How Should People Be Governed?

 NOTE:  This post is a self-contained description of moral accounting, intended as the basis for interviews with experts outside accounting, especially those focused on philosophy, religion, political ideology, or culture.  Those who want more background (including a more scholarly justification of my claims) can read this. Please contact Robert Bloomfield at Cornell University if you are interested in discussing this.  A companion piece about the practical uses of moral accounting is available here, intended as the basis for interviews, with activists, accountants, consultants, and organizational leaders.

How should people be governed?  This central moral question has been addressed in philosophy, theology, and politics and many other fields, yielding much controversy and many conflicting answers.  In this post, I present principles of moral governance, derived from accounting, that I claim will be supportable by anyone, regardless of their philosophy, religion, political ideology, or culture.  I am testing this claim by interviewing a highly diverse set of thoughtful and knowledgeable people, who are willing to read this short document and talk with me about four questions, following up on each and otherwise letting the conversation take its course:

• Is the moral accounting framework as a whole incompatible with any moral perspective you hold or know well?  Why or why not?
• Do any individual aspects of moral accounting’s framework and principles concern you for any reason? Why or why not?
• Were any of the claims or perspectives in this summary particularly surprising or questionable?  Why?
• What research would you suggest I conduct to further develop this framework for moral accounting and the principles of moral governance?

Basic Framework of Moral Accounting

Definition and Goals of Moral Accounting

Moral accounting offers principles of governance drawn not from philosophy, theology or politics, but from traditional accounting itself, only slightly modified.  Accounting dates back at least 10,000 years, when Babylonians began using tokens as tax receipts.  Since then, it has been used to hold people accountable for their obligations across a wide range of cultures, to foster trust when stakes are high and interests are in conflict.  Tested and refined through time and battle, accounting principles are as universal as any social principles could hope to be.

Accounting systems have expanded their scope dramatically over the last century, and are used not just to hold people accountable for their financial obligations, but to shape their behavior and improve their performance—in short, to govern them.  My project, which I call moral accounting, refines accounting principles one more time, to help evaluate whether people are governed in a moral way, and to suggest improvements.

Stewardship & Governance

Moral accounting treats everyone as a steward acting on behalf of the societies to which they belong.  Like a financial steward, social stewards are entrusted with assets (powers), which they are obligated to use wisely on behalf of their employer (their societies).  Good moral performance is defined by good stewardship, and is evaluated by asking familiar accounting questions:  Did you use your assets wisely?  Did you live up to your obligations?  Are you ensuring you will be able to live up to them in the future?  The biggest difference between traditional and moral accounting is the scope of obligations included in a steward’s books.  Traditional books recognize only obligations that are enforced effectively enough that the steward has little or no option to ignore them.  Moral books recognize all obligations, even if no one has the will or power to enforce them.

Moral accounting identifies governance as a special class of stewardship, in which assets are used to shape a steward’s moral performance.  Governance has two facets: controlling others’ performance by making some things harder and others easier (control), and holding parties accountable for their performance (accountability).  Accountability includes rewards and punishments for past behavior, often publicized in advance to motivate better performance, as well as reports that inform those in a position to govern, and changes to controls in response to past performance.

Governments govern when they implement and enforce laws and regulations, impose taxes on cigarettes and alcohol, give tax breaks to people who have children, or post street signs warning of dangerous curves.  But a full analysis of governance requires examining the complete system of all those who govern.  Assume that a society holds that people have a moral obligation not to drive after drinking alcohol.  Government can punish those who do so, but they can also punish those who sell them cars and alcohol, who in turn may impose controls that make it harder to drive after drinking, like installing breathalyzers into ignition systems and refusing to serve anyone too much alcohol.  Friends and family members can make it easier to avoid drunk driving by serving as designated drivers, confiscating car keys, and showing visible disapproval as a form of punishment.

Methods and Scope of Moral Accounting

Moral accounting is not purely theoretical; it is a practical approach to improving governance.  The practice of moral accounting involves documenting the (often quite complex) networks of governors and governance systems, evaluating whether they are living up to moral principles of governance, and proposing improvements.

Evaluating the morality of governance requires understanding the moral aspirations of the society in which parties are governed.  A society is defined as a group of people who share a common mission.  Most people are members of many nested, overlapping and shifting societies:  a college student is a member of their family, their class cohort, their college, their city, state, Facebook groups, and so on.  Each of these is a society, and membership in each entails some moral powers and obligations. The moral accountant chooses the appropriate set of societies as the focus of their analysis.  Because different societies can have different moral aspirations, the evaluation of governance must always be qualified by the understanding that it applies to that particular society.

