Richard Macve

Accounting and the examination: A genealogy of disciplinary power☆

Historical elaboration of Foucault’s concept of ‘power-knowledge” can explain both the late-medieval developments in accounting technology and why the near-universal adoption of a discourse of accountancy is delayed until the nineteenth century. It is the disciplinary techniques of elite medieval educational institutions - the new universities and their examinations -that generate new power-knowledge relations. These techniques embody forms of textual rewriting (including the new ‘alphanumeric” system) from which the accounting advances are produced and “control” is formalised. “Double-entry” is an aspect of these rewritings, linked also to the new writing and rewritings of money, especially the bill of exchange. By the eighteenth century accounting technologies are feeding back in a general way into educational practice (e.g. in the deployment of “book-keeping” on pupils) and this culminates in the introduction of the written examination and the mathematical mark. A new regime of “objective” evaluation of total populations, made up of individually “calculable” subjects, is thereby engendered and then extended - apparently tirst in the U.S. railroads - into modern comprehensive management and financial accounting systems (systems of “accountability” embodying Foucault’s “reciprocal hierarchical observation” and “normalising judgement”), while written examinations become used to legitimate the newly autonomous pro. fession of accountancy.

The genesis of accountability: The west point connections

Abstract We focus on the genesis of the new managerialism in U.S. business and factories in the nineteenth century and re-examine the published histories of the U.S. armories and the railroads. We trace the influence in both arenas of the engineering/military graduates from the U.S. Military Academy at West Point, who represent and reproduce the meticulous “grammatocentric” and “panoptic” system for human accountability introduced there in the years after 1817. Our overall concern is to re-analyse apparently economic-rational changes in accounting and accountability in a wider frame which explains their development as aspects of a general shift in power-knowledge relations—a shift which Foucault characterised as the development of disciplinary power and which we argue originated in elite educational institutions. We propose further examination (or re-examination) of the original accounting and administrative records relating to the armories and the railroads in order to establish the precise process of historical change.

Managing It All By numbers: A Review of Johnson & Kaplan's ‘Relevance Lost’

This review article sets out the Johnson and Kaplan diagnosis of the ‘problem’ with modern US cost accounting and management control systems (‘MAS’) and challenges both their historical analysis and their proposed remedy. It traces the genesis of the knowledge-based disciplinary power of managerialism from the 1830s in the US and contrasts the development of the US/UK focus of MAS on ‘managing by the numbers’, with the different way that knowledge-power has been used by, and has interacted with, managerialism in Japan. It argues that the problems to be confronted with MAS are inherent in the historical genesis of such systems and that it is the behavioural limitations in the way organisations deploy MAS that most need attention. In addition the interrelationships of control between the accounting measurements that create visibility within and without the organisation require that greater attention be addressed to the technical limitations of financial accounting. In conclusion it is suggested that the differing alignments of knowledge-based expertise and disciplinary practices of management control that have developed in the US/UK and in Japan reflect deeper differences in their cultural history.

Reappraising the Genesis of Managerialism

In a 1977 publication Alfred Chandler singled out the Springfield Armory as the site where single‐unit management was pioneered in the United States, crediting Superintendent Roswell Lee (1815‐1833) with establishing a first “managerial” approach to work discipline and labour accounting. However, as economic breakthrough came only in 1841/2, it has since been argued that Lee′s role has been overestimated. Re‐examines archival evidence to show that: the changes of 1842 at Springfield were not due to external economic pressures, but to pressure exerted by West Point graduates in the Ordnance Department; Lee, as the dominant arms manufacturer in the 1820s, was not “held back” by economic factors from implementing any changes he desired; and his system of work organization was never even potentially managerial, with his accounting system in particular having been fundamentally misinterpreted. The evidence reinforces the case for viewing the invention of modern business and managerialism as primarily a discipl...

KNOWING MORE AS KNOWING LESS? ALTERNATIVE HISTORIES OF COST AND MANAGEMENT ACCOUNTING IN THE U.S. AND THE U.K.

In attempting to understand the genesis and scope of modern cost and management accounting systems, accounting historians adopting what has been labeled a “Foucauldian” approach have been rewriting...

