural resources, we are doomed.
The author doesn't realize that we do have a method of evaluating our natural resources and it's called the price mechanism. What is a tree worth? Whatever amount of money the person who owns it is willing and able to accept from another person who is willing and able to buy it. Life is simple; accounting can be tricky; the second half of this book is a chore. I recommend picking up Pacioli's Rules of Double Entry from Amazon and reading whatever is available on him on Wikipedia. The rest is utter nonsense.
* Double entry accounting simply means that every transaction has two entries. If you take out a loan for $100 from the bank, you "debit" your asset account (cash) $100 and you "credit" your liability account (notes payable) $100. For every debit there is a credit, for every credit a debit.
** "Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product ... if we should judge America by that - counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.
Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans." Robert F. Kennedy, speech at the University of Kansas, 18 March 1968
The history is well-researched, well-organized and well-told.
We then tip-toe through history and the author show how the development of accounting helped fuel the tremendous advancements of humanity from the Renaissance through the industrial revolution.
She then brings economics into the mix and ties together the development of Gross Domestic Product (national accounting), flawed as it is, was made possible by the development of accounting.
Were it only that the book ended at or near Chapter Nine (The Rise and Scandalous Rise of a Profession). I will backtrack a little. The author begins the preface with a quote from Robert Kennedy on the failings of measuring a nation's wealth**. What Kennedy and the author miss entirely is that the relative wealth of all participants in an economy benefit as productivity increases. An easy example would be that a poor person born in 1970 is far better off than a wealthy person born in 1870. She also tips her hand by stating that John Maynard Keynes is one of her "economist heroes" (p.8). I should have known then where we were headed.
She points out the failure of accounting and its practitioners to prevent some glaring examples of accounting fraud such as the Enron and Worldcom scandals. What she fails to realize is that greed and theft predate accounting significantly (the former date to the rise of man, the latter dates to the 15th century). All of the prophylaxis in the world, past, present and yet to be will not prevent humans from developing and executing fraud and theft.
She then goes on to advocate for the development of "green" accounting. Humans are destroying the planet and unless we come up with a way to value and apportion our natural resources, we are doomed.
The author doesn't realize that we do have a method of evaluating our natural resources and it's called the price mechanism. What is a tree worth? Whatever amount of money the person who owns it is willing and able to accept from another person who is willing and able to buy it. Life is simple; accounting can be tricky; the second half of this book is a chore. I recommend picking up Pacioli's Rules of Double Entry from Amazon and reading whatever is available on him on Wikipedia. The rest is utter nonsense.
* Double entry accounting simply means that every transaction has two entries. If you take out a loan for $100 from the bank, you "debit" your asset account (cash) $100 and you "credit" your liability account (notes payable) $100. For every debit there is a credit, for every credit a debit.
** "Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product ... if we should judge America by that - counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.
Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans." Robert F. Kennedy, speech at the University of Kansas, 18 March 1968
July 14, 2014
Like The Reckoning: Financial Accountability and the Rise and Fall of Nations, this is a history of accounting. Of the two books, I liked
The Reckoning
more, and I don’t think that’s simply because I read it first. I can’t deny it’s a factor, though, because the overlap of information did bore me in spots whereas it might not have otherwise. But the main difference is in the moral argument each book makes. Whereas
The Reckoning
argues that accounting can be used to fight corruption in business and government, this books makes an additional argument about how accounting can be used to protect the environment. The author advocates for “eco-accounting,” which means to put money values on environmental damage. It was a persuasive argument, but fighting corruption sparks my passions much more. Both books were well-researched and well-presented, but if you only have the patience for one history of accounting, I recommend The Reckoning.
November 20, 2017
An excellent, timely book in two parts.
The first part of the book provides a surprisingly captivating summary of the history of accounting, starting with the story of the introduction of Arabic numerals to the western world, moving on to a biography of Luca Pacioli, the "father" of modern day accounting, and finishing with the development of corporate accounting and then national accounting in the 20th century. This portion of the book was packed with interesting historical tidbits which were interesting in their own right. The content here was largely non-technical and was presented in very readable manner which assumed minimal familiarity with accounting.
The second portion of the book presents the flaws and limits of modern day accounting. This part of the book begins by investigating the failures of large corporations such as Enron in 2001 and raises the question of why the account books of Enron (and other companies who failed similarly) were able to appear sound on paper but to be on shaky ground in reality.
