VALUE AND ACCOUNTING BETWEEN HISTORY AND THEORY. THE ITALIAN CASE

CLAUDIO LIPARI

(Edited by)

PAPERS ON ACCOUNTING

AND ACCOUNTING HISTORY

CONTENTS

INTRODUCTION ........................................................................................................ 5

Claudio Lipari:

Accounting in Palermo – From Ancien Régime to Contemporary Age ........................ 9

Claudio Lipari and Massimo Costa:

Accounting as Administrative Semiotics .................................................................... 29

Massimo Costa:

The ‘Double Integrated System’ in order to Manage Space-Time Articulations in

‘General’ Accounting Determinations ........................................................................ 57

Massimo Costa and Giusy Guzzo

Non-profit ‘Entities’ between Generalistic vs. Specialistic Approaches on a

Systematics of Levels of Definitions and Classifications ........................................... 85

Massimo Costa and Patrizia Torrecchia:

Value and Accounting between History and Theory: The Italian Case .................... 113

Patrizia Torrecchia and Massimo Costa:

More than a Technical Discipline: The Accounting Culture in Italy – A Glance

through the ‘Schools’ ................................................................................................ 187

Patrizia Torrecchia and Massimo Costa:

The Epochal Paradigm Shift in Italian Accounting: From a ‘Stock’ to a ‘Flow’

Approach .................................................................................................................. 219

Giusy Guzzo

The ‘Contemporary’ Thought of Niccolò D’Anastasio through La Scrittura Doppia

Ridotta Scienza (1803) .............................................................................................. 247

Patrizia Torrecchia and Basil S. Yamey:

Giuseppe Cerboni: Accounting Theorist and Practitioner ........................................ 263

Patrizia Torrecchia:

A Sicilian Author of Accounting: Emanuele Pisani and his “Stathmography” ........ 273

Claudio Lipari:

Teodoro D’Ippolito: The First Writer of Treatises on Economia Aziendale ............. 287

Massimo Costa:

A 20th

Century Scholar of Accounting and Business Economics through his Major

Works: Prof. Nicola Colletti ..................................................................................... 303

Massimo Costa and Patrizia Torrecchia:

The Court of Auditors in the Kingdom of Sicily ...................................................... 329

Carmela Gulluscio and Patrizia Torrecchia:

Public Accounting in Austria and in the Lombard-Venetian Area: The First Academic

Teachings .................................................................................................................. 361

BIBLIOGRAPHY .................................................................................................... 389

Massimo Costa and Patrizia Torrecchia

VALUE AND ACCOUNTING

BETWEEN HISTORY AND THEORY:

THE ITALIAN CASE*

ABSTRACT

The paper looks for the economic and philosophic roots of accounting concep-

tions of value, and the following methods of evaluation, through the main accounting

‘classic’ authors of Italian doctrine. The basic assumption is that ‘value’ is not only an

accounting concept but a multidisciplinary category that, incidentally for other disci-

plines, is central for accounting itself. The authors focus on the period following the

‘precepts’ period (late XV – early XIX century) and preceding the ‘Zappian Revolu-

tion’ of 1926 that gave birth to “Economia aziendale”. So the Lombard School

(Crippa and Villa), the Tuscan one (Cerboni and Rossi), Emanuele Pisani, the Ve-

netian one (Besta, Alfieri and the first Zappa’s production) are to be found after, of

course only for what concerns value and evaluations. Still after, having set a brief link

with more modern evolutions of the debate, and fertilized by this comprehensive dis-

cussion, a final critical synthesis of the whole is outlined with an attempt to point out

first theoretical sentences about value and evaluations useful either for historical and

for merely speculative purposes.

––––––––– *

This paper was presented at the 20th

Accounting, Business and Financial History

Conference, 11th

September 2008, Cardiff. Point 1 and Bibliography are due to

the common work of the two authors; Points 2, 6 and 7 are to be attributed to Mas-

simo Costa; Points 3, 4 and 5 are to be attributed to Patrizia Torrecchia.

114 MASSIMO COSTA – PATRIZIA TORRECCHIA

CONTENTS: 1. Introduction. 2. Some Preliminary Notes about Methodology

Adopted. 3. The Lombard School. 4. The Tuscan School and Emanuele Pisani. 5. The

Venetian School. 6. A Glance over Contemporary Italian Thought about Value and

Evaluation. 7. From History to Theory?

1. Introduction

The concept of ‘value’ is and has always been object of interest for

different scholars in different disciplines. This interest is linked either

to the various features that this concept may assume, features that make

the concept be a sort of interdisciplinary tool, and to the complexity of

its theorical settlement.

Philosophers, economists and more recently also sociologists and

psychologists mention the word ‘value’ with different meanings. This

is spring of some problems that are linked to a lack of a common un-

derstanding of its meaning.

We vote the accounting field to be our research area. Investigating

the meaning of ‘value’ in the specific accounting field implies a meta-

disciplinary investigation on meaning and methodologies of determin-

ing ‘value’. A classic and important topic within the contents of ac-

counting is the ‘problem of evaluation’ and of course the strongly

linked concept of value. But the word/idea of value seems to be a pre-

existing concept: that is, it is not made within our discipline but is a

‘loan word’ from other disciplines. The ‘solution’ that can drive to an

agreement in scientific community about these complex items is not

very easy.

The aspect we mainly want to focus in this work, of course related

to the above mentioned accounting point of view, is read, for space and

time reasons, in a defined comparative approach (through the major

contributions of Italian literature of accounting of the XIX century until

the first decades of XX one).

Furthermore we cannot forget the important influence that other

social disciplines played onto accounting. However, at least from a his-

torical point of view, accounting ‘measured and evaluated’ economic

resources and – in terms of its own object of study – this brought about

more overlaps with economics than other. But ‘economic’ value is a

VALUE AND ACCOUNTING 115

species of the genus value (Anderson, 1966) and, as better lighted by

Brown, «economic measures of values are species of the genus as-

signed value, which belongs to the family value» (Brown, 1984).

Even under the relatively small literature compelled, the purpose of

this study is to develop concepts to describe, conceptualise and analyse

the ‘value’ from the point of view of accounting. In order to accomplish

this aim, we have examined the different authors’ backgrounds following

both the variables of philosophical underpinnings and economic

thoughts. Our aim is to study what the single authors perceived as ‘value’

in relation also to their evaluation method. In exploring this relationship,

new concepts have emerged and first theoretical assumptions have been

set, eventually quoting current scientific debate about this subject. This

has been done in consideration also of the needs to share knowledge and

to spread research about scholars operating in non-‘Anglo-Saxon’ con-

texts (Walker, 2005; Carnegie and Napier, 2002).

We believe on the importance of the context, as history of account-

ing can be considered as an illustration of social context (Burchell et al.

1985). So, in this case, we cannot just collect data and simply describe

documents as in an ‘antiquarian’ approach (Napier, 1989). We have

also to make a cross-fertilisation within the contents of accounting and

the contexts in which it operated. In doing this a ‘cross-disciplinary’

perspective (Walker, 2005; Carnegie and Napier, 1996; Parker, 1997),

as said before, will help to enlighten the insight of the elected topic of

our research.

We have chosen the Italian ‘space’ because of the relative facility

in obtaining and consulting the sources that in this case will be both

first-hand and second-hand. In fact, a theoretical research can reach

more general points of view only through a constructive comparison

with other literatures that present different instances. In this sense the

present research may be seen as a first step for a more comprehensive

one. Notwithstanding this, the recurrence of arguments in different lit-

erature allows already a first definition of ‘concept of value’, starting

from philosophical background, passing through a proper economic ap-

proach and reaching a specific accounting point of view.

Is this just and properly a historical investigation? To our opinion,

not entirely. The attempt to pass from a historical perspective to a theo-

retical one, perhaps does not allow a full affirmative answer, but the

best answer could be given only by the reading of the paper itself. Fur-

thermore, the vitality of the selected theme is witnessed by the recur-

rence in literature (as well in ‘business’ as in ‘accounting’) of subjects

like ‘fair value’ or ‘creation of value’ and so on.

But often, not to say always, this debate runs downhill respect to

the source of our concept. Value ‘is what is’, and – after that – we look

for what ‘creates’ value. We do not know well what value is, but we all

know that is a desirable thing, then we have good reasons to want it. It

is for that, then, that we chose to not considering a great bit of litera-

ture, the ‘downhill’ literature, in our bibliography.

In one clause, we are not satisfied, firstly as accounting scholars and

secondly as accounting historians, of the current use of ‘value’ in ‘evalua-

tion literature’. We feel the need to go ‘uphill’ in our metaphor. Going up,

we find – of course – that the main debt we have is toward economics and

then we have to study, above all, economic roots of ‘accounting value’. In

doing so we discover a disconcerting thing: economics was concerned

very much with the theme of value in classical and neoclassical ages,

when first accounting scholars extracted the roots that we are still using,

while the economic literature of nowadays neglects a so important subject,

perhaps considering it overwhelmed by ‘price theory’.

We will come back over this important argument, but since now we

point that this current and mainstream conception is misleading (above

all for accountants who do not work with prices but certainly with val-

ues), because ‘value’ and ‘price’ are not the same thing. Briefly, our

accounting history survey will force us to reopen that classical debate

to declare a ‘point of view’ in a still relatively undetermined subject of

accounting research.

Coming back to the aforesaid metaphor, the exploration of eco-

nomic source of categorial meaning of value reveals deeper sources,

this time of philosophic origin: we have above already said that eco-

nomic value seems to be a particularly relevant species of a broader ge-

nus, the philosophic concept of value. It is for that reason that we have

made attempts to locate our scholars in the light of their philosophical

predilections, even if we will not have the full space for the exploration

of this last and deepest layer of meaning. In every case this study re-

veals many unexpected variations of the meaning of value: in account-

ing literature ‘value’, for example, is nearly always a ‘quantitative’

value, giving hardly ever a space for the ‘qualitative’ side of the same

concept emerging from its philosophic ground.

Someone, at this point, could ask why a historical research to an-

swer (or to give a contribution for the answer) to a theoretical question.

The right answer to this possible doubt comes from a methodological

assumption about accounting and social sciences and applied disci-

plines as well. For that and other methodological problems and choices

we put off just to the next point, mainly devoted to such questions.

Afterwards we will invest the ‘Italian Case’, promised in our title. In

three points, longer than the following, we will present the most eminent

members of the ‘classical’ XIX century Italian School of Accounting

(Costa, 2001): in order, the Lombard School, the Tuscan one, the Ve-

netian one. After, the following point briefly resumes on the main devel-

opments of ‘value’ in Italy from ‘Zappian Revolution’ until today.

Last point, at the end, criticizes about results of our historical re-

search and put some clauses, even in a problematic perspective, for a

more theoretical use of the investigated categories of value and evalua-

tion (the former in a positive approach, the latter in a conditional-

normative one (Mattessich, 1995)).

It is still note-worthy to underline as this work is not to be consid-

ered fully exhaustive, either in economics and, more, in philosophy.

The only goal, very ambitious notwithstanding that, is to show a com-

mon basis for the different disciplines that have dealt with ‘value’ and

possible developments in matter, in order to a more mature and con-

scious understanding of accounting theory itself.

In the worst case the paper could ever be a first basis for broader

researches, both in space and in time: other national literatures and

other periods may, in next future, throw new light on a so fundamental

subject for accounting theory.

2. Some Preliminary Notes about Methodology Adopted

In this point we have just the objective to point out for the readers

the solutions we have chosen to our main methodological problems (or

sometimes ‘existential’ problems about accounting research). Size of

paper does not deserve a broader explanation for this item, even if

touched themes are sometimes of very great importance. We have tried,

then, a compromise between the need for brevity and the fascinating

call of major epistemic and social science questions.

A paper whose title contains words like ‘between history and theory’

leads to a sort of hybrid research: half historical, half theoretical. Is al-

lowed a so brave contamination? A so bold cross-fertilization? In our

opinion, if the two goals of researches are well distinguished each other,

it is. In the mainstream of thought, now generally prevailing in Account-

ing, theoretical research is a positive one (nearly ever testing hypotheses

by means of empirical data and of statistic tools, but this is not now our

main problem); history does not find, of course, a great space in it. His-

tory is hardly bounded in these positive and analytical precincts. The

only way in which time is considered in this kind of research is for short

variations in time series. So, in such an approach, a long time, really dia-

chronic, research could seem one that considers the spreads of any vari-

ables since e.g. the 1980s until now. So, in such a context, historical en-

deavours could seem quite alien from everyday work of accounting theo-

reticians; alien for its synthetic logics and alien for the too long time con-

sidered. History often sets links and relationships among phenomena that

are mutually very far, in space and time. So, if in a positive approach a

space for historic research is allowed, this is only for an antiquarian kind

of research, interested to rebuild the facts (objective facts) that really

happened in the past, in a dead past, whose relationships with the present

are out of every effort of modern scholars.

Under the risk to be considered somehow trivial, we trust the men-

tioned mainstream is both falsified (in the sense of Popper) and normal

science (in the sense of Kuhn). As in the Kuhnian ‘normal science’, a

clean cut between history and theory produces a ‘bad’ theory (truly

analytical, in spite of its presumed empirical ground, not able to add

anything to current knowledge), and a ‘bad’ history (dead in its past,

not able to enlighten the present). The main and crucial progresses in

economic and social sciences drew nourishment from synthetic studies

and from history than from, polemically saying, chi-square tests. With-

out being Marxist, it is remarkable noting as his studies about ‘value’

and ‘surplus-value’ should have not been the same without his continu-

ing contamination among planes of theory, history, and perhaps also

social and political engagement (very strong in his case).

We think history and theory are jointly knowledge that gives sense

(Luhmann, 1984) to society. Common belonging to knowledge, however,

does not mean confusion. Endeavour of history is in se free from theoreti-

cal implications as well as that one of theory is from historical ones.

Furthermore, here historic object of research is prevailing over

theoretic one. We are interested, then, to present above all a survey on

classical Italian efforts of theorizing value in accounting domain. After,

and secondarily, for we are not fully satisfied of contemporary solu-

tions to the problem of value and evaluation in accounting, we try to in-

fer something useful for us, as contemporary thinkers of accounting.

It is not easy in few lines to resume which kind of history is suitable

for our goals. We will limit ourselves, then, to very general assumptions.

Our history is, mostly, a history of ‘ideas’ but not for that an idealistic

history. Our ‘facts’, if we want to call them so, are not natural phenom-

ena or factual events, they are ‘culture’, they are then anthropological

facts. It exists a long stream, beginning since late XIX century thought of

Dilthey, Windelband, Weber, passing through XX century milestones

like Gadamer or Foucault and persisting in a lot of constructive ap-

proaches (Morin et al.) that have along looked for a peculiar social sci-

ence method in the light of ‘idiologicity’ (individuality) of human facts,

that is in the light of its ‘historical nature’. History is not an intellectual

endeavour apart from that of other sciences. At the opposite, science,

theories, in a limit-perspective look like mere abstractions from history

and, perhaps, that is not now only the case for ‘social’ science but even

for every kind of knowledge. But we do not want here to afford the ques-

tion whether also ‘natural’ science can still maintain a strong positive

domain or not. For us it is enough having set the questions above. His-

tory is at the centre of human world and history of accounting specializes

onto a great part of human knowledge, more involved than others with

material conditions of life. According to some authors, at last, accounting

should have a semiotic nature (Lipari, Costa 2003) being ordered to

translation in signs of administrative-economic phenomena according

socially regulated codes and languages or, at least, is a language in a

Habermasian-Gadamerian conception (Lehmann, 2003).

But, even if accounting is a great part of human culture, it is not only ‘signs’ and ‘ideas’ about them. We said, in fact, we are not inter-ested in a merely idealistic history. In history is preferable a holistic approach: like the French say, tout se tient. Contents of accounting are to be understood under the light of their contexts (Parker – Yamey, 1994, et al.). It is for that reason, then, we will underscore the political, economical and social contexts where classical XIX-XX century Italian accounting main ideas were born and will try to discover the more rele-vant links between such contents and contexts.

Willing to find a location in modern research we may evoke, at least, the main currents of ‘developments of accounting thought’ and ‘critical history’ (

But history is not only a field of research among others. History is also one of different kinds of empirical tests for theory. In other words, history is not only a mental construction over the past but also an em-pirical research for the present. We may test hypotheses by making ex-periments (experimental method), by studying covariance between variables (statistical method), by studying variables in cells containing a small group of cases (case study or comparative method), ..., by studying single cases through history (historical method). Among quoted methods, historical one looks really like the weakest, but in so-cial sciences often we have no way to repeat proofs, neither so much cases to invoke the ‘law of great numbers’ nor few cases to conduct a complete case study. History, with all its weakness, remains then the only kind of empirical research allowed.

As every kind of empirical research it must, then, circumscribe its object of inquiry. An object of study has not to be neither too large, nor too small: because in the former case we should have not time and space to deal with suitably while in the latter we should have not matter enough to conclude anything from empirical evidence.

