Jacob Soll

Much as I enjoyed reading the history of double-entry bookkeeping, I couldn't buy the premise of the book that great nations fell because their leaders didn't take bookkeeping seriously. Financial transparency is certainly preferable if you can get it, but even well-audited firms have been known to, er, tell a few fibs. I once had a very wise (if painfully cruel) accounting professor who directed us to watch the stories that the makers of financial statements want us to read. Balance sheets, no less than novels, are fictions of a sort. Sometimes they are comforting fictions, and sometimes they are alarming fictions. You can be sure that when quarterly earnings reports are issued, management wants us to see the most comforting fictions available. Unfortunately, that is the way the stock market works, and that is how we shareholders reward management. I am quite convinced, however, that when I send my corporate financial statements to the bank each year, I am comforted by knowing that the guys who are reading them haven't a clue what they're seeing. It's one thing to make financial statements and quite another to grasp the reality behind them.… (más)

Posted at my note-taking blog Making Scholarship

Jacob Soll, The Information Master: Jean-Baptiste Colbert's Secret State Intelligence System

In many ways a more detailed history of the rise of state centralization and absolutism, one that goes beyond simply asserting that this was done as a command exercise, or for nakedly functional reasons. Soll instead argues that much of this had to do with Colbert's own form of encyclopedism, and that the private or secret world of information was conceptually intertwined with the invention of the 17th & 18th Century public sphere. I find this a really smart reading of many things besides Colbert and the French state.

"Colbert sought to become a scholar of state learning: not simply a bureaucrat but an expert." p. 7

"There are reasons tht intellectual and cultural historians have not studied the intellectual history of the state....Studies of the public sphere focus on journalism, clandestine literature, and printing; as well as sites of sociability, such as academies and the Republic of Letters, public and private communication networks, art markets, salons, learned societies, Masonic lodges, societies, coffeehouses and lending libraries. These social and cultural phenomena are often used as ilustrations of a bourgeois opposition and counterbalance to arbitrary, secretive absolute monarchy". p. 10

Yes, but it's also that I think we take the state as not having a "culture", or if it does, as if its culture does not need investigation--much as we take the actuality of "capital" as sometimes uninteresting unless/until it is simultaneous with bourgeois life.

"Philip II was the first hands-on bureaucrat king of a massive empire and certainly the forerunner of his Bourbon heirs in France. His information system was so vast, so intricate, and in some cases so efficient that even the Venetian ambadssador sent his relazioni back to Venice via Spanish royal messenger posts. Yet this Planet King, on whose empire the sun never set, was never a traveler, but rather inhabited his own virtual world, enclosed in the halls of his monastery palace, the Escorial, which he filled wit mountains of dispatches and reports." p.20

Interesting use of the concept of virtual world--as sequestered/enclosed/unreal.

"Old Italian mercantile, administrative culture had fostered humanism, and it was steeped in an ethic of technical expertise...[but]as humanist traditions evolved, they had less and less mercantile content. What had been a merchant and bureaucratic-inspired tradition of learning became increasingly literary and scientific and humanist philologists translated ancient texts and copied their content. Humanist political theory became grounded in ancient history and legal scholarship. Yet at the very moment that Tacitist humanists claimed that statecraft cold be learned through classical ethics and history, it became increasingly clear that these forms of political learning were not sufficient for managing a large, industrial, colonial and militarized state." p. 52

Very interesting material on double-entry bookkeeping and on the technological establishment of archives. Ch. 4

Ch. 5--creation of "informers", e.g, bureaucratic workers who were trained both to provision information back to Colbert and to carry his will or ideas out to provincial actors. "He transformed their function from provincial tax collectors, into professional observers, statistic-takers and, as Anette Smedley-Weill calls them, 'informers'. The intendants were trained observers whom Colbert told to take notes only on what they had seen with their own eyes, and not rely on the accounts of others." p. 70

Great use of Colbert's system for training his son as a way to reveal both the empirical content of his system and Colbert's authorial imagination of the system, Ch. 6.

"For Colbert, governing was about writing clearly and organizing writing into easy-to-use notebooks. The evolving humanist culture of the commonplace notebook and the Jesuit schools, along with mercantile book keeping, now became the basis of governmental pedagogy." p. 89

"The former English chancellor and inventor of the experimental method, Francis Bacon had suggested that the sort of information collected by scholars, scientists, bureaucrats and industrialists could be formalized within the state itself. Bacon envisioned the state as a center of research and collection, which constantly acquired new information by discovery and experiment. Like Thomas Hobbes, Bacon believed that the monarch should rule over knowledge. What Bacon envisioned was not simply formal, university learning of a library, but rather a state-controlled depot of information of all sorts, constantly renewed, and potentially secret, which gave the state the monopoly on the information of politics, trade and science." p. 97

"Colbert had no time for the formalities of the Republic of Letters, such as openness and the ethics of information exchange. His collecting techniques both disregarded the integrity of individual collections and were devoid of ethics in acquisition. Indeed, he offered to buy the Wolfenbuttel Library outright...He bought other entire collections for the Royal Library, 10,000 books at a time." p. 102