The book then moves on to discuss modern day accounting’s failure to produce financial statements which accurately present environmental costs, and the severe consequences this entails. It also brings into question the efficacy and relevance of present-day metrics such as GDP which we use to evaluate the success of an economy, noting that current national accounting fails to view clean air or a pristine forest (for example) as having any value. As a solution, “eco-accounting” is presented, which would take into account “transactions with nature” so that financial statements would better reflect true costs, and also give value to natural assets which are currently viewed as valueless. In this way, the book suggests accountants could be the ones who ultimately save the planet.
My sole criticism for the book would be that the two parts of the book seemed rather loosely connected, and both could likely have been expanded into longer and more detailed books which could stand on their own. In any case, I highly recommend this book, especially the second part which is more urgent today than ever.
The first part of the book provides a surprisingly captivating summary of the history of accounting, starting with the story of the introduction of Arabic numerals to the western world, moving on to a biography of Luca Pacioli, the "father" of modern day accounting, and finishing with the development of corporate accounting and then national accounting in the 20th century. This portion of the book was packed with interesting historical tidbits which were interesting in their own right. The content here was largely non-technical and was presented in very readable manner which assumed minimal familiarity with accounting.
The second portion of the book presents the flaws and limits of modern day accounting. This part of the book begins by investigating the failures of large corporations such as Enron in 2001 and raises the question of why the account books of Enron (and other companies who failed similarly) were able to appear sound on paper but to be on shaky ground in reality.
The book then moves on to discuss modern day accounting’s failure to produce financial statements which accurately present environmental costs, and the severe consequences this entails. It also brings into question the efficacy and relevance of present-day metrics such as GDP which we use to evaluate the success of an economy, noting that current national accounting fails to view clean air or a pristine forest (for example) as having any value. As a solution, “eco-accounting” is presented, which would take into account “transactions with nature” so that financial statements would better reflect true costs, and also give value to natural assets which are currently viewed as valueless. In this way, the book suggests accountants could be the ones who ultimately save the planet.
My sole criticism for the book would be that the two parts of the book seemed rather loosely connected, and both could likely have been expanded into longer and more detailed books which could stand on their own. In any case, I highly recommend this book, especially the second part which is more urgent today than ever.
February 13, 2015
This book is very interesting. While reading it becomes clear why bookkeeping today is what it is. I liked to see historical information about it and some outstanding people who influenced the way people administer business.
Despite the main idea of the book, this quote shows us that nothing has been changed for centuires:
"Money, wrote Alberti in the 1430s, ‘is the root of all things’: ’with money one can have a town house or a villa; and all the trades and craftsmen will toil like servants for the man who has money. He who has none goes without everything, and money is required for every purpose.’"
Despite the main idea of the book, this quote shows us that nothing has been changed for centuires:
"Money, wrote Alberti in the 1430s, ‘is the root of all things’: ’with money one can have a town house or a villa; and all the trades and craftsmen will toil like servants for the man who has money. He who has none goes without everything, and money is required for every purpose.’"
March 22, 2013
Book skipped around. From the codification of double entry and financial statements to Keynes. Didn't think the dovetail was necessarily consistent.
January 3, 2013
This book has four distinct sections to it:
1. Luca Pacioli's work to create double-entry bookkeeping, which would coincide with the invention of moveable type and make his "Summa de Arithmetica, Geometria, Proportion et Proportionalita" the first widely-distributed accounting treatise.
2. How double-entry bookkeeping allowed limited partnerships to spread mercantilism -- and then to allow factory owners (and later railroads) to accurately account for product costs in the face of large upfront capital investments. Though there are more detailed works, Gleeson-White does a good job of describing the challenges for the reader.
3. A discussion of derivatives and how accounting principals were suborned by Enron and later financial institutions to create illusory profits. This section is terrible, skipping even the simplest outline of how Enron's 'special purpose entities' (SPEs) worked -- or a discussion of how credit derivatives drove the banking system to the verge of collapse in 2008.
4. A final section on the weakness of double-entry systems to account for national health and welfare because of its use to measure gross domestic product (GDP) -- which skips the value of parks, health and other human assets.
The first half of the book -- through the author's discussion of the industrial revolution and the birth of accounting as a profession -- are the best parts. The discussion of John Maynard Keynes use of double-entry techniques for a determination of national output (GDP) is also very good. Though Keynes is most-discussed for the role of government spending, his biographer says that using double-entry bookkeeping to produce a profile of national output "is the General Theory's most enduring legacy," referring to Keynes 1936 "The General Theory of Employment, Interest and Money." Or, as economist William D. Nordhaus said in 2010: "If you want to know why GDP matters, you can just put yourself back in the 1930s period, where we had no idea what was happening to our economy."