A society’s moral aspirations are characterized as answers to two questions:  Who should be recognized as having what powers, and what obligations should come with that power?  By focusing on aspirations, rather than current practices (e.g., who does have what powers, what obligations do they live up to), moral accounting avoids basing its analysis on what a society views as immoral but fails to change because governance is difficult.

The scope of moral accounting is limited in several ways.  First, moral accounting does not evaluate the acceptability of the society’s moral aspirations.  If a society not only treats wives as being slaves of their husbands, but aspires to that arrangement, this is simply treated as the starting point for the analysis of governance. Judging the morality of that arrangement is left to others. This scope limitation is a primary reason the principles of governance can be universal.

Second, moral accounting does not evaluate the morality of stewards. Their moral performance is used only as evidence in the evaluation of governance.  For example, if many stewards fail to live up to an obligation, it is evidence that governance is not very effective in enforcing that obligation.

Finally, moral accounting does not evaluate the morality of those who govern, but only how governance operates and could be improved.  This simplifies the evaluation by eliminating any consideration of governors’ intent or character.  It also reflects the reality that governance is often entirely unintentional—a yawn might be involuntary, but still governs by encouraging others to yawn. Much governance is also accomplished through systems that long outlive their intent.  Americans started tipping servers at restaurants in the mid-1800s, for a mix of reasons still debated by historians.  But those reasons have no bearing on how today’s approach to governing servers could be made more moral.

Seven Principles of Governance

In this section I briefly describe each principle of governance.  All are derived from accounting, though most will be familiar, as they are quite similar to principles espoused by many civic and religious leaders and organizations.  As you read the summary of each principle, please think about whether you agree with the following statement, in light of your own views about morality:

• If this principle can be fulfilled more completely without sacrificing fulfillment of another principle, governance becomes more moral.

If the answer is “no”, the principle is flawed as a moral aspiration.  The underlined qualification is crucial because principles often come into conflict.

When you have read all of the principles, please think about whether you agree with this statement:

• If all principles were fulfilled completely in a society with perfect moral aspirations, governance would be perfectly moral.

If the answer is “no”, then the system is either incomplete or incompatible with your own moral views.  The underlined qualification is crucial because moral accounting does not evaluate the morality of a society’s moral aspirations, so it can only seek to make governance more moral in the eyes of a particular society.

How should governance affect society? 

The Effectiveness Principle states that governance should improve the moral performance of a society’s members, ensuring that powers are used morally and obligations are upheld.  Thus, if two forms of governance differ only in effectiveness (e.g., the status quo vs. a revision), the one that is more effective in improving moral performance is more moral.

Who should be held accountable?

The Entity Principle identifies the types of parties that should be held accountable, and what they should and should not be held accountable for.

Only accountable entities should be held accountable.  An accountable entity is defined as a party or group of parties connected by an internal system of governance.  Every sentient being is an accountable entity because (by definition) each one engages in some degree of self-governance.  The Smith Family, Apple Corporation, and the European Union are all accountable entities.

The group of “all left-handed people” is not an accountable entity because they have no internal system of governance. If left-handed people began encouraging one another to perform unusually well or badly, those who engage in such encouragement can be held accountable for that performance among others in their group.  Otherwise, however, one person couldn’t be held accountable for the behavior of another simply because both are left-handed.

Every accountable entity should be held accountable for their own moral performance and the performance of those they govern, to the extent their governance shaped the moral performance in question. Thus, in most family-based societies a parent should be held accountable for some of their children’s behavior, a CEO for their employee’s behavior, and so on.  A company’s CEO should also be held accountable for many aspects of a company’s performance; its janitor should be held accountable for only a very narrow scope of performance, if any.

On what basis should performance be evaluated?

The Bookkeeping Principle states that an accountable entity’s moral performance should be evaluated on the basis of their moral books.  Because moral accounting treats everyone as a steward acting on behalf of society, moral bookkeeping is quite similar to the traditional bookkeeping used for stewards.  Stewards are entrusted with assets, which give them power, and those assets are balanced by obligations.  Assets include rights to wealth and property, granted by society, capacities endowed by nature and training, authorities to decide and direct, and the power to influence.  Obligations include specific liabilities to perform in certain ways, restrictions against performing in certain ways, and debts to society (often for past misbehavior).  Assets and obligations must always be in perfect balance, so any assets that remain after all other obligations are accounted for give rise to a general obligation to use them on behalf of society.

