آمریکایی و تئوری حسابداری مالی - قسمت 1:آیا امریکا سرمایه دار متولد شد؟

This paper (Part 1), and two related papers (Part 2: The ‘modern business enterprise’, America’s transition to capitalism, and the genesis of management accounting; and Part 3: Adam Smith, the rise and fall of socialism, and Irving Fisher’s theory of accounting), explore historical links between American ideology and Irving Fisher’s theory of accounting. They explain Fisher’s theory as the product of America’s exceptional transition to capitalism and the ideological consequences. Part 1 uses Marx’s theories of the transition in England, of colonisation, and of ideology, to construct an accounting history model of America’s transition to capitalism that identifies the dominant social relations of production and calculativementalities, and uses them to predict the accounting signatures and political ideologies we should observe if the theories are correct. Parts 1 and 2 test the model. Part 3 explores the ideological consequences of America’s transition, for America and financial accounting. Scholars generally assume that America was ‘born capitalist’; historians argue it became capitalist sometime from the late 18th to early 19th centuries. The model, however, identifies early farmers as ‘simple commodity producers’ who, it predicts, kept only single entry accounts of debt, and had a ‘producer’ ideology of ‘equality’ and ‘freedom’. It identifies planters and manufacturers as ‘semi-capitalists’ – part merchant capitalist and part simple commodity producer – who it predicts calculated ‘profit’ as consumable surplus, pursued the ‘simple rate of profit’, controlled only prime costs, and had an ideology of ‘individualism’ that combined the producers’ ideology with the merchants’ ‘laissez-faire’. Part 1 re-examines evidence from accounts to around the mid-19th century, which confirms that farmers were not capitalists and that even the most advanced merchants, manufacturers and planters were semi-capitalists. Part 2 searches for capitalists in the second half of the 19th century. It re-examines evidence from the accounts of the Boston Associates who historians have seen as ‘proto-industrial capitalists’; from the railroads heralded by Chandler as the beginning of ‘managerial capitalism’; and from ‘entrepreneurial capitalists’ like Andrew Carnegie who created the large corporations that conquered America from the 1880s. Their financial accounts and cost management systems reveal the same semi-capitalist mentality found in the early 19th century. Re-examination of the ‘costing renaissance’ in the 1890s and evidence from the DuPont Powder Company and General Motors from 1900 to 1920, suggests that only from around 1900, after escalating conflict between ‘capital and labour’, did the capitalist mentality appear in new management accounting systems focused on ‘return on investment’. Part 3 shows that the accounting evidence closely correlates with the history of American political ideology. It argues that Adam Smith’s Wealth of Nations dominated American politics until the late 19th century because it theorised a nation of simple commodity producers and semi-capitalists. It explains the delay in America’s transition compared to Britain’s, and the decline in the popularity of laissez-faire from the 1880s, as consequences of this exceptional starting point. ‘Big business’ capitalism created an ideological problem for America’s ruling elite, particularly the threat of socialism from around 1900 to 1920. Part 3 argues that Fisher’s neoclassical theory of ‘capital’ and ‘income’, designed as a critique of Marx, responded to this problem and played an important role in undermining middle class support for socialism. Fisher said he based his theory on accounting practice, particularly double entry bookkeeping, but Part 3 shows he did not use or understand it, which divorced his accounting from reality. American history’s legacy to the world, the papers therefore conclude, is a pathological theory of financial accounting.

It has become more widely accepted that to understand the roles of accounting in organisations and society we must ‘‘reflect upon the social, political and economic context in which accounting operates’’ (Cooper and Sherer, 1984, p. 225; Hopwood, 2005). Some bold pioneers of this approach argued for a ‘‘political economy of accounting’’, insisting that ‘‘the study of accounting should recognise power and conflict in society, and consequently should focus on the effects of accounting reports on the distribution of income, wealth and power’’ (Burchell et al., 1980; Cooper and Sherer, 1984, p. 218; Tinker, 1980). Some even suggested an important social function could ‘‘include mystification and legitimation’’, ‘‘an ideological function’’; that ‘‘accounting theories . . . are the product of the society in which they operate and cannot be regarded . . . as neutral; they serve specific interests’’ (Cooper and Sherer, 1984, pp. 218, 223; Tinker et al., 1982). We know much more about accounting in context than we did 30 years ago (Hopwood, 2005, p. 585), but we still know little about accounting theory as ideology, particularly the origins and ideological functions of American financial accounting theory (hereafter, accounting theory).1 This paper (Part 1), and two related papers (Part 2: The ‘modern business enterprise’, America’s transition to capitalism, and the genesis of management accounting; and Part 3: Adam Smith, the rise and fall of socialism, and Irving Fisher’s theory of accounting), address that gap. They seek to explain why ‘‘A restless tension still pervades much of the dialogue concerning the application of economic ideas to accounting practices’’; why ‘‘The world needs to be told what profit ought to be even though it apparently is orchestrated in the name of it’’ (Hopwood, 1992, pp. 129, 130). Why, according to Bob Herz when head of the Financial Accounting Standards Board (FASB), it has resulted in ‘‘a body of official accounting literature that is hard to understand, difficult to use [,] . . . [i]n one word . . . nuts’’ (Herz, 2005, p. 5), clearly ‘‘a strange situation for one of the most important discourses of present-day global capitalism’’ (Macintosh, 2009, p. 4). To address these questions, to ‘‘bring such strangeness into the light’’ (Macintosh, 2009, p. 5), the papers assemble a genealogical history of American accounting theory. It is ‘strange’, they conclude, because the economic ideas that tell the world what profit ought to be come from the seminal work of Irving Fisher, whose theory of accounting was the ideological product of America’s exceptional history. Commentators and scholars generally agree that America has an exceptional culture, particularly its self-defining ideology of ‘Americanism’, the ‘American Creed’ of ‘‘liberty, egalitarianism, individualism, populism, and laissez-faire’’ (Lipset, 1996, p. 18). A large literature assumes or supports ‘American exceptionalism’ (see Foner, 1984; Lipset, 1996; Wilentz, 1984a), but fundamental questions remain. What are its causes? Was American history exceptional? If it was, how did it produce Americanism? Why, unlike Europe, did socialism fail to take root in American politics? Why in America has ‘‘the rule of capital . . . remained more powerfully installed and less politically contested than in any other advanced capitalist society’’ (Davis, 1980, p. 6)? What are the consequences of Americanism? Is it a ‘‘double-edged sword’’? Some see it as the foundation of America’s economic success, but others stress its ‘‘dark side’’, its exceptionally high crime rate, high income inequality, poor social welfare, low political participation rates, high levels of mental illness, etc. (Lipset, 1996). To this list, I will add pathological accounting, America’s exceptional theory of accounting. Scholars of American exceptionalism use different approaches, but two things unite them. First, their failure to define in what sense America is the ‘business society’ par excellence (Cochran, 1967). Cochran, for example, who raises the problem, defines ‘business’ as the ‘‘intellectual constructs and activities by which men seek to manipulate the factors of production for pecuniary return’’ (1967, p. 6), but he defines neither ‘intellectual constructs’ nor ‘pecuniary return’. The papers use accounting to define them, as Marx and Weber did, as the capitalist mentality (Bryer, 2000a). Second, scholars generally assume that American history, particularly the collapse of socialism from around 1920, shows that Marx’s theory of capitalism is wrong. The papers re-examine accounting evidence from colonial times to the 1920s to test it by exploring the history of American capitalism. They argue that by understanding what was exceptional about America’s transition to capitalism we can understand what is exceptional about Americanism, and its consequences, for America and accounting. Neither Marx nor Engels wrote a detailed history of America, but scholars criticise their prediction of its ‘inevitable’ transition to socialism (e.g., Lipset, 1996, p. 33; Runkle, 1964). Marx, Engels, and many others, recognised the obstacles to socialism in America, particularly its workers’ exceptionally high standard of living – what Sombart (1906) called its ‘shoals of roast beef and apple pie’ – its exceptional racial mix, democracy, devotion to disestablished religion, etc. They certainly argued that working class movements ‘‘thoroughly versed in theory’’ would bring socialism to America, and from there it would conquer the world (Engels, 