The final section discusses holes in the use of GDP for measures of national or world health. While the critiques are entirely valid, it goes far afield of the subtitle of Gleeson-White's book.
1. Luca Pacioli's work to create double-entry bookkeeping, which would coincide with the invention of moveable type and make his "Summa de Arithmetica, Geometria, Proportion et Proportionalita" the first widely-distributed accounting treatise.
2. How double-entry bookkeeping allowed limited partnerships to spread mercantilism -- and then to allow factory owners (and later railroads) to accurately account for product costs in the face of large upfront capital investments. Though there are more detailed works, Gleeson-White does a good job of describing the challenges for the reader.
3. A discussion of derivatives and how accounting principals were suborned by Enron and later financial institutions to create illusory profits. This section is terrible, skipping even the simplest outline of how Enron's 'special purpose entities' (SPEs) worked -- or a discussion of how credit derivatives drove the banking system to the verge of collapse in 2008.
4. A final section on the weakness of double-entry systems to account for national health and welfare because of its use to measure gross domestic product (GDP) -- which skips the value of parks, health and other human assets.
The first half of the book -- through the author's discussion of the industrial revolution and the birth of accounting as a profession -- are the best parts. The discussion of John Maynard Keynes use of double-entry techniques for a determination of national output (GDP) is also very good. Though Keynes is most-discussed for the role of government spending, his biographer says that using double-entry bookkeeping to produce a profile of national output "is the General Theory's most enduring legacy," referring to Keynes 1936 "The General Theory of Employment, Interest and Money." Or, as economist William D. Nordhaus said in 2010: "If you want to know why GDP matters, you can just put yourself back in the 1930s period, where we had no idea what was happening to our economy."
The final section discusses holes in the use of GDP for measures of national or world health. While the critiques are entirely valid, it goes far afield of the subtitle of Gleeson-White's book.
June 30, 2013
I made it to page 176/254 and couldn't take it anymore.
As an accountant with a degree in European studies, I was eager to read this book. The ambitious title doesn't describe the work, and the work is poorly written and poorly structured.
The first THIRD of the book is a biography of the Italian mathematician who recorded and disseminated (not invented) double-entry accounting. This degree of detail is not warranted given the ground we supposedly have yet to cover.
The middle part explores the spread of double-entry accounting through Europe, which seems mainly due to the printing press and the long-overdue adoption of Arabic/Hindu numerals instead of Roman numerals rather than the effectiveness of accounting.
Next, according to the preface, chapter titles, epigraphs, and what I skimmed, she's going to blame accounting for capitalism, Enron, the state of the environment, and the overemphasis on GDP as a measure of the health of nations.
The author writes history as a series of facts and opinions she read in other books laced with many tangents. If you want some real economic history, check out the work of Niall Ferguson.
As an accountant with a degree in European studies, I was eager to read this book. The ambitious title doesn't describe the work, and the work is poorly written and poorly structured.
The first THIRD of the book is a biography of the Italian mathematician who recorded and disseminated (not invented) double-entry accounting. This degree of detail is not warranted given the ground we supposedly have yet to cover.
The middle part explores the spread of double-entry accounting through Europe, which seems mainly due to the printing press and the long-overdue adoption of Arabic/Hindu numerals instead of Roman numerals rather than the effectiveness of accounting.
Next, according to the preface, chapter titles, epigraphs, and what I skimmed, she's going to blame accounting for capitalism, Enron, the state of the environment, and the overemphasis on GDP as a measure of the health of nations.
The author writes history as a series of facts and opinions she read in other books laced with many tangents. If you want some real economic history, check out the work of Niall Ferguson.
March 15, 2015
This is a very interesting book that I hope many more people read. While it starts off as a history of Double Entry Accounting from Fibonacci and Luca Pacioli until present day, it is very timely. The last chapters are much concerned with present day shortcomings with double entry accounting and accountants. How accounting can be used to deceive on a purely business level as with recent recessions but also on the true costs of national and international economies.
It literally addresses the grave problems of how our present world civilization ignores the true costs of doing business when we examine the degrading of environment from biological to social.
And I quote the very last lines of the book, "In one way or another, this century will be the on in which we learn to account for our planet. Because unless we start accounting for our transactions with the earth, we will bankrupt it for all future human habitation."
This should be required reading for seniors in high school and all university educations!!!
It literally addresses the grave problems of how our present world civilization ignores the true costs of doing business when we examine the degrading of environment from biological to social.