Our choice, as already known, was on classical Italian schools of –––––––––

(1) «Scholars working in the area of the development of thought […] seek to iden-

tify what constitutes an accounting concept or what justifies it; if, how and why it

changes; and the enviromental factors and individuals that may have influenced it

over time. […] In critical history, accountancy is studied as social and political activ-

ity in itself, both reflecting and influencing its economic, institutional, political and

social environments» (Previts, Parker and Coffman, 1990).

accounting (XIX century, first decades of XX century). The period considered may be seen as a unique great century beginning with the manifesto of D’Anastasio in 1803, by which Italian accounting went out of its long sleeping, until the “New Tendencies in Accounting Stud-ies” of Zappa, in 1926, when the epoch of “Economia aziendale” had its beginning.

This period has been the most studied in Italian literature, and now is known even in international debate mostly for the question about the “nature of accounts” (Mattessich, 2008), not irrelevant for our goals as we will see after. The fact that partition in schools and periods of this interval of Italian accounting history is now relatively consolidated is for us an advantage: we can study, then, the main authors, nearly in vi-tro, without many problems for choice of scholars and books, and eas-ily present results to an international community.

For space reasons we left ‘medium’ authors away and concentrated our attention on the ‘greatest’.

Then we paid no attention to the first attempts of the early XIX century before the birth of Lombard School. In this last one we consid-ered the first author, Giuseppe Lodovico Crippa, and its great disciple, Francesco Villa, and no other person. Afterwards, in Tuscan School, we limited our investigations on the leader, Giuseppe Cerboni and, again, on his greater disciple, Giovanni Rossi. There, too, for chrono-logical reasons, we found space to expose ideas of just one among main authors out of the most famous XIX century Italian school: the original contribution of the Sicilian Emanuele Pisani. At last, in Venetian School, we concentrated our study only on three authors: the leader Fabio Besta, the oldest disciple Vittorio Alfieri and the youngest one, Gino Zappa, but this last considered only in his juvenile phase, when he was only a member of the Venetian School and not already an “Ac-counting Revolutionary” (Canziani, 1994).

Exploring ‘value’ and ‘evaluations’ in these authors gave evidence, at least, of three strata of the question: a more surface one, related to proper accounting, a deeper one, related to ‘value’ in economics, and a deepest one, related to ‘value’ in philosophy. The paper moves upper and lower along these three strata with a privilege, of course, for ac-counting but without posing too narrow boundaries among them.

Research shall be conducted through study of authors’ works and,

when and if possible, through other works on the same argument which, directly or indirectly, may make clearer the whole ‘picture’ of ideas and related cultural and socio-economic contexts.

In order to the best understand and in a comparative approach, for every author, we try to clarify the following points, in an order progres-sively going from contexts to contents:

· socio-political environments;

· philosophical background;

· basic economic theories;

· explicit or implicit definition of value;

· evaluation criteria.

Such points could be logically organized in a table like the fol-lowing (

Fig. 1: Methodological Framework

Socio-political

Environment

Philosophical

Background

Economic

Theories

Definitions

of Value

Evaluation

Criteria

–––––––––

(2) This table is taken from the Ph.D. final dissertation of Patrizia Torrecchia.

At the end of this path we have considered of some interest a brief

connection with actuality in order of not leaving the image of a dead set

of Schools and Ideas: Italian thought even if perhaps less vital and cen-

tral than in the past is still alive and progressively integrating itself with

international accounting; but the claim here is only to give a short epi-

logue to a so complex story and nothing more.

We hope to answer enough at least to our first objective (the histori-

cal one) while we will consider ourselves satisfied for the second (the

theoretical one) if we will be able just to put our first formal sentences.

The historical research could even be well continued after this

work. Where are, as a matter of fact, contributions from ‘other’ litera-

tures? What do classical English or French or German speaking ac-

counting literatures say about value? And contemporary ones? And,

again, which relevant relationships are to be explored between litera-

ture and law, above all ‘professional’ law as ‘standards’ are (national or

international they be)? Briefly, we are perfectly conscious of narrow

limits of our research and of the great field accounting historians and,

generally speaking, scholars can still plough.

The theme of historical-theoretical investigations raises, lastly, an-

other great problem we may just hint here: the nature of accounting it-

self. Referring to that, we may say that we are near to the above men-

tioned conception of accounting intellectual endeavour as a kind of con-

ditional-normative research rather than to a positive one, due mainly to

Mattessich. But the subject perhaps should deserve a broader discussion.

In Italian tradition, for example, the main contraposition is between

‘general’ and ‘applied’ accounting, the first devoted to every kind of

business entity (not only firms, then), the second to peculiar classes of

entities. But in this jump there is, hidden, another variation: ‘general’ is

also speculative, theoretical, while ‘applied’ is technique, normative. The

primary science, positive, underlying (applied) accounting is in Mattes-

sich’s approach essentially ‘economics’ or other social science, while,

broadening his view, this positive but concrete ‘science’ (or, lesser bind-

ing, ‘discipline’) could well be a sort of ‘business economics’, with a

core of economic science, but ‘not only’ economics. The same distinc-

tion between positive and normative could be rather smoothed: in social

systems often ‘what is’ and ‘what has to be’ are very hard to distinguish

each other, for ‘what is’ is often ‘what has survived’ in a natural selec-

tion and ‘what has survived’ is often just ‘what had to be’. This ap-

proach, known in Italian literature as ‘teleological’ (from the Greek “te-

los”, goal) is not clearly defined in international contexts. At last, even if

we agreed with substantial difference between social phenomena re-

corded by accounting (economical or business economical or other they

may be) and accounting itself as a technique, as a language for recording,

as a practical affair, as an applied field, as a social practice in a Haber-

masian view, another space for a ‘pure’ and positive accounting might

still remain: not, of course, that of social, administrative and economical

phenomena but that one of general rules of translation in ‘signs’ or

‘traces’ of the phenomena themselves.

All that has been said only to justify the complexity of question. But

for the little goals we have here, we can plainly assume accounting is an

applied discipline ordered to find different solutions to different informa-

tive problems and then, even in the theoretical part, we do not have to

find the ‘right’ accounting conception of value, but to adopt an ‘extra’-

accounting conception of value and to apply it in various ways, with of

course different pragmatic solutions, to practical problems of evaluation,

this last one, at the opposite, properly belonging to accounting.

Three last warnings still deserve our attention.

First: Our bibliography is perhaps quite exposed toward Italian lan-

guage references. We made the effort to limit ourselves as much as

possible to contributions written in English language, but the subject

dealt with sometimes compelled us to essential quotations of Italian ac-

counting history literature (besides, of course, of classical books inves-

tigated). When unavoidable, then, we inserted them in our bibliogra-

phy, always, however, with an English translation in brackets.

Second: we found hard to translate properly the Italian term “patri-

monio”. Really ‘net worth’ refers only to algebraical sum of assets and

liabilities, while Italian “patrimonio” refers to single components (active

and passive) of this sum; ‘wealth’ is a too generic term; nobody in Eng-

lish uses a term like ‘gross worth’ and it would sound rather ridiculous;

finally ‘patrimony’ is generally understood in English as the “patrimo-

nio” translated in heritage. Notwithstanding that, we use below the term

‘patrimony’, not existing other better, conventionally defined here as the

whole set of assets and liabilities not still summed up in a unique number

(Italian speak, in fact, of a “patrimonio netto” or ‘net patrimony’, liter-

ally, when this summing up occurs, that is the net worth).

Third: we found hard as well to translate properly the term

“azienda” (3). This hardness is due, essentially, to the fact that it has

long been a quite ambiguous term. All Italian scholars have always

considered it the main object of their science, either “Ragioneria” (Ac-

counting) or “Economia aziendale” (Business Economics), but they

never definitely agreed upon the true meaning of the term. But among

the various meanings two are the main streams of thought: on one side

the ‘objective’ conceptions, where “azienda” is a set of affairs, things

to be done, operations, like in its Latin etymon of “facienda” and, for

logical translation, a complex of goods to be managed (things to do,

like in Spanish “hazenda” from which derives directly or in the Portu-

guese “fazenda”); the ‘subjective’ conceptions, on the other side, where

that set becomes personified and sometimes assimilated to a true living

organism (the “azienda”, then, like a person, does this or that action,

etc.). In contemporary Italian business economics and accounting pre-

vails the Zappian conception of “azienda” as an ‘Economic Institute apt

to persist’ that composes the two previous conceptions but with a

prevalence of the latter over the former. But nor this conception is gen-

erally accepted in Italy, nor among the most orthodox disciples of

Zappa. And, moreover and unfortunately, we are not speaking of con-

–––––––––

(3) A few decades ago the Italian Academy of “Economia Aziendale” (AIDEA) at-

tempted the translation with ‘concern’ and ‘concern economics’, but the term was not

very clear and after it was then generally abandoned. It is interesting, however, to quote

e recent definition of “azienda” and “economia aziendale” presented to an international

congress, keeping the ‘concern’ solution (Lipari, 2008): «In Italian research tradition,

Economia aziendale (Concern Economics) is an autonomous and organic discipline on

natural, social-environmental conditions and on internal, external-administrative modes

of economic production of goods and services by all kinds of azienda (concern). It is the

general category of administrative activity unit (concern for profit, non-profit and mixed

ones), which tends to meet human needs by means of economic wealth.

Economia aziendale analyses the environmental and administrative dynamics and

complexity of each azienda relating to organizzazione, about the system of human

resources as subjective aspect of all azienda activity, to gestione, about the system of

operations as objective aspect of azienda management, and to rilevazione or

ragioneria, about the system of recording of operational events through financial and

all other accountings.»

temporary authors but of classic ones. Then we need, at least, two terms

for translating the Italian “azienda” (we do not find very understand-

able the solution to leave the term not translated as some authors do).

We think that ‘business’ is the best solution for objective conceptions

(as, for example, we will do below with Crippa), while ‘entity’ is the

best solution for ‘subjective’ conceptions (as, for example, we will do

below with Rossi). Of course every entity (as a subject) has its own

business and as not always entities are firms as well not always busi-

nesses are ‘for profit’. This solution has however the limit to translate

with two words what Italian speakers hear with one word. But no solu-

tion can be perfect. As an adjective, finally, we translate always

“aziendale” with ‘business’.

Having pointed all that, let now us start with our course in the open

sea of historical investigations.

3. The Lombard School

The authors of the Lombard School here considered are Ludovico

Crippa and Francesco Villa, as they are more directly involved in their

works with the argument under discussion.

Following the work of D’Anastasio (1803), the Lombard School

continued a period of increasing interest in accounting which gave rise

to further and more detailed works which lead to the constitution of a

more knowledgeable community of scholars and professional men in

this subject.

After the Congress of Vienna and the years of Napoleonic domina-

tion, Lombardy became part of the Hasburg Empire again, but in very

different circumstances than those which characterised the relationship

between Milan and Vienna in the times of Mary Theresa and Joseph II

(XVIII century).

In effect Lombardy was the region of the Italian peninsula in which

the capitalist transformation of economic activity had achieved the most

advanced progress. In this region in fact the agricultural transformation

had already in the second half of the 1700s brought about a significant

development of the middle classes compared to other regions of Italy.

It is interesting to note how together with the economic develop-

ment there is a diffusion of a more modern culture, open to stimuli

from more advanced areas of Europe. The intellectual environment of

Lombardy, particularly Milan, while accepting the romantic culture,

does not refuse the experience of the Enlightenment and maintains its

fundamental values: knowledge has a social value and must be used es-

sentially for the economic and civil progress of the country.

In this period, the Italian economy is fundamentally agricultural

and mercantile, and particularly in the regions of the north, industry

was in a period of activation, above all in the field of textiles.

With regard to universities, it was in Venetian-Lombard Kingdom

that the first courses of accounting within chamber studies on state ac-

counting were started.

Already from the first few years of XIX century, Melis reports that

«the art of accounts asserted through the empirical and divulgation

phases – becomes the object of research, examination and criticism,

relatively to the various procedures that it follows, the various consid-

erations and suppositions that it draws attention to and gives rise to, and

the various phenomena that are controlled by it» (Melis, 1950).

As Brambilla asserts (Brambilla, 1901), the first 60 years of the

XIX century are influenced strongly by foreign works in Italy «France

and Austria bring us the love of ultramontane things and everything

which care from abroad was well-received, well-translated and well-

imitated».

Therefore, in the environment of the study of accounting, there is,

on the one hand, the influence of the French school, headed by Edmund

Degranges, who ‘exported’ the famous ‘five accounts’ theory (De-

grange, 1804), on the other hand, the influence of Austria which main-

tained the predominance of the German form.

It can be claimed that «times were mature for accounting to pass

from simple precept-making to theory, and with a community ad hoc of

scholars, to face the problem of the definition of its own limits, its own

nature, its own methods and of its relationship to others subjects» (Costa,

2001). It is in fact in this period that «the beginnings of business doctrine

begin to appear, originating in economic ideas that provided accounting

with a strong base for a qualitative development» (Amaduzzi, 2004).

Though for some scholars we cannot speak of a real Lombard

School, it is however clear that as regards the theme of value, the au-

thors considered here, contributed to the achievement of important

steps for forward in our subject. Although still not completely defined

and organic, the attempts are, in any case, the ‘first incentive’ for all

that follows. It is in fact on these small beginnings that the great theo-

ries of successive accounting are based, inevitably ‘in debt’ to their

predecessors.

On the theme of value, whatever it is considered, there was no clear

position-taking on the part of our authors. It can surely be assumed that

their ideas were influenced by the cultural ferment and the economic

development that marked Lombardy in this period.

Beginning with an analysis of the thought of Giuseppe Lodovico

Crippa, he is remembered above all for the definition of accounting as

“the science of accounts” and for having tried to organise the disci-

pline. It was the “part of the businesses similar and in common to all

businesses”.

Born in Milan at the beginning of the XIX century, he was head of

the department of the Austrian accounting centre in Lombardy.

It could be supposed that our author was part of the cultural fer-

ment operating in the Milanese environment and that his ideas in the

field of accounting could have been influenced by the changes that the

economic structure of Lombardy was undergoing in that period.

In his Scienza dei conti, ossia l’arte di tenere i registri e compilare

i bilanci di ogni azienda (1838) (“Science of Accounts, that is the Art

of Keeping Books and Drawing up Annual Reports of every Business”)

Crippa permanently links accounting theory to administrative theory,

emphasizing the relationship as ‘part of the whole’ of the subject of

registration with accounting. The author often refers to things and val-

ues directing them to the real aim of the art of accounting. This aim is

no other than that of «pointing out and demonstrating the first state, the

movements or the variations and the last state of the physical things and

values of every business».

Therefore every business has ‘its own matter’, for which it is nec-

essary to know, on the one hand, the production method and the way it

is used, and on the other hand, the effects of this production and use on

the same matter.

Considering the influence of the philosophical context of the time

on the ideas of Crippa, it is necessary to underline that, in the works be-

ing considered, there is almost no mention of others authors and phi-

losophers, so it is difficult to define his background exactly.

Paradoxically, however, in order to reconstruct indirectly this

background, the lack itself could be read as a suggestion that reveals

the ideas and consequent methods adopted by the author, who was not

interested in “the comfort and blandishment of an easy demonstration

of erudition and quotation” rather in a clear and rapid statement ar-

ranged solely and strictly for “more private, immediate and stringent

motives” of a work presented in “a more positive and concise manner”.

Here the influence of the Lombard enlightenment environment seems

obvious which in the attempt to represent what is, exactly as it is, or

rather what he calls “the bare essence of the things” seems to anticipate

positivism. Moreover this hypothesis appears to be sustained by his

own words, in which can be seen ‘the horizontal idea’ of a positivist

type, concerning the broadening of the field of investigation, “ideas and

notions needed to go from the more evident and restricted to the more

extended and compound operations and applications of the art”. Fur-

thermore Crippa ‘betrays’ his adhesion to the experimental method

rather than the geometric one, when he claims that he wants to demon-

strate the contents of his work basing it «not on arbitrary and system-

atic principles and conventions, but following immediately and exactly

the results of facts and the natural and gradual development of the sub-

ject under discussion».

The purpose is to show «the formula and the concrete directions of

the art» with «clearness and accuracy in their generation and real desti-

nation» in order that they correspond and harmonise with the rational

principles from which they proceed, so that the reasoning and practical

activity become clearer and sustain each other for the benefit of all. Of-

ten the choice of language can count as an ‘indicator’ of the influence

of the context. In this particular case, the phrase itself ‘to become

clearer’ is specific to the enlightenment culture that attempts to render

the mind of man more lucid, to liberate it from the darkness of igno-

rance, of superstition, of obscurantism through knowledge and science.

