Reviewed by Gweneth Norris Deakin University

This book investigates the cost accounting and cost management practices in the three dominant industries of the British Industrial Revolution (BIR): the iron, textile, and extrac-tive industries. It provides an overview of these practices and industries, before exploring “the relationship between tech-nological change and cost management” and examining “the paradigmatic approaches that have predominated in recent costing history” [p. 4].

Many of the chapters draw heavily from previously pub-lished papers of the authors, both jointly and separately with other colleagues, while adding much original data. Followers of this literature through various journals will benefit from the consolidation of the evidence and the coherent picture that this book presents. The further development and discussion of the Neoclassical versus Foucauldian (Chapters 7 and 9) and Marxist (Chapter 9) arguments provides an added interest.

Working through the book, the material gradually becomes more detailed. The first chapter introduces the reader to the environment from which the source data originate. The rapid developments of the BIR are explicated, illustrated with stag-gering statistics. This chapter also describes, and seeks to ex-plain, the former misrepresentation of the cost accounting his-tory of this period.

Chapter 2 provides “The Big Picture” by summarizing the authors’ “findings of managerial accounting techniques in 25 major BIR enterprises” [p. 21]. After brief detail of the firms and the basis for analysis, the techniques of the period are discussed under eight headings: expense control; responsibility management; product costing; overhead allocation; cost comparisons; costs for special decisions; budgets, forecasts, and standards; and inventoiy control. Within these categories, the degree of sophistication occasions surprise in view of the previous assertions by accounting historians of lack of management accounting applications at this time in Britain. Evidence from the 18th century of cost center allocations, as well as cost analyses for repair-or-sell, outsourcing, and transfer-pricing decisions, whet the reader’s appetite for the more detailed later chapters.

Chapters 3, 4, and 5 examine the three industries more closely, focusing on the iron, textile, and extractive industries respectively. The evidence on management accounting practices in the iron industry provides an interesting background to the study of the less sophisticated textile firms. This is then followed by the more advanced management accounting practices evidenced in the extractive firms. The presentation of analysis in these chapters is not constrained by an attempt at consistency in format. Based on data from 24 iron firms, Chapter 3 presents data from 11 individual case studies (seven briefly and four in more detail), before consolidating the evidence and analyzing the “relationship between iron industry cost management and its environmental influences” [p. 50].

Chapter 4 presents data from the “archival survivals” [p. 81] of 30 textile firms, categorized according to four different uses of the information produced: expense control, product costing, responsibility accounting, and non-routine decision making. While the subsequent analysis relates management accounting techniques to technological changes of the period, the conclusion specifically compares the cost accounting activities in the iron and textile industries during the BIR. Chapter 5 disproves the authors’ earlier contention [Fleischman and Parker, 1991] that cost accounting would be more important and highly developed in a factory environment: “This chapter is presented in an effort to rectify our former short-sightedness” [p. 116]. Here data are classified according to the geographic location of the sites to which they relate. Whereas the influences on management accounting practices in the iron industry were shown to be predominantly external, and those on the textile industries internal, the influences on such practices in the extractive industries are found to be both external and internal to the industry. These are, primarily, financial resourcing issues and the magnitude of operations.

Chapters 6 and 7 demonstrate the range and depth of man-agement accounting techniques by presenting two in-depth case studies. Chapter 6 focuses on “costing practices” [p. 191] in the Carron iron firm, using seven of the categories of Chapter 2 as subheadings. Of particular interest is the inverse relationship found between management accounting and financial account-ing sophistication over the lengthy period studied. Chapter 7 takes a different approach. By focusing on the development and use of labor standards within the Boulton and Watt steam en-gine firm, there is an attempt to “shed light on the labour control issue.” However, this gives rise to an analysis that centers on the conflict, and possible resolution of the debate, between the Neoclassical economic rationalist and the Foucauldian views of the stimuli for using labor standards and performance measurement to control human behavior. A point of interest here is the disclaimer of one of the authors with regard to the argument developed within the chapter.

