Some might be surprised to discover that there is no real Science behind Accounting. It is in final analysis an Artform comparable to painting and sculpting. Unlike Political Science, the Social Sciences, or even the Natural Sciences like Physics, Chemistry and Biology, the Accounting Profession has no philosophical ideas or theoretical concepts for its accountants. Here, the overarching goal is to prepare, audit, analyze, and convey financial data to everyone outside of the Accounting Profession. Not everyone is going to be familiar with how any fixed unit of currency gets transferred between persons, organizations, governments, and nations. A trained accountant with a creative, imaginative mind will encounter the recurring logic within the numbers being recorded on a financial ledger, bestowing them their proper contextual meanings.  When stripped of context, any number becomes abstract, arbitrary, ambiguous.

The people who employ accountants expect them to relay the true Value of an item and in turn their true Price. The accountant must provide them with the most reliable and accurate financial information to the best of their cognitive and creative knowledge. Thus, if the accountant is the artist–a practitioner of this Artform, then the auditor is the art critic. The auditor is an outside observer, someone whose judgments are not tied to the performance of the accountant. Like any art critic, they are expected to evaluate the accountant’s handiwork, criticize them for any flaws in their handiwork, and hold them accountable for failing to fulfill the Legal Duties of their Profession.        

Yet from the standpoint of Political Science (and to a lesser extent, Economics), the political scientist must realize that accountants and auditors, like engineers and scientists, are far from apolitical. Similarly, the economist must ascertain the validity and reliability of the accountant and auditor’s handiwork. Both considerations become more apparent when compiling statistics based on financial data gathered from accountants and vetted by auditors. Having outdated, inaccurate financial data can undermine the political legitimacy of a nation’s government to its Totality as well as the governments of other nations. There may be contexts where accountants and auditors have political motivations to skew financial data to embezzle or commit fraud for personal gain. There may even be other contexts when the Artform’s existing methodologies of are woefully incompatible with something like the Work-Standard, where something as simple as basing a Currency around Arbeit and Geld requires its own set of accounting techniques. Who audits the auditors, if not the accountants themselves?    

As a genuine Artform in itself, Accounting is capable of being imbued with a specific Design Philosophy governing its conventional parameters and techniques. A Design Philosophy demonstrates to its practitioners and observers a specific way in which something can be done. It conveys its own style, its own way of life that instructs the practitioners on its methodology and creates lasting perceptions in the minds of its observers. Where the observer and practitioner are both unable to recognize the influence of a Design Philosophy, the political scientist must expose its existence to them.  

Hidden behind certain Design Philosophies is the Weltanschauung of a particular ideology. Any Artform is capable of becoming a potential vehicle through which someone could convey an ideology of their choosing and convince its practitioner and observer into adopting it themselves through daily practice and observation. This phenomenon is not exclusive to the Accounting Profession, however; a comparable one has been discussed before in relation to two other Artforms, Technology and Democracy, in The Third Place (1^st Ed.). To reiterate an important conclusion from that Treatise, a given Technology represents just one way in which something could be done and should not be considered the only way. In Political Science, contrary to what some biased political scientists would have one believe, there is far more to Democracy than just Parliamentary Democracy.  

What applies to Technology and Democracy deserves to be reapplied to accounting. There is more than one way to measure real wealth in order to uncover its true Value and by extension its true Price. There is more than one way for accountants and auditors to conduct themselves without resorting to the Double-Entry Account Bookkeeping System and the Fraction-Reserve Banking System.

Primer on Liberal Capitalist Accounting and Finance

The Accounting Profession has been under the sway of a Design Philosophy heavily skewed in favor of Liberal Capitalism. Most adherents of non-Liberal ideologies remain unaware of this, partly due to the failures of political scientists willing to inform and a lack of familiarity with the Accounting Profession. The Liberal Capitalist Design Philosophy within the Accounting Profession has contributed to the widespread implementation of the “Double-Entry Account Bookkeeping System” in everyday economic life. The Double-Entry Account Bookkeeping System is a centuries-old development that has seen many refinements since its introduction during the Renaissance and discovery of the Americas. Its Design Philosophy developed alongside the “Fractional-Reserve Banking System,” becoming the preferred methodology for Liberal Capitalists to determine the known Quantities of Kapital and Schuld (Debt/Guilt) earned by privatized commercial firms since the Enlightenment.