The declarative choice of the author is useful, therefore, to discover the

influence of enlightenment elements such as the conception of science

as descriptive knowledge, on the one hand, and the considerable devel-

opment of theory in the field of mathematics, on the other one.

The economic theory that seems to have influenced his work goes

back to the classical economists, or perhaps, even to the physiocratics,

particularly with reference to the vision of an economic system sustained

by natural laws, which on the theme of value is companion to the materi-

alistic vision of an enlightenment type of the same author. His idea of

value coincides with that of quantity; consequently, the evaluation is

seen in terms of quantitative measure. The merits of Crippa are without

doubt, above all, if the period in which he wrote is taken into account.

The hypothesis is based on the brief but significant reference that

he makes to one of the central concepts of classical economic thought,

the labour value. Even if in a small note almost at the end of his work

the author speaks about «the influence on the manufactured or trans-

formed object by the expense of storage, the maintenance of machin-

ery, administration etc.».

This idea recalls the reformulation of Ricardo, who, while accept-

ing the idea that labour confers value on a particular merchandise sus-

tains that it is important to consider not only the present work but also

past work, that one incorporated into the capital goods necessary to

produce goods in question.

In this vision there is to be found also an attraction of the author to

physiocratic theories, above all, on the theme of land as the privileged

factor in the production of wealth. In fact, he classifies businesses ac-

cording to four typologies, called ‘subjects’ or ‘types’, outlining the

characteristics that make them equal and those that make them different.

The ‘subjects’, therefore, concern the field of exchange (com-

merce), the production (agriculture), the competence (possession) and

the modification (art and profession).

Such subdivision is interesting as it reflects the idea of ‘economy

per section’, in which the real producers of wealth are the agricultural

ones or perhaps also those belonging to the ‘modification’ category.

The numerous examples reported by Crippa support such a hypothesis.

So it could be said that here the author approaches the physiocratic the-

ory that sees in nature and its exploitation the only source for human

wealth (even if for physiocracy, wealth is all ‘product of the land’)

which leads back to the economic development of Lombardy that, par-

ticularly in this specific phase, is toward a progressive expansion of

management of a capitalist type in agricultural firms.

As regards the presence of a definition of value by the author, it is

found indirectly as ‘attribute of things’ and more precisely subordi-

nately with respect to ‘quantity’ that is said to be the ‘real’ value. It be-

comes ‘measured’ by means of ready money «universal merchandise or

general representative thing, here a simple comparison or measurer».

It is necessary to state that the author, concerning this, confuses

monetary value, price and cost. In fact once he speaks about ‘price’ as

«common to various objects comparison or measurer» but subordinated

to the quantity that is «the prevailing idea or notion that should not be

mislaid». Another time he speaks about «measuring money». Finally,

he refers to an evaluation of «real cost».

Further precision is necessary however. The presence of real ac-

counts (things) and personal accounts (people) is undoubted, however,

as already anticipated «people are noted solely for the things they give

or receive, or rather as simple deliverers of these same things» so that

«we have always only accounts of things with the mere variety of these

to be considered in the whole. Or one’s warehouse, or the address and

repository of the people». Therefore «the prevailing object is always

that of quantity and the material value of things». «Things and the same

values, in the exercise of the art, are in substance and necessarily con-

sidered under the only fundamental aspect or idea of ‘quantity’».

It is understood that for Crippa, it is the quantity that must be con-

sidered, the ‘real value’: «in its own essence quantity only presents the

following basic features and accidents, that is a positive or negative ex-

istence or first determination, further and correlated circumstances and

addition of other ‘positive and negative’ quantities and the consequent

final results». So perhaps more than of value we should speak of meas-

ure. The ‘quantity’, our author would say, is the element whose indica-

tion must ‘remain intact’ and that represents «the idea or notion that

should not be mislaid».

The position of Villa is certainly more advanced; because he an-

ticipated not few fundamental concepts of the theory of Italian

“Economia aziendale”, after he was called “the Father of Economia

aziendale”. For this author, value is relative, it changes with time and

place and is expressed by the quantity of money that can be obtained in

exchange. He also makes clear that the foundation of value is in its use,

which comes back to the emergent economic marginalist theories.

The work of Villa stems the diffusion of the French theory, support-

ing the ‘mixed’ theory of accounts, that is not exclusively personalistic

like that of Degranges. In fact, inspired by the Austrian authors, in par-

ticular by Schrott, he founds his theory, on the one hand, on the personal-

istic one, and on the other hand, on the materialistic one, already con-

cealed in nuce a few decades before in the Scrittura doppia ridotta

scienza [Double Entry Reduced Science] of D’Anastasio (1803).

As Melis reveals (Melis, 1950), in the work of Villa «emerges the

doctrinal content of accounting and its characteristic aim: the control.

The field of study of accounting is entity; the organization of entity, the

study of the actions that the organism directs onto the real elements –

the assets and liabilities – in order to maintain them integral (conserva-

tive operations of wealth) and in order to obtain the maximum produc-

tivity (management); the administration of the ‘patrimony’ of the en-

tity, finally, all means are studied so that these operations are unceas-

ingly and efficiently followed and determined in every action, in order

to foresee the end results and to control the whole: the registration of

administrative facts».

The accounts express the values of the entity, and are grouped in

periodical statements, derived from systems, kept in double entry

method, furthermore «the evaluation should be completed regularly

with established inventories if necessary on estimate processes (rela-

tive therefore also to future values)».

The accounting should be distinct from the bookkeeping: they both

are involved in different spheres, as it is that complex of knowledge and

operations that are needed to apply the methods taught by bookkeeping

to different cases and to use them according to the aim of the Admini-

stration, of which the accountant must have sufficient knowledge. As po-

litical economics does not teach calculation but supplies matters for cal-

culation and gives the criterion, another kind of calculation, so the de-

tailed knowledge of a ‘patrimony’ and the principles of a good admini-

stration do not teach how to keep accounts, the registers, but to supply

matter for the application of the art and to make it rational».

Therefore «the art of keeping accounts or registers has the aim of

assuring that the registrations can guide the formation of a demonstra-

tive prospect of the progress and the results of an administration and at

the same time, the accuracy and integrity of the people involved».

What distinguishes the work of our author from that merely techni-

cal or bookkeeping regards the application of general economic princi-

ples in the field of business, the criteria of economic advantage to

which the author makes explicit reference, the observations on the

theme of evaluation of inventories and references to the relationship

that occurs between the economic administration and accounting.

Although Giannessi (Giannessi, 1954) meets references to the eco-

nomic field that in his opinion reflect substantially the claims of classi-

cal economics, however, it would be more appropriate to speak about

neoclassical influence as can be seen later.

Of more interest to our purpose is surely the fact that both the main

works of the author begin with an explanation of the concept of value.

The first part of the treatise, Accounting Applied to Administration,

dwells on the notion of economy and administration. This part is com-

posed of three chapters. In the first, the preliminary ideas are set out; in

the second, the concept of the estimate of a substance is discussed; in

the third, the importance of estimated accounts is said of and the char-

acteristics of domestic, rural, manufacturing and commercial admini-

strations are described.

In general, according to the author, without doubt, value is founded

on the profit, since «men give a price only to the things that can be use-

ful to them, or from which they obtain some satisfaction, therefore by

making useful a thing that was not so before, a value is created». As for

the usefulness, he claims: «our needs make everything that can satisfy

them, useful», considering the fact that the said needs «vary according

to the country and its customs. It is easy for an object to which we at-

tach some merit to lose its value and become completely useless to a

population that does not know it and cannot appreciate the use of it». In

fact «what value would a hundred hats have taken to a place where only

turbans can be worn».

However the value of single good could also not depend on its level

of usefulness «the necessity we have of salt would make us willing to

pay even ten times its present value».

The measure of value is expressed in «the quantity of money that

can be obtained in exchange». The same «idea of value», therefore, is

relative because «two values could not be compared without using a

conventional measure that is money». Villa claims that «if the value of

the objects is variable and relative, it is useless to compare two amounts

of wealth, unless they exist in the same time and place». Therefore, the

value of money is used to estimate other values, this is so because «the

custom of adopting money as an intermediate in all buying and selling

has made much easier the comparison of value to that of the sum of

money and not to the value of any other object». Money is therefore the

«common denominator of values given and received in exchange».

Anything is produced is destined for consumption and «if the pro-

duction of a value is a gain, the consumption of a value is a loss». As

regards the connection between value and sum of money, it depends on

the continuous necessity of the exchange of goods «which is a tempo-

rary consideration of a value in the form of a numeraire».

4. The Tuscan School and Emanuele Pisani

After the Lombard School, we now consider the exponents of the

Tuscan School, who, with their works, are nearer to the object of our

research; they are Giuseppe Cerboni and Giovanni Rossi. The figure of

Emanuele Pisani, a frontiersman between the Tuscan and the Venetian

Schools can be added to these.

Compared to the Lombard School, in the Tuscan School we find a

stronger desire to ennoble accounting as a scientific subject.

With the union of Italy a process of transformation begins that sees

the gradual passage from an agricultural economy to an industrial one.

This industrialization had already begun in the first few decades of

the 1800s; however, in this period, there is still the prevalence of a manu-

facturing activity linked principally to agriculture. It is in the second half

of the century that this ‘industrialization’ is definitely asserted.

To describe the context of reference of the Tuscan School we

should go over the history of the construction of the Italian state in its

administrative structure and in its economic choices.

The biography of Giuseppe Cerboni takes us, on the one hand, to

the Grand Duchy of Tuscany, where he obtained his education and

where he had his first professional experience, on the other hand, to the

newborn Italian State, for which he had the post of General Accountant

of the State from 1876 to 1892.

They were years of radical change, that determined the direction of

the Italian economy and society.

With Cerboni, the elaboration of the first of three paradigms,

unanimously recognized in a general view of the history of Italian ac-

counting, has begun.

The direction of the studies of the author are clearly seen in the

same title of his more significant work, where the words “Scientific

Accounting” are placed with the subtitle “and its Relationship with

Administrative and Social Disciplines”. This makes clear the idea that

the essence of accounting should not be sought in the «empty aligning

of figures and numbers, but in the principles that identify the logic of

human reasoning».

The role of our author in the administrative field, in the phase of

construction of the new United State is important. After covering the

role of voluntary apprentice in military administration of the Grand

Duchy of Tuscany (1843), he was appointed to the General command

(1848), than took part in the organization of the Bersaglieri Corps

(1851) and the administrative service of the War ministry (1859). Cer-

boni became General Accountant of the State in the period in which the

newborn Italy needed a considerable effort to achieve a united public

accounting system.

Cerboni had the merit of understanding the great charge happening in Italian Society and aware that also in the field of accounting signifi-

cant transformations were needed. He elaborated an ‘invention’ in the field of the method of ‘balanced entries’.

In this context, the economic theory that appears to have influenced the ideas of Cerboni goes back fundamentally to neoclassical econo-mists. The same author, in note XXII, expresses the principles of Walras economics: declaring his adhesion to the same ideas. In particular, our author divides economics into three different aspects, “pure, applied and social” and the distinction between science and art. In fact «science tends to truth; art to usefulness, good and beautiful» [ours the italics for we will use these Cerbonian categories in our theoretical conclusions]. Cer-boni points out how, in the distinction between the two great classes of beings in the universe, that is, people and things, the purpose of the things is, with reason, subordinate to the purpose of people».

It should be noted however, in Cerbonian thought, that the neoclas-sical elements in the theme of value do not appears completely mature. In particular, in his Encyclopaedia, trends of a classical type appear. Smith is cited and the conclusion is reached that the notion of value, in-separable from that of exchange, depends on two fundamental ele-ments: the utility, on the one hand, the effort, fatigue and labour on the other. The value is not only measured only «on the intrinsic utility of the thing, but instead on the service rendered by the producer». The utility «is inherent in things, given by nature»; value instead is «a social extrinsic relation, dependent on the exchange of the same things».

The value of an object is the «possibility of exchanging a product with others», so it is sufficient for the exchange to be possible, in other terms that «a relation exists and a comparison can be made between two objects able to be commuted. The existence of value supposes at least the possibility of a contract».

At this point, starting from his ‘declaration of intents’ to his defini-tions and quotations, an attempt is made to reconstruct his philosophi-cal background. As principal exponent of the above mentioned Tuscan School, Cerboni pursues his intention to elevate accounting, which is part of the business economics administration, from the simple plain of art to that of science. Accounting, he claims «is a large body, in which three main limbs can be distinguished, accounting offices organization, computational techniques and logismography [term invented by him designing bookkeeping methods]».

Cerboni connects the logismological thought to the progressive af-

firmation of the culture of ideas and liberty, founded in the internal

consciousness of man and of human personality. He finds in Christian-

ity the moment when man is finally placed as the fundamental principle

in civil life and morals.

In this context also, the Enlightenment through encyclopaedic knowl-

edge is ‘read’ as a further development of the «moral force of man».

In the conception of Cerboni, science would be the fundamental

factor to make logismological thought ‘complete and really perfect’.

Regarding the explicit consideration of the problem of value, it is

within the explanation of the ‘principle function’ that the ‘determining

of the value of the substance’ is considered.

In this context, Cerboni recognises the strong link between ac-

counting and economics, the link that is explained above all in the di-

rection and the method of political economics which shares with ac-

counting ‘common aims’, among which the study of value.

Then, it is claimed that without computational thought, the «eco-

nomic and administrative thought would be like two poor blind people,

who giving each other an aim, and up both falling into the ditch; where

computational thought is the soul, life and light of its two companions».

Furthermore computational thought is highly subjective and so linked

to both economic thought and to administrative one; educating the first

to value well the means of buying and of production of economic mate-

rial, and the second to keep well distinct the reasons for giving and re-

ceiving the due to each person.

Even though the problem of value is not central to the work of Cer-

boni, some passages indirectly explain his general formulation. Our au-

thor attempts to «translate mentally into precise figures and convince

himself and others of the real value of permutable things and to learn

how to keep in complete and continuous clarity the legal statement of

debit and of credit in order to avoid any mistake and to proceed rapidly

in any kind of transaction». He speaks of ‘real value’ attached to per-

mutable things, of the transactions and above all of the legal statements.

This is therefore the aspect to point out in Cerbonian thought: «the value is always connected to credit/debts relationships. So, assets and li-abilities can and must result immediately referable to individual rights and

obligations, with special columns for the differences i.e. the results. The entire construction if declined according an accounting language repre-sents the legal moment which can give rise to a sort of accounting law».

As anticipated, reference here is made to the Encyclopaedia that re-sults of particular importance for the theme under discussion. It is right in the voice ‘evaluation’ that the more significant pages can be found. The necessity of knowing the economic power of wealth is declared, in which lies the acquisitive capacity which is measured in concrete numbers (the price) by means of exchange. It is therefore in the effective determination of the value that we must find «the real extrinsic act of the administrative function […] recognition and evaluation of the substance (

Finally, as regards the method of evaluation, reference is made principally to the «patrimonial-economic evaluation» defined as «the assignment of economic value or of the exchange to one or more quan-tities of wealth».

Giovanni Rossi is remembered, above all, for having devoted his scientific activity to the defence and the valorization of Cerbonian theory. Born in Reggio Emilia in 1845, he began his career as a teacher of accounting and mathematics in technical schools. He then entered public administration in the role of first collaborator of Cer-boni in General Accounting of the State, and subsequently as that of superintendent of Finance.

Following Cerbonian thought, Rossi maintained the need to give a philosophical content to the studies of our discipline. Antonio Amaduzzi defined him, in fact, as the “Philosopher of Accounting” (Amaduzzi, 2004).

His general formulation is removed from that of the Master for the influence both of social life and scientific production.

His scientific attitude is different from that of Cerboni, also for generational reasons, which refers to idealism and in certain ways also to positivism. Rossi, instead, refers explicitly only to positivist and ma-terialist concepts and to the experimental method.

–––––––––

(4) Often in Italian doctrine one speaks of ‘substance’ as of the wealth of an entity

studied in qualitative terms; passing to quantity generally a substance becomes a capital.

In the context of this positivist vision, he interprets the economic

administrative body (azienda) in a strictly biological way. The complex

entity can, in turn, be broken down into smaller parts, in a kind of bio-

logical reduction.

Considering more specifically the problem of evaluation, it «ac-

cording to the dictionary is no more than the action of giving a value,

which consists in attributing an economic or exchange value to one or

more quantities of wealth». With regard to the principle on which the

estimate to determine in numbers the value of any goods of a patrimo-

nial nature, is based, Rossi declares that «the science of economics and

of evaluation have not been able to go further than the empirical but

fundamental principle […] things are worth that which can be obtained

by free selling».

It will be seen, after, how Zappa criticizes the position of Rossi and

others who «interpret the word evaluation in the sense of determining

the value, the latter intended as the meaning of exchange value».

However, because it is Rossi who writes the contents of the voice

‘value’ in the Cerbonian Encyclopaedia, it cannot be considered wrong

to consider everything in the sphere of ‘transferable’ – perhaps even

more so – as also his ideas.