Qualitative Research: Experiences in Using Semi-Structured Interviews

Publisher Summary The chapter discusses “real-life” experiences in using semi-structured interviews in qualitative research. The reasons for using semi-structured interviews, the design and development of the questionnaire used, the process of interviewing and choice of interviewees, and some of the problems encountered and overcome are presented in the chapter. The chapter describes the process of conducting the interviews that includes writing up the interviews and other activities, and explores additional problems in interviewing abroad. The chapter first covers a U.K. study and using it as the foundation, draws some contrasts from an EU study. The chapter concludes that the use of semi-structured interviews provides a valuable means to allow researchers to explore their horizons.

Coals from Newcastle: an evaluation of alternative frameworks for interpreting the development of cost and management accounting in Northeast coal mining during the British Industrial Revolution

Abstract How have the power and organisational effects of modern accounting systems developed? What is the appropriate theoretical framework for interpreting that development? Researchers in the ‘Neoclassical’ tradition of ‘economic rationalism’ focus on tracing how efficiently developments in accounting techniques, from the British Industrial Revolution (BIR) to the present, have been engineered to match the demands for new forms of rational economic management of emergent big business, while those adopting a ‘Foucauldian’ approach emphasise how it was that the emergence of new practices and knowledge-based discourses for calculating human performance, and for establishing new forms of human accountability, engendered the creation of the modern kind of business organisations through ‘disciplinary power’. To evaluate the relative merits of these two frameworks, we re-examine the primary archival evidence about managerial practices in the Northeast BIR coal mines. We focus on two unique features—the cadre of professional managers/consultants (the ‘viewers’) and the form of direct labour contract—since comparable features have been held to be significant in the rational economic development of sophisticated cost and management accounting techniques in other industries. We find that, while the records include sophisticated valuations of mines and calculations of technological efficiency, surprisingly absent, as compared with ‘modern’ accounting and managerialism, is any detailed measurement of human performance for setting piece rates and controlling production. Although our particular findings here could be explained within both the ‘Neoclassical’ and ‘Foucauldian’ theoretical frameworks, their consistency with the evidence being obtained from other historical sites further questions the adequacy of ‘economic rationalism’ to explain fully the genesis of modern management and the development of accountings modern power.

The development of life assurance accounting and regulation in the UK: reflections on recent proposals for accounting change

At its beginnings in the late sixteenth century, UK life insurance was originally short-term, often one-year, insurance. Its development into a long-term investment medium exposed a tension between the emerging commercial accountancy conventions for stating financial position and results, based on past transactions, and the forward-looking,actuarial approach needed for the valuation of the business for solvency verification and for decisions about distributions. It is argued here that the first Companies Act in 1844 included insurance companies (unlike banks) with the generality of companies, and subjected them to the same accounting and auditing requirements, by default, as there was not yet sufficient confidence in the techniques and standing of actuaries to rely on specialist actuarial valuations. But the resulting confusion over how to present life insurance company accounts led to gradual recognition of the special nature of the public interest in insurance companies, and the nature of the accounting...

The costs and benefits of increased accounting regulation: a case study of Lloyd's of London

Abstract While a valuable literature exists on theoretical considerations in cost-benefit analysis (cba) of accounting regulation, and although the regulators themselves acknowledge the need for cost-benefit appraisal of their work, empirical analysis of the costs and benefits of changes in accounting regulation is almost non-existent. This paper attempts such an analysis for a step change in accounting and audit regulation—at Lloyds between 1982 and 1985. It aims both to advance the cba methodology, and to inform debate about the evolution of the Lloyds market. While the estimates do not show whether the changes produced an optimal level or form of Lloyds regulation, they do suggest that, comparing changes, the extra benefits exceeded the extra costs—whether the chosen accounting unit is a private one—Lloyds Names—or a social one.

Principals and agents in crisis: reforms of accounting and audit at Lloyd’s, 1982-1986:

The 1970s and early 1980s saw significant structural change in the insurance market at Lloyd’s of London and it became increasingly difficult for providers of the collateral against which insurance was written to monitor the activities of those responsible for writing the insurance risks and determining the distribution of returns. Agency theory analyses the incentives for principals and agents to develop more formal and rigorous arrangements for accounting and audit when agents become more remote from principals. However, when we examine the historical evidence, we find little sign of such development at Lloyd’s during this period. We explore a number of institutional characteristics of the Lloyd’s market which acted to constrain adaptation until external regulatory pressure was brought to bear. Conclusions are drawn on the limited role of agency theory in guiding policymakers and regulators in financial markets.