The Imagined Dichotomy of Accounting versus Economic Income Concepts

Human beings tend to see the world through the lens of dichotomous thinking. Accounting researchers are no exception and are particularly partial to the accounting versus economic income dichotomy. Although the authors of the main paper are more nuanced than usual, their arguments are centered around it nonetheless.In this companion paper, I would like to show that masters of neoclassical economics in the twentieth century, Irving Fisher and John Hicks in particular, had quite different ideas on income from what recent accounting “reformers” advocate. Accordingly, what economic monists and fair value advocates assert is not tenable even if we take neoclassical economics as a given framework. I am confining myself to the neoclassical equilibrium world throughout because the conventional dichotomy would become all the more questionable if it were shown to be untenable even under a neoclassical framework.However, my adopted approach is wanting in exploring a two-way interaction between accounting and economics, to which the main article has made a noteworthy contribution.It is time to abandon a curious obsession with the dichotomy and explore a fascinating link between accounting and economics through the now half-forgotten Austrians and other Continental Europeans, whether you embrace neoclassical economics or not.