The economic power of wealth is measured, therefore, in actual

numbers (the price), by means of exchange. Finally, as regards the

method of evaluation, he refers mainly to the «economic-patrimonial

evaluation», defined as «the assigning of the economic or exchange

value to one or more quantities of wealth».

The author declares, however, that this argument is the competence

of another subject, rather, evaluation. He then ‘borrows’ some criteria

for the evaluation of the object. In particular: the estimate of real estate,

by the capitalization of the net income, the evaluation of real goods that

do not produce income, through the historical cost, the evaluation of

credit, by its present value, corresponding «to a fraction of their nomi-

nal value according to the level of probability of their partial collec-

tion»; the evaluation of liabilities, by «the sum that must be paid to

someone to affirm this said liability».

Emanuele Pisani was born in Modica (South-Eastern Sicily) in

1845. After his classical studies in 1886 he obtained a qualification for

the teaching of mathematics. From 1871 to 1888 he was teacher of ac-

counting in a technical school. He then became central inspector at the

Ministry of Education and moved to Rome. Finally in 1891 he won the

accounting chair at the Commercial High School of Bari, where he

teaches in 1900.

Though our author does not belong to the Tuscan School, neither

for geographic provenance or for affiliation, it is still appropriate to

take him into consideration because in the ‘form’ his theories are very

near in position to the above mentioned School. In the substance, in-

stead, his theory is near to that of the Venetian school. This is why he is

considered a ‘frontier’ author: Pisani is the link between the great

schools that contended the field during the last decades of the XIX cen-

tury; he is included as a ‘learned’ and relatively solitary figure. It would

appear correct here to recall his ideas as they are influential in the pas-

sage from the Tuscan School to the Venetian. In fact to reorganize the

ideas of Pisani, Besta supported the theory of ‘value accounts’.

Briefly these accounts are opened to commensurable and estimated

objects without neglecting personal rights.

Our author operated in a period in which sections of accounting

began to be born in technical schools and the College of Accountants

was constituted in Palermo (1891), all things considered, not too many

decades after the analogue formation in UK, cradle of the Industrial

Revolution. In addiction during the 1880s and 1890s, in Palermo we

find a series of publications of minor authors (Prinzivalli, Fazio-

Favaloro) and also a National Exhibition (1891) which testifies of vital-

ity both in the study of our discipline and in wider sense of the econ-

omy of the island. In these years, still in the Sicilian capital, a journal,

La Ragioneria, is founded, directed by Pisani, which had a national and

international following.

He was immersed in the Sicilian context then strongly influenced

by Anglo-Saxon empiricism, which led to a distancing from any theo-

retic construction which is not completely genuine or far from reality.

His conception of accounts was inspired by a strict principle of eco-

nomic reasoning, formulated by the neoclassical economic theory of

the maximum effect with the minimum effort, and a materialism very

similar to that which would be part of the first Venetian school.

Furthermore, the fact that he uses terms like ‘real competence’, ‘ef-

fective expense and income’, as well as ‘true surplus’ and ‘true deficit’,

reveals the proximity of our author to the ideas of a positivist kind.

The name of Pisani is linked to the introduction a new method

called Stathmography, ‘invented’ by him. He remains however far from

the doctrinal argument in favour in this period, and concentrates his

work on bookkeeping methods.

Interested in this arguments, he claims that if accounting is a sci-

ence we do not need to forget that «the form of its manifestation is

eminently artistic […] the character of its artistic form is such that it

strongly influences the substance of its purpose, as the language of

Dante influences and refine the concept of the Divine Comedy».

Though he is a supporter of the materialistic theory, Pisani consid-

ers the personalistic theory of Cerboni as ‘parallel’ to his own. In fact,

according to our author, it is value, the element that all accounts-

balances have in common and not the real or presumed people to whom

the same accounts are registered. This conviction of him is explicitly

seen in the choice of adopting the term ‘charge’ and ‘discharge’, as

Crippa had already done vs. the more spread ‘debit’ and ‘credit’, still

expressing a personalistic approach. As Massa states (Massa, 1912) the

originality of the stathmographic method consisted in «considering

logically and rationally coexistent the value accounts and personal ac-

counts that other writers consider incompatible each other». For these

peculiar characteristics, the stathmographic theory is different from that

of any other method, even if it is necessary to emphasize that other

methods accept the principles».

From the philosophical point of view, Pisani appears to be a true all

round ‘materialist’ (Costa, 2001). The materialist theory of accounts is

taken in fact to extreme consequences so as to make him reject even

terms like ‘debit’ and ‘credit’, which – as we said just above – recall

the personalistic theory. The same Besta will move away from this po-

sition, considered too extreme.

With reference to the problem of value, after having defined the azienda as a «system of interests that develops round a patrimony» he

defines likewise the administration as a «system of functions having as a purpose the conservation and the improving of a patrimony». He identi-fies in the public sphere the main administrative functions set out below:

1. the evaluation of the substance;

2. the forecast of receipts and expenditures;

3. the verification of the same;

4. the collection of the receipts;

5. the payment of the expenditures;

6. the final statements.

A principal role is assigned therefore to the evaluation of the sub-stance. In particular, as for as the inventory is concerned, it «should contain all the data of the respective stock on hand, with the maximum exactness, which depends on a rigorous evaluation of all the patrimo-nial elements».

In fact, referring to ‘hard experience’, our author advices to never consider ‘harmless’ any movement of capital, as this movement has the «form of equivalent transformation». It is just this difference between ‘nominal value’, and ‘real value’ that needs to be referred to, avoiding in this way the tendency to ignore that equivalent (in nominal value) assets can have different related losses or gains.

Pisani reveals that the main problem consists in having created ‘enormous constructions’ without considering the «cost superior to their intrinsic value, their deterioration, their fructification negative or inferior to the burden of the interests of capital investors».

As regards the evaluation of capitals, which are jointly parts of the economic matter administrable by the entity and constitute its different specific elements, our author speaks about ‘estimate’. From this super-imposition between evaluation and estimate, it is clear again his posi-tivist position on the possibility of an objective determination.

After the works of Cerboni, our subject should be compared with the new ‘scientific’ dimension, begun by him; however, in terms of value, the same ‘revolution’ does not result neither in the Tuscan School after him nor in Pisani.

The theme of value is not central to the theory of these authors. It is

possible however to note a clear influence of the neoclassical economic

theories, which is seen in the fact that often the value is assimilated to

the ‘price’, while for evaluation, the subject of estimate is used, without

giving to accounting the duty and the necessity of an attribution that

follows its own suggestions.

In this sense, it could be claimed that the determination of value is

not included in our discipline, returning therefore to the ‘mere’ consid-

eration of the evaluation and delegating even this duty to an ‘instru-

mental’ subject like estimate.

Probably, this is due to an increased attention to problems of the

founding of our discipline, neglecting the parts that according to the au-

thors could be ‘borrowed’ from other disciplines.

5. The Venetian School

At the end of the XIX century and at the beginning of the XX one,

the second industrial revolution began, which had the particular feature

of the development of large enterprises and the rapid evolution of the

science. This context inevitably leads to the influence on the culture

latu sensu that undergoes a deep transformation.

It is right in this context that «accounting takes large qualitative

leaps ahead and the assertion of the ideas of Fabio Besta opens the way

to the great business theories of the 1900s» (Amaduzzi, 2004).

Even if the ‘baptism’ of Italian scientific accounting can be im-

puted to the preceding school (Costa, 2001), it is with Besta that it

passes definitely from the formal exposition of the accounting method

to the study and the knowledge of values that these accounts must con-

tain and therefore to the treatment of the problem of the values of ac-

counts and of annual reports.

«Fabio Besta is universally considered the greatest scholar of ac-

counting studies. His work, where attention is given to the time and the

circumstances in which it was written, is not only one of the more ap-

preciated works of accounting literature, but also the corner stone on

which the structure of our discipline is built» (Giannessi, 1992).

This fact must be considered in order to face the theme of value in

the work of the Master and his disciples.

Zappa must also be considered among these. However the works

referred to in this article belong to the first phase, that which is consid-

ered as “Bestan”, or rather preceding the Prolusione (1926).

The decisive turning point towards the science of accounting

thought occurred in the late XIX century, following the consolidation

of the capitalist industrial system. The presuppositions for the new ac-

counting theory of Fabio Besta were so determined, giving a rigorously

scientific system to accounting, based on an original and innovated

concept of azienda (business) and its patrimonio (wealth), linked to the

needs of the domestic patrimonial entities and the individual commer-

cial concerns of the second half of the 1800s.

For the development of the economy and the productive structure,

it is a decisive period, for which some elements have already been ob-

ject of attention as regards the context of the Tuscan School. Compared

to the latter, however, the Venetian School, with Besta and above all

with Zappa, seems to interpret in a more detailed way and follow, from

the point of view of accounting, the restructuring of the Italian econ-

omy in the period between 1870 and 1926, reflecting also the new ten-

dencies of the emerging economic theories in the international debate.

It is precisely the opposition to the paradigm of Cerboni which

gives rise to a new direction in the study of accounting, due to Fabio

Besta, great master and founder of the so called ‘Venetian School’.

Already from the first page of his main work, La Ragioneria

(Besta, 1922), it is evident the adhesion of Besta to the canons of posi-

tivism. In the section How a Science can be Defined, he quotes Spencer

in the first note.

The discussion goes through the elaboration of a few reflections of

a general economic character. As regards the economic theories that

seem to influence the work of our author, they go back fundamentally

to the ideas of Francesco Ferrara (5). Still on the theme of value, it is

–––––––––

(5) One of the greatest Italian language economists of that century. Born and living

in Palermo (Sicily) till the 1848 Revolution, after which was compelled to escape to-

necessary to mention that Besta reviews other definitions provided by

various economists, then to draw his own conclusions. These references

are a demonstration of the cultural education of our author. He quotes

Ricardo, Ferrara, Gide, Schaeffle, Boccardo, Cossa, Queirolo, Maglio-

ne, Schrott, Neumann, Gobbi, Carey, and Minghetti.

In particular, he refers to Ricardo and his concept of ‘production

cost’ that, as can be seen, will be replaced by that of ‘reproduction’.

The concept taken from Ferrara and Gide is discussed later. From

Schaeffle he takes a concept of price resulting from the encounter of

demand and supply, from Boccardo the direct relationship between

price and demand, from Carey he extrapolates the concept of cost of

reproduction, from Cossa the concepts of ‘current’ value and ‘normal’

value; finally from Minghetti the ‘theory of substitutional goods’.

The number of pages dedicated to the problem of value indicates

the centrality of this concept in the subject of accounting and shows

how, compared to previous literature, the approach to the discipline it-

self has changed.

In his Prolegomena, our author refers to the definition of Pan-

taleoni on value in general; as «mathematical proportion between two

quantities of wealth» where wealth is «goods with regard to economics,

that is economical goods […]. All wealth is therefore a product of hu-

man labour».

Economic goods, or wealth, constitute the patrimony or substance

that can be seen as «a whole for which a measure must be found». But

it is necessary to remember that «the difference between the elements

does not allow to the measurement of a patrimony by only the number,

or the extent, of the quantity of goods». Therefore it is necessary to

consider these goods ‘in an all conforming aspect’: «to contemplate for

all a common constant measure that can be expressed with the same

denominator». This essential and characteristic attribute is «that in the

majority of cases is the only measure common to all», is that of value.

In fact «only through value economic goods become commensurable».

–––––––––

ward Savoy States, he was along the first dean of the High School of Business in Ven-

ice, where the same Besta taught accounting. He is famous, too, for his strict liberal-

ism, and is considered one of the latest classical economists.

For our purpose the chapter The Evaluation of Wealth is decisive,

where Besta in art. 1 of the paragraph On Value and its Measure pro-

vides a very clear picture of his concept of value.

First of all, as Cerboni had done, the author begins with recalling

the field of political economics, as, in the sphere of determining wealth,

it superimposes that of accounting. These two camps are connected by

the concept of value.

Besta recognizes that this concept can have different meanings and

continues making a distinction between ‘use value’ and ‘cost value’,

where the former refers to useful to be hoped for or to the attitude of a

given utility to satisfy a desire or a need. The latter, instead, considers

the effort made or to be made to achieve this useful.

As Besta himself claims in a note, he uses the voice ‘value’ «in the

meaning of quantity permutable with that considered, instead of the ac-

tual meaning of relation of permutability».

From here it seems possible to refer to the exchange ratio of Jevons

and Pareto (Mazza, 1976).

But the value for antonomasia is, for our author, the exchange

value, that is derived from the comparison between the above men-

tioned use value and cost value. At this point he quotes in a note

Ferrara and Gide. Form the first he takes an extract in which the pas-

sage from three meanings of value to only one is explained: the ex-

change value. From the second he tries to outline his research on the

cause of value. In particular, after finding that the notion of value is

relative, that is «of the same class that size and weight belong to» Besta

refers to the passage of Gide in which he demonstrates how exchange is

a measure for value.

He claims that «every time an exchange of products occurs, there is

a real determination of value» emphasizing that a ‘double determina-

tion’ of value is shown: «when two men, owners of different objects,

who want the object owned by the other, each, before deciding on the

exchange, compares the work accumulated in his own object with the

utility that he sees in the other’s object or, better, the cost value and the

use value that he, exchanging, according to him, would gain; each of

the two makes a comparison according to his ideas, his opinions and his

own needs, for which the two have different conclusions. The exchange

will take place only in the case in which each decides “that the utility of

the other’s object is worth the effort represented by his own object”. If

the exchange occurs, each of the two objects exchanged is reputed to be

worth the other, each buys and is bought by the other, and each be-

comes the cost of the other».

Besta emphasizes however that «there can also be determination of

the value of a product or of a single good without actual exchange with

the other, because a future probable or possible exchange can be con-

sidered. That is, what could, if wished, be obtained in exchange». He

refers to unilateral determination of value or judgement of equivalence

that one makes between one economic good and the others which, ac-

cording to him could, if wished, be obtained in exchange». This unilat-

eral determination takes the name of estimate which, as already said,

precedes every actual exchange by both contracting parties.

In all this, a fundamental role is covered by money «a normal in-

strument of exchange» that «greatly helps the conception and enuncia-

tion of values». In any case Besta advices not to think that instrument-

money induces any substantial variation in the nature of value. In fact it

is «itself a product or merchandise […] it has a cost value and an ex-

change value that cannot be expressed or measured if not by means of

various quantities of other products». The fundamental idea that is

learnt from these pages is that the concept of value, apart from that of

money, which has the function of making the exchange indirect, has

never impeded direct exchange or the enunciation of value without the

help of money».

Nevertheless, in the field of accounting «only the determination

and the enunciation of value by means of money has real importance».

This is because «in all the processes of economic control the value is

expressed by means of numbers referred to the ‘unit of money

adopted’».

Furthermore, our author claims that «the problem of the measure of

values with regard to economic control is restricted, generally, to the

determination of the number of the units of the money equivalent to the

goods that must be valued». In particular, he distinguishes the “real de-

termination of value” from “mere estimate”. The first is verified when

«there is an exchange of goods with a more or less large sum of money

of account». The second, instead, when «from one or more estimators,

a simple judgement of equivalence is made between goods to value and

a sum of money of account».

Besta also accepts completely the distinction between value and

price, as reported in his work. In fact, there were not many economists

of his time that used the two concepts in an indistinct way.

He declares that if the assertions of these economists were true «in

accounting, the price only would be spoken of, but not the value, since

all values, in every determination made of them, and in every mention

of them in writing, are expressed constantly in money». But in reality

for our author, such assertions are not true or at least «do not respond

entirely to the meaning of the voice ‘price’». Recalling in this way the

ideas of Neumann, Besta observes that «the prices and values can be

expressed in money and in other products. Values are the results of es-

timate and prices are determined in occasion of selling».

He reaches the conclusion that «there cannot be a price-fixing

without a prior determination of value, where on the contrary there can

be a pursuit of the use value and the cost value, and estimate of the ex-

change value for a good, even of the money of account, without the ne-

cessity of future probability of exchange, and however without express-

ing the properly said price».

Our author wonders at this point how it is possible to determine the

«pecuniary measure of value in its various aspects». As regards the use

value, he states that it «has its reason for existence in the needs, the as-

pirations and finally in the prejudices of man». Therefore it is always of

a subjective nature and its determination «cannot be found either in the

productions or in the exchange no confirmation, and even if it were

possible, it could not provide any criteria of profitable and correct ad-

ministration». The situation is different as regards the cost value, in as

much as it «depends in general on concrete facts, whose data with more

or less care and exactness can be revealed and recalled, and it is always

useful to know the cost of our thing when it possible to know it».