And I quote the very last lines of the book, "In one way or another, this century will be the on in which we learn to account for our planet. Because unless we start accounting for our transactions with the earth, we will bankrupt it for all future human habitation."
This should be required reading for seniors in high school and all university educations!!!
June 23, 2014
I enjoyed the chapters about Luca Pacioli, the mathematician who included 29 pages on double-entry bookkeeping into a massive work on math. He can from the same town as Piero della Francesca, was friends with Leonardo da Vinci, and basically was smack in the middle of the Italian Renaissance—which was funded by the the wealth born of international trade.
Arabic numerals and double-entry bookkeeping: what a winning combination!
Come the Industrial Revolution and there were new challenges, dealing with stock holding companies and manufacturing capital, resources, and labor.
A late chapter discuss accounting scandals (Enron et al.) and the author concludes with a plea to move beyond GDP to find ways to measure the value of natural resources, the cost of environmental degradation, and so on.
Arabic numerals and double-entry bookkeeping: what a winning combination!
Come the Industrial Revolution and there were new challenges, dealing with stock holding companies and manufacturing capital, resources, and labor.
A late chapter discuss accounting scandals (Enron et al.) and the author concludes with a plea to move beyond GDP to find ways to measure the value of natural resources, the cost of environmental degradation, and so on.
September 11, 2021
Gave up relatively early on. I found multiple historical errors in things I know already. Given this, I do not trust her to get things right that I don't already know.
Interview with the author here, where she describes her multiple nervous breakdowns and emotional instability, which are definitely the fault of the patriarchy.
https://www.theguardian.com/business/...
Interview with the author here, where she describes her multiple nervous breakdowns and emotional instability, which are definitely the fault of the patriarchy.
https://www.theguardian.com/business/...
July 15, 2018
I enjoyed the first 8 or so chapters of the book, but found the last few sections a bit unexciting (though still quite informative).
The book does a great job of retracing the steps that eventually led to the invention of the double-entry bookkeeping method by Luca Pacioli (a fascinating character whom I recall my college accounting textbook only cursorily mentioned in a footnote), knitting together historic shifts such as Europe’s adoption of the Arabic number system (which made doing arithmetic operations more manageable) and the viral spread of new ideas (brought about by the arrival of the printing press) into a coherent narrative of the sequence of events that set the stage for innovations such as double-entry bookkeeping to take root.
The author also succeeds in explaining how the double-entry method helped create the joint stock company, made mass production more efficient, and shaped the entire idea of capitalism itself (not to mention its influence on Karl Marx).
Apart from taking a big-picture view of things, the book’s early chapters also delve (to some degree) into the double-entry system’s nuts and bolts. For example, the sections on Pacioli’s methods provide some fairly detailed examples on how a Venetian merchant would most likely have gone about making memorandum, journal, and ledger entries in his day-to-day business operations.
However, I just wish the author maintained the same balance between engaging storytelling and technical clarification throughout the rest of the book. The sections on the Enron, WorldCom, Royal Bank of Scotland, and other accounting scandals could have been made better with a bit more detail into how the perpetrators carried out their financial fraud.
All in all, I liked the book and learned a lot from it. I’m extremely fortunate to have studied double-entry accounting in college (I learned it by heart, not just through rote memorization). To me it’s not just a system of keeping a business’s financial house in order, but a mental framework that gives me a more methodical way of looking at the world. That’s what this book reminded me.
The book does a great job of retracing the steps that eventually led to the invention of the double-entry bookkeeping method by Luca Pacioli (a fascinating character whom I recall my college accounting textbook only cursorily mentioned in a footnote), knitting together historic shifts such as Europe’s adoption of the Arabic number system (which made doing arithmetic operations more manageable) and the viral spread of new ideas (brought about by the arrival of the printing press) into a coherent narrative of the sequence of events that set the stage for innovations such as double-entry bookkeeping to take root.
The author also succeeds in explaining how the double-entry method helped create the joint stock company, made mass production more efficient, and shaped the entire idea of capitalism itself (not to mention its influence on Karl Marx).
Apart from taking a big-picture view of things, the book’s early chapters also delve (to some degree) into the double-entry system’s nuts and bolts. For example, the sections on Pacioli’s methods provide some fairly detailed examples on how a Venetian merchant would most likely have gone about making memorandum, journal, and ledger entries in his day-to-day business operations.
However, I just wish the author maintained the same balance between engaging storytelling and technical clarification throughout the rest of the book. The sections on the Enron, WorldCom, Royal Bank of Scotland, and other accounting scandals could have been made better with a bit more detail into how the perpetrators carried out their financial fraud.
