Weekend Linklings

The Net makes VRM possible. No Net, no VRM. So for this post I’ve gathered a bunch of stuff about the Net, starting with posts about neutrality and structural separation, and then moving on to other Net-threatening topics.
David Reed:Does the Internet need “governance?The short answer is no. The best long answer is here.  And we need it, because “Internet governance” is a hot topic. Pay close attention to what he says about “stakeholders.”
Susan Crawford (who worked for him), gives usObama’s Presidential Moment .

On its 10th Anniversary, Firefox gets even more VRooMy

I just upgraded Firefox from 33.0.1 to 33.1 — the 10th Anniversary edition. When it came up, I was greeted by welcome notes and a tour that begins with this:

Firefox screen shot

Nice!

And that’s just one of the new privacy-respecting goodies that come with the latest version. watch this video:

Firefox-choose-independent

Here’s the script (with a different voice for each line), which I just transcribed:

Who owns the Internet?

The answer is no one.

The answer is everyone.

Which is why thousands of volunteers around the globe give  their time and talent

To create an Internet experience that’s owned by everyone.

And  doesn’t own you.

Where your information isn’t being bought and sold.

Where power is in your hands.

Not in a corporate database.

That’s why ten years ago we created Firefox.

Nonprofit. Non-corporate. Non-compromised.

Choosing Firefox isn’t just choosing a browser.

It’s a vote for personal freedom.

It’s how we keep your independence online burning bright.

ProjectVRM has been about two things from the start: engagement and independence. All browsers are tools for engagement. But only one stands for independence.  Hat’s off to the Mozilla and Firefox teams for standing on the side of everybody. And happy 10th anniversary.

Bonus link: a search for more on Firefox v.33.1.

What would a VRM social network be?

The Big Bang of Social Networking 128px-Emoji_u1f4c7.svgis a piece by Jim Dwyer in The New York Times that will likely be a subject of a session today or tomorrow at IIW. So here are a few thoughts of my toward that discussion…

  1. All of us had social networks before Facebook, Diaspora and Ello existed. We still do. They’re in our heads, hearts, contact lists and address books.
  2. Facebook, Diaspora* and Ello are silo’d commercial services. They do serve many social purposes, of course, and a few very well, or they wouldn’t be so popular.
  3. If we want real social networks online, we need to start with our own genuine personal ones.
  4. To be VRM, they need to support independence and engagement. They should also be substitutable in the same way that, say, browsers and email apps and services are substitutable.

It is essential to start outside the box of thinking that says everything needs to be a service. Inside that box we risk thinking only of other calf-cow solutions to calf-cow problems.

Facebook and Ello are both cows. Even though one doesn’t advertise at us, we’re still calves in its fenced farm.

Unless, of course, we can take our social graphs away with us, to use on our own, or with some substitutable service.

VRM social network solutions to the problems of calf-cow designs need to be first person technologies. At that link, I explain,

Only a person can use the pronouns  “I,” “me,” “my” and “mine.” Likewise, only a person can use tools such as screwdrivers, eyeglasses and pencils. Those things are all first person technologies. They were invented for individual persons to use.

I suggest we start with address books and calendars. Those could not be more personal, yet more social. And, far as I know, nobody has yet done them in a way that’s useful for scaffolding the successor to Facebook on top of them. But that shouldn’t stop us.

* [Later...] This was a copy/paste/rush error.  In fact Diaspora is quite VRooMy. The Wikipedia  entry makes that clear.

 

 

@Capgemini on #VRM: well done!

Just learned about these two new videos by @Capgemini:

The introductory copy says,

Both Customer Relationship Management and Vendor Relationship Management want to improve customer relationships but they approach this differently. Find out what are the three main factors that separate them.

Both videos not only explain VRM nicely, but illustrate it on a whiteboard:

Screen Shot 2014-10-23 at 1.03.24 PM

Screen Shot 2014-10-23 at 1.04.48 PM

Big thanks to @LarrySCohen, @NielsvdLinden, @rickmans, Nick Gill and all the other @Capgemini people behind this. (Though not mentioned in the above links, I also want to throw thanks to @VINTLabs and @Sogeti, both also of Capgemini, and who I suspect are involved too.)

And it would be great if some could come to VRM Day and IIW next week. We’ll set the stage with these videos.

