Social Accounting

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"What I proposed in "Time on the Ledger" is a social accounting framework for evaluating the net social productivity of different hours of work arrangements. The basic idea is that first, there are fixed social cost to labor that are not reflected in capitalist accounting and the way that employers can shed their labor costs by laying off workers and second, there is a technologically-determined optimal length of working time per worker exceeding which subtracts from net social product over the longer period. The information from this process can guide collective bargaining and public policy advocacy while at the same time inculcating a commons mentality in practitioners. It is not enough to translate back and forth between capitalist accounting perspective and a commons ideal. One must become fluent in a new social accounting language." (



Tom Walker:

"Werner Sombart (1952) described the concept of capital as something that "did not exist before double-entry book-keeping." "Capital," he wrote, "can be defined as that amount of wealth which is used in making profits and which enters into the accounts." In "Accounting and the Labour Process," Rob Bryer (2006) wrote of a capitalist "mentality" that consists of using accounting information to control the labor process "by holding the collective worker accountable for the rate of return on capital." Such control from the bottom line is central, not incidental, to both the domination of the labor process by capital and the evolution of the ways that domination has been implemented through successive varieties of technology. Any alternative to that domination requires the development of a counter-mentality that "turns the capitalist development of calculation and accountability to other ends."

Bryer imagined such counter-mentality as a "socialist mentality" but I would amend that to a"social-accounting mentality" to both enlist and implicate an existing social-accounting tradition as well as to differentiate the alternative mentality from advocacy of state socialism. Ownership of the means of production may be beside the point or the amenable forms of ownership may be more eclectic than traditional socialism assumes. It is not private ownership per se that is onerous but the domination over the labor process that capital decrees and a one-dimensional accounting mentality enforces. Social accounting is simply the kind of accounting that needs to be done when two or more accounting entities are aggregated. It differs from the accounting of a single enterprise in the way that transactions between the constituent parts are treated. Great care needs to be taken in defining the boundaries between parties to avoid the double-counting errors that are pervasive in attempts at social accounting.


When these book-keeping calculations are naïvely transferred to social accounting practices – including collective bargaining – they also produce "really wondrous errors and confusions." Today, national income accounting – the Gross Domestic Product (GDP) – is the most prominent example of social accounting. Most economists assume that a perpetually increasing GDP is an imperative for achieving well-being, full employment or some other normative goal. Critics of this supposed growth imperative suggest otherwise. But perhaps the debate is confounded by a misperception of what it is that is growing."

The problem of externalities

Tom Walker:

"Roefie Hueting (2008) has adapted Simon Kuznets's analysis of duplication to the issues of social and environmental externalities, using the term "asymmetrical entering" as a more inclusive description of the accounting error than double counting. Asymmetrical entering refers to the costs of restoring or substituting for an environmental or social free good after it has been damaged or destroyed. There is no subtraction from the GDP for the damage to the environment or social wellbeing, which is technically appropriate because there is no monetary exchange involved, but this is what makes counting the costs of restoration as an addition to GDP asymmetrical. Stefano Bartolini (2006) has made a related point about what he terms negative externality or negative endogenous growth (NEGs). This describes a vicious cycle in which the products required to substitute for the free goods of nature and society destroyed by the negative externalities of industrial activity count as growth even as they are generating additional negative externalities, which then lead to more substitution, more growth and so on."


  • Book: Jobs, Liberty and the Bottom Line, Tom Walker, Draft: 12/07/2011