All in all, I liked the book and learned a lot from it. I’m extremely fortunate to have studied double-entry accounting in college (I learned it by heart, not just through rote memorization). To me it’s not just a system of keeping a business’s financial house in order, but a mental framework that gives me a more methodical way of looking at the world. That’s what this book reminded me.
December 29, 2020
The first half of this book gets 5 stars. The author embarks on a brilliant history of the evolution venetian accounting and its evolution into modern finance. The author explains the issues with roman numerals, abacuses and other more arcane systems of accounting. She also does a brilliant job of intertwining different characters from antiquity, to the renaissance to modernity in telling the story.
The second half was not so entertaining. The author makes an argument for abolishing the GNP in favor of newer (unspecified) systems of accounting. Anything like this requires at least a whole book (and that book is by Piketty). It feels out of place, and poorly thought out. This half gets 2 stars.
The second half was not so entertaining. The author makes an argument for abolishing the GNP in favor of newer (unspecified) systems of accounting. Anything like this requires at least a whole book (and that book is by Piketty). It feels out of place, and poorly thought out. This half gets 2 stars.
November 26, 2020
There was a lot of really interesting info in this book, and it was well-written, but there were still a fair number of moments when I felt like I was slogging my way through it. It did give me some new perspectives on the birth of early modern and modern finance that were kind of mind-breaking, though, and this was enough for me to give it a round 4 star review. Let's face it, this was always going to be a tough topic to make highly engaging to anyone outside of a very narrow part of academia. Gleeson-White did the best job with it that anyone likely could have.
June 5, 2020
Really enjoyed this book! Enjoyed the historical overlay and development of the profession.
December 19, 2023
A well-told history of the accounting profession.
November 14, 2025
What a marvelous journey !!! I could have never guessed that the history of something as mundane as accounting could so riveting .
June 2, 2014
DOUBLE ENTRY is a brief history of double-entry bookkeeping from the principles systematized by Luca Pacioli in his Particularis de Computis et Scripturis (Particulars of Reckonings and Writings) published in 1494 to today's arbiter of national economic progress (the GDP). The revolution that double-entry bookkeeping represented was the reorganization of discrete sequential transactions (the buying and selling of goods) into an abstraction (the same activities organized as capital assets, expenses, and income represented as exchanges). Second, the method, not unlike the scientific method that also grew out of the Renaissance, allowed, through its system of dual entries and balancing, a means of detecting errors. Ideally, a set of accounts should be identical, regardless of who had done the actual clerical work involved.
Double entry bookkeeping has evolved very far from these humble origins. In 1772 Josiah Wedgwood applied the method and discovered many of the problems that plague modern businesses including erratic pricing, poor cash flow, and an undisciplined financial basis for expansion. A major revelation was his perception of fixed vs. variable costs. A second major transformation arose in the 19th century when the system expanded to reflect the mechanism of capital investments. Gleeson-White uses the building of the railroads which solved the problem of raising capital by selling shares of stock, to demonstrate this adjustment. As a corollary, asset valuation, depreciation, and recognition of arbitrary time cycles needed to be addressed. (In 15th century Venice, the time cycle was governed by the twice a year shipments of goods). By 1900 the generation of annual financial statements became a prime goal of accounting.
If you haven't fallen asleep yet, let me assure you that the final section of Gleeson-White's book is of broader interest. We seem to be unable to make a new conceptual leap comparable to that of the merchants of Venice. By viewing all enterprise and even national economies through the oversimplified lens of accounting, we ignore the costs and depletions outside of the system: Pollution, deforestation, and social well-being. She bolsters her arguments with opinions offered by economists ranging from Schumpeter to Raj Patel. She recounts an interesting anecdote from Patel. A group of filmmakers did a psychological profile of corporations, treating them as if they were people. Diagnosis: Psychopaths! Rationalizations that sanction law-breaking, sacrificing long-term benefit for short-term gratification, litigiousness, and blindness to ethical boundaries were some of the conclusions they cited using the DSM-IV (Diagnostic and Statistical Manual of Mental Disorders). At another point she relates the chilling “cost-benefit” analysis conducted by the marketers of the Ford Pinto.
Gleeson-White's most effective critique is of the GDP as sole measure of economic well-being. It's basis is a mystery to most of us, and therefore, it's implications as well are overlooked. “A tree in a forest is not counted as a national asset. But when that tree is cut down and sold as timber it is measured in GDP—and only then does it contribute to economic growth as officially measured.”
