An Expanded Ledger Grammar for Encoding and Communicating Our Economic Realities*
By Jorge López & Akseli Virtanen, July 2023
[*Last week, we were in Madrid working with EthicHub in Cryptocafe, and this week here in Barcelona, talking in the ReFi Gathering Spain and in the ETH BCN. These are some notes, from our preparations, to maybe help you navigate better what we have been talking about. Check here also our notes for the ETH BCN presentation Reciprocal Stakeholding: A New Economic Networking Primitive. Thank you ETH BCN & EthicHub teams for organizing!]
Accounting practice shapes the economic reality
It is becoming clearer and clearer to us that there is a transformative potential of viewing accounting practices and ledgers as an economic grammar — a formal language that encodes and communicates our economic realities. While traditional accounting principles have long served to sustain capitalist structures, we think that an evolved economic grammar, grounded in the principles of postcapitalism, could provide a platform for redefining economic practices and relationships. Drawing on semiotics, linguistics, and formal languages, we can show how accounting can transition from a tool of capitalism to a language of postcapitalism.
The language of accounting, traditionally seen as a purely technical system for capturing economic transactions, holds profound potential as a vehicle for transforming the economic landscape. To understand this, we must first appreciate accounting as an economic grammar, a formal language that structures, communicates, and shapes our economic realities. This perspective opens a pathway to reimagine and redefine this language for a postcapitalist era.
Accounting as a formal economic grammar
Much like any language, accounting practices and ledgers adhere to a formal structure and rules — a grammar. In semiotics terms, every transaction (signifier) represents a real-world economic event (signified). This symbolic representation forms the backbone of our economic discourse, with the rules of double-entry bookkeeping providing the syntactic framework for our economic narrative.
This economic grammar also reflects linguistic pragmatics — the context-dependent nature of meaning. For instance, the implications of numbers in financial statements are always interpreted within the broader context of industry norms, the company’s operation, and macroeconomic trends.
Accounting as a coordination language
Accounting serves as a coordination language, facilitating communication and agreement among diverse economic agents. It standardizes financial information, enabling coherent transactions, contracts, and performance evaluations across disparate sectors and regions. This role enhances the effectiveness of accounting as a global economic language, communicating universally understood ‘stories’ of economic performance and relationships.
The encoding of capitalism and the dawn of postcapitalism
Traditional accounting practices and the metrics they emphasize — profitability, ROI, market share — are a reflection of the capitalist economic model, where profit maximization is paramount. Accounting, thus, encodes the rules and values of capitalism into an economic language, shaping our understanding and practice of economic life.
However, the recognition of accounting as a language allows us to reimagine and redefine this economic grammar for a postcapitalist era. By altering what we measure and value, we can rewrite our economic narrative. For instance, the rise of the triple bottom line approach, which considers social and environmental impacts alongside economic performance, and the emergence of B-Corporations, which try to balance profit with purpose, point already towards the idea of an evolved economic grammar that embeds sustainability and equity into our economic discourse.
Conclusion
The shift from viewing accounting merely as a technical tool to understanding it as an economic grammar opens up profound possibilities for shaping our economic future. As we transition towards a postcapitalist economic model, redefining this economic language will play a crucial role. By transforming the grammar of our economic language, we can redefine our economic realities, paving the way for a more sustainable, equitable, and inclusive economic order. This potential underscores the need for continued exploration and innovation in our economic grammar — the language of accounting.
Jorge Lopez is a distributed protocol architect and Akseli Virtanen a political economist. They are both members of the Economic Space Agency and co-authors of the Protocols for Postcapitalist Expression (New York: Minor Compositions, 2023), together with Dick Bryan.
ECSA ECONOMIC IDEAS
Economic Intellect: the 12 magic powers of the Economic Space Protocol
Collaborative finance — An ECSA view
A Macroview — What is Cryptoeconomy?
Towards Post-Capitalism: A Language for New Economic Expression
Economic Media: Crypto as a New Medium for Economic Expression
What is Stability? The Time for Alternative Money
Crypto-Political Economy. Transcending Hayek and His Digital Disciples
A Peer-to-Peer Value Creation System
Economics back into Cryptoeconomics
Rethinking Money and Credit in a Cryptoeconomy: On Protocols for Securing Liquidity in a Distributed Economy
Network derivatives, synthetic indexes, distributed value forms (Cryptoeconomics II at NYU/Stern)
Cryptoeconomics Working Session at NYU/Stern
Token as a derivative and a gift
Valuation Crisis and Cryptoeconomy
Distributed Programmable Organization
From Robin Hood to Economic Space Agency
PODCASTS & VIDEOS
Designing post-capitalism and social derivatives with ECSA
A radical strategy to finance a revolution
The Crypto-political economy of ECSA: Transcending Hayek and his digital disciples
ECSA vision: Economic grammar for the information age
The inevitable future of blockchain space: an inter-blockchain economic grammar as “Layer 1” (ETH BCN Opening Key Note)
An offer is a relational fabric
What is economic media?
Organization as an art of rights structures
Experiments in governance
What comes after decentralized finance?
Crypto-cooperatives
Programming organization (21min)
Economy is a game (16min)
Token architectures in programmable economy (9min)
The ECSA Tech Stack in 30sec (30sec)
ECSA in the history of computation: Small Talk, Self, Xerox Parc, Cryptographic object capabilities, Mark S. Miller, stateful multi-agent programming languages…(12min)
Balancing privacy with the utility of aggregating data (3min)
Informational integrity of network derivatives (9min)
Decentralized exchange, stable unit of account, bridging of different value forms (video, 4min)
Rethinking Money and Credit in a Cryptoeconomy (MIT)
An Economic Grammar for Post-Capitalism (MIT)
A Distributed Exchange Protocol (MIT)
Economic Protocols for Liquidity Creation (MIT)
A Peer-to-Peer Value Creation System (MIT)
Distributed Network Protocols as a Metapragmatic Grammar (MIT)
How does it feel to work with ECSA? ECSA team at work, Lohja, Finland.