By the early 20^th century, the Double-Entry Account Bookkeeping System and Fractional-Reserve Banking System underwent significant changes and expansions to support Liberal Capitalist efforts to adjust to the conditions of the State of Total Mobilization. It became possible in the last century to develop a “Chart of Accounts (CoA)” for all economic activities, consolidate them into a “System of National Accounts (SNA),” and provide enough information on the known Quantities of Kapital and Schuld in existence. With both sets of accounts, a political scientist or economist will also be able to know the Value and Price of Kapital and Schuld within a nation, the allocations of Kapital and Schuld between persons, organizations and governments, and the movements of Kapital and Schuld across international borders. They will even be able to know the Incentives behind these transmissions to Kapital and Schuld. The overarching aim of compiling the SNA is to find the “GDP (Gross Domestic Product)” and the “GNI (Gross National Income)” of a Liberal Capitalist nation.

The GDP and GNI are important in any Liberal Capitalist analysis of a national economy. A Liberal Capitalist economist could draw enough inferences from the statistical data to argue that this national economy is destined to accumulate more or less Kapital and Schuld over a set fiscal period. Backed by the Design Philosophy of the Double-Entry Account Bookkeeping System, they can develop their conclusions in a manner conducive to the foundational ideological aims of Neoliberalism without any scrutiny from anyone opposed to Neoliberalism. Why should anyone opposed to Neoliberalism question the statistical data if they are incapable of challenging the Liberal Capitalist economist in this area? Without a comparable accounting system, how else could anyone accuse the data of being Neoliberal propaganda?  

The idea of a standardized accounting system for Liberal Capitalist economic life is a fairly recent development that coincided with the Great Depression, the two World Wars, and of course the Bretton Woods System. In the 1950s, to provide a standardized international basis by which the Liberal Capitalists could measure the economic and social life of their world order, the “Liberal International Economic Order (LIEO)” or the “Empire of Liberty,” the United Nations (UN) introduced the “United Nations System of National Accounts (UNSNA).” The term “SNA” stems from that proposal that has since become common practice in the IMF, World Bank, the OECD, the EU/NATO, and most Liberal Capitalist regimes.  

UNSNA has undergone revisions in the decades since its introduction in 1953 to account for the Death of Bretton Woods, Deindustrialization, Automation and Globalization, the dissolution of the Soviet Union and Eastern Bloc countries, and the Chinese economic reforms. The most recent edition of the UNSNA was released in 2008, the same year as the Great Recession. As of this Treatise’s First Edition, the UN did not publish any new revised editions throughout the 2010s and early 2020s. Any Entries devoted to the “SNA” will be written in reference to the 2008 edition. The Treatise may receive a new Edition in response to the revisions made to the UNSNA by the UN.     

It is worth noting that the UNSNA emerged during the Cold War because the validity UNSNA was in fact open to doubt for anyone who is not a Liberal Capitalist. The Soviet Union and the Eastern Bloc countries, fully aware of the Liberal Capitalist Design Philosophy behind the UNSNA, adopted a more formalized “Material Product System (MPS)” for nations aligned with the CMEA (Council of Mutual Economic Assistance). Like the Liberal Capitalists, the Soviets and Eastern Bloc countries would release annual financial reports of their economic activities with a Marxist-Leninist Design Philosophy in mind. MPS has since been phased out in the wake of the dissolution of CMEA, the Eastern Bloc, and the Soviet Union. Today, no nation employs in its purest form due to a number of inherent design flaws that have since been made apparent after the Death of Bretton Woods.   

Moreover, the SNA is also designed to facilitate the ability to find the true Value and Price of Kapital and Schuld in spite of Currency Depreciation/Appreciation vis-à-vis the Inflation/Deflation Rate. It can be used to track how much Kapital and Schuld is being created from the Central Bank of a Fractional-Reserve Banking System. The SNA is ideal for monitoring how much Kapital and Schuld are accumulating from the issuances of “Liberal Capitalist Financial Instruments (LCFIs)” such as Stocks and Bonds.  

Relation to the Modes of Production

The SNA of a Liberal Capitalist regime is particularly instructive in demonstrating how economic life under Neoliberalism operates according to a shared paradigm between “Production for Profit” and “Production for Utility.” Every economic activity recorded by the Double-Entry Account Bookkeeping System is related to Kapital Accumulation. There are economic activities done by privatized commercial firms and commercial banks to generate Kapital for the Market/Mixed Economy and Fractional-Reserve Banking, which could be taxed by the Parliament and spent on an OECD-Type Student Economy or digital infrastructure for accessing the World Wide Web (WWW). There are also other economic activities intended to promote the Utility of Civil Society at the behest of Parliament. Such activities may be done by philanthropies, charities, NGOs (Non-Governmental Organizations) and IGOs (Intergovernmental Organizations), think tanks, government agencies, parliamentarian lobbying groups, and others.

