Accounting History http://ach.sagepub.com/ Book review: Double Entry: How the Merchants of Venice Shaped the Modern World and How their Invention could Make or Break the Planet Alan Sangster Accounting History 2012 17: 501 DOI: 10.1177/1032373212450161 The online version of this article can be found at: http://ach.sagepub.com/content/17/3-4/501 Published by: http://www.sagepublications.com On behalf of: The Accounting History Special Interest Group of the Accounting and Finance Association of Australia and New Zealand Additional services and information for Accounting History can be found at: Email Alerts: http://ach.sagepub.com/cgi/alerts Subscriptions: http://ach.sagepub.com/subscriptions Reprints: http://www.sagepub.com/journalsReprints.nav Permissions: http://www.sagepub.com/journalsPermissions.nav >> Version of Record - Aug 16, 2012 What is This? Downloaded from ach.sagepub.com at Griffith University on August 17, 2012 ACH173-410.1177/1032373212450161Book reviewAccounting History 4501612012 Accounting History Accounting History 17(3-4) 501 –510 Book review © The Author(s) 2012 Reprints and permission: sagepub.co.uk/journalsPermissions.nav ach.sagepub.com J Gleeson-White Double Entry: How the Merchants of Venice Shaped the Modern World and How their Invention could Make or Break the Planet, Allen & Unwin: Sydney, 2011, 294 + viii pp.: ISBN: 9781741757552 Reviewed by: Alan Sangster, Griffith University, Australia DOI: 10.117/1032373212450161 This is a very interesting and easy to read book from which I gained a great deal of pleasure. The author should be commended on her courage and her success in absorbing and then retelling the history of a subject that those more equipped to do so have generally not done for the simple reason that the sum is greater than the parts – finding evidence is one thing, putting it all together in a coherent and internally consistent manner, is another. The Contents List is a challenging mixture of accounting history, economic history, and accounting - the art, the science, and the profession. The opening focus on the inability of account- ing, as we know it, to present in financial statements items other than those that can be expressed in monetary terms is both surprising and refreshing. The call made later in the book for a reinven- tion or redesign of an accounting which embraces such factors as the impact upon the environment is well written and argued, and extremely timely. Professor Rob Gray’s “elephant in the room” (2010, 2013) has rarely had such an outing in public, even if his writings and those of many others on the subject are strangely absent from this book. It is a difficult enough task to understand sufficiently well the treatise on bookkeeping contained in Luca Pacioli’s Summa Arithmetica of 1494, without attempting to also understand the activities and processes of accounting in the previous 200 and subsequent 500+ years – a modernised transla- tion of the treatise was sufficient to warrant a PhD (Cripps, 1995). This is not a minor task that Jane Gleeson-White set herself. In its fullness, it is nothing less than the work of an entire lifetime, and Jane Gleeson-White did it all in three years. Could this be possible? Today, with the freedom of the “library on your desktop” (Sangster, 1995: 3) finally realised, possibly, but it is still an enormous task requiring the reading of hundreds of articles, books, and websites. This was a challenge indeed and Jane Gleeson-White emerges from her travail with honour and achievement. Yet, speed is not the mother of all invention. Rather, it is the inevitable creator of shortcuts and assumptions arising from limited time to follow things through that are destined to leave questions only partially answered. Nevertheless, in this case, the flaws are not sufficient to devalue the whole. This is a very well-constructed book. I found some chapters particularly interesting: • The Preface is a superb, short, yet very informative introduction to the book. • Chapter 7 (“Double entry and capitalism – chicken and egg?”) which, while by no means covering the literature on this topic, nevertheless presents some worthy insights to the topic for those who have not encountered it previously. More from Basil Yamey would certainly Downloaded from ach.sagepub.com at Griffith University on August 17, 2012 502 Accounting History 17(3-4) not have gone amiss, as would the inclusion of material on capitalism and accounting in The Netherlands in the sixteenth century, where Funnell and Robertson (2011) suggest book- keeping practice derived not from Pacioli but from German business practices. • Chapter 8 (“John Maynard Keynes, double entry and the wealth of nations”) opens up a debate much needed to support and understand the Conclusion to the book. The material is brief and well-written, however, I do find the tenuous link to double entry bookkeeping something of a stretch. I seriously