DOUBLE ENTRY is a valiant attempt to delineate the historical evolution of a world view that treats all human endeavor as part of a giant income statement. However, the road to that destination is long. In spite of detailed explanations, only a student of accounting will comprehend the mechanics of double-entry bookkeeping. (My experience is that you only learn mathematics by actually working through the problems). Historians will find the dense recitative of Italian tracts on mathematics of interest. Incredibly, in the 15th century, calculations were still written with Roman numerals and computations done by abacus. The contributions of India and the Muslim world are often either overlooked or dismissed. Yet, all of this foundation is necessary to the author's eloquent critique of the way we currently view the economy. “In an era of international capital, when our wealth is more than ever tied up in its fortunes, and at a time when corporations, governments and financial institutions are demonstrating their fallibility on a global scale, it is essential that we are aware of the somewhat arbitrary laws of account that govern them—especially because it is in the labyrinthine workings of our accounting systems that value itself is assigned....In one way or another, this century will be the one in which we learn to account for our planet. Because unless we start accounting for our transactions with the earth, we will bankrupt it for all future human habitation.”
NOTE: "Green is Good; The Nature Conservancy wants to persuade big business to save the environment," by D.T. Max in THE NEW YORKER, May 12, 2014, p.54-63 is an interesting article that applies the idea of valuing resources." The idea is both interesting and controversial. (note added June 2, 2014).
Double entry bookkeeping has evolved very far from these humble origins. In 1772 Josiah Wedgwood applied the method and discovered many of the problems that plague modern businesses including erratic pricing, poor cash flow, and an undisciplined financial basis for expansion. A major revelation was his perception of fixed vs. variable costs. A second major transformation arose in the 19th century when the system expanded to reflect the mechanism of capital investments. Gleeson-White uses the building of the railroads which solved the problem of raising capital by selling shares of stock, to demonstrate this adjustment. As a corollary, asset valuation, depreciation, and recognition of arbitrary time cycles needed to be addressed. (In 15th century Venice, the time cycle was governed by the twice a year shipments of goods). By 1900 the generation of annual financial statements became a prime goal of accounting.
If you haven't fallen asleep yet, let me assure you that the final section of Gleeson-White's book is of broader interest. We seem to be unable to make a new conceptual leap comparable to that of the merchants of Venice. By viewing all enterprise and even national economies through the oversimplified lens of accounting, we ignore the costs and depletions outside of the system: Pollution, deforestation, and social well-being. She bolsters her arguments with opinions offered by economists ranging from Schumpeter to Raj Patel. She recounts an interesting anecdote from Patel. A group of filmmakers did a psychological profile of corporations, treating them as if they were people. Diagnosis: Psychopaths! Rationalizations that sanction law-breaking, sacrificing long-term benefit for short-term gratification, litigiousness, and blindness to ethical boundaries were some of the conclusions they cited using the DSM-IV (Diagnostic and Statistical Manual of Mental Disorders). At another point she relates the chilling “cost-benefit” analysis conducted by the marketers of the Ford Pinto.
Gleeson-White's most effective critique is of the GDP as sole measure of economic well-being. It's basis is a mystery to most of us, and therefore, it's implications as well are overlooked. “A tree in a forest is not counted as a national asset. But when that tree is cut down and sold as timber it is measured in GDP—and only then does it contribute to economic growth as officially measured.”
DOUBLE ENTRY is a valiant attempt to delineate the historical evolution of a world view that treats all human endeavor as part of a giant income statement. However, the road to that destination is long. In spite of detailed explanations, only a student of accounting will comprehend the mechanics of double-entry bookkeeping. (My experience is that you only learn mathematics by actually working through the problems). Historians will find the dense recitative of Italian tracts on mathematics of interest. Incredibly, in the 15th century, calculations were still written with Roman numerals and computations done by abacus. The contributions of India and the Muslim world are often either overlooked or dismissed. Yet, all of this foundation is necessary to the author's eloquent critique of the way we currently view the economy. “In an era of international capital, when our wealth is more than ever tied up in its fortunes, and at a time when corporations, governments and financial institutions are demonstrating their fallibility on a global scale, it is essential that we are aware of the somewhat arbitrary laws of account that govern them—especially because it is in the labyrinthine workings of our accounting systems that value itself is assigned....In one way or another, this century will be the one in which we learn to account for our planet. Because unless we start accounting for our transactions with the earth, we will bankrupt it for all future human habitation.”
