How accounting forced transparency on the aristocracy and changed the world

In the 16th century, celebrated Dutch painters did a brisk trade in heroic portraits of accountants and their ledgers. That's because accounting transformed the lowlands, literally bringing accountability to the aristocracy by forcing them to keep track of, and report on, their wealth. As Jacob Soll (author of The Reckoning: Financial Accountability and the Rise and Fall of Nations) writes in the Boston Globe, from the 14th century invention of double-entry bookkeeping until the 19th century — when accounting became a separate profession instead of something that every educated person was expected to practice — accountancy upended the social order, elevating financial transparency to a primary virtue.

As it became more remote, and as financial scandals piled up—even in Britain and Holland—accounting gained a dual reputation for being both boring and possibly fraudulent. Writers such Charles Dickens, Honoré de Balzac, and Louisa May Alcott, to name but a few, included accounting in their work, showing it as a double-edged sword which was used by humble honest clerks and grandiose swindlers alike.

Today, the internal ethics of accounting have receded from public view. No one publicly celebrates the virtues of balancing one's books and of audits with great art or gripping characters. Occasionally an accounting hero emerges, bringing a billion-dollar loss to light, but few people appreciate it, as the Dutch did, as a profound moral advance in business and public affairs.

Yet, in ignoring this aspect of accounting, or leaving it to the technical whizzes inside the financial world, we're losing something important. In a world driven by money, in which everyone tends to be answerable to money, accounting offers a toolkit for anyone to at least understand the basic principles that are supposed to guide finance—as well as a genuinely independent kind of moral reckoning for its practitioners. The balancing of books still provides a dramatic language of financial morality, with numbers telling stories of riches and ruins, or hiding them. But before we can speak and decipher it, we too need to learn to balance our books.

The vanished grandeur of accounting [Jacob Soll/Boston Globe]