Terms like “for-profit” and “non-profit” become identification markers for economic organizations facilitating Neoliberalism’s Production for Profit and Production for Utility. The same can be said about the corresponding terms “Private Sector” and “Public Sector.” Economic organizations that function according to Production for Profit are intended to create Kapital and Schuld from the production and consumption of “Commodities,” goods and services. Conversely, economic organizations operating under Production for Utility implement the Welfare Capitalist policies of Parliament. While such economic organizations may be ‘privatized’, ‘contracted’ or ‘nationalized’ by Parliament, economic organizations under Liberal Capitalism are nevertheless accounted for in their nation’s SNA.

Whether they function according to Production for Profit or Production for Utility, all economic organizations under Neoliberalism rely on Kapital and Schuld for their everyday activities. SNA was designed early on by the UN to accommodate both Modes of Production but not the third Mode of Production from The Work-Standard (2^nd Ed.) and The Third Place (1^st Ed.), namely Production for Dasein. While glancing through a nation’s SNA, one should be able to uncover the known Quantities of Kapital and Schuld accumulated by “for-profit” and “non-profit” economic organizations, and the Incentives ultimately driving them vis-à-vis Supply and Demand. One should also be able to deduce how much Kapital and Schuld were accrued from Production for Profit and Production for Utility. Since every nation’s SNA is covered on an annual basis, these transactions and movements can be narrowed down to their original source and intended recipients.

Always remember that all of the information provided in a nation’s SNA comes from the CoAs for its economic organizations. All Liberal Capitalist economic organizations maintain their own CoA to track the sources of Revenues and expenses. The CoA itself is based on financial data gathered by means of the Double-Entry Bookkeeping System. However, the Double-Entry Account Bookkeeping is only designed to record Kapital and Schuld within the framework of the Fractional-Reserve Banking System. It cannot record for instance the Value and Price of Cryptocurrencies such as Bitcoin or Ethereum and the Value and Price of Arbeit and Geld under the Work-Standard.

Conventional Cryptocurrencies employ Blockchain Technology to bypass the Fractional-Reserve Banking System, which necessitated the need for an alternative accounting system to accommodate everyone else with access to the Blockchain. To reduce reliance on the Fractional-Reserve Banking System, the Blockchains of conventional Cryptocurrencies use a “Triple-Entry Account Bookkeeping System.” A regular transaction within the Blockchain involves at least two or more persons: somebody sends a fixed unit of Cryptocurrency to another person, while the other person receives their Cryptocurrency. Everyone who has access to the Blockchain will be able to access the Timestamp of their transaction occurred without knowing too much about their identities or their locations. This was obviously intended to ensure that the persons involved in the transaction are acting in good faith.  

Meanwhile, an entirely different conception of Currency, relying on its own Values and Prices, demands distinct accounting techniques to accommodate its own monetary system. The Work-Standard employs its own conceptions of Value and Price based on the “Reciprocal Theory of Value (RTV)” and “Work Theory of Money (WTM).” Every aspect of economic life revolves around Arbeit and Geld, rendering any reapplications of the Double-Entry Account Bookkeeping System impractical. Anyone who tries to apply the Double-Entry Account Bookkeeping System will never be able to determine the Value of Arbeit and its close relationship to the Price of Geld.

Back in The Work-Standard (2^nd Ed.), attempts have been made on my part to develop mock drafts of accounting techniques. The result was the realization of “Command-Obedience Account Bookkeeping,” which could then be expanded further to incorporate its own equivalents to the “Chart of Accounts (CoA) and the “System of National Accounts (SNA).” The rejection of Double-Entry Account Bookkeeping warrants the need to develop alternatives. Prior to the writing of this Treatise, Work-Standard Accounting Practices (1^st Ed.), a rudimentary model has been developed. The following Entries concern the development and articulation of revolutionary accounting techniques designed to measure overall economic performance and growth for a Socialist Nation whose Currency is already pegged to the Work-Standard.  Everything here will be straightforward enough to allow political scientists, economists, accountants, statisticians, and pretty much anyone opposed to Neoliberalism to replicate the techniques for themselves.

Categories: Work-Standard Accounting Practices

Tags: Accounting, ARPLAN, Cold War, Cryptocurrencies, Cryptocurrency, Economics, Finance, Fractional-Reserve Banking, Philosophy, Politics, Psychology, Socialist Finance, Soviet Union, Third Place, Work-Standard