The Reckoning: Financial Accountability and the Rise and Fall of Nations

The Reckoning: Financial Accountability and the Rise and Fall of Nations

by Jacob Soll

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For centuries, the importance of financial accounting has been well understood. Essential to building businesses, states, and even empires, accounting has also helped leaders measure their power and craft their policies. When practiced poorly or neglected, accounting has contributed to cycles of destruction, as the 2008 financial crisis has made all too clear. In


For centuries, the importance of financial accounting has been well understood. Essential to building businesses, states, and even empires, accounting has also helped leaders measure their power and craft their policies. When practiced poorly or neglected, accounting has contributed to cycles of destruction, as the 2008 financial crisis has made all too clear. In The Reckoning, award-winning historian Jacob Soll shows how the use and misuse of financial bookkeeping has determined the fate of entire societies. In the right hands, accounting has created social stability, good governance, and economic prosperity. In the wrong hands, good accounting practices have often been subverted, with disastrous results ranging from financial losses and debt to complete economic collapse.

From the Medici bankers to the director of finances under Louis XVI, from the Industrial Revolution to the Stock Market Crash of 1929 and the Great Recession, The Reckoning demonstrates that civilizations are only as strong as their bookkeepers.

Editorial Reviews

Publishers Weekly
Good bookkeeping makes for good government—but not for very long—according to this absorbing history of accounting in the public sphere. Historian and MacArthur fellow Soll (The Information Master) surveys public financial record keeping after the invention of double-entry accounting in 13th-century Tuscany, a breakthrough that made systematic analysis of profit and loss possible. The benefits for well-ordered, responsible government were felt wherever this innovation was embraced: medieval Italian city-states, 17th-century Holland, and 18th-century Britain all became economic and geopolitical powerhouses, he argues, thanks to well-kept government books. But his is even more a story of backsliding and failure, as corruption, spendthrift government, and factional intrigues perennially undermine the discipline of meticulous public accounting—and the state. Soll’s engaging narrative highlights both the political impact of accounting practices—a public audit of Louis XVI’s woeful state finances helped spark the French Revolution—and the advent of a “culture of accountability” as the bourgeois business classes rose to power; he explores the deep-seated religious and philosophical power of balanced-books metaphors in the West, from the Gospel of Matthew to Thoreau’s championing of the simple life. The result is a provocative, illuminating take on history that assigns humdrum accountants a central and dramatic role. Photos. (May)
From the Publisher

Wall Street Journal
“Mr. Soll spices his story with big historical personalities.... [He] earns high marks for well as for scholarship.”

Los Angeles Review of Books
“[A] brilliant, deceptively brief book.... Soll pulls off the miracle of making his history not a monolith but a mosaic. He examines financial affairs in a dozen eras with a cultural historian’s flair for fidelity, but then assembles these fragments into a whole that leaves the reader satisfied with everything except the status quo. That’s because what emerges from The Reckoning is an enormous missing concept in our debates over market and the state, as well as a mandate to rearrange our thinking in response.”

Financial Times
“Soll’s wry and lucid book traces this fraught relationship between accountability, economic success and political will from Renaissance Florence and the Netherlands to the larger modern republics of France and America, via the empires of Spain and Britain. In his hands, accountability and accountancy becomes a way of investigating the rise and fall of nations.... Without political will, financial accountability remains toothless, but what scope is there for rigorous accountability when the accountancy firms behind banks and corporations thought too big to fail are already their advisers and representatives? Perhaps some rather old lessons from the surprisingly exciting history of accountancy can help us deal with these not so very new problems.”

Pittsburgh Tribune-Review
The Reckoning demonstrates how financial transparency and accounting – essential for capitalism and our global economy – are linked with political transparence and accountability, drawing on such historical examples as the Medicis’ Florentine city-state, the Spanish and British empires, the French Revolution, America’s early days, the 1929 stock market crash, the Great Depression and the 2008 financial crisis.”

Literary Review, UK
“Financial accounting is at the heart not only of capitalism but also of any well-functioning government. Jacob Soll’s The Reckoning is a detailed and versatile demonstration of this important historical truth, written by one of the world’s pre-eminent experts.... It is a dazzling book, rigorously researched and demonstrating an extraordinary scholarly range.”

Global Finance
“In Soll’s retelling of history through the lens of accounting, somewhat obscure but endlessly fascinating characters take center stage. With their heads buried in numbers and ledgers, they made crucial contributions to the development of this practice and thus to the betterment of the world.... Soll’s book is chock-full of valuable snippets of information.”

Accounting Today
“In this insightful whirlwind tour of the history of accounting, professor and MacArthur Fellow Jacob Soll demonstrates why the profession and its players are crucial players in any civilization, while also making a strong argument for integrity and transparency in reporting.”

Accounting Today
"Full of fascinating details on the development of accounting over time.”

Prospect, UK
“Historian Jacob Soll develops the case that double entry ranks with gravitation, calculus and relativity, as he uses the history of accounting to provide insight into business and political history.”

Chronicle Review
“[A] sweeping, detailed history of how humankind has kept its books.... Soll takes the reader on a tour of everything from accounting in classical antiquity to the murky origins of double-entry bookkeeping in the 13th century to the financial crisis of 2008.... He is a master of the telling anecdote and the entertaining digression, embedding the mechanics of accounting in well-crafted stories complete with colorful personalities, dramatic turns of fate, and healthy servings of historical trivia.”

South China Morning Post
“Really interesting.... [The Reckoning] shows the crucial role played by the development of accountancy in the management and indeed mismanagement of government and businesses.”