"While Colbert's library and research facilities produced knowledge and appeared to be practical, they also created constraints on Colbert's government. One of the most revealing elements of Colbert's policy archive are the files concerning colonial enterprises....while he certainly kept his large colonial administrative correspondence, he did not integrate it into his archival system for daily government. This undermined his ability to effectively manage his Canadian policy" p. 113

"The fact that Colbert mixed the worlds of state administration and scholarship so closely makes it hard to define exactly what he created. Were his intendants and agents bureaucrats in a modern sense? Or were they subservient versions of the humanist secretaries that had filled the ranks of papal and Italian administrations since the late Middle Ages? What becomes clear is that Colbert was creating a new sort of agent loyal only to the state. He actively trained information managers who could find, copy, catalog, and bring him documentation as he needed it for his day-to-day affairs. In other agents, he sought scholars to teach him how better to handle the historical material he used for government." p. 120

"More than anything, however, was remained of Colbert's legacy was not a permanent state information system or even tradition. Rather, Colbertism should be defined as the idea that a large-scale state would need to centralize and harness encyclopedic knowledge to govern effectively, and that all knowledge, formal and practical, could be used together in one archival system to understand and master the material world." p. 163… (más)

From Dante’s Inferno to Monty Python’s Flying Circus, accounting has often had a bad name. The Reckoning by Jacob Soll goes a long way towards redeeming it, showing how financial accountability has been at the heart of the rise and fall of nations from Renaissance Italy to the present day.

A history of accounting may not sound like an exciting read, but Soll spares us the details of double-entry bookkeeping and instead tells a series of engaging stories of well-known historical events like the French Revolution and the Industrial Revolution, and the not so well-known ministers, merchants and clerks who were balancing the books (or not) behind the scenes.

“Follow the money” is usually a fruitful approach, whether in historical analysis or contemporary politics, and it proves to be here. We see the financial chaos behind the splendour of Louis XIV’s court and the failed attempts to introduce accountability. We learn how the Dutch commercial success had its roots in the nation’s unusual topography: being largely below sea level, it relied on an elaborate system of dikes and drainage channels, none of which could be maintained without careful administration and regular, open audits to maintain public trust.

The narrative is particularly strong when Soll is charting the early growth of accounting in Renaissance Florence, a natural outgrowth of the personal systems used by bankers and merchants. He shows us how the Medici rulers used accounting to cement their power, and mixes in some beautiful descriptive language:

"Florence is an odd city. In the right light, with dry air in a late afternoon, there is no more beautiful place on earth. The heavy stones give off a rosy hue, and its mixture of humidity and dryness can, on a hazy day, make the city seem like it is floating up to the glorious hills that surround it, to the earthly paradise of Fiesole."

In some cases, the effort to place accounting at the centre of political successes and failures goes too far. Soll’s basic thesis is that successful nations have strong accountability, and it’s usually when those standards start to slip that the nation goes into decline. He chooses his examples well, and they support the thesis so neatly that the effect becomes slightly repetitive – a ruler achieves success by instituting rigorous accounting policies, and then loses power when the audits get sloppy. History, of course, is rarely so neat.

Given the book’s broad historical sweep and Soll’s desire to tell engaging stories, there are naturally plenty of gaps. This is not a comprehensive survey of all nations and regimes, and nor does it pretend to be. But whenever you get a series of vignettes arranged to support a thesis, it’s worth asking whether the thesis would have been supported if different examples had been chosen.

It’s easy to think of examples where the link between good accounting practice and successful statecraft doesn’t hold. Nazi Germany, for example, kept meticulous records, financial and otherwise, but that didn’t prevent the “Thousand Year Reich” from falling after a little over a decade. As for the British Empire, Soll touches on the role of accounting in its rise, but says little about its decline. Britain’s accounting was just as rigorous in the 20th century as it had been at the height of empire, and yet it was powerless to hold things together.

Which leads us to the U.S. and the present day. Occasional scandals aside, the U.S. has a very comprehensive and well audited system of public and private accounts. The government’s books are carefully recorded, and open to the public to inspect, as are those of all the companies listed on the stock exchange. None of this has stopped the nation from sliding into a massive national debt, a debt so large and increasing so quickly that it seems impossible that it will ever be repaid. The U.S. is different from countries like Greece and Argentina only in that it has power. It’s simply “too big to fail”. At least, for now.

It begs the question, for me, of whether accounting really plays such a central role. What if everything is recorded accurately, but the obvious lessons are ignored? What if the U.S., like the British Empire before it, simply ends up documenting its own demise in rigorous detail?

I would have liked to see more in this book on events in the contemporary world, but the last chapter rushes through from the Wall Street Crash to the Enron scandal in such a whirl that it’s hard to draw too many conclusions. Soll is a historian, however, and so it’s unfair to criticise him for focusing on history. I’d strongly recommend this book for the fresh insight it brings to familiar historical events, and for its author’s ability to find the compelling human stories in the dry world of income statements and balance sheets.… (más)