1993, p. 553; Marx, 1996, p. 9; Runkle, 1964, p. 135). However, they did not say this would ‘inevitably’ result from ‘economic forces’; that the economic development of capitalism to its highest level there would inexorably lead to class-consciousness and socialism. Another reading of Marx’s theory is that the ‘economic base’ of society, its ‘mode of production’, the way owners of the means of production extract surplus, is based on a shared calculative mentality elaborated and reinforced through a ‘superstructure’ of ideology, institutions, culture, etc. (Bryer, 2000a). Because the ‘base’ and the ‘superstructure’ are ideas or social practices, the base does not ‘determine’ the superstructure (Avineri, 1971, p. 157; Giddens, 1971, p. 43); both are products of class conflict. The papers explain the ideological defeat of socialism in America as the outcome of exceptional class conflict caused by its exceptional transition to capitalism. The exceptionalism literature highlights Americanism as an ‘ideology’ but offers conflicting explanations of its origins and functions. The dispute is between ‘structuralists’, such as Laslett (1974), who argue that America has an exceptional ideology because it has exceptional ‘social structures’, a high level of economic well-being, diverse racial mix, etc., and the ‘ideologists’ such as Bell (1960) who see these structures as ‘conditions’ not ‘causes’, and argue that ideology is primary. On this issue, the papers side with the ideologists (for example, Lipset, 1996), but avoid the weakness of their approach, which is to define ideology by its appearance as the ‘values’ of ‘liberty’, ‘egalitarianism’, etc., and not by reference to whatever it was that produced them (Laslett, 1974, p. 112). The papers support Marx’s view that ‘class’, defined by an individual’s relationship to the means of production, is the most important ‘social structure’ that determines ideology. However, they avoid the reductionism of the ‘classical’ Marxist notion of ideology as simply the distortion of reality, only a functional false consciousness that distorts the truth in favour of ruling-class interests (Armstrong, 2005, p. 7; Rose, 1977, p. 47). They use Ricoeur’s (1986) reconciliation of the ideas of ideology as ‘distortion’ with ideology as ‘social representation’ (Chiapello, 2003, p. 156), his elaboration of Marx’s comment in the German Ideology that ideology is a ‘‘language of real life’’ (1976a, p. 36, see Taylor, 1986, p. xiii) that integrates individuals within social structures by legitimating a mode of production as unalterable reality. To avoid reductionism, ‘‘We must integrate [the] concept of ideology as distortion into a framework that recognises the symbolic structure of social life’’ (Ricoeur, 1986, p. 8). We must integrate distortion with praxis, with selfconscious productive activity based on socially defined ‘‘symbolic structures of action’’, with a ‘‘discourse of praxis’’, or ‘‘language of real life’’ (Ricoeur, 1986, p. 12). Ideology has an organising and integrating role, a ‘‘real constitutive role . . . in social existence’’, and a potentially distorting role in the ‘‘legitimation of leadership’’, Weber’s ‘‘problem of authority, domination, and power, the problem of the hierarchization of social life’’ (Ricoeur, 1986, p. 12). A ruling class needs ideology ‘‘because no system of leadership, even the most brutal, rules only by force, by domination’’; it must ‘‘summons not only our physical submission but also our consent and cooperation’’ (Ricoeur, 1986, p. 13). Ideology provides it with a discourse of praxis distorted in its interests, but this is a dangerous game because distortion can introduce pathology. At one extreme, ‘‘Ideology moves beyond mere integration to distortion and pathology as it tries to bridge the tension between authority and domination’’ (Ricoeur, 1986, p. 14), but at the other are languages of real life. As a symbolic discourse of praxis there are ‘‘a range of possibilities preserved by Marx’s analysis, a range extending from the language of real life to radical distortion . . . [and] the concept of ideology covers this full range’’ (Ricoeur, 1986, p. 79). Students of ideology have focused on religion, education, and politics, but Ricoeur’s formulation allows us to study any language as a possibly integrating and distorting ideology, including accounting. Although a cliche´ , accounting is ‘the language of business’, of ‘capital’, ‘profit or loss’, ‘assets’, ‘liabilities’, ‘revenues’, ‘expenses’, etc., a language of real life that provides symbolic structures for social action, a language for the discourse of praxis in business. Applied to accounting, Marx’s theory of value produces a language of the ‘circuit of capital’, ‘constant and variable capital’, ‘fixed