In parts of the early chapters, readability suffers from the heavy detail that is presented. However, respect for both the weight of evidence that supports the authors’ arguments and their full discussion of other related literature outweighs the occasional laboriousness of the prose. While the assiduous at-tention to detail continues through Chapter 8, it is presented within the historical setting that this reader had sought in earlier chapters. Briefly revisiting much of the evidence from earlier chapters, this chapter presents a flowing account, and a fascinating picture, of the use of management accounting tech-niques for informed decision making with regard to, for example, selecting, procuring, and running new technological applications. Would this industrial revolution have occurred, or taken a different direction, were it not for the micro-level analyses that directed individual decisions? This argument challenges the narrow arguments that macro-level factors, such as population growth and expanding overseas markets, completely dominated financially uninformed, or reckless, entrepreneurs. Was the survival of the fittest firms a matter of lucky or of intelligent decision making?

Chapter 9 appears to attempt the impossible. The first sec-tion provides an overview of extant methodologies and the paradigm paralysis that inhibits the development of the plural-istic and synergistic approach that the authors believe is vital to an understanding of accounting’s role in history in general [p. 276] and, more specifically, its role during the BIR [p. 241]. The chapter progresses to deeper coverage of what are claimed to be the “three major schools” represented in the literature on industrial revolution cost accounting: Neoclassicism, Foucaul-dianism, and Marxism. The chapter represents compulsory reading for both would-be accounting historians and current “participants [protagonists?] in these theoretical debates” [p. 241]. The authors conclude that the coexistence of competing theoretical perspectives is necessary so that each may bring a contribution to a synergized whole. What appears to be missing at present is the necessary mutual respect between different schools of thought that is a prerequisite for useful dialogue and debate among them.

The final chapter highlights the major findings with regard to the industry studies, firm case studies, the relationship be-tween costing and technological change, and “the perspectives yielded by differing theoretical and methodological paradigms” [p. 281]. It encourages further investigation of the period by reference to the archives of other firms, especially those in other industries (e.g., railways). However, it does not address some issues relating to both met and unmet objectives of the book. First, the intended demonstration that British cost accounting methods predated American costing methods is not mentioned, although achieved. Second, there are claims early in the book that it would show that the BIR was a “formative period for the development of sophisticated management accounting methods” [p. 17], that it was a pioneering epoch in the development of cost accounting [p. 23], and that the authors seek the foundations of “purposeful” cost accounting [p. 23]. This view is also both mentioned and inferred elsewhere. However, the evidence is not convincing that either these methods were first developed during this period in history or that they are the basis of current management accounting knowledge and practice. Indeed, the concluding chapter states that many of the cost accounting and cost management practices later temporarily vanished from view. Further, due to lack of documentation we may never know what drove the choice and use of innovative methods (some mechanical) during the earlier agricultural revolution. Can we confidently exclude their use during the days of the Roman Empire, or by the early Egyptians or Mayans? Any claim of a period of first use is brave indeed. Is it not possible that certain members of man[kind] are capable of determining what information is relevant to a particular decision in an isolated fashion? Notwithstanding this, anyone with a deep interest in history would find the methods actually employed in historic decision making quite fascinating.
A useful addition to the book would be a chronological chart, placing this period and its developments into context. For an holistic appreciation of the period and the place of the phenomena under study within that period, a chart that posi-tions the developments and inventions of the period (e.g., the spinning jenny, the laying of the first railway, the Davy lamp, and the widely different dates for the introduction of stationary and mobile steam engines) against the criteria that otherwise serve as reference points to our knowledge of the environment (e.g., the sovereign, principal wars and battles, military and political leaders) would be invaluable. Much of the contextual information that would add to an appreciation of the content of Chapters 2 to 7 does not appear until Chapter 8, and some readers with little knowledge of British history may find it easier to read Chapter 8 first. The discussion within the chapters would thus be easier to follow since they jump backwards and forwards through the era under study.

Concurrently, the authors have synthesized previous litera-ture (both their own and that of others) on the research topic and considerably extended our knowledge of cost accounting techniques and usage during the BIR. The evidence is presented in detail, while summaries of the findings are comprehensive yet succinct. Such a useful analysis of the extensive data would have been a mammoth task. The collection of data and its analysis extended over ten years but proves well worth the effort. Reading the book from cover to cover, one is aware of the necessary repetition. However, it would definitely meet the needs and satisfy the interests of a wide variety of readers. At the same time as being a research document of high academic merit, reporting on extensive original research, this book would be useful as a research resource, a reference text for teaching management accounting history, and as a general interest reader.

REFERENCE

Fleischman, R.K. and Parker, L.D. (1991), “British Entrepreneurs and Pre-Tndustrial Revolution Evidence of Cost Management,” Accounting Review, Vol. 66, No. 2: 361-375.