The Accountant Shortage Threatens Capitalism's Future

Capitalism can’t function without a healthy system of accounting. The breakthrough from feudalism to capitalism in Renaissance and Reformation Europe was only made possible by the emergence of professional accountants. And a dearth of accountants — or a dearth of respect for accountants — has spelled trouble ever since. “Over and over again,” Jacob Soll wrote in his fascinating history of accounting, “The Reckoning: Financial Accountability and the Making and Breaking of Nations,” “good accounting practices have produced the levels of trust necessary to fund stable governments and vital capitalist societies, and poor accounting and its attendant lack of accountability have led to financial chaos, economic crimes, civil unrest and worse.”

In Renaissance Florence, 4,000-5,000 of the city’s 120,000 inhabitants attended accounting schools at any one time, studying the new device of double-entry accounting with its delicate balance of profit and loss. Cosimo de Medici (1389-1464) and other Italian bankers thrived because they kept impeccable accounts (Cosimo himself did yearly audits of all his various branches). Luca Pacioli, a Franciscan friar and mathematician, wrote the first great accounting textbook in 1494.