This is my first book published in 1982. In order to develop a mathematical model of the stocks and flows of property inside a firm (part of the research program of developing the mathematical theory of property), I first had to give a math model of the usual double-entry accounting for the stocks and flows of the scalar value, and then generalize it to vectors of property rights. The mathematical treatment of even ordinary double-entry bookkeeping turned out to be new, and now three decades later, it is still unknown in the parallel universe of the accounting profession. In any case, all this was worked out in god-awful detail in this book. The essence of the mathematical treatment can be discerned from a couple of papers on this site or a couple of blog postings in the Math Blog.

There are some other points of interest. It was shown that the usual Miller-Modigliani formulas for valuing a corporation can be expressed in a form: value = net economic book value + goodwill. The point is that there is no present property right to force the other parties to make the assumed contracts in the future, so the “goodwill” part of the value is not the value of any present property right. The same conceptual flaw runs right through conventional capital theory. The fact that “goodwill” does represent a present property right is also developed in other papers on this site and in the Main Blog.

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