The Truth Machine: The Blockchain and the Future of Everything. Paul Vigna

Чтение книги онлайн.

СКАЧАТЬ for capital, they have to open their books to prospective investors. To remain in the market, they need accountants to verify those books regularly. Well-maintained and clear accounting is sacrosanct.

      The ascendance of bookkeeping to a level equal to truth itself happened over many centuries, and began with the outright hostility European Christendom had to lending before double-entry booking came along. The ancients were pretty comfortable with debt. The Babylonians set the tone in the famous Code of Hammurabi, which offered rules for handling loans, debts, and repayments. The Judeo-Christian tradition, though, had a real ax to grind against the business of lending. “Thou shalt not lend upon usury to thy brother,” Deuteronomy 23:19–20 declares. “In thee have they taken gifts to shed blood; thou hast taken usury and increase, and thou hast greedily gained of thy neighbors by extortion, and hast forgotten me, saith the Lord God,” Ezekiel 22:12 states. As Christianity flourished, this deep anti-usury culture continued for more than a thousand years, a stance that coincided with the Dark Ages, when Europe, having lost the glories of ancient Greece and Rome, also lost nearly all comprehension of math. The only people who really needed the science of numbers were monks trying to figure out the correct dates for Easter.

      It was only during the twelfth century and the Crusades, when Europeans began trading with the East, that they encountered the mathematics that had developed in the Arab world and Asia. In the thirteenth century, an Italian merchant named Fibonacci made trips to Egypt, Syria, Greece, and Sicily, where he collected numerous mathematical papers. His Liber Abaci, a book filled with integers and fractions, square roots and algebra, showed how this new math had commercial applications, such as currency transfers and profit calculations. Before Fibonacci, European merchants simply couldn’t calculate the things we take for granted today; he taught them how to measure proportions, how to divide, say, a bale of hay and charge accurate prices. He taught them how to divide profits in an enterprise. Fibonacci’s math gave them precision in business matters that people did not previously have.

      Fibonacci’s new numbering system became a hit with the merchant class and for centuries was the preeminent source for mathematical knowledge in Europe. But something equally important also happened around this time: Europeans learned of double-entry bookkeeping, picking it up from the Arabians, who’d been using it since the seventh century. Merchants in Florence and other Italian cities began applying these new accounting measures to their daily businesses. Where Fibonacci gave them new measurement methods for business, double-entry accounting gave them a way to record it all. Then came a seminal moment: in 1494, two years after Christopher Columbus first set foot in the Americas, a Franciscan friar named Luca Pacioli wrote the first comprehensive manual for using this accounting system.

      Pacioli’s Summa de arthmetica, geometria, proportioni et proportionalita, written in Italian rather than Latin so as to be more accessible to the public, would become the first popular work on math and accounting. Its section on accounting was so well received that the publisher eventually published it as its own volume. Pacioli offered access to the precision of mathematics. “Without double entry, businessmen would not sleep easily at night,” Pacioli wrote, mixing in the practical with the technical—Pacioli’s Summa would become a kind of self-help book for the merchant class.

      That a member of the clergy took an interest in double-entry bookkeeping was important, because Pacioli’s method helped the merchants overcome the church’s disdain for usury. The merchants had to prove to the church that their businesses were not, in fact, sinful, that they provided a benefit to mankind. During the Middle Ages, writes author James Aho, “the very thought that a person might be profit-hungry and yet Christian was an outrage.” Double-entry accounting, completely unintentionally, provided a way around this. How? The answer lies in the Book of Revelations, Christianity’s tale of a final reckoning, where it is said:

      And I saw the dead, small and great, stand before God; and the books were opened; and another book was opened, which is the book of life; and the dead were judged out of those things which were written in the books, according to their works.

      Interpretation: The dead stand before God and open their book. Then God opens his book. The second book. You might call this, oh, double bookkeeping. “Whosoever was not found written in the book of life was cast into the lake of fire.” Through a simple method of accounting, the merchant class was able to perform a trick that had eluded them for a millennium: making it acceptable to engage in the business of making loans. Double-entry bookkeeping, Aho writes, “was itself complicit in the invention of a new ‘field of visibility’: the Christian merchant.”

      This deliberate connection between biblical records and accounting records is evident in Pacioli’s writings. His very first instruction in describing his double-entry method directed: “Businessmen should begin their business records with the date AD, marking every transaction so that they always remember to be ethical and, at work, always act mindful of His Holy name.”

      Once usury was liberated from the Christian distrust of commerce, people began to take it up. The Medici of Florence came first, turning themselves into vital middlemen in the matching of money flows around Europe. The Medici’s breakthrough was made possible because of their consistent use of double-entry ledgers. If a merchant in Rome wanted to sell something to a customer in Venice, these new ledgers solved the problem of trust between people who lived at great distances from each other. By debiting the payer’s bank account and crediting that of the payee—with double-entry practices—the bankers were able to, in effect, move money without having to ship physical coins. In so doing, they transformed the whole enterprise of payments, setting the stage for the Renaissance and for modern capitalism itself. Just as important, they also established the 500-year practice of bankers creating an essential role for themselves as society’s centralized trust bearers.

      The value of double-entry bookkeeping, therefore, wasn’t merely in dry efficiency. The ledger came to be viewed as a kind of moral compass, whose use conferred moral rectitude on all involved with it. The merchant was pious, the banker had sanctity—three popes in the sixteenth and seventeenth centuries came from the Medici family—and the trader discharged his business with veneration. Businessmen, previously mistrusted, became moral, upstanding pillars of the community. Aho writes: “Methodist Church founder John Wesley, Daniel DeFoe, Samuel Pepys, Baptist evangelicals, the deist Benjamin Franklin, the Shakers, Harmony Society, and more recently, the Iona Community in Britain, all insist that the keeping of meticulous financial accounts is part and parcel of a more general program of honesty, orderliness, and industriousness.”

      Thanks to mathematical concepts imported from the Middle East during the Crusades, accounting became the moral grounding for the rise of modern capitalism, and the bean counters of capitalism became the priests of a new religion. Most (though certainly not all) people today have a hard time seeing the Bible as literal truth; but they had no trouble seeing Lehman Brothers’ books as literal truth—until the gaping inconsistencies were exposed.

      The great irony of 2008 was that our belief in a system of accounting, a belief woven so deeply inside our collective psyche that we’re not even aware of it, made us vulnerable to fraud. Even when done honestly, accounting is sometimes little more than an educated guess. Modern accounting, especially at the big, international banks, has become so convoluted that it is virtually useless. In a comprehensive dissection in 2014, the Bloomberg columnist Matt Levine explained how a bank’s balance sheet is almost impossibly opaque. The “value” of a large portion of the assets on that balance sheet, he noted, is simply based on guesses made by the bank about the collectability of the loans they make, or of the bonds they СКАЧАТЬ