At this point, a difference between cost of production, with refer-ence to ‘work already done’, and the cost of reproduction, with refer-ence to ‘work which must or should be done to obtain that economic good’, is revealed. This shows how the author has accepted the passage

from production to reproduction, and therefore the complete overcom-ing of Ricardian thought. As regard this he quotes some extracts from Carey and Ferrara, in which this passages are explained and which specifies his agreement with what will be called, more exactly, substi-tution cost. In fact «in the estimate of value it is not the consideration of the past that activates the human mind, but rather that of the present and future. The past is contemplated only to be correct in the present and foresee the future with more security. The knowledge of the effec-tive cost can influence the determination of value because it is a sug-gestion of the present and future cost of identical goods».

Besta concludes with an assertion that seems in disagreement with what is declared at the beginning; or rather he refers to the existence of a ‘real’ value which leads to that of exchange. He says in fact that «even when it is possible to obtain the approximate measure of value of a single good, this measure does not stand up, except for a given time and place. The exchange value has nothing in itself of absolute, it is es-sentially relative and changeable, so it is useless to look for a fixed, cer-tain, undisputed measure of the value of something».

So it appears that it can be asserted that ‘true and real’ (veri e reali) values to which Besta refers are objective, but at the same time relative because tied to a determined place and to a determined time. Such ob-jectivity of value is placed further in discussion in the moment in which he himself claims that, whatever it is, it «always denotes a judgement, an opinion of the intelligence of man compared to economic goods».

This prelude in a certain sense ‘opens the way’ to the theme of value in Zappian work. But this will be spoken on later.

Our author emphasizes how «the varying of the measure of credit and debit, and the dimensions, the number and weight of things can be revealed without much difficulty […]. More difficult to follow is the mutability of value, but, as this does not change its nature, for the changing of things and of the way in which wealth is formed or con-sumed, it can easily be understood. Notwithstanding the variety of the businesses and the variety of the ways in which wealth operates in them, it is possible to reduce to unity of method the rational procedure by which economic control should be expressed and to scientific unity the series of principles to which these procedures must be inspired».

For our author the problem of ‘measuring’ of size of the ‘patri-

mony’, or of the «aggregate of values attributed to goods» has for ac-

counting ‘capital’ importance. «To consider the ‘patrimony’ as a com-

mensurable quantity, instead of a measured quantity, is important with

regard to accounting, as one of its main functions, as it is art, is that of

recording this changeable quantity in the whole and its parts. The active

and passive elements of the ‘patrimony’ so considered and the entire

‘patrimony’ becomes ‘value’».

In opposition to the Cerbonian idea of the personal accounts, he is a

supporter of real (or value) accounts, which are opened to commensu-

rable and valuable objects without however neglecting personal rela-

tions. For reasons which will better explained later, he changes ‘nature

of accounts’: as the patrimonial fund (net worth) is an ‘aggregate of

values’, each single object can also be expressed in «similar quantity»;

the money of account then is chosen to «give a homogenous expression

to the values in the recording».

He speaks about account value, indicating with this expression «the

value that is attributed to the variations of quantity revealed in the ac-

count objects, expressed in that money to which all the recordings of a

given azienda are referred and which are directly colligated among

themselves, which is the money of account». But because not all the

variations of value can be revealed and, even if they are revealed, they

could not always be «exactly determined», Besta arrives to the conclu-

sion that the account values cannot indicate the ‘real’ value of the

goods, object of bookkeeping.

This gives the importance attributed to the so called adjusting entries

that have the aim of aligning the account values to the expression of real

value «when it is desired to close the accounts at the end of the financial

year, it is necessary above all to reduce the balance to indicate all to-

gether with the best possible approximation, the real condition of the pat-

rimonial fund and the final result of the management. So, on the one

hand adjusting entries must be used in not a few of the accounts so that

the value appears that is judged expedient to attribute to these elements;

on the other hand, the balance of the income accounts must be summa-

rized, where necessary in their correct expression, with the intention of

seeing how net profit or loss of the financial year is composed».

The idea of Besta of a ‘patrimony’ intended as a ‘commensurable’

quantity or ‘aggregate of values’ marks a net break with the idea of

Cerboni of a ‘patrimony’ intended as a «sum of rights and obligations».

Value for Besta has homogenous function as it is the only means of ob-

taining a measure of the wealth: «only through value do goods become

economically commensurable. Therefore value must be contemplated

for the elements». So it is through value that it is possible to obtain

“mathematical-algorithmic reduction” of the “patrimony” and its modi-

fications.

Besta recognizes also that in evaluation it is necessary to consider

always the conjunction of goods anticipating that ‘coordination’ that will

be subsequently brought back and enlarged by Zappa (Colletti, 1964).

This coordination is moreover acknowledged by Besta himself to the

functions of administration. But then, if the value for antonomasia is that

of exchange, the following question is asked: the theory of value ac-

cepted by Besta is or is not in conflict with the complementarity of the

elements? As Palumbo observes (Palumbo, 2003) the configuration of

exchange value, under the influence of cost of reproduction of Ferrara, is

obtained joining the use value and the cost value. However, as it reflects

an opinion of the utility that is linked to the ‘generating effort’, the above

mentioned exchange value of the patrimonial elements is coherent with

the complementarity of these last ones.

Vittorio Alfieri is traditionally considered the most important disci-

ple of Besta, excluding obviously Zappa, who will be discussed later.

He was born in Turin in 1863 and taught in the technical schools of

Chieti and Rome and at the Royal Colonial and Business High School

of Rome (‘ancestor’ of contemporary Faculty of Economics).

He follows the ideas of his master sustaining that the philosophical

formulation of the accounting concepts should not be taken from dog-

matic premises but from principles resulting from observations of the

facts. He defines business (azienda) as a complex of affairs or concerns

to administer concerning goods that are economic «both for the end and

for the means» (Alfieri, 1921).

He claims also that there cannot be businesses or administrations

«completely extraneous to economic goods» and therefore, if a busi-

ness is not economical in its end, certainly it will be so in its means. So

even when scientific or religious purposes are followed, the business is

always linked to distribution of wealth.

As in Besta, accounting is defined as a science of control. Eco-

nomic control, «before expressing itself in records, it is measurement

and evaluation».

It is with Alfieri that an important phase begins, defined by

Palumbo (2003) of «extraordinary research on value».

In particular, for our purposes, we will examine the work that can be

considered the “Manifesto” of the author on the theme of evaluation:

Osservazioni intorno alle stime [Notes about Estimation] (Alfieri, 1925).

The author begins by claiming that, in businesses things can be the

object of different estimates. In first approximation, these estimates can

be divided into two big categories:

· True, effective or real, when the realizable price of a thing is

expected in a determined moment;

· Apparent, accounting, or pseudo-estimate, when the thing is

substituted ideally with another thing according to certain rules.

As regards the first, they require full knowledge of market, and as ref-

erence is made to the future, also statistical data on the movement of prices

and of the many circumstances that influence the exchange. For the sec-

ond, he specifies that they can be susceptible to ‘coercion’ and to ‘check’.

If «complexes of things» are taken into consideration, it is neces-

sary to make a further distinction between two opposite estimates:

· of composition, that consider the complex of elements as a

whole, taking into consideration however the purpose it is

turned to;

· of decomposition, that consider elements of the complex as

separable things.

At this point it is necessary to establish what is a “complex of

things” in the business. It is the variable business substance, constituted

by the things which business can use. But perhaps more interesting is

the continuation of this definition: in fact, Alfieri claims that «to de-

compose a complex of things is to extinguish a business», and again,

that «in a substance business when components are distinguished, they

change and supposedly also is changed their destination», it is clear

here the coordination of the factors of production that will be resumed

in a more detailed manner by Zappa. To confirm what has been stated,

our author continues saying that «the substance is only one of the req-

uisites of the operative complex called azienda, in which things are

joined to personal forces. It has, besides, its opposite, that is formed by

things due to third parties».

But to know only the substance and the counter-substance does not

mean a complete knowledge of the varying situation of the business.

The real estimate is the estimate of the decomposition of the sub-

stance; it is an estimate of extinction. But, when the extinction of busi-

ness is not imminent, it is not possible to have real estimates because

«the difference between estimate of a substance considered as a complex

and that of the same substance considered simply as a number of corpo-

real things» is the estimate referable to the «coordination of those things

for the purpose of which the business acts». This coordination, which

would not exist if business were not considered ‘good-willed’, is the

goodwill and originates «from the skilful organization of business, from

the fortunate location premises, from the ability, diligence and honesty of

the agents, from the customs, tendencies, eccentricity of the public».

Therefore «foreseeing and presupposing the extinction of the busi-

ness, if goodwill is estimated separately that is as intangibles or a fa-

vourable condition, the business substance should be estimated as a

simple group of tangibles. The union of these two estimates gives the

estimate of a business in going concern.

As to what has been said up to now it can be deduced that the ap-

plication of the real estimate is less widespread than that of pseudo-

estimate: «everything that involves estimates, involves pseudo-

estimates as well, on the contrary what involves pseudo-estimates does

not always involve real estimates».

Alfieri specifies that «whoever sets out to carry out a real estimate, giving to estimate the meaning of realizable price, must, it is clear, specify the time of realization». In fact «if the realization and therefore immediate selling or at least, a brief postponement, is presupposed, pay attention to market prices, not forgetting however the influence that the

supply of the thing to estimate would have on it». If instead «the reali-zation and therefore the selling after long postponement is presupposed, a great effort of prevision must be made. Being a matter of things bought or produced for selling, the difficulty of prevision can already have been faced, but not all solved, because it is impossible to keep all events under control, because all negotiations have their risks».

So «the judgement of probability around realizable prices, while waiting for the confirmation of the selling, can be refused by the occur-rence of irregular or extraordinary circumstances and lacking precur-sory events».

As regards the pseudo-estimate instead, «it passes over this and other considerations. It is not even indispensable to go back to economic sci-ence to start from the theory of value. As a beginning, we can consider the hedonistic principle, speak of level of utility, explain the economic balance, distinguish the various forms of exchange, define the value, […] but the real beginning must be restricted to a few measures, to a few agreements. It must be used solely to give intonation, to try the instru-ment, to loosen the fingers, to tempt the souls of the audience and not be-come a long symphony, completely detached from the drama».

Then, it is convenient to immediately consider the pseudo-estimate in function of the data on which they are founded and from which they begin, and distinguish them in the following way:

· estimate of market prices referable to things to be estimated;

· estimate of income of which things to be estimated are capable;

· estimate of costs of these things.

The first is an indirect or comparable estimate, the third is a direct estimate, and the second can be both direct and indirect.

But it must be specified that «it is not possible to follow the same rule for all things, in all the businesses», therefore it is necessary to classify things in the following classes:

· susceptible to estimate on the market prices;

· susceptible to the estimate on income;

· susceptible to the estimate on costs.

To these classes could be added also those of the things that are not

susceptible to any estimate «which could be rare things, that sustain the

evaluation only when the buyer is in view».

In particular, the estimate of market prices or current prices is «the

most agile and genuine. It gives as an estimate to things by means of

the price that other identical things have actually had. If however, there

is a disparity of prices, it gives average price, not considering the

arithmetic average. It must therefore collect homogeneous prices».

Estimate on income «adjusts the estimate of the things to the sum

of the estimate of all their future results. It is therefore the estimate of

future things even if the things to be estimated, as regards the business,

are present. It obtains the present estimate of future things converting

their future estimate, or the estimate attributable to the same things

when, as regards the business they become present things». He lists a

series of inconveniences and difficulties for the estimate on income.

The estimate on costs «should be above all an estimate of costs, if

these are not presented with estimates for identity. The cost is not al-

ways and only estimated simply in money, rather its elements (simply

decrease of substance and increase of counter-substance) are sometimes

completely different and therefore the estimate that could begin with

the costs may need the help of other estimates».

To resume therefore the various procedures of pseudo-estimate,

they can be listed in this way:

· the estimate on prices attributes a value to things on the base of

‘homogenous’ average prices observed on the market for

‘identical things’;

· the estimate on income are obtained by discounting back; if the

‘income’ that a thing could produce in the future is discounted

back, then reasoned value of the thing is obtained;

· the estimate on costs is the ‘estimate of the costs’ and may need

«other estimates» when the object is the result of a productive

process.

As Palumbo claims (Palumbo, 2003), Alfieri pays great attention to

the ‘business subject’ in the attribution of value to the ‘business com-

plex’. In fact, the pseudo-estimate gives way to ‘real estimate’ not only

in the case of extinction of the business but also in that of ‘future varia-

tion of the business subject’. This is the cause of the importance that

our author attributes to the business subject in the coordination of the

factors of production. This is found in the goodwill that particularly in

the above mentioned cases could disappear.

This is why the goodwill configures as its ‘source’ the complemen-

tarity of the elements that in turn comes from the actions of ‘personal

forces’.

On such a vision is based the definition of the goodwill as the dif-

ference between the systemic evaluation and the atomistic evaluation of

the business.

The production of Zappa, finally, can be ideally divided into two

fundamental parts: on the one hand, the studies of the author as the

young disciple of Besta; on the other hand, that of the ‘mature’ Zappa,

at the beginning of the climax of his ‘revolution’. In this point the first

part is taken into consideration.

Gino Zappa was born in Milan, January 30th

1879. After attending

the liceo “Parini” in Milan, he obtains the diploma in accounting at the

technical school in the same city. He went to the University of Venice

and, from 1903 to 1905, he had the chance to study under the direction

of Besta. He completed his studies in 1905 and the next year he begins

his career as professor in Genoa, where he remains until 1921, the year

when he moves to the chair of accounting in Venice. He also receives

other appointments at the Bocconi University of Milan, with which he

remains always in contact.

It might seem superfluous to reassume the reasons for which Zappa

is considered a ‘revolutionary’ in the field of our subject. However, the

fundamental aspects of his ideas are mentioned as follows.

The academic year 1926-27 is prophetic: Zappa holds in Venice the

very famous Prolusione that marks the definite turning point in studies

of our discipline.

From that moment, ‘nothing will be the same as before’: the new

systematics of business disciplines proposed by him would change the

theoretic environment in a decisive manner. In this context, accounting

assumes a secondary role, it is no longer the ‘prince’ discipline but be-

comes part of a discipline of wider limits, that is precisely the “econo-

mia aziendale” (business economics).

For our purposes, the work of young Zappa taken here into consid-

eration is Le valutazioni di bilancio (“Evaluations of Financial Re-

ports”) of 1910. The author begins his work expressing those which, in

his opinion, are the indispensable premises from which to start to be

able to face the problem of evaluation.

In particular, we refer to the distinction between financial reports and

inventory. Though the two concepts are linked, they are often confused

and used as synonyms. Instead it is more correct to have, on the one

hand, the financial reports as «general prospect of statement» or «final

account» and, on the other, the inventory as «base of financial reports».

Our author specifies that the importance of the inventory for the

annual reports arises not so much in that the financial reports is a sum-

mary of the inventory, but because «the first constitutes an integral, es-

sential and principal part of every patrimonial statement».

In his work, Zappa limits his attention to the study of the evaluation

of the inventory and in particular on those inventories that, «in com-

mercial enterprises are established at the end of every financial year to

reveal the results of the past management and to prepare the base that

will permit the projection of the results on the future management».

He specifies furthermore that he will deal with evaluation, directing

his attention to the inventories that constitute «an integral part of those

financial reports, that some authors call ordinary, to distinguish them

from those multiple reports that must be compiled in abnormal periods

of the life of an entity». Furthermore, our author refers, in a particular

way, to the inventories of the limited company by shares for two rea-

sons: «1st because the study of inventories of enterprises belonging to

limited company by shares is made clear, even in the object of evalua-

tion, and gives rise to many questions of particular importance that in

the inventories of individual enterprises or belonging to unlimited com-

pany, are not, and cannot exist or are not usually considered for their

scarce importance. 2nd

because the application of incorrect procedures

of evaluation cause in the limited companies consequences much more

serious than in other enterprises».

At this point, the fundamental problem that Zappa asks is that of ex-

istence of criteria of evaluation that can be considered general. In the af-

firmative case, the question is «what are the criteria mostly followed in

practice» and «what are the principles suggested by the major writers».

According to the author, the need of a general theory in the subject

attribution of value in the inventory would be felt more in Italy be-

cause, compared to the other countries, our law was insufficient in the

subject of the formation of financial reports and, more, in it the rules

lack that discipline the above mentioned evaluation.

In the establishment of the above mentioned theory, the «opinion of

the law» would be almost useless, as it is limited «to deciding the cor-

rectness of the evaluation only when the compilers of the financial re-

ports could risk civil or penal responsibility». From this it follows that

«the only discipline that can give the reason for the assignation of in-

ventory values and that which deals particularly with it, is accounting».

Zappa makes clear that the evaluation cannot be determined in the

sense of determination of exchange value; the values of inventory can-

not be attributed by procedures that follow purely economic criteria.