NOTE: "Green is Good; The Nature Conservancy wants to persuade big business to save the environment," by D.T. Max in THE NEW YORKER, May 12, 2014, p.54-63 is an interesting article that applies the idea of valuing resources." The idea is both interesting and controversial. (note added June 2, 2014).
May 4, 2013
I really enjoyed this book. I'm biased because many years back gnucash got me convinced that double entry accounting is the "true way". Then Neal Stephenson's Baroque Cycle convinced me that there was an interesting history behind double entry accounting. I heard an interview with Gleeson-White (this author) on marketplace money and also saw a review somewhere else -- I knew I had to read it. (Funny aside, when I first did an amazon search on Double Entry there were a few eye-popping books showing up!)
To my read, this book had two fairly different sections: the first 2/3 was "history of double entry accounting" and really read like a scholarly history (the author is working on her PhD now, and it showed). The themes of cultural exchange, the transition out of the dark ages to the renaissance, the cross fertilization of economics, science, math, and art, and speculation about grand philosophical developments (e.g. Marxism then Keynes vs ) all from the accounting angle was a very interesting intellectual tour-de-force. However, I was a little lost keeping track of the various Italian people, cities, and various European locales. The last third of the book had a very different feel. Almost a polemic about the failures of double entry accounting and economics! (One chapter is "How accounting could make or break the world") It was still well-supported thesis but focused on recent economic failures and the role of double entry accounting (forcing short-term, profit-centric thinking). Gleeson-White argues convincingly that GDP must be fixed to correctly account for externalities.
To my read, this book had two fairly different sections: the first 2/3 was "history of double entry accounting" and really read like a scholarly history (the author is working on her PhD now, and it showed). The themes of cultural exchange, the transition out of the dark ages to the renaissance, the cross fertilization of economics, science, math, and art, and speculation about grand philosophical developments (e.g. Marxism then Keynes vs ) all from the accounting angle was a very interesting intellectual tour-de-force. However, I was a little lost keeping track of the various Italian people, cities, and various European locales. The last third of the book had a very different feel. Almost a polemic about the failures of double entry accounting and economics! (One chapter is "How accounting could make or break the world") It was still well-supported thesis but focused on recent economic failures and the role of double entry accounting (forcing short-term, profit-centric thinking). Gleeson-White argues convincingly that GDP must be fixed to correctly account for externalities.
February 4, 2014
I read this book because it was mentioned in a Planet Money podcast, and the story sounded interesting - where did our accounting system come from and the guy who first wrote down how it worked seemed like the sort of thing that would suck me in. And that part did, more or less, but sadly it wasn't the only focus of the book. The author focused on it for about a third of the book, but then turned her attention elsewhere, which is when my attention lagged. It seems too obvious to say a book on accounting was boring but this one sadly was. It could have used more concrete examples (I never felt like I really understood double entry bookkeeping) and some diagrams or other images to make things clearer. Also some pictures would have been nice - it drives me crazy to have an author describing the only official portrait of a subject and not have at least a black and white of the portrait to look at. Finally, I really wish the author had just stuck primarily with the history aspect of the book and just made her points about the system being arbitrary and the environmental and human costs not being included in a quick 2-3 pages. It didn't need a preface, 2 chapters (one on recent scandals and one just about the environment) and an epilogue. In a fairly short book, there just wasn't much substance, and I hope someone else does a real in depth historical look at Luca Pacioli and double entry bookkeeping, because even that part felt somewhat sparse.
December 4, 2013
First, the Audible narrator was horrible. She sounded like a computer. It was very distracting.
I found the book itself decent, but it missed what I imagine were major points (the Netherlands? Most of America's history?). The last chapter or two is also bizarrely off-topic. The author takes the idea that double-entry creates an idea that all costs are accounted in the accounting cost and runs with it, decrying it as laying waste to our environment. Not only is this not a view held by any economist I've ever read or talked to (every single economics lecturer I've ever had stressed the failings of GDP), but it gets to the point where it is entirely unrelated to double-entry. The most disappointing part was the citing of extremely unreliable studies on the economic value of various environmental assets. These studies as a group tend to be methodologically unsound at the best of times. The trumpeteering of "new economy" environmentalism might have been easier to swallow had it actually used reasonable studies. Though I know the author has an economics background, it smells like one of those backgrounds where it's just enough to be extremely dangerous. In this last section, no attempt is made to present alternative viewpoints or anything but an extremely radical, methodologically invalid position.