and fluid capital’, ‘productive capital’, ‘capital of circulation’, ‘socially necessary labour time’, ‘value’, and ‘surplus value’, etc. (Bryer, 1994b, 1998, 1999a,b). By the mid-19th century, British capitalists had produced a language of the ‘principles’ of accounts, of ‘historical cost’, ‘realization’, ‘costs attach’, ‘matching’, etc., which Marx summarised as ‘‘cost price’’ and ‘‘profit’’, a language he said was ideological because it obscured the origin of profit in exploited labour, because it ‘‘inverted’’ reality (1998, p. 49). Capitalist accounting, he argued, was an ‘‘ideological phenomenon’’ that produced a ‘‘false consciousness’’, ‘‘mystifying’’ social reality (Burchell et al., 1980, p. 19, fn. 7). In the German Ideology he used the metaphor of the camera obscura inverting the image on the retina to explain what he meant by distortion. Althusser (1970) objected, criticising the ‘early Marx’ for his Hegelian idealism, arguing that ‘‘since an inverted image is always the same’’, inverting Hegel’s notion of ideology remained within his framework, belonged ‘‘to the same ideological world as the original’’ (Ricoeur, 1986, pp. 78, 79). However, if Marx was not stuck within idealism, but had explained capitalist ideology as an inverted representation of social reality, because an ‘inverted [reality] is always the same’ reality, capitalist accounting as a legitimating distortion retains its integrative, organising function as a language of real life. Accounting ‘‘conceal[s] real determinations’’, is a distortion, but of ‘‘reality as praxis’’, of the ‘‘life-process’’ (Rose, 1977, pp. 28, 37; Ricoeur, 1986, pp. 5, 78). Accounting’s ‘principles’ therefore lie at the heart of Marx’s theory of capitalist ideology because they provide a language that integrates and sustains but simultaneously distorts the social reality of exploited labour. If the language of capitalist accounting provides the foundation of capitalist ideology, other languages of accounting should underlie other ideologies. Accounting history therefore provides a joint test of Marx’s theory of ideology and his theory of the transition to capitalism, a theory of changing ways of extracting surplus value reflected in distinctive modes of accounting, signatures of different calculative mentalities and forms of accountability (Bryer, 2000a, pp. 137–143) that should articulate as different languages of real life, as different ideologies. In short, according to this reading, Marx’s theory is that class conflict produces new social relations of production, a new calculative mentality, and accounts with a new language of real life, which produces a new political ideology.2 If the language of accounts provides the ‘economic base’ of the dominant political ideology, we should be able to predict that ideology from the dominant mode of accounting, and predict changes in political ideology from changes in accounting during the transition to capitalism. For many scholars, particularly ‘liberal-market’ historians, the transition to capitalism is a non-issue because they assume America was ‘born capitalist’ (Wood, 1999, p. 37). Using mainly evidence from farmers’ accounts, some liberal-market historians, particularly Rothenberg (1981, 1983, 1992), and an important minority of ‘moral-economy’ (or ‘social’) historians (Clark, 1979, 1991; Gordon et al., 1982; Henretta, 1978; Kulikoff, 1989, 1992; Merrill, 1976, 1995), agree that that America became capitalist sometime between the late 18th and early 19th centuries. However, despite this consensus, after extensive debate historians still ‘‘have a difficult time making precise just what social relations the word, capitalism, refers to, not to mention how to characterize its development across the four centuries of American history’’ (Appleby, 2001, p. 1). This remains a ‘‘vexed question’’ (Appleby, 2001), Part 1 argues, because the liberal-market historians’ definition of capitalism as free markets is an unhelpful tautology, and because the moral-economy historians do not understand accounts. To avoid these problems, the papers use Marx’s definition of capitalism as the mode of production where ‘free’ capital employs ‘free’ wage labour, where the dominant calculative mentality is the ‘rate of profit’, conventionally defined in accounting as the return on investment (ROI).3 Part 1 uses Marx’s theories of the transition to capitalism in England, of colonisation, and of ideology, to build an accounting history model, a sequence of social relations and mentalities that predict the accounting signatures and political ideologies we should observe in American history. Parts 1 and 2 present accounting evidence that supports the model. Part 3 presents historical evidence that supports the predicted correlation between the mentalities