This is so because «the evaluation of a ‘patrimony’ is obtained through

the evaluation of the various elements that constitute it – it is precisely

this division of a complex organism of complementary goods in sepa-

rate parts, it is precisely this single attribution of value, that makes the

evaluation made with economic criteria, arbitrary».

In fact, an evaluation that follows only these criteria «cannot ration-

ally be considered apart from the utility» and therefore, for example, it

would not give attention to the greater value that the single patrimonial

elements have as they «are united to form a whole that results, by

chance, in an income superior to the norm». even if we acknowledge the

«fictitious separation of the ‘patrimony’ of a firm into elements constitut-

ing single parts, the consequent determination of exchange value would

often result impossible, because to be able to distinguish the elements to

value, they should present individually not only the attitude to the ex-

change but should also be destined to the selling». But then, what would

happen to all those patrimonial components destined for lasting use that

form part of the fixed assets Zappa concludes that for them «it is impos-

sible to find a rational search for exchange value» or rather «the need to

attribute to these said patrimonial elements an exchange value leads nec-

essarily to the application of strictly personal criteria, not founded on the

reality of the things, which are to be avoided».

However this presumed exchange value could figure in a realiza-

tion and liquidation inventory that is compiled «to provide a base at the

winding up of substance of a given entity». But in this case the main

purpose of inventory would be that of presenting «the financial out-

come of the winding up» and therefore the criteria of evaluation would

be appropriate to the scope for which it was destined.

If inventories are taken into consideration «that are integral parts of

annual reports, and which are compiled in firms of every kind at the

end of every financial year with the purpose of determining the various

measures that the net worth assumes in subsequent moments» it would

be a serious error to «try to determine those measures in relation to a

fictitious supposed realization of every patrimonial element». It follows

that the eventuality of the winding up must be considered only in the

determination of the amount of the reserve, but «must in no way influ-

ence the assignment of the inventory values on the patrimonial ele-

ments, which must be determined solely considering the purpose for

which the same inventory is formed».

If it is presumed to be able to give meaning to the voice evaluation

starting from economics, it is true that a sole criterion cannot be found

that reports the evaluation of the inventory. But if the technical mean-

ing of «determination of pecuniary measure can be acknowledged in

the voice ‘evaluation’» then a «single directive principle can certainly

exist, that serves as a guide in the assignment of values». However, it is

necessary to be able to express with only one number the amount of the

patrimony in bulk, so that comparing its amount in two different in-

stances, it is possible to see, in the meantime, how much it has in-

creased or diminished; and because in order to know the complex

measure of the ‘patrimony’, an algebraic sum must be carried out of the

various measures attributed to its various elements active or passive.

For this purpose there must exist full homogeneity among the measures

that must be joined and compared».

From this is achieved the dependence of the income from the ‘pat-

rimony’ and the vision of the ‘patrimony’ as a sum of parts.

The homogeneity that our author refers to is of three approxima-

tions. In the first place as regards the homogeneity of the unit of ac-

count in which the measures must be expressed. In the second place,

the homogeneity refers to the singleness of criterion. Finally in the third

place, the homogeneity regards the fact that the various operations must

all be referred to «one same determined moment».

He specifies that among the criteria of evaluation, none is perfect,

none leads to determination of measure rigorously reported and

mathematically exact. However, the necessity of the evaluation im-

poses the fixing of general criteria. Among the various criteria, the au-

thor will try to choose the one that, in his opinion, «can ensure for the

financial reports that truthfulness that is searched for in vain».

Although the economic life of the entities is ‘one’ in its duration, and

the continuation of phenomenon expressing it is uninterrupted, however,

for control general periodical functions, it is reputed opportune to con-

sider the existence as subdivided into various ‘periods’ in time.

Due to the fact that «every excess, in the attribution of value to the

patrimonial elements, both in a positive sense and in a negative, is dan-

gerous», the inventories represent an important instrument of control

before and after, because they «indicate a time, and the point of arrival

of the statement as regards the past period of administration, and the

starting point of that as regards the following period».

Our author aims at determining the criteria to follow in the assign-

ment of values in the inventory, particularly in the case in which a base

is needed for the determination of distributable profits. He goes over

the principle criteria of evaluation that, «practice applies, that law im-

poses, or that doctrine suggests», or in other words, he examines the

criteria of current prices and the presumed present exchange value, of

individual value and the prices of effective future returns, of nominal

values and of costs.

In particular, as regards the evaluation based on current prices, he

claims that, in the majority of cases, it is not an indication of values for

at least two reasons. First of all, because «the current price is the equi-

librium price with which, in a given moment, the equation between ef-

fective demand and effective supply can be realized; in other words

with the formulation of the current prices to be applied to the elements

of the inventory, these should not be considered». It can be deduced

from this that «the current prices, on the day of the formulation of the

inventory, cannot be considered representative of the prices that would

be obtained or will be obtained, by a presumed realization on the afore-

said day or even in a previous or following period».

As regards the present presumed exchange values, the author dem-

onstrates how it is wrong to apply them to the evaluation of the inven-

tory so that they are as near as possible to the ‘objective truth’. In fact

«for determined patrimonial elements, to want to establish a present ex-

change value is to ignore the nature of things». Though he recognizes

that value is linked to and exist in the exchange, however he does not

deny that even without exchange a determination of economic value

can be carried out. But this involves arbitrary evaluation on the part of

the compiler of the inventory and in any case, they result as variable.

As regards the evaluation based on individual value, or ‘subjective

value’, as it cannot be applied to the fixed assets, it cannot be used as a

general criterion of evaluation.

Though necessary «for the purpose of providing an important ele-

ment for the formulation of a correct judgement of the economic situa-

tion of a determined firm», the same thing can be said of the criteria of

effective future return, it cannot be used for general criterion. The reason

is that it «presents the same deficiency that we have already encountered

in the criterion of present exchange value. Its application presupposes, in

fact, an unreal hypothesis, the liquidation of the entire business ‘patri-

mony’». Furthermore, its determination is entrusted to «prudent and cor-

rect criteria of the compiler of the financial reports»: «founded as it is

mainly not on the past facts but on future circumstances whose occur-

rence will not be, at the best, predetermined on the base of reasoned as-

sumptions, it, however correct, can only be a prevision».

Finally, as regards the evaluation based on costs, it «can generally be

obtained, if not with full exactness, with great approximation, if appro-

priate systems of records are kept, if the formation of the cost is followed

in its various moments». In fact, it finds «generally a sure base in real

data», so an arbitrary determination is not necessary. However, «it can

only offer a directive in the determination of the pecuniary measure of

the patrimonial elements that constitute the object of the inventory».

Such general criterion «though remaining unvaried in the fundamental

informing concepts, must then be adopted to the particular destination of

the various patrimonial components to which it is applied». At this point

Zappa makes different observations according to whether he refers to

elements of the ‘fixed patrimony’ or of the ‘patrimony due to selling’.

For all the elements belonging to the first category, «it is as a rule

recognized in practice, the principle that the value attribute to them in

the inventory must never be more than that of the cost». Moreover, our

author emphasizes that «most of the fixed assets undergo depreciation

due to age and use». This depreciation is given «by the difference be-

tween their cost and the price of estimated profit attributed to them

when for change of destination they become an element of the ‘patri-

mony due to selling’». It then becomes necessary to distribute the total

depreciation onto the various financial years through the depreciation,

whose nature «provides the general criterion within which deprecia-

tions must be carried out: they cease to be determined in rational way

when they or damage the social wealth or constitute a concealed re-

served surplus».

In this way in order to guarantee the integrity of partnership’s capi-

tal, Zappa accepts the criterion of the least value between cost and mar-

ket values.

Furthermore, the criterion of the cost «is that which leaves the least

latitude to the more or less enlightened but always interested evaluation

of the administrators, to whom is assigned the determination of the ex-

change values». In fact, this criterion is «the only one whose applica-

tion, in no small way, is founded on real data», and is therefore the only

one that «confining to a limited area what is necessarily arbitrary is for

the nature of things in the evaluation, it can count for, as far as possible,

correct determination of the distributable profit».

The study of the accounting works considered shows the progres-

sive awareness of the necessity to take a ‘step back’, questioning the

nature and the cause of value in itself and independently of its expres-

sion by evaluation.

This work began with a conception of value strictly linked to

‘quantity’, typical of the Lombard School and influenced by economic

formulations first physiocratic and then marginalist, considering the

problem on a deontological and pragmatic level.

Then it passed through the theory of the Tuscan School, linked to

neoclassical theories and influenced by Rosminian spirituality and by

positivism. It considered value as the main object of estimate and

mathematical method. Here, in a certain sense, we have remained on

the threshold of the ontological-syntactic problem.

Finally attention is paid to the real treatment of the problem of

value as an integral part of the field of accounting. In the Venetian

School, it is value-object and the level of analysis moves from deonto-

logical-pragmatic to ontological-syntactic. The influence of economic

thought goes back explicitly to Ferrara, Gide, Pantaleoni and the

American institutionalism. In particular, Besta is the first author to

question the nature and cause of value. From his theory, of a plainly

positivist kind, important studies are derived that culminated finally in

the so called ‘revolution’ of Zappa.

6. A Glance over Contemporary Italian Accounting Thought

about Value and Evaluations

As we just said before, we do not want now to give a comprehen-

sive view of all ‘what happened’ in the last eighty years (more or less)

in Italy about value and evaluation but a short epilogue of the question.

Such a purpose would be simply impossible and, moreover, misleading

respect to the ends of our essay. History does not ever stop and other

‘classic’ authors, certainly not less important, entered the scene after

the ones studied above.

The only things we may and want say about this debate after proper

classic period are then the following.

In 1926, professor Gino Zappa launched a manifesto in which af-

firmed that accounting itself as a distinct discipline was by that time

out-of-date; in that occasion he launched his famous “Economia azien-

dale” (‘business economics’, more or less) formed by the merging of

organization, management and accounting studies in one new doctrine.

The real or wanted scientific revolution started with a Trilogy (Zappa,

1920, 1926, 1934) and nothing in Italian accounting was the same as

before after those issues. Little by little new paradigm resulted as that

one prevailing through Italian faculties of economics, not without hard

struggles. But accounting, whose term itself (the glorious Italian name

of “Ragioneria”) was discouraged by the most orthodox disciples of the

Master as a remain of the past, survived in Italy to this storm. Now it is

embedded in “Economia aziendale”, as its ‘core business’, but without

so much autonomy to be considered a discipline with an its own com-

munity of study. Notwithstanding that accounting occupies still now a

relevant part of university didactics as well as of live research for a

great segment of Italian ‘business economics’ scholars.

Another characterization of Zappian prevalence in Italy, not well

studied till now, was a relative isolation in international affairs. It was

born in a period when the economics of ‘intermediate’ systems (be-

tween the ‘masses’ and ‘state’ of social economy, both of Marxist in-

spiration and of Keynesian liberal inspiration, and, at the opposite, the

‘individuals’ and ‘single firms’ of classic and neoclassic economics) in-

spired the ideology of ‘corporative economy’, a sort of ‘third way’ be-

tween socialistic and capitalistic way of organizing economic life of a

nation. That ‘third way’ was typical of authoritative political systems as

the one then existing in Italy (and, perhaps not accidentally, in contem-

porary Germany of Betriebswirtschaftslehre). Italian “Economia azien-

dale”, apart from episodic links with the regime, exploited however the

dominant ideology for a pure scientific end: the creation of an ‘eco-

nomics’ good for such intermediate systems.

The relative self-sufficiency of Italian economy and the pervasive

role of state in economy itself, till ’50s and ’60s, beyond the relative

distance from political connections of Italian academicians (or, some-

times, their clever transformism) allowed to continue in this self confi-

dent national context for some decades: government control of econ-

omy continued, in substance, in the new Christian Democrat or Social

Democrat context and, with it, the interest for a ‘third way’ and for the

economics of ‘intermediate systems’ of civil society.

After a period of relatively quiet development of Italian theory,

nearly static, a new context got over the old one. First was the time for

European integration, after the fall of two blocks world equilibrium, at

the end, practically now, the great challenge of globalization.

Italian academic accounting world could no more stay out of this

new world, shut in its ancient ‘ivory tower’. New tendencies are then

showing themselves and the relationship with old ‘holy’ textbooks is

becoming, day by day, more critical.

Contemporary accounting is then progressively and inevitably

opening itself toward internationalization and comparative approaches.

Another strong tendency is toward a normative approach for ac-

countancy. Traditional Italian accounting was more speculative, ‘prob-

lem setter’ than ‘problem solver’. The role that in other countries had

been played by professional organizations or by state agencies or by

other authorities in accounting regulation in Italy had been played by

academic doctrine, smoothed, quite philosophic, ‘light years’ far from

the Anglo-Saxon concept of ‘standard’. These last one, under the per-

haps misleading name of ‘principle’, arrived in Italy only in the ‘Seven-

ties’, and just under the pressure of precise European Directives and at

least the first generation of principles (before the IV Directive CEE),

but even partially the following, are still more similar to scientific texts

of accounting than to a simpler ‘general agreed accounting principle’.

In this changing world the ‘business economics’ approach from

Zappa is, on the whole, still well recognizable.

Affording the question of value in contemporary Italian accounting

means then to answer to the question: is the conception of mature

Zappa about value really different from that of his youth?

In our opinion theoretical bases about value were not now changed

respect to the past, but two main problems of preceding studies are now

brought to their extreme consequences: depreciation of money, the ba-

sic measure unit for value, and holistic property of systems.

Before the First World War the Gold Standard warranted a rela-

tively stable measure unit for value. Not existing, as we saw, a fix or

absolute measure unit for value, the fall of Gold created terrible prob-

lems for every confident determination of static values. That, on its

turn, made the author moved his emphasis from stocks of values (stat-

ics) to flows (dynamics). Determination of flows shall be less sure than

of stocks, epistemologically problematic, but the unique allowed for

practical goals and better than the unrealistic numbers of previous posi-

tive doctrine.

The holistic property of systems assumes the ‘value of businesses’

as combination of many production factors is always greater than the

sum of ‘values’ of single factors. ‘evaluation of single assets and li-

abilities’ shall be than an impossible goal for everyone because it is

impossible sharing a complex value in a discrete sum of single values.

As the reader may imagine such problems involve greater episte-

mological questions about accounting, that justify the location of our

Italian scholar among the ‘Great’, but we here do not want explore

them but just mention.

The main result of all that was the abandon of previous ‘patrimony’

accounting system in favour of the new ‘income’ accounting system,

till now the more used throughout Italy.

The shifting from a static to a dynamic view of accounting was not

only an Italian intellectual fashion of those days. In a parallel way we

find the conceptions of “Dinamische Bilanz” by Schmalenbach and the

radical ‘income’ view from Walb in Germany as well as the ‘revenues

and expenses view’ as opposite to ‘assets and liabilities view’ in USA

and UK more or less in the same years. Notwithstanding that, in the

long run, determination of value as a ‘stock’ prevailed over the ‘flow’

one throughout the world, all the world but Italy! Of course now it is

the time for more and more sophisticated versions of ‘stock’ value,

nothing or very little to share with XIX century methods, but on the

whole there seems to be much more confidence nowadays on positive

determination of ‘accountable’ numbers for value in a global context

than in national debates preceding the Second World War.

We will not go beyond on that but assume for our goals only the

strong persistence in Italian debate of dynamic and problematic ways to

determine value for firms and other entities. This quite sceptic attitude

about value made Italy for time as a stronghold of accounting conserva-

tivism, more than Germany, more than the same France, where similar

‘income’ attitudes did not follow ‘business economics’ or academician

ambitions, but a more normative and technique way (the PCG, as gen-

erally known).

Let us to be allowed to translate in short sentences, finally, the

main logical steps of traditional XX century Italian accounting about

values with unavoidable drastic simplifications.

If time were a straight line, determination of value in points of it

should be an impossible and perhaps useless task. We are forced to de-

termine it in intervals (creation of value in time), but even this task is

very hard and subject to too many estimations and hypotheses. Income,

as ‘interval’ value, is shared in two parts: the one derived from finan-

cial transactions to and from outside the entity (the sure or ‘objective’

part, the true ‘revenues’ and ‘expenses’) and the part determined in

compliance to accrual accounting (the estimated or ‘subjective’ part,

with other calculated gains and losses, such as depreciations, prepay-

ments, provisions and so on).

In such a view, capital (financial reports capital, that is the net

worth published onto official disclosures) is only an accounting deter-

mination resulting from the algebraic sum between ‘true’ or proper fi-

nancial values (cash, credits, debts) and other ‘calculated’ or economic

values (for example historical costs ‘parked’ on the balance sheet and

waiting for coming back on the income statement when of their compe-

tence). Then it is not, nor represents the value of the firm, but is only a

number ordered to the less mistaken determination of ‘income’.

Value of firms is another thing and it is not the algebraic sum of

assets and liabilities because the ‘value of sum’ in Zappian view has

always a different (generally greater) value than the ‘sum of values’.

