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Memory, transaction records, and The Wealth of Nations

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  • Basu, Sudipta
  • Kirk, Marcus
  • Waymire, Greg

Abstract

Adam Smith hypothesized that impersonal exchange was necessary for a society to develop specialized division of labor and create wealth. Douglass North and Vernon Smith argue that successful developed economies are the result of institutions. We hypothesize and provide evidence from ethnographic data that the basic accounting technology of recording transactions is associated with more extensive impersonal exchange and increased specialization in the division of labor. Our intuition is that extensive impersonal exchange requires reliable memory of trading partners' past behavior to sustain trust and encourage reciprocity when a group expands beyond the size of traditional hunter-gatherer groups. Our findings are consistent with the hypothesis that transaction records are necessary for the emergence of complex economies as suggested by the archaeological evidence of recordkeeping in Mesopotamian societies 10,000 years ago.

Suggested Citation

  • Basu, Sudipta & Kirk, Marcus & Waymire, Greg, 2009. "Memory, transaction records, and The Wealth of Nations," Accounting, Organizations and Society, Elsevier, vol. 34(8), pages 895-917, November.
    • Handle: RePEc:eee:aosoci:v:34:y:2009:i:8:p:895-917
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    1. Yannick Lemarchand & Laure Pineau-Defois & Cheryl Mcwatters, 2011. "Comptes et récits de la maison Chaurand, retour sur les liens entre comptabilité et capitalisme," Post-Print hal-00650546, HAL.
    2. Forsberg, Per, 2023. "Symbols in wood as a means of reciprocity: Accounting and social cohesion in pluralistic economies," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 96(C).
    3. Barker, Richard & Schulte, Sebastian, 2017. "Representing the market perspective: Fair value measurement for non-financial assets," Accounting, Organizations and Society, Elsevier, vol. 56(C), pages 55-67.
    4. Macve, R.H., 2015. "Fair value vs conservatism? Aspects of the history of accounting, auditing, business and finance from ancient Mesopotamia to modern China," The British Accounting Review, Elsevier, vol. 47(2), pages 124-141.
    5. Erb, Carsten & Pelger, Christoph, 2015. "“Twisting words”? A study of the construction and reconstruction of reliability in financial reporting standard-setting," Accounting, Organizations and Society, Elsevier, vol. 40(C), pages 13-40.
    6. Gilbert, Christine & Everett, Jeff & de Castro Casa Nova, Silvia Pereira, 2024. "Patriarchy, capitalism, and accounting: A herstory," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 99(C).
    7. Murphy, Tim & O’Connell, Vincent & Ó hÓgartaigh, Ciarán, 2013. "Discourses surrounding the evolution of the IASB/FASB Conceptual Framework: What they reveal about the “living law” of accounting," Accounting, Organizations and Society, Elsevier, vol. 38(1), pages 72-91.
    8. Mullins, Daniel A. & Whitehouse, Harvey & Atkinson, Quentin D., 2013. "The role of writing and recordkeeping in the cultural evolution of human cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 90(S), pages 141-151.
    9. Venky Nagar & Madhav V. Rajan & Korok Ray, 2018. "An information-based model for the differential treatment of gains and losses," Review of Accounting Studies, Springer, vol. 23(2), pages 622-653, June.
    10. Murphy, Tim & O’Connell, Vincent, 2017. "Challenging the dominance of formalism in accounting education: An analysis of the potential of stewardship in light of the evolution of legal education," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 44(C), pages 1-29.
    11. Basu Sudipta & Waymire Gregory B., 2019. "Historical Cost and Conservatism Are Joint Adaptations That Help Identify Opportunity Cost," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 9(1), pages 1-13, March.

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