Episode #145: VeraSage Fellow Adrian Simmons, CPA, On Value

Adrian's Biography

Adrian enjoys the creativity behind helping each entrepreneur envision what motivates them, and being a part of bringing that to life. He is deeply convinced about the dynamism of the small business economy, and it’s ability to create value in the lives of owners, customers, team members, and communities — a value that matters not just for the short-term, but for the long-term.

Adrian graduated from Loyola University Maryland in 1999 with a bachelor’s degree in accounting, and then went on to complete his MBA with a concentration in finance in 2000. He began his career as an auditor for one of the Big Four public accounting firms, and transitioned to working with small business owners with his father in 2002, eventually purchasing the firm in 2014. He both speaks at conferences and writes pieces for the accounting profession, is a Practicing Fellow with the VeraSage Institute, and is happy to call Laurel his lifelong home.

In the final analysis, I find nothing as intellectually satisfying as the history of ideas.
Great theories, in economics as in other subjects, are path-dependent . . . ; that is, it is not possible to explain their occurrence without considering the corpus of received ideas which led to the development of that particular new theory. . . .
without the history of economics, economic theories just drop from the sky; you have to take them on faith. The moment you wish to judge a theory, you have to ask how they came to be produced in the first place and that is a question that can only be answered by the history of ideas. —Mark Blaug, Not Only an Economist

 

This interview with Adrian was inspired by a book he’s been reading: An Austrian Perspective on the History of Economic Thought Before Adam Smith (Vol I), and Classical Economics (Vol II), by Murray N. Rothbard.

Ron’s Questions

What got you interested in wanting to study the history of the theory of value?

What struck you about the early portions of Rothbard’s book?

The Greeks were attuned to the concept of scarcity, which makes us talk about tradeoffs, not solutions. The word “Economics,” is from the Greek oikonomia, meaning “household management.”

Democritus (a contemporary of Socrates) [c.460-c.370BC], had three important ideas:

  1. founder of subjective theory of value!
  2. rudimentary notion of time preference (prefer a good today rather than tomorrow) “it is not sure whether the young man will ever attain old age; hence, the good on hand is superior to the one still to come.”
  3. advocated private property (thou shall not steal)

Did that strike you?

Rothbard points out that leaving out religious thought from the history of economics would disastrously skew our understanding of how these ideas came about. After all, the early economists called themselves “moral philosophers,” not economists. You can’t separate ethics and morality from economics, can you?

Business is about humans, perhaps we should have anthropologists on our teams. Ed Kless says, “Business ain’t science.” The history of the theory of value is long, and includes many errors. Why do you think cost-plus pricing is so endemic in the business world, even though it’s a flawed theory?

Accountants have foisted that idea that debits equal credits. But exchanges take place because of the inequality of the items being traded, and because we don’t book the customers’ profit from the exchange, in the real world debits don’t equal credits!

Do you have a specific metaphor to explain the win-win nature of voluntary exchanges?

What’s your response to the argument that “value pricing is hard”?

What is the number issue facing the CPA profession in your opinion?

Ed’s Questions

The three laws of thought: Law of identity; Law of non-contradiction; and the Law of the excluded middle.

You would think most people in business today could grasp these laws, but how often do our customers in business ask for things that are contradictory, and why don’t we professionals call them out on it? Any thoughts on that?

The notion of causality is part of natural law. The confusion between causality and correlation is endemic, however (wet streets don’t cause rain). Do you see this misunderstanding in the business world or among your customers?

Economists, media, commentators, etc., all seem to miss the vital role of the entrepreneur in the economy. Comment on that for us.

Comment

Ed Kless

Ed Kless joined Sage in July of 2003 and is currently the senior director of partner development and strategy. He develops and delivers curriculum for Sage business partners on the art and practice of small business consulting. Courses include: Sage Consulting Academy, Business Strategy and Customer Experience Workshops. Ed is the author of The Soul of Enterprise: Dialogues on Business in the Knowledge Economy, a compendium of a few of the episodes of his VoiceAmerica talk-show The Soul of Enterprise: Business in the Knowledge Economy with Ron Baker, founder of the VeraSage Institute where Ed is also a senior fellow.