revealed by accounts and the history of American political ideology. According to Marx, transitions from one mode of production to another are the product of class conflict. Many have argued that the primary cause of socialism’s failure to secure a permanent place in American politics, unlike Europe, and why it was relatively devoid of class conflict until the 1880s, was the weakness of its ‘working class’. Some think the causes were ‘structural’, the ‘safety valve’ of western land, lack of feudal traditions, relative affluence, racism, divided by mass immigration, segmentation, etc. (Laslett and Lipset, 1974; Foner, 1984). Others argue that the exceptional aggression of its ruling class from the 1880s inflicted cumulative bloody defeats on workers that left them apathetic and disorganised with a ‘‘qualitatively different level of class consciousness, and intra-class cohesion’’ (Davis, 1980, p. 7). These explanations fail to recognise that what was really exceptional about American ‘class conflict’ was that America was a society dominated by what Marx called ‘simple commodity producers’ until the 1880s, where the majority of farmers owned the means of production (mainly land), and its merchants, manufacturers, and planters, were ‘semi-capitalists’, part merchant capitalists and part simple commodity producers. Part 1 re-examines evidence from farmers’ accounts from the late 18th to the mid- 19th centuries, which shows they were not capitalists in Marx’s sense. It re-examines evidence from the accounts of merchants, planters, and manufacturers over the same period, and from the McLane Report of 1833, which shows they were typically semi-capitalists. Part 2 goes in search of America’s transition in the second half of the 19th century. It re-examines evidence from the Boston textile mills to the 1860s, from the railroads that Chandler claimed created ‘managerial capitalism’ and the first ‘modern business enterprises’, and from ‘entrepreneurial capitalists’ like Andrew Carnegie who created the large corporations that transformed America from the 1880s. Their financial accounts and cost management systems continued to evince the semi-capitalist mentality. To find the capitalist mentality, Part 2 re-examines evidence from the ‘costing renaissance’ from the 1890s, from the DuPont Powder Company from 1903 to the 1920s, and from General Motors in the 1920s. This shows that only from around 1900, after 20 years of escalating conflict between ‘capital and labour’ over control of production, and a large increase in immigrant labour, does the capitalist mentality appear in new systems of management accounting based on ROI. Class conflict was relatively absent before the 1880s, Part 3 argues, because America remained a society of simple commodity producers and semi-capitalists that broadly coalesced around what became the political ideologies of ‘free labor’ and ‘laissez-faire’.4 An accounting analysis of Adam Smith’s Wealth of Nations shows that despite becoming the ‘Bible of the liberal bourgeoisie’, his theory of price elaborated the mentalities of the simple commodity producer and semi-capitalist. For many Americans, Adam Smith had provided a ready-made post-Revolutionary handbook of political economy that accurately described their pre-capitalist mentalities, providing a broadly agreed framework for political ideology from the RevolutionaryWar (1775–1783) to the 1880s. Part 3 explains the history of American political ideology as the consequence of its starting point. Before the 1880s, it argues, America was a society of farmers and artisans, simple commodity producers with an ideology of ‘equality’ and ‘freedom’ based on an ‘independent producer’ labour theory of value, and of semi-capitalist merchants, manufacturers, and planters, also with a ‘producer’ ideology, but of ‘individualism’, of the ‘workingman’, or ‘selfmade man’, when combined with the merchant’s ‘laissez-faire’. Political leaders of the simple commodity producers (idealised by Thomas Jefferson) and semi-capitalists (idealised by Andrew Jackson) agreed with Adam Smith’s analysis of ‘capitalism’, and until the late 19th century with his criticisms of British capitalism’s monopolising mercantile and monied interest. This consensus collapsed from the 1880s when ‘big business’ – giant corporations that dominated markets – swept America, and many Americans strongly resisted the destruction of their social relations, economic status, and security, and challenged its owners’ aggressive rendition of Smith’s laissez-faire as ‘survival-of-the-fittest’. The eruption of ‘class war’ from the late 1870s in the midst of America’s first major recession coincided with the appearance of ‘entrepreneurial capitalists’ who set about its corporate reconstruction (Sklar, 1988), a