How did the successive stages of capitalism change the UK's accounting Essay - 1

How did the successive stages of capitalism change the UK's accounting and financial reporting processes - Essay Example The other is that which supplies his immediate consumption." (Smith, 1776, Web) Revenue in this regard relates to surplus economic production as opposed mere subsistence, but also represents a larger, rational pursuit of this surplus in profit. Yet, it is important to note that Adam Smith does not write specifically of â€Å"capitalism† as a system, but does define the importance of capital in economic relations critically in his analysis. (Novara et al., 2003) In his text â€Å"On Wages† (1817), David Ricardo writes that, "Capital is that part of the wealth of a country which is employed in production, and consists of food, clothing, tools, raw materials, machinery, etc. necessary to give effect to labour." (Ricardo, 1817, Web) Yet, it is Marx who develops capitalism as a system theoretically in his works such as â€Å"Das Kapital† (1867) and others which would inaugurate and define nearly all later intellectual treatment of the subject. (Bryer, 2005) I. A Defin ition of Capitalism In "Wage Labour and Capital" (1849) Marx initiates a fundamental definition of capital: "Capital consists of raw materials, instruments of labour and means of subsistence of all kinds, which are utilized in order to produce new raw materials, new instruments of labour and new means of subsistence... ... ystems, trade, and labor exchanges are found from the early stages of human development historically, but Sombart points to the use of accounting standards as an essential characteristic of capitalism. Through this interpretation, historians can search primary source materials from various societies to determine the degree that accounting records were kept. Where systems of agriculture and early industry involved work relations and paid labor, the development of capitalism historically in the society is evident. Similarly, a community monetary system is essential for the development of marketplace capitalism, as well as the exchange of surpluses in supply and labor. As Basil Yamey writes in "Accounting and the Rise of Capitalism" (1964): "Werner Sombart was largely responsible for the broad thesis that systematic of scientific accounting, identified with the double-entry system, played an important part in releasing, activating or accentuating the 'rationalistic pursuit of profits,' and essential of the capitalist spirit." (Winjum, 1971) III. The Pre-Capitalist Era (4000 BC to 1000AD) In the pre-capitalist era, money systems allowed agriculturalists to trade surplus products in a manner that encouraged the growth of capitalism and forms the basis for economic exchange. Some theorists relate capitalism to a system of political values, as the theory of capitalism developed from within the political context of the 18th Century related to the onset of democracy, liberalism, and modernism historically. This creates the question of whether the political definition of capitalism can be legitimately applied to early commercial, industrial, and agricultural trading activity in England in the pre-historical or feudal period. The development of artisan groups and skilled labor