Various remedies for today’s accounting and reporting anomalies have been proposed--many of them tough and sensible--but to date, none has really recognized or proposed to deal with the underlying structural source of the problem: that the kind of wealth everyone is most interested in is ultimately just a matter of perceptions.

In today’s economy, the reported earnings and dividends that come out of the accounting process are in the final analysis no more than symbols or tokens.

The form of “value” that’s of the most intense interest is stock prices. And these are the cumulative and highly amplified results of layer upon layer of perception, mood, and estimation of the perceptions and moods of other investors, all circulating endlessly though a feedback loop, with the net effect that highs as well as lows can come out exaggerated far beyond any practical or sensible explanation.

Consider the case of Xerox. How it chose to define revenue was actually not all that greatly at variance with the methods other contemporary companies have adopted to present themselves in a favorable light to investors. (And $10 million SEC fine or no fine, the company still has not outright admitted it did anything wrong.)

The effects of both the accounting gimmickry and its aftermath have been the stuff of high drama.

In 1996, Xerox shares sold for $20. Then in 1997, the company began tweaking its accounting. By 1999, share prices had tripled in value, to $60.

Given the number of Xerox shares outstanding, this produced a mind-boggling amount of “wealth.” But was any of it real?

The question applies with equal validity to a subsequent drop in Xerox’s share price, which plummeted down below $4--a 90% loss in value--the very next year.

The proposition that this much actual wealth and value could be either created or lost over such a short period of time, by a large and established company, through the manufacture and sale of familiar durable goods, for which no great technological breakthrough had suddenly created or eliminated a demand, simply defies common sense.

Xerox’s case is by no means an isolated anomaly in the contemporary economy.

The perceptions and, ultimately, the mob psychology of the stock market have become far and away CEOs’ most important success barometer and money source, eclipsing sales revenues and literal profits not only for the corporation, but also for the top dogs’ own personal finances, as compensation becomes ever more tightly bound to stock options and “performance” on the trading floor.

Accordingly, the most significant component of business has become the attempt to orchestrate the perceptions and images and moods on which stock trading is based--making every business, ultimately, a variant of show business.

In this environment, the real reason things like earnings and dividends can be decoupled from objective reality is that nobody actually cares all that much about them: they have become mere props, to be manipulated as the impresarios see fit.

Various proposals now on the table can make the props a bit more reliable.  But nothing currently under discussion in the public realm has the potential to cure the institutionalized madness (or to use a more precise term, dissociation) in whose service the props are employed.