VRM News & Views

First, some VRooMy startups and projects:

Next, I’ve got this idea that whawhat we need for full personal agency is an operating system of our own. Something that’s as personal as our own clothes, and just as wearable and privacy-affording. Also something we wield, like a tool. Or a set of them, which might include, if need be, weapons. So here are some links that point in that direction:

Now for some government stuff:

A collection of VRooMy posts by Don Marti, and links from some of those posts:

Data stuff:

Etc.

#VRM Tweetings

Here’s a pile of #VRM tweets. One of these days I’ll find the least crufty way to copy and paste them (or whatever works best). Recommendations welcome.

    1. Here’s Why Public Wifi is a Public Health Hazard

  1. Some more Morgo coverage RT : “The rate of company failures is increasing…”

  2. @seanbohan  Oct 17

    MT Take a look @ list of developers: Not a complete list, but not bad

  3. @AdrienBlind  Oct 17

    “What’s bugging people is that companies know stuff about them that they don’t know”

    1. @AdrienBlind  Oct 17

      today at to speak about (vendor relationship mgmt). Interesting presentation!

      Embedded image permalink
    1. @RealEstateCafe  Oct 16

      . Compare Few 3rd parties developing commercial solutions vs residential

      Embedded image permalink
    1. @RuudKnorr  Oct 16

      Visit Kenya and Ethiopia Veiling Rhein-Maas suppliers Start-up Season

      Embedded image permalink
  4. Been a couple years since I read The Intention Economy by . Wanted to see what was going on with

  5. Looking forward to connecting with other ‘ers at VRM Speed Networking event tomorrow at 9am PST.

  6. @gaguilardelgado  Oct 15

    What’s this? We are building an app that will surely explain it. And maybe will help users to take advantadge of their .

  7. The “I don’t care who you are, terrorist, Fed or , get out of my data” sentiment HAS to favor PDSs, no?

  8. VRM+CRM at IIW “come for the , stay for the

    1. @nitinbadjatia  Oct 8

      Is Fitbit selling data? – Fitbit doesn’t plan to share stats with Apple’s new Health app, for now via engadget

  9. @seanbohan  Oct 8

    want to learn more about Intention and ? Check out what’s happening at Oct 27-30

  10. needs a hand to shake on the customer side that’s not a captive one’ –

Weekend Linklings

Events

VRM Day 2014b- Eventbrite. 41 have registered. Room for 50.  Better hurry.
Internet Identity Workshop XIX #19 – 2014b- Eventbrite. Come for VRM Day, stay for IIW.

Politics and governance, aka #GRM

 snapvote14.com by NewGov.us.
 SNAPvote14 | Indiegogo. Support a Good Thing.

Thinkings

 Hidden In The Myths Of Time | Brian Grimmer Founder & CEO Present Group. Deep thinkings across space and time from the father of the personal cloud company Onexus.
 Doc Searls: Business as Morality – O’Reilly Radar. Some possible moral contexts for VRM discussions, including the…
 Genuine progress indicator – Wikipedia, the free encyclopedia
 Shift Happens – Katryna Dow. Thinking from another of our great friends from Oz.
 Iain Henderson – The Personal Data Eco-System | Kantara Initiative. An oldie that’s still a goodie. Dep reading.
 Walk A Mile In Your Customer’s Diapers: Co-Creating The Customer Experience. Big topic.
 kitewheel.com/wp-content/uploads/2014/10/Journey-Final. More on that.

VRM +/vs. Marketing

 Unhappy Customer: Comcast Told My Employer About Complaint, Got Me Fired – Consumerist. Source of much discussion on the VRM list.
 The Marketing/Cybercrime symbiosis. T.Rob on a topic close to home.
 2014 Report – Adblocking Goes Mainstream | Inside PageFair. A fair warning to the online publishing and advertising industries, which are kinda the same.
 US tech companies heading for a customer service disaster? | MyCustomer

Developments

 ownCloud.org
 Company – Protonet
 Thingz. Dunno what it is, but it’s run by our friend Don Thorson.

Etc.

VRM+CRM at IIW

Four years and a few months ago, CRM Magazine devoted much of its May issue to VRM.not_iball1 That’s the cover there on the right. It was way ahead of its time. Same goes for ProjectVRM, which started four years earlier.