doubt if John Maynard Keynes had, as is implied on p.179, any great interest in, or more than a passing knowledge of the principles of double entry bookkeeping, if that. He will, however, have understood how to construct economic financial models of the economy using the principles of algebra, upon which the duality of double entry is based. The marvel of balance in an accounting system based upon double entry is a mathematical one, nothing more and nothing less, and Y = C + I is an algebraic equation, as is the accountant’s Capital = Assets – Liabilities. This wish of Jane Gleeson- White to brand everything under the umbrella of “double entry bookkeeping” is admirable, but, I would suggest, misplaced. • Chapter 9 (“The rise and scandalous rise of a profession”) is one of the highlights of the book. Some of the history recounted is incomplete and some of the statements made are misleading due to their inaccuracy, but the overall message of this chapter is strong and, I believe, appropriate. The author clearly believes that accounting scandals create more work for accountants, more demand for accounting services, and more jobs for accountants, and, in short, that accounting scandals are “good” for the accounting profession, and no one else. Accounting creates the image the decision makers wish it to create; accountants cannot agree on what is a “correct” interpretation of the data they have – and, much more. The man- ner in which the discussion towards the end of the chapter moves from accounting scandals to the $200 Big Mac and then to a very brief discussion of the flaws of GDP is very well done and a very good lead-in to Chapter 10. • Chapter 10 (“Gross Domestic Product and how accounting could make or break the planet”) and the Epilogue chapter are thought provoking and a wonderful climax to this excellent book. Among specific criticisms I have of the choice of content of the book, the “rules versus princi- ples” distinction is introduced too briefly on pp.156–157, and the not very convincing link to the “is accounting a science?” debate is one of the low points of this book. The computerisation of accounting is barely mentioned (p.204): surely something ought to have been included concerning how auditors responded? And, surely more could have been made of the changing world of accounting arising from eBusiness and eCommerce, and, not least, the far higher profile today of forensic accounting. Furthermore, surely something ought to have been included on the beginnings of accounting standards in the US in the 1930s and the UK in the 1940s. In the history of the dis- cipline, these were important steps and it is disappointing that Ms Gleeson-White seems to think that these initiatives originated in 1970 (p.206). While these appear to be small points and not so much strong negatives as an indication of how coverage of topics could be enlarged in subsequent editions, it is fair to say that the book is not “all good”. The first six chapters are a curate’s egg of under-researched and, sometimes, misunderstood analysis, accompanied by wonderful clarity and exposition of a seriously complicated story: the history of double entry bookkeeping. I compiled a long list of inaccuracies – 41 of them – while reading through these 160 pages. One incorrect statement every four pages is an exceptionally high error ratio if a book is to be taken seriously, and that is before consideration is taken of the virtual Downloaded from ach.sagepub.com at Griffith University on August 17, 2012 Book review 503 absence of a number of topics, not least charge and discharge accounting and the manner in which it survived for hundreds of years after the emergence of double entry bookkeeping. Double entry had a serious rival and yet Ms Gleeson-White gives the impression that as soon as Pacioli’s treatise was published in 1494, everyone adopted double entry and that businesses thrived and prospered as a result; neither is the case. As an accounting historian and specialist in Pacioli and the birth of double entry bookkeeping, I found the author’s approach to citation exceedingly odd and unhelpful. In 1942, R. Emmett Taylor produced his wonderful biography of Luca Pacioli, No Royal Road. The dust jacket reveals that the typists who worked on his manuscript found it humorous and pre-publication reviewers commented upon his success in recreating the life of the times of Pacioli, but that book has one serious flaw noted by every historian who has ever used it as a source of information: you often cannot tell or identify which of Taylor’s sources is related to which of his “facts”. This was the style of academic writing evident in early Anglo-Saxon articles on accounting and accounting history (as seen for example, in the Accounting Review in the 1920s) but, by the 1940s, the style was no longer in vogue and was certainly not considered helpful to either serious researchers or students.