For each of the assigned readings for the week (not including the Critical Thinking… text) identify one causal claim made by the author(s) and evaluate the validity or merits of that claim. Are you able to identify alternative explanations for the phenomenon in question?
Bakker and Korten causal claim evaluation
Bakker casual claim that accountant would save the world
Bakker based his discussion on a casual claim that accountant would save the world. According to Bakker, the world is experiencing serious social and economic issues that it has the potential to solve effectively, only if suitable accounting rules are put in place. Bakker cited the aspect of hunger in the world. According to him, the world has enough food to feed every hungry individual in the globe, despite this, a child dies of hunger every six seconds in the world simply due to poor logistics put in place to ensure food supplies reach those who need it. According to Bakker, he once worked with the world food program (WFP) to develop a program that ensures the WFP reaches victims of natural disasters, famine, and drought. Although the program worked very effectively, there was no capturing of financial reports. The company was building social capita that based on the current accounting laws, it was not necessary to inform the stakeholders about it. This situation is replicated in many other companies where the companies are required to show what they earn in terms of revenue but not how they earned it, especially with regard to natural and social resources used to enhance the business (1). Bakker argues that most companies use social capital and natural capital to enhance their money generating activity. However, none of them is held accountable for the same. This makes most organization to enjoy high profits without paying back to the natural and social capital they used to make the money. This creates economic imbalance especially when social and natural capital fail to get their share of returns. Bakker’s argument is highly viable. The majority of organizations tend to use social resources without any accountability. Even those that are socially responsible, they do not give back equivalent to what they use. There is a need to change accountability rules and systems to ensure each organization is held accountable for natural and social capitals used in production, before counting their profit. An alternative way would be controlling the amount of social and natural capital an organization can use. However, this is quite impossible in a capitalist world since it is likely to limit the return. This makes Bakker suggest highly powerful in ensuring social and natural capital are accounted for in any accounting process.
Korten a casual claim that the inflation and deflation
In “The Money Game” Korten, makes a casual claim that the inflation and deflation happening in the stock market can sometimes result in huge losses, amounting to enough money that can feed the entire world for about three years. However, this in the real sense cannot amount into even a grain of rice since the loss is measured based on assets value, despite there being no physical change in the asset appearance that would make a person consider it less valuable (2). This claim is valid in that, the stock value in the exchange market is determined by a number of factors, with the physical appearance of these assets not being one of them. For instance, the world market has already lost a huge amount of money following the spread of coronavirus in China and other parts of the world. Anything that would initiate massive sale of stock from a certain company resulting to increase in stock supply results to oversupply, while the demand remains the same or even decrease, this based on the law of supply and demand results to decline in prices, which result to general deflation of the stock value. As a result, the investors end up losing money at a very high rate. The alternative explanation for the phenomenon is that similarly, inflation can take place when the majority seeks to purchase stock from a single company for one reason or the other. This can result in the instantaneous growth of investors’ wealth. However, unless one makes a point of selling the shares to make tangible money, that wealth is just documented in the system. Such growth and deflation of wealth happen with little accountability and with little individual control. Their effects on the society are thus immeasurable.
- Bakker P. Accountants will save the world. Harvard Business Review. 2013 Mar 05 [Cited 2020 Feb 27]. Available from: https://hbr.org/2013/03/accountants-will-save-the-worl
- Korten DC. When corporations rule the world. Oakland: Berrett-Koehler Publishers, Inc; 2013