Now things are starting to shift.

I’ve heard encouraging reports from friends who went to Oracle OpenWorld last month and are headed to Salesforce‘s Dreamforce  next week. They tell me it is now becoming apparent to CRM that it needs a hand to shake on the customer side that’s not a captive one. Specifically —

  • That customers need scale across the many companies they deal with, just as companies need scale across the many customers they deal with. So, for example…
  • A customer should to be able to change his or her address (plus other form fields) for every company they deal with in one move, rather than one at a time within each company’s separate CRM system.
  • A customer should be able to intentcast as a qualified lead, safely and (at least at first) anonymously, outside of any one company’s captive marketplace.
  • An individual’s sovereign identity matters more to them — and to the marketplace — than any administrative identities conferred by companies or governments.
  • The negative externalities of unwelcome surveillance tend to outweigh whatever positive internalities the practice provides.
  • Co-creating the customer experience is better than having one side in charge of the whole thing — especially when the customer has few ways to bring consistency to her experience with many different companies.
  • Customers should have clouds of their own (aka personal clouds, stores, vaults, PIMS), and not just those of silo’d services.
  • Customers need ways to express their own policies, preferences, terms and conditions, and not be forced all the time to accept those provided by sellers — and that mutually agreeable terms will be far better than the one-sided (and in many cases unenforceable) ones nobody reads because there’s no point to it.
  • There is far more leverage on customer retention in the “own cycle” than in the “buy cycle” of the customer experience.

Speaking of which, here’s how that cycle looks, thanks to Esteban Kolsky, who drew the original: oracle-twist

There are now many dozens of developers in or near the VRM space that can be helpful for CRM as well.

Given all the action that’s going on, it would be way cool if we can get players on both sides together in one room to talk and whiteboard our way onto common ground and build new and better stuff there.

So we’re in luck, because that’s what we have with VRM Day and IIW, both at the Computer History Museum in downtown Silicon Valley (101 and Shoreline Road in Mountain View), on the last week of this month.

  • VRM Day is Monday, October 27.
  • IIW (Internet Identity Workshop) is Tuesday to Thursday, October 28-30.

The two go together. VRM Day is located and timed to lead in to IIW. The topics are ones we’ll want to be working on for the next three days — and beyond.

IIW is an unconference. There are no speakers or panels. All the topics are vetted by participants, who lead discussions and push topics forward in breakout rooms. It’s designed that way so stuff gets done and not only talked about.

While the original focus was (and remains) identity, the workshop is open to anything. High on the list of topics that get worked on, every time, are VRM ones like those listed above.

VRM Day and IIW will provide an ideal week for anybody who wants CRM to truly engage customers to get together and help make that happen.

VRM developers need to know more about how to connect with and help CRM systems and related ones, such as sCRM (social CRM), Customer Experience Management and call centers.

CRM developers need to know more about how to connect with and help VRM developers.

And, since everybody with a wallet is also a customer, that character will be well-represented too.

So I encourage everybody involved in CRM or VRM to come to VRM Day and IIW — with a special shout-out to Oracle, SAP, Microsoft Dynamics, IBM, Salesforce and SugarCRM. We need you there. And so do you. :-)

It’s time to make good on the promise we’ve seen coming for way too long.

Today’s VRooMy Links

    Data Ontology

Why double-entry bookkeeping is actually cool

The subject of double-entry bookkeeping has entered the ProjectVRM conversation.  As it happens I have some source material for that conversation, in the form of a chapter of The Intention Economy that didn’t make it into the book. The reasons: too academic, too off-topic, too boring. And, in spite of all the work I put into it, I still didn’t know enough about what I was writing about.

Still, I did a lot of research on the subject, and my sources at least knew what they were writing about. So, rather than let my last draft of the thing languish any longer, here it is. Hope it’s useful.

— Doc

Balances

Books should be closed each year, especially in partnership because frequent accounting makes for long friendship. —Luca Pacioli

THE ARGUMENT

Networked markets connect two ways: between businesses and people, and between the functional parts of companies. These connections have long been facilitated through double-entry bookkeeping, the deep virtues of which have mostly been ignored or forgotten in our digital age. If we recall what double-entry bookkeeping did, and can do again, we may have another useful path toward The Intention Economy.

