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 accounting's modern power.