A political economy of the history of management accounting in the USA

What is it about?

This is a detailed critique of Johnson & Kaplan's Relevance Lost, (Johnson, H.T. & Kaplan, R.S., Relevance Lost: The Rise and Fall of Management Accounting (Boston, MA: Harvard Business School Press, 1987)). Instead of a reliance on transaction cost theory the history here is based upon labour histories of control within North American firms. This reveals major deficiencies in conventional historical studies of cost and management accounting and offers possibilities for their resolution. It is argued that accounting controls were not a consequence of economic or technological imperatives, but rather were rooted in struggles as firms attempted to control labour processes in various epochs of capitalistic development, namely the destruction of internal subcontracting and craft control of production in early factories with the advent of “Scientific” Management and homogenised labour and, post-1930, with an accord between primary sectors of labour and corporations, which led to an increased emphasis on monopoly pricing, smoothing production and hence employment patterns, and a shift of economic pressures to secondary labour and producer markets. The paper concludes that in today's globalisation of capital, control associated with the labour and capital accord are being abandoned as corporations experiment with new methods and ideologies of control reflected in new accounting methods.

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Why is it important?

This paper illustrates how and why accounting histories based on labour history and the need for employers to control labour processes shed different interpretations of accounting's role within different epochs of capitalism.