THE ORIGINAL BUSINESS SCIENCE

Modern banking is seven hundred years old. It was invented in early Renaissance Italy, and modeled at its start by the Medici bank, which lasted from 1397 to 1494.[ii] One fo those early Italian banks, Banca Monte dei Paschi di Siena S.p.A., founded in 1472, is still around.

Modern double-entry bookkeeping was also established in that time, though it dates back farther. The first major published work on the subject was Summa de arithmetica, geometria, proportioni et proportionalita (Venice: 1474), a textbook by Fra Luca Pacioli, a Franciscan monk, doctor of divinity, and mathematician on the faculty of several universities [iii]. Within Summa is a Tractatus de Computis et Scripturis: the first complete description of double-entry bookkeeping, a system of mathematics which Pacioli treats as equal to Euclid’s in relevance to the everyday world.

Summa was Pacioli’s second published work. Da_Vinci_Vitruve_bw-imagonlyThe first, Tractatus mathematicus ad discipulos perusinos, is a six hundred page textbook in which sixteen sections are devoted to “merchant arithmetic.” [iv] In 1509, Pacioli published both Geometry (a Latin translation of Euclid’s Elements) and Divina proportione, illustrated with sixty drawings by Pacioli’s student and friend, Leonardo da Vinci [1]. Although Pacioli and Leonardo did not begin working together until 1496, it is likely that da Vinci’s Vitruvian Man (on the right), drawn in 1487, was informed by Summa de arithmetica, a copy of which da Vinci possessed.[v] (Pacioli also applied the divine proportion (better known as the golden ratio) to typeface design. The “M” in the Metropolitan Museum of Art logo is Pacioli’s[vi])

In The Printing press as an agent for changeElizabeth Eisenstein calls Pacioli “a pioneering public lecturer and science-writer whose work was ransacked by others for a century or more”[vii], and “probably the most wide-ranging, influential and forceful advocate of mathematics for the layman during the first century of print,”[viii] with influences on DürerKeplerPascal and others. She continues,

Less often noted is the way this fifteenth-century encyclopedic work linked double-entry bookkeeping and business arithmetic with Pythagorean harmonies and the music of the spheres… Pacioli’s Summa represents something of a landmark. Within the covers of this one book can be found all the varied between schoolmen and mysteries of double-entry bookeeping for mechants, so too he underlined the importance of the study of Euclid for Surveyors, architects and other ‘universal men.’ [ix]

In “The Beauty of Double-Entry Bookkeeping and its Impact on the Nature of Accounting Information,” (written in celebration of Summa’s 500th anniversary), Yuri Ihri writes, “the essence of double-entry bookkeeping is not just a contrast between balance sheet accounts and income statement accounts, but, more generically, a contrast between state accounts and explanatory accounts, with the latter explaining changes in the former.” Note that these are two different things. Ihri continues,

This essence, which is stated here in the form of axioms of double-entry bookkeeping are done not globally but myopically and incrementally, which is of double-entry bookkeeping on the nature of accounting information is analyzed accounts. Turning somewhat philosophical, “difficulty, efficiency and originality” are regarded as being the three ingredients of intellectual beauty. Double-entry bookkeeping is found to have all three and to be a “thing of beauty” indeed, as stated by Goethe, Cayley and Sombart, whose quotes are given at the beginning of the paper.[x]

Those quotes are,

“What a thing it is to see the order which prevails throughout his business! By means of this he can at any time needing to perplex himself in the details.What advantages does he derive from the system of bookkeeping by double-entry! It is among the finest inventions of the human mind.” (Goethe, 1824., Vol. I, Book 1, Chapter X. p. 28, translated by Thomas Carlyle). “The Principles of Book-keeping by theory which is mathematically by no means uninteresting: it is in fact like Euclid’s theory of ratios an absolutely perfect one, and it is only its extreme simplicity which prevents it from being as interesting as it would otherwise be. (Cayley, 1907).

