Reviewed by Victoria Beard University of North Dakota
It is refreshing to come across a work which makes a conscious effort to cross disciplinary boundaries. In this historical/sociological inquiry into the Professionalization of management accounting in Britain through 1925, Loft argues that cost accounting is too important to modern society to limit its historical study to the traditional chronological narrative, to official histories of professional associations, to studies of ac-counting solely within organizations, or to comparative histories of technological and procedural developments. Instead, her interest is in understanding how cost accounting acts on, and reacts to, wider contemporary social and political issues.
In Chapter Two, in order to present the theoretical groundwork, Loft makes extensive use of Michel Foucault, the French social historian. She concentrates on his 1977 work Discipline and Punish: the Birth of the Prison, where he analyzes the transition to industrialization and modernization in France through the 19th-century disciplinary institutions (prisons, hospitals, workhouses, schools, factories) and their related disciplinary technologies. Foucault writes about the intimate, interchangeable relationship between power and knowledge, that each begets and reinforces the other. Loft proposes to use Foucault’s knowledge/power continuum to study how social relationships are modified by management accounting and by the establishment of a professional association of cost accountants.
Cost accounting produces a visible record (Foucault’s “knowledge”), a positive reality measured in monetary terms, that claims the status of sole truth about events. Loft explains that the knowledge generated by accounting systems is not neutral but is intimately linked with the operation of power and discipline in the factory. Management accounting is a disciplinary technology, a technique of surveillance and of detailed control of the individual.
Records are not just an enabling device for power to use; the creation of a record is an act of power itself. Not only does it represent the result of a choice concerning what is important in the organization but its creation can induce obedience [p. 35].
But unlike corporal punishment in past centuries, this new disciplinary technology is aimed at the “soul” of the individual. Again using Foucault’s terminology, Loft argues that detailed record-keeping should also be seen as a human science involving “the creation and application of knowledge about man; albeit man reduced to the cipher of the number on the page” [p. 22]. Cost accounting’s peculiar attribute is that it duplicates production activities in paper form, providing a permanent, visible, timeless, and apparently objective truth that allows for discipline to continue long after the event.
Loft discusses at length two other modern techniques of discipline in the factory from a socio-historical perspective: the precise measurement of time and the visibility of management. Control through visibility has its roots in Jeremy Bentham’s 1789 plan for what he called a penitentiary panopticon, an architectural embodiment of discipline through visibility. The panopticon was to be a circular prison with open, visible cells surrounding a central observation tower which itself would have a series of shades to prevent the observer from being seen by the prisoner. Both control and reform were thought possible simply through this constant unseen surveillance. When transferred to the factory, the “disciplinary gaze” retained its anonymity and omnipresence, but took on the pyramidic structure of management.
In the last part of Chapter Two, Loft begins to address the main topic of the rest of the book — the history of the rise of professionalism among British cost accountants — with a con-cise summary of sociological theories of professionalism, from Max Weber’s closure theories to Foucault’s disciplinary model of knowledge/power
As a foundation for an entire book, this “theoretical chap-ter” has the weakness of recapitulating existing theories rather than generating new ones. In this way it is more typical of a dissertation (the book is based on Loft’s) than of a novel theoretical work. The strength of the chapter comes from her original application of existing theories to cost accounting. When major portions of this work were published as an article in the journal Accounting, Organizations and Society [Loft, 1986], this chapter was omitted.
For her historical methodology, Loft adopts Foucault’s “genealogical history,” or history as an illumination of the present through detailed analysis of past social and historical conditions (not a reconstruction of the past from the anachronistic viewpoint of the present), a variation on Croce’s dictum that all history is contemporary history.
Her genealogical history of the present begins in Chapter Three with an historical search for early manifestations of management accounting and incipient professionalism. During the Industrial Revolution (1750-1840), the independent village artisan was moved to the factory. This necessitated the de-velopment of intensive labor management practices in the Age of Capital (1840-72), which in turn needed the support of a growing bureaucratic clerical workforce. During the Great De-pression period (1873-96), accountants distinguished themselves as independent professionals in charge of bankruptcies and audits, but continued to distance themselves from costing activities. By the Prewar Period (1897-1914), however, cost ac-counting had marginally entered the discourse in textbooks and in professional examinations.
Chapter Three is a marvelous example of history written through a sociological lens, focusing on generic issues as they relate to management accounting (centralization of authority, shifting hierarchy of occupations, coalescing of a body of knowledge) with only a secondary interest in unique historical events, politics and personalities. Loft makes good use of quotations from contemporary observers, and her fluid writing style complements the ebbing and flowing of the social forces which she describes. On the other hand, readers accustomed to historical narratives anchored by primary source documents, dates, and statistics may feel uneasy with the heavy use of secondary references.
In Chapters Four and Five, ambitiously entitled “The First World War” and “After the War: Reconstruction and Reality,” Loft continues her methodological move from the general to the specific, restricting her reader’s attention to management ac-counting with admirable persistency. Cost accounting emerged in Britain during the war, she says, “as an unanticipated result of the way in which government mobilized the industrial resources of the country” [p. 140]. Unwilling to surrender the capitalistic industrial heritage, even when seriously threatened by profiteering on munitions contracts, the government began a massive program to employ accountants to cost war contracts. Cost accounting, previously regarded by accountants as “some-what beneath their dignity” [p. 158], gained enormously in stature by becoming a part of the political discourse. Not surprisingly, both Capital and Labor looked forward to the post-war reconstruction period where the same means — mod-ern cost management and scientific production efficiencies — would serve their very different desired ends.
In Chapters Six and Seven, Loft details the difficulties surrounding the establishment of the new professional associa-tion, the Institute of Cost and Works Accountants, its internal conflicts, its membership selection criteria, and its examination procedures. The discussion ends with a return to Foucault’s theory on knowledge accumulation, its claim of encapsulating the “truth,” and the social implications of its ability to generate privilege and power for the profession which claims it.
In her concluding chapter, Loft reemphasizes her commitment to studying accounting in its social and policital sur-roundings, rather than as a purely technical body of knowledge. She recognizes, however, that her own coverage of the interde-pendent relationship between accounting and the state is limited and suggests this area as a productive direction for future research.
REFERENCES
Loft, A., “Towards a Critical Understanding of Accounting: The Case of Cost Accounting in the U.K., 1914-1025,” Accounting, Organizations and Society, Vol. II, No. 2 (1986), pp. 137-70.
