Do Financial accounting practices as per the political setup and their administrative strategies, pose problems to the pace of Socio-economic development of any nation ? This paper addresses this question with a preview to the dawn of human civilizations on earth, and mathematically cumulating the thoughts of Socio-economic development in four facets, from Individual to National level. Different Financial Management Techniques are used under the two divergent political setups, namely the Capitalism and the Communism. A capitalist setup provides the freedom of corporate control under each individual entrepreneur or a corporate unit (I), under private or government control (G), to function as an autonomous body. These units could function towards their self goals, using the "Return on Investment" as their motivating guideline. A communist setup represents a centralised approach through individual work contributions at micro level. Under this setup, the national demand is pre-assessed and fixed by the State. The financial management is taken care by the State Bank. These financial overviews lead to the conclusion that irrespective of the political setup, the Socio-economic development is a Three Dimensional Closed Cycle Economic process, namely Manpower, Materials and Techno-commercial infrastructure, in a preset Seven Sequential order. Of these, the Manpower is the Prime component. It should be supported by adequate Infrastructure Systems, and Performance Feed back. The Politico-Financial overview infers that the Cost and Quality of Domestic goods and services, decide the status of Socio-economic development. This directly depends upon the proper utilisation pattern of the three ingredients and the Productivity orientation of the Prime component (Manpower). The world experiences support the Closed Cycle Economic process. The inferences are supported with examples from Britain, Germany, India, Russia and USA. The matter is supported with 4 Creative and Comprehensive Schematic Diagrams summarising the Financial Approaches of Capitalist/Communist setup, Closed Cycle Economics and the Productivity relationship of the Prime component Manpower, respectively. This Research Paper is based on a study survey by the Author to various countries functioning under different Political and Financial accounting Appraisal Techniques.
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Paper provided by EconWPA in its series Public Economics with number
0404004.
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