Accounting and Economics LO27876

From: AM de Lange (amdelange@gold.up.ac.za)
Date: 02/19/02


Replying to LO27854 --

Dear Organlearners,

Michael Bremer < CGCMIke@aol.com > writes:

>Toyota does spend less on accounting related
>information than Ford or most other companies.
>Their accounting system is part of an overall
>system(sy) and surrounding(su), as At vividly
>describes in an earlier message. Dr. Deming
>(whom I spent time with on several occasions)
>and Russ Ackoff, among others, also talk about
>how every system is part of another system.
>When we make changes to one system we risk
>making another worse......we could also unknowingly
>make another one better.

Greetings dear Michael,

This SY/SU distinction is our recognition of the 7Es (seven essentialities
of creaivity) in our Systems Thinking at the basic level. Jan Smuts, for
example, would have said that the system SY is the whole while its field
is the surrounding systems all together as one complex system SU. For him
wholeness is this "whole+field".

For me this SU/SY distinction is rather sureness in which the system SY
acquires its "identity" in terms of the "categoricity" of its
surroundings. Wholeness is rather the interacting pattern SY*SU(1)*SU(2)
where SU(1) and SU(2) are two systems form the surroundings SU. What is
clear to me, whether we look at wholeness as Smuts did or as I do, both
Deming and Ackhoff are very sensitive to wholeness.

Should we be ignorant to the 7Es, then unknowingly we will influence such
systems in the surroundings more adversely rather than for the better.
Should we be sensitive to the 7Es and try to honour them, then even not
knowing all what will happen, more for better than for worse will happen.

The other five remaining 7Es can also be traced in this SY/SU distinction.
The one which I do want to mention, is openness. Many fellow learners
think of openness as either open or closed. It is not. It is a set of
states progressing from "isolated" to completely open. It is the boundary
wall of the SY which have to deal with this set of states.

All living systems are partially open by isolating them from ceratin
things and opening them for other things. For example, our skin (except
for its sweat glands) prevents water leaving our body, or water entering
it. A cactus in the desert has several mechanisms to prvent a loss of
water. It has few stomata ("sweat glands"), a heavy coat of wax on its
epidermis and a body shape with as little surface as possible.

The biggest problem I think in accounting is the assumption that monetary
quantities are conserved. By this I mean the assumption:-
"net change" = "all which come in" - "all which go out".

In all living systems it is not the case for all quantities. For example,
the "total energy" E of SU/SY is conserved, but the "free energy" F like
the entropy S is NOT conserved. In other words, the books cannot balance
for F. Trying to balance the books would amount to crooking.

Should we have in economics any kind of money akin to F rather than E (and
I strongly suspect it), then we can actually fool ourselves thinking it is
better than what is actually the case.

>I am unaware of the source of the information
>(referenced to Andrew), that 4/5 of all people live
>on less than $2 US a day. That is not true of the
>places that I have worked and visited as I traveled
>all over the globe. It's an interesting statistic however.
>And ugly, but not quite as ugly as it sounds. When
>the local population does have limited funds, the local
>prices tend to be less than prices charged in New York,

Your observation about prices holds in many cities, but it is often the
other way around in rural areas. When it is like that in the cities too,
then it is late in the night for the country

It is one thing to look at numbers. It is another thing to look at the
people and see what they actually eat and wear. It is a third thing to
look how they get ripped off because they cannot make calculations or
comparisons. What a complex mess does a lack of learning not cause!

With care and best wishes

-- 

At de Lange <amdelange@gold.up.ac.za> Snailmail: A M de Lange Gold Fields Computer Centre Faculty of Science - University of Pretoria Pretoria 0001 - Rep of South Africa

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