process that continued to around 1920. In the 1890s, a widely based ‘Populist’ movement coalesced with a bruised and angry labour movement into the ‘socialist menace’ of the first two decades of the 20th century, scornful of the big employers’ ‘free market’, ‘survival of the fittest’ ideology. Big business created an ideological problem for the ruling elite because it contradicted the ‘individualist’, laissez-faire ideology of small employers and the ‘independent producer’ ideology of farmers and workers. At the same time, big business and its dependence on government appeared to confirm the socialists’ prediction of the inevitability of collectively controlled production, and the socialists agreed with the producers’ labour theory of value. Rather than a weak ‘working class’, Part 3 argues, the independent producer, ‘free labor’, ideology strengthened American farmers and workers when coupled with socialism, and not just workers resisted big business. Many small employers bitterly opposed it, which left America’s employers ideologically divided. Conflict erupted because a strong farmer-labour-populist movement triggered a violent reaction from the ruling elite whose free market ideology had lost its legitimacy. By the end of the 19th century, workers had suffered bloody and legal defeats and farmers and small businesses remained oppressed big business. Their leaders turned to politics and significant numbers to socialism, but a unified and confident coalition of government, big business, and the American middle-classes, had destroyed socialism as an effective political force by 1920.5 It is clear that ‘‘the ballast of capital’s hegemony in American history has been the repeated, autonomous mobilizations of the mass middle strata in defense of petty accumulation and entrepreneurial opportunity’’ (Davis, 1986, p. viii). However, most explanations of the defeat of socialism assume the ideological success of the American ruling class, its ideological recruitment of the middle classes to big business capitalism by the 1920s. How did it do this? The problem facing America’s elite was to justify replacing a society dominated by simple commodity producers and semi-capitalists with a society dominated by big business and Wall Street to a hostile and in parts increasingly radical public. To meet this challenge, around the turn of the century the elite responded with a social movement of its own. In the ‘Progressive Era’, from around 1890 to 1920, business leaders, politicians, academics, and intellectuals, came together in various institutions, but prominently in the ‘National Civic Federation’, to counter the socialist threat by formulating and propagating a new ideology of ‘corporate liberalism’ (Weinstein, 1968; Sklar, 1988). Developed through the progressive politics of Theodore Roosevelt (1901–1909), William Taft (1909–1913), and particularly Woodrow Wilson (1913–1921) (Sklar, 1988; Dawley, 1991), corporate liberalism reinterpreted the individual’s liberty of freedom of contract to mean the legal liberty for corporations to regulate markets so long as the methods and results were ‘reasonable’. That is, so long as market regulation was ‘socially responsible’, did not prevent future competition, and prices and the returns on capital were ‘fair’. However, corporate liberalism left unanswered the socialists’ fundamental criticism of capitalism, which was that no profit was ‘fair’, that capitalism was inherently ‘socially irresponsible’. How did the elite answer these criticisms? The exceptionalism literature ignores the intellectual attack on Marx launched in Europe and America in the late 19th century and its contribution to the ideological defeat of socialism. It therefore overlooks the seminal contribution of a young American economics superstar at Yale, Irving Fisher (1867–1947), in justifying profit as ‘fair’ and big business as ‘socially responsible’. Worker and farmer unrest, the growth and activity of unions, populist politics, and the spectre of socialism, encouraged scholars to ‘‘disprove Marx, or destroy his arguments about the origins of profits in exploitation, [that] became almost an intellectual crusade over all Europe and North America’’ (Desai, 2002, p. 61). The ‘disproof’ was the development of neo-classical economics in which Irving Fisher played the key role in America. Fisher’s unique contribution was his theory of accounting, which Part 3 shows he designed as a critique of Marx and American socialism to legitimate big business and the capital market by, it argues, transforming simple commodity producers into semi-capitalists and reconciling them with money capitalists. It explores the hypothesis that Fisher’s theory made an important contribution to the creation of an ideologically dominant ruling