Some implications of the Bookkeeping Principle are worth special emphasis.  Because assets and obligations are always in perfect balance, those with more assets always have more obligations.  Thus, the Bookkeeping Principle is like the familiar Spider-Man Principle (borrowed from Voltaire):  Those with greater power have greater obligations.

If someone comes into a sudden gain of power, or is relieved of an obligation, their books will be balanced by adding to their general obligations to society.  For example, imagine that someone discovers treasure in their back yard, or finds that the child whose tuition they promised to pay has won a scholarship.  Most societies will give them considerable freedom to choose how to fulfill the resulting general obligation to society, including improving their own well-being.  However, few societies would see it as moral for them to buy up scarce life-saving medicine and burn it in their driveway.

It is also possible for someone to experience sudden loss of power, or the sudden addition of an obligation.  For example, they may have promised to drive a neighbor’s child to the park, only to find that their car will not start (loss of an asset) or that their mother needs to be driven to the hospital (a new obligation).  In such cases, the books must be reorganized, much like they are in bankruptcy:  the obligations are prioritized from most to least important, and those of lowest priority are cancelled to the extent needed to balance the books, because they are impossible to fulfill.  The flip-side of the Spider-Man Principle is that one cannot hold someone accountable for failing to accomplish the impossible.

Who determines the powers and obligations of the governed?

The Social Recognition Principle states that every entity’s assets and obligations are recognized (entered into their books) as determined by the societies of which they are a member.  Entities do not decide for themselves what powers society recognizes them as having, or what they owe to others, or what powers others have over them or owe to them.

The overlapping nature of societies poses some practical challenges in addressing conflicting assets and obligations.  For example, one society may view an animal as vermin, giving everyone an obligation to kill them on sight, while another views them as sacred, giving everyone an obligation to treat them with care.  What then are the obligations of a merchant who travels from one society to the other?  Such interaction gives rise to a “federalized” society that makes such determinations.  The Social Recognition Principle does not spell out how this society should handle such conflicts, but most federalized societies tend to defer to their component societies as much as possible, obligating visitors and newcomers to defer to local morality, and overturning local recognition decisions only in cases of extensive cross-societal interaction and severe incompatibility.

How should governance be tied to performance?

The Proportionality Principle states that governance should be suited, in both nature and extent, to the moral performance it is governing.  The Principle expands on the familiar maxim to let the punishment fit the crime.  Accountability for past behavior, which can include not only punishment, but rewards and changes to controls, should be proportional to the extent of the moral performance it is addressing. To the extent accountability involves changing controls, it should be tailored to the nature and severity of performance (e.g., installing breathalyzers to prevent drunk driving, rather than confiscating cars).

What qualities should governance reflect? 

The Judgment Principle states that people should be governed with knowledge, competence, diligence, neutrality, and courage.  The first three are familiar elements of the professional standards to which accountants and other professionals are universally held.  Neutrality is sometimes excluded for professionals who advocate on behalf of their client, while courage is emphasized mostly for those who must make decisions against the interests of those with power to retaliate.  But moral governance requires neutrality and courage because those who govern do so on behalf of society, not for the benefit of themselves or any other specific parties.

Who should govern? 

The Subsidiarity Principle states that a party should govern only to the extent that (1) they cannot avoid doing so, or (2) their governance upholds the complete set of Principles more completely than would otherwise occur.

Requirement (1) is essential because governance is often unavoidable.  For example, when someone makes an inappropriate remark in front of you, any response can be viewed as holding the speaker accountable—a smile is a reward, a frown is a punishment, and a neutral response is the absence of a reward or punishment.  Even “no control” and “no accountability” are forms of governance.

Requirement (2) is essential because typically many parties have the power to govern.  For example, a child misbehaving at a public park could be held accountable by the people who were harmed, the child’s parents, bystanders, a park employee, or a police officer.  If no one governs the child, the child is left to self-govern; self-governance is always unavoidable.

To live up to the Subsidiarity Principle, each party must govern exactly to the extent that they fulfill all six remaining principles of governance more completely than if they let someone else govern.  In practice, this often means that governance should be decentralized, and specifically left in the hands of local parties closest in space, time and relationship, unless the benefits of proximity are outweighed by the benefits of the more distant parties’ capacities.