Then, not properly financial resources (plants, inventories, build-

ings, ...) are represented in balance sheet only as a discounting back of

future income and nothing more.

Then, they (all they!) may ever not go over their historical values,

or, if the estimated future flow of revenues should be lesser than their

historical costs, they may be only depreciated.

Then, if the only reliable part of income is that of ‘financial’ deriva-

tion, it is useless to record internal transactions. Only at the end of finan-

cial period we will have to make estimations and hypotheses to best de-

termine distributable income (the lesser is, of course, the better is).

After Zappa’s work his successful view made that critical aware-

ness of Italian accounting survived along. It is not hard to find, until the

’80s, textbooks preaching and allowing accounting policies: value is

hard to determine, and then let us find a number for official income that

helps the best capital maintenance for the future.

Still after, new relationships with abroad impressed a radical

change in perspectives, but it would be impossible to talk here about a

so near epoch, practically about now.

In general terms we may say that a so ‘nihilistic’ approach fa-

voured very sophisticated disputes about determination of evaluations

but was not so determined in the practical and operational side of the

question.

Out of that, and with notable exceptions, Italian accounting fol-

lowed the general trend of contemporary economics of not dealing too

much with the value dispute, considered a great question of the past and

is progressively concentrating itself on its own task of evaluation, a

‘downhill’ but surely accounting task, every day more aware of its role

and sharing in international accounting community.

7. From History to Theory?

We have already said about the epistemological side of the rela-

tionship between historical and theoretical researches. With all deep in-

fluences between the two researches, they both remain different each

other. All know the famous Ciceronian saying: Historia magistra vitae.

And this saying for centuries attracted people with all its ambiguous but

charming meaning. In what a sense ‘history’ is ‘master’ for ‘life’ in-

deed? In a mere practical sense? In theoretical sense? In normative

sense? According to us an improper use of that can really mislead a

good research.

Whatever may be use, in fact, of history for theory, in any case it

keeps an its own dignity of scientific endeavour. History is not only

somewhat useful for something. History is above all useful for itself; it

has to give answers to questions that the same history made. Reducing

history to an instrumental discipline or to intermediate ends in knowl-

edge or simply to mix confusedly two kinds of work is unacceptable.

Furthermore, history has – for accustomed and sensitive people to it – an

its own taste, an its own sense, not limited to a subset of other domains.

Having said all that, however, nothing justifies, at the opposite, a

sharp separation between history and theory as the two domains did not

have a great space of intersection. If something from history may help the-

ory, we have no reasons for not exploiting and exploring this possibility.

And, this time, comes back the aforesaid question: in which sense

history may be ‘master’ for ‘life’, where this last term be applied to

building or corroborating theories?

We might think, in first approximation, that history could be an

empirical ex post research. But, unfortunately, it neither verifies nor

falsifies anything!

Set we have a defined theory (e.g. for ‘value’ and ‘evaluations’), a

defined and single experience in the past (or several but ever limited

experiences from past) does not proof, as a crucial experiment, the real

truth or falsity of mentioned theory. Every attempt to investigate the

logical side of this task in order to verify a possibility of use for cor-

roborating theories is destined to failure. This perspective, then, is to be

abandoned.

In a second approximation we might think history is an ex ante em-

pirical research. But, unfortunately, without going too far, the chance to

make inductions, formally and logically correct inductions from just

one or several limited experiences from the past, seems a task harder

than the previous one and, ultimately, not less destined to failure.

The only way then, in our opinion, history may help theoretician’s

work is that it furnishes a great deal of experience, stimulating

scholar’s imagination, fertilizing her or his intuition; it can look a mod-

est help but indeed it is not.

History sets problems, many unresolved problems, with a variety

sometimes never reached nor by programmed empirical researches, nor

by the more sophisticated analytical works. In history of thought prob-

lems are often the arguments of old disputes (as was the case for ‘our’

value). Sometimes time appears to have resolved such problems and

then those disputes look like just belonging to the past. Other times his-

torical problems are not still resolved. They are still open wounds, and

then scholars may not remain silent or neutral speaking now of them,

out of the case they have exclusively historical interests and no theo-

retical engagements.

In all that ‘value’ is not only a historical question among others. It

is crucial for many respects, both under a systematic point of view, and

under a thematic one.

As the first point of view is concerned, value’s discussion makes

we are brought to investigate about nature of accounting. Do we have

to deal with value? The affirmative or negative answers depend mostly

on the answer we have previously given to the question about the na-

ture of accounting.

Is accounting a science or a technique? If it is a science, what kind

of science it is? And it would be easy to continue so on. We mentioned

and approved above the conditional-normative approach from Mattes-

sich. It finds an early, parallel and similar development just in Italian

Schools. The Italian economist Pantaleoni, to whom Zappa made often

reference, supported for the first time the idea that existed so many an-

nual reports how many goals we have (or – modernly – stakeholders

ante litteram). The Italian follower of Zappa, the Sicilian Colletti, sup-

ported the idea that value in itself did not exist, without specific refer-

ence to ends of accounting ‘determinations’.

As we said, subject of value is very interesting for the debate on the

same nature of accounting it promotes. This latter, grounded on this

conditional apparatus as well as on strong empirical bases, might

evolve in a purely axiomatic discipline. Being given axioms (from out-

side, e.g. from social sciences or from economics) and having set pos-

tulates (from inside, e.g. the objectives of information and communica-

tion), ‘then’, according to formal rules, the best accounting practices

will be... In this sense we may certainly subscribe the idea of an ‘ap-

plied’ science, not looking for but taking from outside its main con-

cepts (like value) and applying them for practical tasks (6).

As the second above point of view is concerned, instead, centrality of value is determined by the fact that the core of administrative ‘signs’ are ‘value’ signs. Theoretically speaking, as a matter of fact, adminis-trative phenomena can be translated in every kind of signs, as qualita-tive as quantitative. But physical quantitative signs and qualitative ones

–––––––––

(6) Set aside, of course, the question of the ‘pure’ science supplying above mentioned

axioms and concepts, either it is a pure science describing relationships among phenomena

in the real world, like economics, or it is another field of knowledge describing ways of

translating social phenomena in signs and languages, like semiotics or linguistics.

leave ‘heterogeneous’ traces of business life, while ‘value’ enjoys the property of combining, summing, etc. business resources, so reduced to a unique measurement unit. Only value – and we add only ‘economic’ or ‘exchange’ value – with all its limits and problems we discussed above, but still beyond, can make all in business be ‘homogeneous’, and then comparable among alternative quantitative results, and then useful for persons utilizing accounting information.

So, we may point out our first conclusions till now, in three syn-thetic sentences.

First: Evaluation is one of the more central subjects in accounting.

Second: Evaluation, as an applied subject, is related, and at the same time distinguished, to value, as a pure or positive subject, mainly from economics (without stressing if we are speaking of ‘general’ vs. ‘business’ one).

Third: Historical studies about above mentioned studies are very important to fertilize the field of theory, but they neither allow a full induction ex ante nor a true verification vs. falsification ex post.

On this third sentence, we add we are aware of the narrow space occupied by our investigation and likewise of time distance between then and today. But, on the contrary, we are aware as well of dealing with a vital and precocious country for accounting history and, after all, of the fact that problems in value and evaluation are very recurrent in our literature as in practice.

In words, what taught us our historical survey on classic Italian ac-counting about value?

Let us begin from the Lombard School.

Firstly we note as accounting is debtor to economics, in matter of value, since its early whimpers.

Passing to single authors, Crippa owes his conception of value a bit to classic economists but perhaps more to physiocratics. For him value was a quantity. It is not still clear if he refers to a general physic quan-tity, as the harvest, or already to an economic quantity, as the normal value of classics (labour embedded in products). In this early attempts of Italian accounting, value, price and cost are sometimes muddled each other. In every case it is still recognized that ‘money is the meas-ure unit for value’, a first important conquest to hold to future memory.

Coming to greater Villa, now presence of classic literature in eco-

nomics is quite evident and, even, not few motives of neoclassic

economists (at that time known still as ‘vulgar economists’) are ac-

quired. From classical thought we find the concept of ‘absolute’ value,

well and lucidly distinguished from ‘relative’ one, drawn from begin-

ning neoclassic thought. The latter, founded upon utility, is already ex-

pressible by means of exchange money quantity. Notwithstanding that,

that principle conception is not clear for evaluation goals: it is compati-

ble either with historical costs (exchanged money in the past) and with

current price values (exchanged money in the future). It reveals the link

between classic and neoclassic conception of value, their common

ground, but it does not distinguish among a mere price theory, a value

theory founded upon production costs and a value theory founded upon

re-production costs.

The Tuscan School keeps the link with economic debate. Now, for

example, it is the turn of Walras with Cerboni. The same author also is

the first identifying a social deeper layer (particularly according a law

point of view) below the economic one: value judgements as founda-

tion and logical premise for economic or exchange values. Dependence

of value determinations from value judgements brings our concept (and

our discipline) outside of the true science (now we may say ‘positive’

science) because not interested to the ‘true’, but inside of the art (now

we may say ‘applied’ science) because depending on the looking for

the ‘good’, or the ‘beautiful’ or the ‘useful’ (7).

We owe, after, to Rossi the clear distinction between a plain and

theoretical concept of value and a plurality of accounting methods for

evaluations. Pertinence of this latter subject on the former does not im-

pede to accounting a vast field where many practical choices may be

taken without any mechanical derivation of applied methods from sci-

entific concepts. We also owe to him the identification of a distinct dis-

cipline, devoted to evaluations, the ‘estimate’.

–––––––––

(7) What introduces an interesting sharing in four parts of philosophy (and of knowl-

edge as well): firstly dividing theoretical attitudes from practical ones, secondly dividing

on their turn this latter ones among ethic, aesthetic and economic. This partition in four

will be explicitly introduced in philosophy by a very famous Italian author of XX cen-

tury, the philosopher Benedetto Croce, of course unaware of Cerboni’s work.

Notwithstanding that, Tuscan School on the whole did not seem to

add so much to previous acquisitions of Lombard School, perhaps be-

cause of its stress on juridical and social aspects of accounting rather

than on more economic ones.

Pisani is otherwise interesting for his attempt (nowadays we could

say ‘desperate’ attempt) to find a true ‘objective’ determination of

value. Certainly this was the most coherent idea with positivist culture

of those days, with all lesser epistemic maturity respect to previous

school of course. Attempt of positivist and new positivist philosophers

of reducing every scientific conception to assertive or positive task,

leaving all the remaining to fun domain of ‘not science’ or, disparag-

ingly, ‘metaphysics’, seems always to lead toward a blind alley. How-

ever we have to recognize all that allowed the author’s distinction be-

tween ‘nominal value’ and ‘real value’, very important for not identify-

ing money as bringing always a constant value in itself, and logically

preparing our acquisition that ‘real value’ as a fix number does not ex-

ist but as an exchange ratio.

Passing to Venetian School we feel at this point to have entered a

very modern period of accounting either in language and in method and

in concepts, nearly like reading these authors were not very dissimilar

from a contemporary one. In all these authors we are generally beyond

neoclassic confusion between ‘value’ and ‘price’: the second is influ-

enced by the first and reveals part of the first, but we, as accounting

scholar, are hardly ever interested to it.

Besta thought to have resolved the problem of determining a quite

objective value. His appeal to Francesco Ferrara and his re-production

costs had for him dignity of general principle to define value. Value in

Besta is still an ‘exchange’ value but it combines in itself other two

classical meanings of the term, not always in a perfectly coherent way:

the ‘use’ value and the ‘cost’ value.

Even in a principle way, Besta’s values should be always oriented

to the future, and then estimated values. But his system accepted not

few degradations and simplifications about this principle: persistence of

historical evaluations, for example, is not theoretically justified but for

ease of calculation.

We do not follow, at last, Alfieri and Zappa through their full ex-

planation of different evaluation methods. They put in practice theo-

retical distinction between the ‘spring’ value and the ‘streams’ of

evaluation, and demonstrated, for that, accounting had joined now a

high maturity level, perhaps in the former even more than in the latter.

Zappa, however, in works here studied at least, well individualized

the aforesaid ‘holistic property of systems’ for which the value of sum

is hardly comparable to the sum of values. The main debt toward Zappa

for us is then his partition in three areas:

· ‘numeraire’ or ‘true’ values;

· estimated or future values;

· conjectural values, resulting by subjective sharing of values

along space and/or time.

After this historical survey we have matter enough to start a first re-

flection about value.

In words, what teaches us this history on the whole?

At a first glance we find confirmed our a priori intuition about the

three strata of the question: the surface one (in business or accounting),

the intermediate one (in economics), the deep one (in philosophy).

Without a strong ground in lower strata it is hard, for these masters as

for us, to build anything in upper ones.

Going back respect to this same investigation the logical sequence

should be the following. First we have ‘deontological’ sciences: those

branches of philosophy founded upon ‘values’ and ‘value judgements’,

looking for the aforesaid general ends of ‘good’, ‘beautiful’ and, most

relevant for us, ‘useful’, instead of ‘true’, looked for by ‘ontological’ or

theoretical sciences. After, we leave the abstract domain of philosophic

thought and decline our values over another space, this time belonging

to social and, most relevant for us, economic sciences. The passage

from a subjective or absolute perspective (the ‘use’ value) to an ‘inter-

subjective’ (that is relatively objective) perspective (the social or ‘ex-

change’ value) is still that one well described by Smith or Marx. Eco-

nomic value as a social value loses the most of its contents when was

an individual or absolute value. But this reducing in exchange ratios of

personal utility is the only way to deal operationally with this concept.

At last arrives accounting, with its evaluations, attempting to translate

these numbers, representing figures of exchanges among subjects, in

opportune signs, useful for the most various goals of administrative and

everyday life.

As was the case in the past, as seems to be still now.

Without repeating now neither historical experience nor economic

theory we may say, finally, accounting lies ‘downhill’ in matter of

value, respect to that economic and philosophic background. But, we

said, value is central and essential for us. We are not allowed, then, to

say ‘there is’ value, whatever it is; we are not allowed, as accounting

scholars to not have an our own theory of value, even if it were con-

ceived as ‘axiomatic’, that is as a meta-theoretical principle derived

from other sciences where accounting is built upon. Then we feel the

opportunity to point out our point of view in a series of steps, in logical

sequence, we make ready here, so, without too much discussion, like in

an apodictic way, at conclusion of our work to the simple attention of

the accounting scholars community.

· The concept of value is not in itself neither a proper accounting

concept nor an economic one; its deepest foundation is to be

searched for in philosophic disciplines.

· Amidst them it has been looked for in vain by theoretical

philosophers, thinking the only knowledge, the only philosophy,

the only sense, the only science was in theory, neglecting so

practical domain. The only allowable logical conclusion in such

an approach has been value is not a ‘thing’, nor an ‘attribute’,

nor a ‘property’, nor a ‘relation’, briefly, value in the ‘state of

world’ in a certain sense does not exist (Hall, 1952). Really

value does not belong to ‘pure reason’ but to ‘practical reason’

or to ‘judgement’. Recalling the famous Cerboni’s lexicon, we

might say it does not belong to the ‘kingdom’ of true. It belongs

to other branches of human knowledge, not interested so much

on ‘what is’ world, but more on ‘what it should be’: value

assumes a sense first in ethics (value as subjective judgement

about good), but also in aesthetics (judgement about beautiful)

and finally in economics (about useful). Generally speaking we

attribute value to an entity (a thing, a good, a service, a concrete

or abstract condition, a thought, a state of the world until an

‘entity-business’, that is an azienda, and its component parts)

only if we are able to judge it. And the strongest and deepest of

these judges are the moral ones: we ‘trust’, first of all, even

without being aware of that, in ethical values. Values are then

the translation in judgements of our final ends. Of course in life

do not exist only ethical ends. All other ends (that we may recall

in terms of ‘aesthetic’ as synonym of pleasant, opportune, fine

or similar adjectives) are even grounded on ethical terms.

Ethical values do not need other values for themselves; aesthetic

values, at the opposite, are secondary judgement and implicitly

founded upon the previous ones. After, and often neglected by

philosophers always interested on ultimate ends, there are

judgements on means, which are but intermediate ends respect

to the ultimate ones. Economic values are not then the first ring

of a chain (the use value after translated in exchange value as

classic economists say and finally in evaluations) but are

already, at least, second or third.

· Then in its deepest nature value is a primitive concept. We

cannot define it without making recourse to similar concepts like

judgements, measure and so on. To judge is a fundamental

attitude of human beings. Passage from ‘pure reason’ dimension

to ‘practical reason’ one is not to be defined or explained, at

least by us, modest accounting scholars. Starting from this

general approach value may be declined on various planes, more

or less abstract. We may decline it in a logical and philosophical

meaning (or relatively high meaning) or in a scientific and social

one (or relatively low); we may decline it making reference to

final ends (high sense) or to successive and intermediate ones, or

means (low sense). Among all these senses of the term ‘value’,

the nearest to our needs is the economic one, the ‘use value’,

perhaps one of the lowest and poorest meanings of the term.