“Double-entry bookkeeping is bourne of the same spirit as the system of Galileo and Newton… With the same means as these, it orders the phenomenon into an elegant system, and it may be called built on the basis of mechanistic thought. Double-entry bookkeeping discloses to us the cosmos of the economic world by the same method as, later, the cosmos of the stellar universe was unveiled by the great investigation of natural philosophy… One can scarcely conceive of capitalism without double-entry book-keeping: they are related as are form and context. It is difficult to decide, however, whether in double-entry book-keeping capitalism provided itself with a tool to make it more effective, or whether capitalism derives from the ‘spirit’ of double-entry book-keeping”. (Sombart, 1928. Vol. II, Part I, p. 118-9).[xi]

In spite (or perhaps because) of these cosmic qualities, nothing in Summa reads strange to a businessperson today. Pacioli describes journals, ledgers, inventories, accounts receivable and payable, trial balances, income, expenses, trades and exchanges, salaries, duplicate receipts, “sales for cash or on time with brokers’ commissions,” profit, loss and other concepts and practices that have hardly changed in most of a millennium. His instructive tone is also familiar:

He who wants to know how to keep a ledger and its journal in due order must pay strict attention to what I shall say. To understand the procedure well, we will take the case of one who is just starting in business, and tell how he must proceed in keeping his accounts and he may find each thing in its place. For, if he does not put each thing in its own place, he will find himself in great trouble and confusion as to all his affairs, according to the familiar saying, Ubi non est ordo, ibi est confusio (Where there is no order, there is confusion).

Central to bookkeeping — then and now — are its three books: the memorandum, the journal and the ledger. Here is a compression of Pacioli’s teachings, taken from a series of chapters in Summa:

The memorandum book… is a book in which the merchant shall put down all his transactions, small or big, as they take place, day by day, hour by hour. In this book he will put down in detail everything that he sells or buys, and every other transaction without leaving out a jot; who, what, when, where, mentioning everything to make it fully as clear as I have already said in talking about the Inventory, so that there is no necessity of saying it over again in detail.

…The bookkeeper will put everything in order before he transcribes a transaction in the journal. In this way, when the owner comes back he will see all the transactions, and he may put them in a better order if he thinks necessary. Therefore, this book is very necessary to those who have a big business.

…After you have proceeded on this way through all the accounts of the Ledger and Journal and found that the two books correspond in debit and credit. It will mean that all the accounts are correct and the entries entered correctly.

…After you have finished checking off the Journal, if you find in the Ledger some account or entry which has not been checked off In debit or credit, this would indicate that there has been some mistake in the Ledger… and you shall correct this error.

Throughout Summa, Pacioli invokes the context of balance. Balancing books also balances a functioning business in the world. It is an exercise as normal and necessary as walking upright on two feet.

MOMENTS IN DOUBLE-TIME

In 1913 Charles M. Van Cleve self-published Principles of Double-Entry Bookkeeping. His purposes were to “to explain the principles which underlie the art of accounting by the double-entry method,” and to solve “the problem of placing double-entry bookkeeping on a rational basis”:

As a rule, the study of a useful art has a certain value as mental discipline; the art of accounting is the one exception to the rule. Aside from the so-called occult sciences, there is nothing which so tends to bewilder the mind and to dull the faculty of reason as the study of double-entry bookkeeping in the form in which it is customary to present it.[xii]

In our time, double-entry bookkeeping has fallen out of favor after a six century run. Today accounting is done on computers, with software packages, the most popular of which is Quickbooks, which boasted a 94.2% share of retail units in the business accounting category in 2008. [xiii]  Quickbooks is built for single-entry bookkeeping. Yes, you can get it to do the double-entry kind, though not in ways that make sense to double-entry stalwarts. One of those is Jim Reverend, who blogged this in 2006:

A few years ago, just for fun, I taught myself Double Entry Accounting. I found the whole process very interesting and was intrigued by the fact that so many people would go through so much trouble to learn what amounts to nothing more than a hunk of theory and procedures developed over 500 years ago that have changed very little since then. I really enjoyed the simplicity of the system and the obvious nature of its rules.

I assumed that keeping track of my business’ finances using accounting software would be a relatively straight-forward task, so I set out in search of this software. Quickbooks came highly recommended by almost everyone I asked so I purchased the “Pro” version. $150 later and 10 minutes into using the software and I found myself angry, confused, and sitting in a pile of my own hair.

