*Accounting for Capitalism: The World the Clerk Made*

That is the title of a new and excellent book by Michael Zakim.  Here is one bit:

A single block fronting Wall Street in 1850 was thus home to seventeen separate banking firms, as well as fifty-seven law offices, twenty-one brokerage houses, eleven insurance companies, and an assortment of notaries, agents, importers, commission merchants, and, of course, stationers.  A rental market for office “suites” developed apace “fitted up with gas and every other convenience,” which also included newly invented “acoustic tubes” that allowed managing partners to communicate with porters in the basement and clerks in the salesroom without ever having to leave their desks…

All this office activity spurred a flurry of technological spillovers that included single standing desks and double-counter desks, sitting desks featuring nine or, alternately, fifteen pigeonholes, and drawers that could or could not be locked.  “Office chairs capable of swiveling and tilting became available as well, together with less costly “counting house stools” that lacked any upholstery.  Paperweights, check cutters, pen wipers (the woolen variety being preferable to silk or cotton, which tended to leave fibers on the nib), pencil sharpeners, rulers, copying brushes, dampening bowls, blotting paper (less important for absorbing excess ink than for protecting the page from soiled hands), wastepaper baskets, sealing wax (including small sticks coated with a combustible material ignited by friction and designed to be discarded after a single use), seal presses, paper fasteners, letter clips (for holding checks while entering them into the daybook), writing pads, billhead and envelope cases, business cards, receiving boxes for papers and letters, various trays (for storing pins, wafers, pencils, and pens), and “counting room calendars” spanning twelve- or sixteen-month cycles — all became standard business tools.  So did the expanding inventory of “square inkstands,” “library inkstands,” and “banker inkstands” designed with narrow necks which prevented evaporation and shallow bodies that kept the upper part of the pen from becoming covered in ink, thus avoiding blackened fingers and smudged documents.

There is then a whole other paragraph about the different kinds of paper that developed and their importance for clerical work.  This is perhaps the most thorough book I know on the importance of “small” innovations, and it is also a useful book on the history of accounting.


There is a theory that the invention of double-entry bookkeeping was a key catalyst for the economic growth of the last several hundred years, viz the Renaissance and the Industrial Revolution. I think this is a very plausible theory. You can't have efficiency without careful and consistent accounting.

As long as it is honest. The Soviet Union had a lot of careful and consistent accounting. Lenin was a huge fan of careful accounting.

But everyone lied.

Careful and consistent accounting is necessary but definitely not sufficient for economic growth.

My finances with my wife are typically slapdash, but with my mistress I use the double-entry method.

Good, but in some ways it goes to far and in others not far enough.

"Too far" in that I think it's a mistake to associate all those developments with capitalism. A lot of them are associated with development in general, in particular of bureaucratic and managerial innovations. I was reminded of this when I recently read this article about how ISIS ruled or more accurately managed the people and lands and cities that it had conquered. We already know they had plenty of stonings, hangings, arrests, etc. But their real secret was the same one that the Roman Empire and before them the Persian Empire and Egyptians used: bureaucracy. Meaning record-keeping and having a flow of information so the leaders know what those records say.

"Not far enough" in that the clerks and accountants should be credited with more than just paper clips: they almost certainly were responsible for the invention of writing, at least in Mesopotamia. The earliest cuneiform tablets were for priests or kings to keep track of how many sheep and how much wheat had been contributed. The Incas were using knotted strings for the same purpose (and maybe those string could contain other information too but we don't know). And that sort of record-keeping is also what the ISIS bureaucrats were doing.

Surely the volume of activity and level of specialization described in the quote are distinctive to capitalism. I don't think anyone is claiming that no bureaucracy existed before modern capitalism.

Also, the Roman empire had a flourishing market economy. ISIS engages/engaged in a whole lot of economic activity, but they also get to benefit from the existing capitalistic innovations of the modern world, without having to develop them themselves.

Never, ever, buy a swivel chair in the Philippines. It will break after six months normal use if you weigh over 75 kg. Never. I bought two and they both broke. I think they are designed for Asian women, or, as is common in PH, they are rejects from the first world, sold here as new at a discount, rather than being hauled to the trash dump where they belong. Always buy a simple chair that's fixed, and it will last longer (actually even those chairs often have the back break, if you lean back like I do, after about a year or two, but at least they last longer than six months).

Bonus trivia: the Monkey's lead singer's mom invented Liquid Paper and got rich off the patent, one of the few patent success stories out there (most inventors make very little).

Cowen: "This is perhaps the most thorough book I know on the importance of “small” innovations . . ." Tim Taylor has blogged on this theme many times. Here is one example: http://conversableeconomist.blogspot.com/2017/05/edmund-phelps-won-nobel-prize-back-in.html Taylor also connects the abuse of the patent system by trolls and innovation: http://conversableeconomist.blogspot.com/2018/01/the-problem-of-questionable-patents.html While we obsess about the invention of the next big thing, economic progress is actually found in the small things, the myriad small innovations that make us more productive, what Phelps calls "dynamism".

I agree, there are many small innovations being made continuously. Taking the example of cars, some are visible like the cup holder or keyless ignition, some are under the hood, improving efficiency and reducing pollution.. Nothing earth shattering but it's significant because there are so many of them in all areas of the economy.
So we don't see huge developments happening like fusion in a bottle, or supersonic flying cars but there's still pervasive, continuous progress.

This morning I learned there is a Eudaimoni Institute at Wake Forest, whose purpose is to support eudaimoni, or "genuine human flourishing", with the goal of "enabling more people to achieve eudaimonia". GMU probably has a chapter, with Robin Hanson as its director. Is eudaimonia the answer to "complacency" and the path to "dynamism"? Does this comment belong under Cowen's prior blog post?

What a fascinating excerpt (about a seemingly boring subject).

So much is lost and forgotten as we move on to new technologies. I had no idea that speaking through tubes was a thing--never mind single-use sealing wax sticks. And these things are just minutiae. We think we know what the world was like in the past, but we really do not.

'I had no idea that speaking through tubes was a thing'

Well, they are not an invention of capitalism - 'Voice pipes, the maritime term, served to transmit reports from lookout positions aloft to the deck and from the bridge to the steering position and engine room. These were somewhat larger in diameter than the domestic version and were often covered in sound absorbent material to increase their efficiency.

Copper voice pipes were being fitted to British two and three-deck warships as early as 1803. A notable use was on board HMS Victory at the Battle of Trafalgar in 1805. Victory's ship's wheel was shot away early in the battle. A voice tube was then used to carry steering orders from the quarterdeck down three decks, to where a gang of sailors operated the ship's tiller directly using ropes and pulleys.' https://en.wikipedia.org/wiki/Speaking_tube

The U.S. Navy still uses them, by the way, depending on the age of the ship.

Imagine you are Dick Cratchit standing at your desk with a cola stove heating the room. Adding machines/calculators to not exist. Each day, you manually add hundreds of individual account/subsidiary ledger and general ledger entries and you can keep the books both correct and in balance.

Hell, you don't need to look back further than the early 1980's to get a taste of the Victorian accounting systems.

The distribution of the PC and portable printing into the workplace was extremely radical.

Mainframe-based corporate systems of course pre-dating that revolution by a decade or so. Together the two took accounting out of the nineteenth century.

Err, you mean coke stove, not cola.

Probably a transposition error changed it from coal to cola.

Coke stove is a possibility, but AFAICT a 19th century office would've been more likely to use a coal stove than a coke stove.

"it is also a useful book on the history of accounting." I'm still chortling.

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