I found the book itself decent, but it missed what I imagine were major points (the Netherlands? Most of America's history?). The last chapter or two is also bizarrely off-topic. The author takes the idea that double-entry creates an idea that all costs are accounted in the accounting cost and runs with it, decrying it as laying waste to our environment. Not only is this not a view held by any economist I've ever read or talked to (every single economics lecturer I've ever had stressed the failings of GDP), but it gets to the point where it is entirely unrelated to double-entry. The most disappointing part was the citing of extremely unreliable studies on the economic value of various environmental assets. These studies as a group tend to be methodologically unsound at the best of times. The trumpeteering of "new economy" environmentalism might have been easier to swallow had it actually used reasonable studies. Though I know the author has an economics background, it smells like one of those backgrounds where it's just enough to be extremely dangerous. In this last section, no attempt is made to present alternative viewpoints or anything but an extremely radical, methodologically invalid position.
December 29, 2020
This book explores the history of the Double Entry bookkeeping system that is the foundation of all accounting today. First explained by an Italian mathematician in an "encyclopedia" of mathematics during the Renaissance, the system had been passed on from India through the Arab world to Europe by traders. The jigsaw puzzle, self-contained, tautological structure have been highly refined into the complex applications of today. Debits and credits are perfectly designed for the digital "on/off" world of computers. The history was truly fascinating - and you don't have to be an accountant!
The book only gets 3 stars because about half way through it wanders into the topic of National Accounting and the Environment. Now this is also a great topic BUT the author skips around and does not have time to answer questions such as "Should we have a National Balance Sheet that includes the environment? Should we subtract environmental and social damage from our GDP when new technologies or pollution are created? Fantastic questions ... but should be in a second book... Definitely a "Good Read" though...
The book only gets 3 stars because about half way through it wanders into the topic of National Accounting and the Environment. Now this is also a great topic BUT the author skips around and does not have time to answer questions such as "Should we have a National Balance Sheet that includes the environment? Should we subtract environmental and social damage from our GDP when new technologies or pollution are created? Fantastic questions ... but should be in a second book... Definitely a "Good Read" though...
March 9, 2013
I can't remember what intrigued me when I read a review of this book but I've been wanting to understand economics better for a while so perhaps that was the main motivation. I do somewhat understand a few things better.
What absolutely fascinated me though was her last chapter where she shows convincingly how accountants could help to save the world. She points out that our GDP and similar figures are deeply flawed since they do not cost the expense of using the environment and the destruction of the environment. She says several of the Nobel level economists agree and have been working on various ways to more honestly measure these factors which she maintains would lead to a drastic change in how we use these resources. I must admit I absolutely loved her story of applying human standards to corporations as people and what they discovered doing that!!!! That alone was worth reading the book!
What absolutely fascinated me though was her last chapter where she shows convincingly how accountants could help to save the world. She points out that our GDP and similar figures are deeply flawed since they do not cost the expense of using the environment and the destruction of the environment. She says several of the Nobel level economists agree and have been working on various ways to more honestly measure these factors which she maintains would lead to a drastic change in how we use these resources. I must admit I absolutely loved her story of applying human standards to corporations as people and what they discovered doing that!!!! That alone was worth reading the book!
November 5, 2012
A great little book which evoked memories of my accounting studies a long time ago. The author mentions the influence on Pacioli of Piero della Francesca who was both a mathematician and a painter (and wrote on the application of maths to painting). Curiously I was reading Betty Churcher's "Notebooks" at the same time and Piero's name popped up again, with Churcher's analysis of Piero's painting "The Baptism of Christ" hanging in the National Gallery, London. A nice co-incidence, perhaps. But Gleeson-White acknowledges the scandals which accompanied the rise of the accounting profession, and highlights the problems of developing national income accounts and measuring GDP. Accounting, it would seem, is also art.
November 14, 2014
A history of double-entry accounting. Do not be afraid. It is far more enjoyable than you might have thought. Really.
First of all, the history of accounting goes back to the earliest civilizations and may have played a role in the invention of writing. Things really get going in Venice at the start of the Renaissance when the Venetians discover (or possibly borrow from the Arabs) the techniques of double-entry, the form of accounting used all over the world today, for good or ill. Highly recommended. Thanks Lucas!
First of all, the history of accounting goes back to the earliest civilizations and may have played a role in the invention of writing. Things really get going in Venice at the start of the Renaissance when the Venetians discover (or possibly borrow from the Arabs) the techniques of double-entry, the form of accounting used all over the world today, for good or ill. Highly recommended. Thanks Lucas!
August 23, 2025
i am Writing a history of accounting which will be a little bit more Thorough and have more Action but this was Useful
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