While Quickbooks may indeed perform Double Entry Accounting in the background, using it is nothing like the simple system of checks and balances that I learned. Quickbooks breaks everything down into common business aspects and concepts and takes the accounting out of it as much as possible. This is great if you don’t know accounting and your business doesn’t deviate too far from the norm. However, if you intend to make even the slightest curve away from a “normal” usage pattern, you’ll find that the software gets in your way more than anything. So I’ve found that my knowledge of Double Entry Accounting isn’t nearly as useful as I thought it would be and, instead, I’m now giving myself a profanity-studded crash-course in manipulating “Quickbooks” into doing what I want.[xiv]

When we go back to Van Cleve, we begin to see why Reverend got so frustrated with Quickbooks’ new double-entry conventions:

The whole difference, and the only difference, between the two systems of accounting is in the fact that single-entry bookkeeping always uses literal language, while double-entry bookkeeping always uses figurative language except when speaking of persons. As soon as one understands the figurative language which it uses, double-entry bookkeeping is just as simple as single-entry bookkeeping — and much more compact.

In single-entry bookkeeping, cash means cash. Merchandise means merchandise. Interest means interest. Expense means expense. But in double-entry bookkeeping cash does not mean cash; it means the imaginary person who owes the amount of the cash. Merchandise does not mean merchandise; it means the imaginary person who owes the amount of the merchandise. Interest does not mean interest; it means the imaginary person who owes or is owed the amount of the interest. Expense does not mean expense; it means the imaginary person who owes the amount of the expenses. Net Capital does not mean net capital; it means the person (real in the case of an individual owner, imaginary in the case of a firm or a corporation) who is owed or owes the amount of the net capital.

This kind of abstraction may seem to detach meanings, but instead they are useful generalizations. Quickbooks insists on a specificity that loses the virtues of abstraction. Here’s Reverend again:

If you want to “pay a bill” (an annoying feature of Quickbooks that you are all but required to use) you will be annoyed every time you do unless you have a “Credit Card” defined. I don’t have a business credit card. I don’t really need one. Despite this, I ended up making a fake “Credit Card” account just to get it to shut up.

You can only pay bills by “Check” or “Credit Card”. You cannot use “Cash”, “Accounts Payable” or “Owner’s Equity” to do so. Oftentimes, I “pay bills” with my personal funds which are not tracked along with my business accounts. So, in order to work around this, I had to create a “Credit Card” account for myself at the “Bank of Daniel”. Any expenses that are paid with personal funds are treated as charges on the “Bank of Daniel” “Credit Card”. Every now and then (once a month, probably) I’ll submit a transaction to pay off the debt on this “Credit Card” with funds from “Owner’s Equity”.

Van Cleve’s case was for all-rational double-entry bookkeeping: “What this treatise has accomplished is to prove that double-entry bookkeeping is a rational process and therefore does not involve the necessity of using irrational language.” [xv] His final paragraph is a Victorian huff:

When accountants learn to use words in their proper sense, when they learn to say asset when they mean asset, liability when they mean liability, and net capital when they mean net capital, they will be surprised to find how much higher a place their occupation will hold in public esteem.

Van Cleve won. Pacioli lost. In place of double-entry bookkeeping’s well-abstracted “irrational” language is an all-literal vernacular, formalized in Quickbooks. Gone also is what Van Cleve failed to appreciate, even if he understood it: that bookkeeping isn’t just about keeping books, or recording profits and losses. It’s about the business’s own narrative. That narrative maintains the integrity of the business itself and its connection to the world. It’s also a way to maintain the form of coherence we call sanity. We have, as they say, lost it.

This was an observation made by Dan Palanza more than three decades ago.

MAKING THE CONNECTIONS

I first met Dan Palanza in September 2010, when I was in Woods Hole with friends. One of those was Andy Maffei, a scientist with the Woods Hole Oceanographic Institution. Andy had pulled together a small group to hear Dan share what he had learned about bookkeeping, a subject Dan had studied intensively over the last three decades. In recruiting me, Andy wrote, “Dan has convinced me that Book-keeping is actually a language that is used to describe energy transfers between two entities where there are two paired components, one physical and one intellectual. It is a way both to describe that transfer and to analyze and represent the balance inherent in such transfers.”

