An Evolutionary Defense of Bookkeeping

An Evolutionary Defense of Bookkeeping
Author(s): Basu, Sudipta and Waymire, Gregory B.
Year: 2005
Paper Number: GBS-ACC-2005-015
Goizueta Department: Accounting

Abstract

We use modern research to characterize the crucial evolutionary role played by transactional records that form the foundation of modern accounting. Hard transactional records institutionalize memory of past voluntary exchanges, which when combined with norms of honesty embodied in law and inherent social proclivities, plays an important role in encouraging trust, sustaining cooperation, and facilitating exchange. Expanded exchange opportunities promote the extensive division of labor recognized by Adam Smith as the primary cause of human economic improvement. Thus, the basic thesis we advance is that formal recordkeeping, law, and other institutions (e.g., weights and measures and money) co-evolve as cultural adaptations to secure the gains from large-scale cooperation in human societies where complex exchange occurs between strangers across time. We interpret several aspects of the recordkeeping in ancient Mesopotamia as consistent with this thesis. We also identify extensive opportunities for expanding research boundaries by exploring further the relation between accounting and anthropology, human cognition, law, linguistics, innovation diffusion, and the evolutionary function of accounting education.