Creatively Accounting
“Think of the book as A Brief History of Accounting.... Time and again, we see kingdoms and rulers establishing good practices and procedures leading to years of plenty, following by degradation into unaccountability and, ultimately, a great crash, i.e. their reckoning.... The book does show the importance of educating ourselves in accounting, whether or not that is our field of study. As a Representative Democracy, how can we expect our citizens to make prudent financial votes if they don’t have a basis for understanding the financial ramifications?”

New Zealand Herald
“A rollicking historical narrative.”

“[F]ascinating.... [A] readable romp through a history of accounting.”

Publishers Weekly
“[An] absorbing history of accounting in the public sphere.... [An] engaging narrative.... The result is a provocative, illuminating take on history that assigns humdrum accountants a central and dramatic role.”

“An intriguing, well-crafted discussion highlighting a major contribution to political and economic well-being, with an obvious moral for today.”

Andrew Blackman
“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.... 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.”

Jack Rakove, Pulitzer Prize-winning author of Original Meanings: Politics and Ideas in the Making of the Constitution
“Who would imagine that a history of accounting and double-entry bookkeeping could be so engaging? Yet in this concise, sharply argued book, Jacob Soll deftly examines and explains the remarkable impact that the practice of accounting has had on the rise—and sometimes the fall—of nation states. In his probing analysis, this commitment involves more than the dry techniques of bookkeeping. It also reflects and fosters a complex set of moral and political values whose persistence cannot be taken for granted—a lesson Americans have recently and painfully had to relearn.”

James K. Galbraith, author of The End of Normal
“Many have long known, or at least suspected, that CPAs rule the world. The proof is here. The Reckoning is a tale of power, empire, art and culture—and of their half-hidden puppetmasters from the Roman Empire to the Gilded Age.”

Emma Rothschild, Director of the Joint Center for History and Economics at Harvard University, author of Economic Sentiments: Adam Smith, Condorcet and the Enlightenment
“The history of accounting and accountability is in Jacob Soll’s remarkable book a dramatic story of politics, morality, printing, temptation and the destiny of economic society.”

Arthur Levitt, former Chairman of the United States Securities and Exchange Commission
“The greatest frauds in the history of the world have been fueled by accounting misdeeds. Jacob Soll's riveting book The Reckoning is a compelling argument for the historical and humane imperatives for clear standards and globalized regulatory oversight. Politicians and business people will benefit from a careful reading of this important book.”

Darrin M. McMahon, author of Divine Fury: A History of Genius
"Who knew accounting was so interesting? Jacob Soll does, and in this masterful history of the men and women who have kept, and sometimes cooked, our books, he will convince you, too. The Reckoning does what the best history should: it piques our interest in accounts of the past so that we may better balance our own."

Robert Bloomfield, Nicholas H. Noyes Professor of Management and Accounting, Cornell University
“Packed with riveting stories of how empires can be so easily felled by poor accounting, whether through willful disregard (Louis XIV) or lack of training (Lorenzo de' Medici), The Reckoning is a must read for anyone who hopes to avoid similar fates for the institutions they cherish. But the book is more than a litany of woes. Every student, teacher and practitioner of business or government should know this history of accounting, from its grounding in theology and philosophy to its central role in the rise of modern commerce, statecraft, and indeed, civilization itself.”

Peter D. Kinder, co-author, Ethical Investing and Investing for Good; co-founder, KLD Research & Analytics, Inc].
“Accountability and the trust it breeds made possible business and government as we know them in the West, a history The Reckoning recounts engagingly. Yet every era’s Madoffs, magnates and mega-organizations—and, critically, their minions—subverted that relationship with catastrophic results of which 2008-09 is only the most recent. Jacob Soll has persuaded me that this time, it’s different: our traditions of accountability could be destroyed yielding a reckoning we cannot project.”

Kirkus Reviews
Soll's (History/Univ. of Southern California; The Information Master: Jean-Baptiste Colbert's Secret State Intelligence System, 2009, etc.) double-entry bookkeeping in relation to the political and cultural significance of accounting and the rise and fall of nations and businesses. In his historical analysis, the author examines why modern societies consistently find themselves mired in crises involving not only financial issues, but political accountability as well. Different than entries in a checking account register, double-entry bookkeeping tracks credits and debits in separate columns, thus permitting real-time accounting of the costs and profits associated with particular and aggregated transactions. The author argues that it allows effective management through accountability and auditing. He contends that successful nations have not only been rich in accounting and commercial culture, but have also learned how to build cultural frameworks that have countered the all-too-human tendency to ignore, deceive or falsify. Soll substantiates his thesis by tracing the history of the method from its beginnings, showing how it was used successfully, and then disregarded disastrously, by Florence's de Medici family and, later, France's Louis XVI. The author credits Luca Pacioli's 1494 Treatise as the enduring source that permitted the technique to be adapted for public policy, beginning with the Dutch republic. Some of the founders of the United States, including Robert Morris and Alexander Hamilton, also used the method. Soll stresses the cultural benefits of incorporating accounting into educational curricula during the 19th century, and he explores how standards have been lowered over time, starting with railroad barons' failures to adequately pay to replace aging equipment and ending with the current concept of mark-to-market, in which financial assets are worth what others will pay for them. An intriguing, well-crafted discussion highlighting a major contribution to political and economic well-being, with an obvious moral for today.

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Basic Books
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Meet the Author

Jacob Soll is a Professor of History and Accounting at the University of Southern California. The author of Publishing The Prince and The Information Master, Soll was awarded the MacArthur “Genius” Grant in 2011. He lives in Los Angeles.

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