While Dan’s topic is book-keeping [2], his subtopics include thoughts and works by Einstein, Lewis HydeDenise Schmandt-Besserat’s history of counting and writing, four kinds of arithmetic, computing, software, linguistics, the construction business, and the financial meltdown. The list is actually much longer, but that gives you a sense of Dan’s scope. Dan’s story begins in the 1950s, when he worked at General Electric:

In those days the company had a well-refined double-entry book-keeping framework. It ran a complex manufacturing operation building steam turbines, generators and ship propulsion systems. These manufacturing operations were run by a book-keeping journal that used mimeograph business cards as control. The control cards carried production operations as shop work-orders and were returned with accounting data telling which pieceworkers completed each operation.  When the journal data was used to generate ledger reports, those reports were detailed to treat each shop foreman as an individual business within the business. The technical term for this level of book-keeping is “cost accounting.” Note that cost accounting and production operations were connected in this system, which was still the one Pacioli described. What GE also had was a network business architecture. The pieces were all functionally connected, and these connections transcended corporate hierarchy.

For many years after leaving GE, Dan didn’t give book-keeping much thought, beyond remembering with admiration how it worked. By the 1970s he had returned to his family’s construction business, and by 1979 was specializing in energy-efficient homes. The first personal computers were in the world then, so Dan decided to get an Apple II and a book-keeping program, in faith that he would find in the program the same deep cost accounting methods he had learned at GE twenty years earlier. “I assumed that book-keeping was book-keeping,” he said, “even if it was done on a PC. But it didn’t work out that way.” What Dan found was that accounting systems on early PCs were flawed:

Essential pieces were missing. There no cost-accounting, no network architecture. I saw problems not only for my own business, but for the whole financial system that would be built on top of inadequate programs like the ones I saw at the time, and on through the 1980s. Even though these were business applications, they were built to serve isolated needs: filling out checkbooks, paying taxes, putting stuff in lightweight databases and spreadsheets. None of them implemented the journal | ledger pattern, which is fundamental to a proper book-keeping framework. They skipped the journal entirely, posting transactions directly into a relational database, which was fine for doing what databases do, but what databases don’t includes double-entry book-keeping.

In 1985, when Dan’s daughter Laureen opened a small business in Falmouth, Dan decided to learn programming, and developed his own full cost-accounting system with a network business architecture. Laureen’s place became Dan’s own little General Electric. Then, after Laureen’s was sold in 1995, Dan set about re-constructing book-keeping’s universal framework of rules. Like Pacioli, Dan mission was to understand and codify the fundamentals of an applied science. Unlike Pacioli, Dan was operating in a world where the science was no longer applied. So Dan got a Small Business Innovative Research (SBIR) grant from the National Science Foundation in 1998, and competed his project in 2003. He did this alone, since there was no peer group for his work, and no standing interest in what otherwise looked like an utterly mundane subject. Since then Dan has been studying Einstein, Gödel, von Neumann, Heisenberg and other Deep Dudes, making connections between their work—both finished and unfinished—and book keeping, plus three other subjects that explain why this chapter is here: the market, the Internet and the commons.

If we want the Internet’s commons to function fully as a marketplace, Dan says, we’re going to need double-entry bookkeeping. Put more simply, business will need to become sane again. We don’t need Dan to tell us business is insane now. But it might help to report that Dan saw the loss of double-entry book-keeping writ large in the dot-com and housing industry meltdowns, both of which he predicted years before they happened.

He doesn’t blame business leaders or governments for not getting it. He blames a lack of tools. Business without double-entry book-keeping is like mathematics without calculus. You still can do a lot, but you’re crippled if you want to look at—say, change. Not that Dan is a pessimist. He sees the lack of book-keeping tools as an opportunity. “If we bring back double-entry book-keeping—to business, to the commons, to the Internet, to the marketplace, and to our everyday lives—we’ll start another renaissance.”

DEMAND AND SUPPLY

The expression “supply and demand” was first coined as “demand and supply” by James Denham-Steuart in An Inquiry into the Principles of Political Oeconomy, written in 1767. [xvi] In his Inquiry, Denham-Steuart says of demand, “it must constantly appear reciprocal. If I demand a pair of shoes, the shoemaker either demands money, or something else for his own use.” He goes on to describe seven qualities of demand, the sixth of which is, “The nature of demand is to encourage industry.”

