Contradiction and social dynamics in the capitalist agency relationship

Abstract

Agency theorists appear to believe that they have the means to revolutionize the study of organizations and the role of accounting therein. If this is attempted by straightforwardly extending the existing paradigm of agency theory, however, the result will be nothing more than a particularly narrow-minded version of functional analysis, a paradigm which is already dominant in organizational analysis, and whose theoretical shortcomings are well known. On the other hand, an analysis of the capitalist agency relationship in terms of social action holds out great promise for a radical theorization of the part played by accounting in systems of organizational control. The problematic of a radical theory of this type differs considerably from that of the existing theory of agency. Where this latter is concerned with the specification of monitoring and incentive systems so as to achieve top-down control, the radical analysis proposed here focuses on the contradictions involved in attempts to achieve control through agency relationships within the capitalist social order. This paper represents an attempt to re-think the theory of agency for this purpose. In the process, revisions are proposed to its epistemology, theorization of social action and conceptualization of organization. It is also shown that a broader view needs to be taken of the means of control available to principals, with the social production of trust considered alongside monitoring and incentive schemes. The paper concludes with a preliminary analysis of some of the contradictions which result from the tensions between these two means of control.