class, unified with the middle classes by the 1920s, and an ideologically disarmed working class. By then American labour leaders, politicians, and the middle classes, had abandoned socialism, and Fisher was famous. Part 3 shows that Fisher radically rewrote the language of accounting, which many Americans learned. Another exceptional feature of America was its early university level education in accounting that taught ‘accounting theory’ (Chatfield, 1977, p. 153), in the English speaking world a uniquely American subject dominated by Fisher (Bryer, 2011). This is an unashamed ‘interest’ explanation of American accounting theory and ideology: that consciously or unconsciously Fisher distorted the meaning of accounts because this was in the ideological interests of the bourgeoisie. It is true that scholars often ‘‘take for granted what it means to say that an interest is ‘expressed by something else’. How do interests become expressed though?’’ (Ricoeur, 1986, p. 257). A focus on accounting addresses this question because its language articulates a calculative mentality, expresses economic interests through the way it quantifies and presents ‘economic reality’. This allows us to tackle ‘‘one of the greatest challenges of a Marxist history of ideas to make more plausible the connections between a system of interests and a system of thought’’ (Ricoeur, 1986, p. 94). The system of interests examined here is the economic interest of the bourgeoisie as a collective, what Marx called ‘total social capital’, the ‘capital market’, in the maximization of ROI. The system of thought that expresses these interests is accounting theory. This explanation of Fisher’s theory is also an unapologetic ‘strain theory’, that ideology is a functional response to ‘‘the chronic malintegration of society’’ (Geertz, 1973, p. 203). The papers argue that American history had produced workers and middle classes with ideologies that threatened its bourgeoisie, who responded with exceptional violence and the counter ideology of corporate liberalism underpinned, Part 3 argues, by Fisher’s theory of accounting. To answer the questions of ‘fairness’ and ‘social responsibility’ left by corporate liberalism required, it argues, a radically new theory of accounting that did not just ‘invert’ the capitalist reality represented in accounts, but radically distorted it. It concludes that Fisher produced a new language of ‘income’ and ‘capital’ that went beyond ‘inversion’, introduced a pathological distortion that turned accounting into a ‘‘disease of communication’’ (Ricoeur, 1986, p. 228). Fisher said he based his theory on business practice, particularly double entry bookkeeping (DEB), but Part 3 shows he did not use or understand it. Instead of the accountants’ integrated, cost-based, balance sheets and profit or loss accounts produced from transactions using DEB, Fisher gave us ‘income’ and ‘outgo’ accounts and single entry ‘fair value’ balance sheets. Divorcing accounting from transactions opened the possibility of pathology, that it could function as a ‘‘general device by which the process of real life is obscured’’ (Ricoeur, 1986, p. 5). This conclusion has important implications because ‘‘the main currents of twentieth century accounting thought can be viewed as the ‘legacy’ of Irving Fisher’’ (Mouck, 1995, p. 47). He made ‘‘the fundamental contribution to the subject’’, was ‘‘the founder of modern income theory’’ (Whittington, 1977, p. 201). His work influenced leading American accounting theorists during the 1920s (Bryer, 2011), and through them and later theorists his work underlies the US Financial Accounting Standard Board’s conceptual framework. The papers therefore call on critical scholars to explore the hypothesis that the legacy of America’s exceptional transition to capitalism, to America and the world, is Fisher’s pathological theory of accounting.

In search of a genealogical history of American accounting theory, the paper constructed an accounting history model of America’s transition to capitalism by adapting Marx’s theory of the transition in England. According to his theory, yeoman farmers were simple commodity producers that the model predicted would produce only single entry accounts of indebtedness. Because merchants employing a social capital, and planters and manufacturers employing unfree labour, were according to his theory semi-capitalists, the model predicted they would calculate their consumable surplus as receipts less expenditures, emphasise action controls, seek to control only prime costs, and would calculate the SRP when they participated in a social capital. As free capital did not face free wage labour, the model predicted we would find no capitalist accounting. We need more research, but the evidence supports these