1213th Ordinary General Meeting

Wednesday, 7 August 2013

"How numbers came to rule the world: the impact of Luca Pacioli,
Leonardo da Vinci and the merchants of Venice on Wall Street" - Jane

At the 1213th meeting of the Society at the Powerhouse Museum on Wednesday, 7 August 2013, Jane Gleeson-White outlined the argument she presented in her best-selling book Double Entry, the history of the impact of double-entry accounting on the development the capitalist model that has shaped Western civilisation.

Until the 13th century, the prevailing arithmetic system used in Europe was the Roman system which largely precluded complex operation such as multiple cache on and vision. During the Renaissance, the Hindu-Arabic number system and algebra was introduced. One major figure in this was Luca Bartolomeo de Pacioli, a Renaissance monk and mathematician, a colleague of Piero della Francesca and Leonardo da Vinci.

Pacioli wrote a number of major texts on mathematics and was one of the great influences on the development of maths during the Renaissance. He lived for a time in Venice and the merchants there were quick to introduce his system of double-entry book-keeping to record their mercantile transactions. (The double-entry system requires there to be two accounts for every transaction: one a credit account, the other debit account. For every creditor there must be a debtor; and for every debtor there must be a creditor.)

Although merchants had recorded their transactions from Phoenician times, these records were largely narrative in nature. The merchants of Venice were able to abstract and summarise financial performance into a single accounting system that was independent of the goods being transacted. Over the next couple for centuries the double-entry bookkeeping system was adopted first throughout Europe and into the rest of the world.

Gleeson-White argues that this innovation was fundamental to the development of capitalism and the consumer-oriented economic system that prevails worldwide today. It led to the system of national accounts that is used by governments that distils all human activity into a single number: gross domestic product or GDP. She further argues that double-entry book-keeping was a major influence on the scientific revolution and that together these led to the industrialisation of the world and the unsustainable stress that it is currently facing. These claims are not uncontentious and there was a lively discussion after the talk.

Jane's talk was broadcast by the ABC on Radio National's Big Ideas on Tuesday 3 September 2013. Click 1213th OGM to download the RN broadcast.

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