In The Wealth of Nations, published nine years later, Adam Smith wrote, “The real and effectual discipline which is exercised over a workman is that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence.” What these two bright bulbs of the Scottish Enlightenment both illuminated—the necessity for strong connections between customers and companies—fell into darkness in the Age of Industry. As the mass market replaced the literal one, the importance of individual customers to large businesses diminished. Actual conversation between company and customer was a cost to be minimized, rather than a source of intelligence and discipline.

SO, THEN

In recent years we have seen many ways in which bridges between customers and companies can be built, some of which we reviewed back in the Asymmetrical Relations chapter. But none of these are more than partial systems. And none of them take full advantage of the Net’s nature as a commons, and as a marketplace. Which means there are many opportunities ahead of us—especially if we take a few lessons from our Italian and Scottish teachers.

Footnotes

[1] Pacioli was also the first to note Leonardo’s left-handedness. In De viribus quantitatis (Ms. Università degli Studi di Bologna, 1496–1508), Pacioli says his buddy “wrote in reverse, [his script] is left-handed and could not be read except with a mirror or by holding the back of the sheet against the light.” (Carmen C. Barnbach, “Leonardo, Left-Handed Draftsman and Writer.” Special Exhibition, Metropolitan Museum Of Art, 2003.)

[2] Dan prefers the hyphenated spelling, which is the original form, though less widely used today. So, when referring to Dan’s background, thinking and work, I use his spelling.

Endnotes

[i] John B. Geijsbeek, Ancient double-entry bookkeeping: Lucas Pacioli’s treatise  (A.D. 1494 — the earliest known writer on bookkeeping). (Denver: self-published, 1914)

[ii] Raymond De Roover, The Rise and Decline of the Medici Bank—1397-1494, 2nd Ed. (New York: Beard Books, 1999.)

[iii] Elizabeth Eisenstein, The Printing Press as an Agent of Change: Communications and Cultural Transformations in Early Modern Europe. (London: Cambridge University Press, 1979.), 547.

[iv] Albrecht Heeffer, “Algebraic partitioning problems from Luca Paccioli’s Perugia manuscript (Vat. Lat. 3129).” Sources and Commentaries in Exact Sciences, (2010), v.11, 3–52.

[v]Carmen C. Barnbach, “Leonardo, Left-Handed Draftsman and Writer.” Special Exhibition. (New York: Metropolitan Museum Of Art, 2003.) http://www.metmuseum.org/special/Leonardo_Master_Draftsman/draftsman_left_essay.asp (Accessed June 12, 2011.)

[vi] Ibid.

[vii] Eisenstein, Loc. cit. 547.

[viii] Ibid., 550.

[ix] Ibid., 549.

[x] Yuri Ihri, “The Beauty of Double-Entry Bookkeeping and its Impact on the Nature of Accounting Information,” Economic Notes, Volume 22, No. 2 (1993). Reprinted in Proceedings of the Conference Accounting and Economics: In Honour of the 500th Anniversary of the Publication of Luca Pacioli’s Summa de Arithmetica, Geometria, Proportioni et Propotionalita, Siena, 18-19 November 1992 (Garland Publishing, Inc., New Works in Accounting History by Martin Shubik, January, 1996), 266.

[xi] Ibid., 266.

[xii] Charles M. Van Cleve, Principles of Double-Entry Bookkeeping. (New York: James Kempster Printing Company, 1913)

[xiii] “Intuit Hits 50,000-member Milestoene With QuickBooks ProAdvisor Program.” Intuit, Inc., 2008. The number quoted is from NPD Group. http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=151982&nid=127645 (Accessed June 9. 2011.)

[xiv] Jim Reverend, “Quickbooks != Double Entry Accounting.” Revjim.net, April 20, 2006. http://revjim.net/2006/04/20/quickbooks-double-entry-accounting/ (Accessed June 9, 2011.)

[xv] Van Cleve., loc. cit., 204.

[xvi] James Denham-Steuart, An Inquiry into the Principles of Political Economy (London: Printed for A. Millar, and T. Cadell, in the Strand, 1767). Online there are three good sources: Google Books http://bit.ly/hI3oTL , McMaster University http://socserv.socsci.mcmaster.ca/~econ/ugcm/3ll3/steuart/  and Marxists.org http://www.marxists.org/reference/subject/economics/steuart  (Accessed July 19, 2010)

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