predictions. Many scholars assume that America was ‘born capitalist’, and some historians argue it had become capitalist by the early 19th century. However, according to the evidence surveyed above, America did not have capitalist farmers, slaveowners, merchants, or small manufacturers during the late 18th and early 19th centuries, which raises the questions, when and how did it make the transition, and what were the consequences, for America and accounting? Detailed archival evidence exists for larger manufacturers and the railroad companies for the second half of the 19th century, and their accounts are the focus of Part 2. Historians have argued that ‘capitalism’ appeared in the Boston textile mills, the high point of industrial development in America before the Civil War, but re-examining the accounting evidence shows that, like large southern slave-owners, the Boston Associates who owned them were semi-capitalists. Chandler (1977) famously argued that ‘managerial capitalism’ first appeared on the railroads and quickly spread to the iron and steel industries from the 1860s through the efforts of ‘entrepreneurial capitalists’ like Andrew Carnegie. However, Part 2 shows that the railroads and entrepreneurs like Carnegie remained semi-capitalists, and that not until around 1900, after two decades of intense conflict between ‘capital and labor’, in a growing ocean of free wage labour and a rising tide of free social capital, did capitalists appear in the big corporations. Typified by Pierre DuPont, they set about the real subordination of labour and the separation of ownership from control through new systems of management accounting, a process only completed in the 1920s when America abandoned plutocratic capitalism, professional managers ran large corporations, and investors held diversified portfolios. According to Marx, contradictions within feudalism gradually produced capitalism in Europe against persistent violent resistance, from his perspective taking England around 350 years to reach its most advanced form (circa. 1550–1900) (Bryer, 2000a). By contrast, Part 2 argues, the transition took America around 50 years (circa. 1880–1930). By European standards, before the 1880s America was relatively peaceful, Part 3 argues, because it was a society of simple commodity producers and semi-capitalists, which also explains why its transition to big business capitalism from the 1880s to the 1920s was exceptionally violent. The final transition in Britain to large businesses financed by the capital market and run by professional managers from around the 1880s, to ‘total social capital’ by 1900, took an already capitalist society with free wage labour and revolutionary Chartism behind it, relatively peacefully to its highest level. In America, by contrast, big business rapidly and violently transformed a society of simple commodity producers and semi-capitalists into a society with widespread free wage labour, dominated by plutocrats and Wall Street. The conflict this generated, Part 3 argues, explains why America’s political ideology dramatically changed. Big business created an ideological problem for the ruling elite because it split the employing class between small and large corporate employers, and united farmers, workers, and many small businesses, against it in a political context where socialism became a threatening possibility. To counter this threat, politicians, business leaders, Wall Street capitalists, and intellectuals came together during the ‘Progressive Era’ to formulate a new ideology of ‘corporate liberalism’, of ‘social responsibility’ and ‘regulation’, to undermine socialism’s appeal and justify big business (Weinstein, 1964; Sklar, 1988). Unnoticed by historians, one of these intellectuals was Irving Fisher, a young professor of political economy at Yale, a rising star who grew up with this political agenda, absorbed it, and Part 3 argues, made a seminal contribution to its success by popularising his theory of accounting, his unique contribution to neoclassical economics, his theory of ‘capital’ and ‘income’. Part 3 argues he designed it as a critique of Marx and American socialism, to reconcile simple commodity producers and semi-capitalists with the money capitalists of Wall Street, thereby underwriting corporate capitalism with a unifying ideology apparently substantiated by the mundane practices of accountancy. Part 3 concludes that Fisher’s theory reproduced Americanism in a new form that went beyond Adam Smith to explain and justify the capitalist world of big business. Fisher created a new language that accounting theorists and through them the American middle classes came to live and breathe, a language that history would show had pathologically divorced accounts from reality (Bryer, 2011).