Even if derived from upper (until supreme) values, economic

ones have a their own dimension. They express ‘only’

preferences or judgements about subjective utility from

economic goods.

· It is not in doubt that above mentioned conception of value

(quite philosophic in certain respects) makes abstraction from

nothing else than ‘common sense’. Reason and formal clauses

about value (and other concepts of course) would not have sense

if there were not before a social (or perhaps just linguistic)

meaning of the term. Even if aware of such deep foundations,

might we not limit to a social investigation leaving the way till

now followed by our Masters of attempting to found their

science on philosophical concepts? Is it not a useless task at all

we should better to run away from?

· Other essential, or existential, doubt: even reducing the ‘uphill’

exploration to ‘use value’, neglecting every other social or, still

up, philosophic investigation, does it exist a real link between

‘use value’ and ‘exchange value’? If such a link should not exist

or be demonstrated, why to go so ‘uphill’? Might we not limit to

investigate values only as ‘central values’ of surface ‘prices’ that

oscillate around them, more or less as neoclassic economists did

without any care for the substantial and subjective content of

socially determined exchange ratios? In words, are we not

uselessly complicating our modest work of ‘applied’ scientists

loosing ourselves through philosophic disputes? Classical Italian

writers were interested on these deep foundations, but were they

not perhaps in mistake doing so?

· The two questions above, in our opinion, are misleading. In fact

we do not need an ‘economic use value’, or, ‘worse’, a ‘social

value’, or, ‘worst’, an ‘ethical or philosophical value’ in

operational terms to derive and calculate an exchange value,

useful for economic theory, or, ‘better’ for accounting purposes,

or, ‘best’, to choose a specific evaluation method. We leave to

others the task to investigate whether such links between

relatively subjective values (upper) and relatively objective

value (lower) exists. We think there are, but now we are not

interested to such question. For us the existence in itself of these

upper notions of value is enough. It, in a sort of metaphysic and

regulative sense, witnesses the existence of a reference point

from which spring concrete determination of value. The passage

from ‘use value’ (the lower among the uppers) to ‘exchange

value’ remains for us quite obscure: water has generally a low

‘exchange value’ but a high ‘use value’ and the opposite is for

gold. But if people were not interested in water (and in gold) no

exchange would happen with these goods. Let us leave,

however, to psychologists and economists, the answer to the

question: why we are willing to exchange a good by another

good ‘as the two were equivalent in utility’.

· And then we may pass to proper exchange value. In an abstract

world where exchange does not exist, likewise exchange value

does not exist. It, then, does not exist if exchanges are not in the

market, if this basic institution of economy did not exist.

Exchange value, then, implies market economy. Out of it

(primitive or socialist economies, free transfers of money or

goods, production of goods not destined to selling as public

services are) determination of an economic value becomes, at

least, problematic. We might define perhaps a virtual value by

means of incorporated labour, but we are not sure this solution is

not uselessly dogmatic and really do not understand what an

exchange value may be without exchange. Perhaps, simply, in

such cases exchange values do not exist.

· Simpler is the case if we are in an exchange economy. Here it is

a ratio, the potential and socially accepted exchange ratio

between a good with another good.

· Now let us make another step. Let us have not only an exchange or

market economy, but also a monetary economy, that is an

exchange economy where exchanges are generally not barters but

goods against a peculiar good named money. Money is but a good,

whose utility is to be a mean for exchanges. Introduction of a good

generally accepted for payments, however, implies three

consequences: value can be accumulated by money and then

‘survive’ beyond the moment of exchange, value now has a

‘measurement unit’ though imperfect as we will see below, from a

heterogeneous and abstract ‘exchange value’ now we have passed

to a homogeneous and concrete ‘monetary exchange value’.

Accounting itself would not exist without this homogeneity and

without the possibility to sum up different goods.

· Then, is value a kind of measure as the ‘metre’ or the ‘kilogram’

is? In our opinion, absolutely not. In fact, when we measure

sizes, we first reduce a quality (length, weight,...) to a standard

size and then we ‘measure’ reporting every other item to that

standard and then calculating the ratio between our object and

the standard. But here we have not the standard; that is because

our quality here is already a ratio, and worse a ‘social’ ratio,

nothing of similar then to a physic object or phenomenon. If

money were be considered as our standard (as accounting does

for evaluating tasks), we soon will realize we have chosen a

strange standard, continuously shortening and lengthening. Why

is it so odd? Because it is a ratio itself and the two terms of

every ratio can vary through the time (and through the space).

The best thing we may hope is that it is relatively stable, but

nothing more. The looking of our Pisani for an objective value

was then only a positivist myth, logically impossible.

· What does not mean, however, that in given space and time

conditions a provisional value is not determinable. In given space

and time conditions money has a determined exchange ratio with

goods and these ratios can well express our terms of value.

· However, even so, value is not the same thing of price, even if

strongly correlated to it. When we talk about value (from now

on implicitly and only ‘exchange value’), we are talking about a

social and generally accepted exchange ratio between money

and goods. Price is instead the effective or actual sum of money

exchanged. When contemporary economics neglects subject of

value probably it is in mistake. Prices depend of course on value

but even on rhapsodic facts depending on their turn on peculiar

circumstances of the particular exchange or of the subjects

involved in it. Prices are directly observable; they presumably

oscillate around a central number we may consider the ‘real’

value. But prices in themselves are irrelevant for accounting

doctrines (as in theories as in practice). We need to represent

figures about values, not about prices, even if value is not

directly observable, but indirectly through its imperfect

manifestations that are prices.

· Then let us turn to economic theory about value. But, in this

respect, we find only two main theories: the classic one, of

labour, and the neoclassic one, of the relative scarceness of

goods. What to adhere to? We think they are both right in the

sense they both see an aspect of the question. The former takes

into consideration the relative hardness of obtaining goods, from

a technological point of view, the latter takes into consideration

the relative scarceness of goods, in terms of market restrictions.

There is, however, a limit case where the two approaches bring

to the same number: in the perfect competition market, in fact,

neoclassic values fall to their minimum, just enough to

remunerate living work (by wages) and incorporated work (by

profits). There is no space for any kind of rent or quasi-rent. Is

there, then, a possibility to conciliate the two theories?

· Followers of value-labour consider that this coincidence enforces

their own theory. Restrictions of competition should be unnatural

and undue. The ‘true’ value is that one reflecting conditions of

production. Others appropriation of value – to use a Proudhon

term – should be a theft. Let all restrictions be relaxed and

‘apparent values’ (through prices) fall to their natural terms, the

terms of labour embedded in products. They think a determined

quantity of work necessary to obtain a product is a relatively

stable and certainly neutral reference point, while market

conditions are extremely variable. For that, perhaps, Marx defined

the emerging neoclassic theory as ‘vulgar’ economics. But this

strength of classical approach hides several weaknesses of the

same. Someone was cleverly removed by late classical authors

(like quoted Gide and Ferrara) passing from production cost

values to reproduction cost values. But other remained

unresolved, like the creation of surplus value (weakly resolved by

Marxist theory of surplus labour) or the mysterious path from

‘real’ value to prices. When prices oscillate around value we may

consider all that not problematic; when prices (the only

observable ones) go toward the opposite direction of that of

presumed ‘real’ value, we cannot be satisfied by dogmatic or

moralistic assertions about ‘natural’ value itself.

· As a matter of fact there is a limit case in which labour value

theory is widely falsified: it is the case of money. May we say

money is not an economical good? Of course we may not. May

we say money has not value? Of course we may not. And

exactly its value is the one recognized in goods and services

exchanged for it. But how much is work incorporated in

production of money? Once, when money was only formed by

metal coins, it was a product as every else: states imposed a

seigniorage over its intrinsic value but on the whole value of

money reflected the work needed to extract gold or silver, to

mint it, etc. until to put it into circulation. Now it is still so, more

or less, for coins minted by sovereign states. Already for bank-

notes (issued by central banks) it is hard to say that the few cents

needed to print them and to distribute them are the ‘real’ value

instead of the face value everyone accepts for it and the

difference are a ‘theft’... But we reach the absurd if we consider

that nearly the 90 % of money now used is ‘bank money’, with

practically no production or reproduction costs. Even if this is a

really exceptional case, who is now so unwise to say that ‘real’

value of 90 % of money in circulation is ‘zero’? The only way to

trust still in labour value is to assume it as a faith, as a

metaphysic assertion not falsifiable for definition.

· Where money takes from its value? From scarceness, derived

from monopoly of money emission kept by central banks: even

quantity of money issued by states (coins) and banks (sight

deposits) are decided by monetary central authorities. Value of

money is then almost determined by its supply restraint. May we

then abandon at all theory of value-labour? In our opinion, we

may not. Money’s case is a limit case. In all values of goods,

relaxing restraints in supply does not bring ever to values lower

than remuneration of the factors of production. Production is a

combination of factors: out of land and other similar ‘rental’

factors ruled by scarcity, all factors are labour, present labour or

past labour but always labour. Then the ‘minimum’ value, the

‘core’ of value is of course the value (in monetary terms) needed

to production (or, perhaps better, reproduction) of goods. We

may say then two theoretical values exist: a cost value and a

current value. Current value is the average ‘value’ for real prices

and it is determinable by means of adding a market restraint

factor to previous cost value. This last one is, or should be, the

lower bound for real prices, while we are not still sure of what

influences the upper bound. Perhaps it is a maximum

determined in the basis of psychological and social instances on

‘use value’ (as this one was expressible in monetary terms, as

the greater monetary sacrifice to be supported for obtaining a

utility). It is not a case, in fact, that in monopoly value tends to

upper bound (if the supplier is a firm oriented to maximization

of profit) and that in perfect competition tends to lower bound,

so equalizing current value and cost (or labour) value. At least

this is our hypothesis (even provisional if the reader prefers) to

better conciliate all historical debate we talked about above.

· Having set this kind of economic value, now we must do

another step: the accounting evaluations. Till now we moved on

a positive plain, since now we are moving on a normative one.

· This difference of plains does not seem still well distinguished

in theory and in history of accounting. Traditional doctrines here

studied, out perhaps partly those of Alfieri and Zappa, look

inadequate. But the confusion between positive and normative

perhaps is more general. Even ‘financial standards’, either

national or international, give precepts but do not give doctrine

which they are derived from, nor in frameworks to say the truth.

Someone moves still in a full positive approach: ‘value is..., and

then evaluation has to be...’. Others understand normativeness as

the looking for the ‘one best way’ to evaluations. In matter of

evaluation we should better need of approximations that are

functionally linked to different purposes of knowledge.

Economic conception of value is of course of basic importance,

but it is not sufficient, if we do not know ‘why’ and ‘for whom’

we are creating accounting information with value

determinations.

· As an example, at the end of our historical survey (and at its top)

we saw that Besta’s and Zappa’s perspectives, generally

considered as in contraposition each other, do not disagreed onto

the ‘economic’ conception of value (the ‘reproduction costs’ of

Francesco Ferrara) but from this starting point arrived to

different conclusions in evaluations: ‘real’ value the first,

accepting historical costs as a practical simplification,

‘historical’ value the second. Furthermore, the second looks

much less interested in economic roots of accounting value. And

all that because the communicative goals of the two famous

authors were different. This relativity of value is not ours, of

course, but due to Italian economist Maffeo Pantaleoni above

quoted. We may provisionally get over this kind of problems

reducing accounting information in many respects: only for

financial reports, only for big firms having shares or bonds in

equity markets, only for investors’ decisions, and so on, as IFRS

do. But it is clear we are speaking of a very small segment of

possible determinations of values, and not always, even in this

restricted domain, homogeneity is granted.

· To this factor of complexity we add another one: the above

mentioned ‘holistic property of systems’. Accounting gives

value to single assets and liabilities and to entire entities as well.

Value of entity is different than the algebraic sum of assets and

liabilities. General principle of ‘prudence’ can however help to

get over this problem. Assets not having an its own destination

to market are, as a matter of fact, natural candidate to be

evaluated by the minimum or cost value; the value they add to

entity as full combination of factors, is not prudent to be

attributed to them than to other factors that, jointly to them,

generate cash flows. As we see the general privilege we granted

above to current value finds application for the entity as a

whole, rather than for single assets participating to production.

The aforesaid difference, not attributed to single factors, is

generally considered a distinct resource, goodwill if positive,

badwill if negative.

· A possible answer to these problems could arrive just from

Italian doctrine here studied. Final result of all was in fact the

creation of the ‘income system’ by Zappa (but in many respects

anticipated by Alfieri’s distinction between estimates and

pseudo-estimates). Going away from his too radical and too

prudent positions something useful still remains, that is the

distinction of wealth (‘patrimony’ more or less in Italian) in two

fundamental zones (for evaluation purposes):

• financial or intrinsic value, to which all assets and liabilities

that have an intrinsic value determinable according to the

principle set above, belong. They are, e.g., cash, credits, debts,

shares, bonds, lands and buildings hold for civil use, and so

on. They are the domain of the proper Alfieri’s estimates.

• economic or extrinsic value, to which all assets and liabilities

that need an extrinsic evaluation (because, out of the

business combination, they nearly have no market value)

belong. Their value depends on the fact a historical expense

(or rarely a revenue) was charged for it and on the fact it is

an investment ordered to future income or cash flow. They

are, e.g., capitalized costs for research and development

projects, plants and machinery, inventories, prepayments,

and so on. If it were not for the competence principle, we

probably would know nothing about them. They are, instead,

the domain of Alfieri’s so called pseudo-estimates.

Are we saying that financial values are to be evaluated according

to a current value criterion and economic values according to a his-

torical cost criterion? The answer has to be a little refined.

· Let us begin with first zone, then. Financial or intrinsic values

have a suitable value according to what we said in previous

point XVI. Not caring about the fact they participate to the

entire value of entity, they have anyway a their own value. If

their contribution to full value of entity would be lower than

their current value, in any case, they may be depreciated. But

ordinarily they have their value. Is this the current / market

value? It is, if an official market is build up or if it is easy to

have access to determination of such a number. But sometimes it

is not so easy. Then the current or market value, no more as a

‘read’ value, becomes an estimated or calculated value

considering the condition of the market and of the production as

above mentioned in point XVI. This is then the famous fair

value, defined but not explained by accounting standards. Fair

value then would be a calculated market value, whether the

market exists or not, good or preferable for all assets and

liabilities that have an intrinsic value (financial ‘patrimony’).

· Differently the conception is, instead, with second zone, the one

of above called economic values. Forcing them to an unreal fair

value can give only the illusion of homogeneity for evaluation

criteria. For said reasons for them we cannot determinate a value

separate from value of the entity. For them, then, historical cost

evaluation (‘child’ of the ‘parent’ theory of labour value) keeps

all its attraction.

· Someone could say this solution is too debtor of Italian tradition

(but it should be not a scandal in a paper whose subtitle is ‘The

Italian Case’) and effectively D’Ippolito’s variant of Zappa’s

system, the most similar to fair value and to present IFRS, still

flutters around this paper. We owe to him our fundamental

inspiration, and before him, to all classical Italian tradition. But,

hopefully, it does not seem for that a parochial solution. IFRS

divide generally and actually in two criteria of evaluation with a

preference accorded to fair value than to historical costs. But it

does not justify the reason of this distinction. Our solution, just

outlined in these short closing sentences, might have the

advantage to rationalize and give reason of an empirical fact

perhaps not still well interpreted. Why, for instance, plants and

machinery have a different criterion of evaluation from bonds?

Only a tradition, only a generally agreed practice? No reason? We

think a hidden reason exists and we have tried to explore it with

recourse to the spring of the problem, the nature of value itself.

· Finally IFRS answer to a very partial and definite set of

evaluation purposes. For all we have said before, changing ends

of accounting communication, evaluation criteria can or must

change as well. But we wanted to point out here just a noticeable

and clear exemplification of a broader way to afford this problem.

VALUE AND ACCOUNTING BETWEEN HISTORY AND THEORY. THE ITALIAN CASE

Documents

Transcript of VALUE AND ACCOUNTING BETWEEN HISTORY AND THEORY. THE ITALIAN CASE

THE VALUE IN FUNDAMENTAL ACCOUNTING INFORMATION

Accounting ii (written)

Elements of Accounting

ACCOUNTING SOFTWARE

Accounting Principles 1

Accounting Principle

accounting and the time value of money - CSULB

Management Accounting

stratefic accounting management

FINANCIAL ACCOUNTING

Reflections on the value concept in accounting

accounting ratios - TopperLearning

Islamic accounting

ITALIAN CREATIVITY BRIEF

Managerial accounting

MANAGERIAL ACCOUNTING - LibreTexts

Using Italian

Accounting with the Use of Accounting Software

Managerial accounting - SubFly

Financial Accounting - TaiLieu.VN