Cfitical Perspectives on Accounting (1991) Z&31-58

UNTING, INTERESTS, AND RATIONALITY:

A COMMUNICATIVE RELATION

C. EDWARD ARRINGTONAND ANTHONY G. PUXTY*

University of Iowa and *University of Strathclyde

This is a pedagogical essay that suggests the value of Jiirgen Habermas’ theory
of communicative action to the critical accounting research agenda. We outline in
a broad way the formal pragmatic properties of accounting as communicatively
rational social action, juxtaposing those properties aga-inst more customary
senses of the term rationality in the context of accounting. Our claim is that
accounting acts always and already are implicated in the teleological possibilities
and actualities that inform objective, intersubjective, and private experience; and,
because accounting is so implicated, we argue that its legitimacy is seen to
depend upon democratic adjudication of reasons for and protests against
particular forms of accounting practice. That argument is advanced through
Haber-mas’ reciprocal notions of communicative rationality and Ideal Speech
Communities. Having made that argument, we then turn attention to
social-systemic reasons why accounting might be viewed as legitimate
despite deviations from these two reciprocal notions. The legitimacy of that
deviation is seen to depend upon a presupposition of trust. Through in all,
our primary purpose remains broad and pedagogical; that is, we are more
concerned to introduce a formal pragmatic typology of accounting as
rational social action and less concerned with excursus into particular,
diachronicstudies concernedto critique actual accounting practices.

Introduction
Accounting is teleological action in the broadest sense of that term-action oriented
toward human needs and desires that are not merely imperatives of
nature, and action that is a candidate for moral reflection and deliberation. In short,
accounting is highly situated in the context of human interests, and it is the relation
between accounting action and human interests that concerns us
in this paper. We view accounting’s relation to interests through the lens of
communication, a context where accounting has often been a home.’
Approaching questions of accounting’s relation to interests in a com-
municative way is different from subjectivist approaches; i.e., those that make
an ontological presupposition that interests originate with and attach to specific
individuals or groups. Interests, as we construe them, are pragmatic and not
subjectivist: their shape and character have to do with the intersub-jective
conditions which surround discourse oriented toward deciding upon how accounting
ought to serve a polity. We argue for a discursive arena in which any conceivable
claim about that shape and character can be brought
to bear upon accounting in a democratic and rational way. Interests and
Address for correspondence: Professor E. University of Iowa, Department of

Accounting. Iowa City, Iowa 52242, U.S.A.

Arrington.
Received 24 April 1990; revised 4 November, 26 7990; accepted 5 December 7990.
November
31

'045-2354/~1/010031+28 $03.00/O CCJ 1991 Academic Press Limited

32 C. 33. ~~~~~~~ and A. G. Paxty

accounting’s relation to them are not then determined but are fluid and
interactive. In this sense, we are pluralists; we do not offer a singular
substantive interest presumed sovereign over accounting. But in a more important
sense, we seek rational grounds for working through a pluralistic space of interests.
That entails a recognition that, while accounting may be of relevance to a practically
infinite number of interests, it nonetheless does (and
must) trade among those interests. Accounting action is always positively aligned
with certain interests, and it always ought to be contestable in terms of the interests
that it discounts and impedes. The important question then becomes how
accounting might come to relate to particular interests in a way that is grounded in
criticizable reasons and is, thereby, made rational. We suggest that the rationality of
accounting action as interested action depends
upon securing certain conditions of public argument that can be called
democratic.* By viewing the rationality of accounting as determined by
processes of democratic communication, we stand over and against the two
alternative means for the adjudication of interests-money and power.3
We appropriate our arguments from the work of Jiirgen Habermas;4 in our view,
the foremost social theorist of our time. Solicitous as that claim might
appear, it nonetheless suggests the importance of Habermas if we are to
break out of what Miller and O’Leary describe as accounting’s remarkable
insulation from important theoretical and historical debates that have tra-
versed the social sciences (1987, p. 235). Others have introduced some
Habermasian thematics to accounting, and we add some new ones: no single
essay can capture more than a smattering of the relevance of Habermas’
broad and systematic programme to accounting (for other work, see Laughlin,
1987; 1988; Roberts, 1988; Power, 1988; Puxty & Chua, 1989). We also have the
benefit of access to Habermas’ more recent Theory of Communicative Action, a text
which approaches the question of interested action in a manner different from his
earlier work.5
We begin with a discussion of accounting’s relation to interests, illustrating that
relation with some examples from extant research. Our objectives here
are (1) to establish the contestability of accounting with respect to interests;
(2) to argue that the possible ways of configuring accounting in relation to interests
are practically infinite; and, (3) to turn brief attention to the question
of whether interests can be rationalizedin accounting; that is, whether it is
possible and desirable to try and make accounting’s relation to interests be the
subject of reason and critique. This essay proposes a positive answer to
this question since we turn subsequentattention to a theory of the rational
adjudicationof accountingas interestedaction. In the next section, we
describe a three-fold typologyof relations between interests, communicative
practice, and accountingaction. In the section before the conclusions, we
discuss the ethical-politicalconditionsunder which accounting can claim
status as rational interested action. We conclude the essay with some comments
on the relevance of our work to critical theories of accounting, and we raise some
questions that confront both Habermas and our use of his texts here.

Two caveats are in order. First, Habermas’ work is massive and complex. We not
only extract from his work in a way that does injustice to its
 Acccsamtimg,interests, and ratimalty 33

systematic structure, we also adapt what we do extract to the context of accounting

with all the dangers that accompany a specialized approach to a
general social theory. Second, the thematics that we do extract from Habermas
are necessarily not well argued here. That is due to the constraints on a single
essay oriented toward accounting rather than toward phiiosophi-Cal exegesis. We
refer the reader to Habermas and his critics for such exegesis (see, for example,
Bernstein, 1985; White, 1989; McCarthy, 1979; Ricoeur, 1986).

Accounting’s Relation to Interests

Some Background
While the idea of accounting as a disinterested (or neutral) pursuit maintained
currency for most of this century,6 contemporary research is recovering a
concern with accounting’s contestable relation to interests. As Hopwood
(1989) notes:
“Accounting is coming to be regarded as an interested endeavour. Rather than
being seen as merely residing in the technical domain, serving the role of a
neutral facilitator of effective decision-making, accounting is slowly starting to be
related to the pursuit of quite particular economic, social and political interests.
The active and influential ways in which accounting is implicated in the
construction and propogation of notions of organisational and social control are
now starting to be addressed” (p. 141).
There are many examples of inquiry into how accounting relates to particular
interests. The economic consequences literature (see Zeff, 1978, 1981) recog-
nizes that accounting can have detrimental impacts on the ability of particular
people to fulfill their needs and desires; Neimark (1986) recovers a positive
sense of the public interest in accounting out from under the Hobbesian
atomism of a social theory grounded in private interests; Williams (1987) critiques
accounting from a Rawlsian perspective on procedural justice and
fairness; Lehman (1988) makes accounting contestable in terms of sexist,
ideological and political interests; Tinker, Merino and Neimark (1982) and Tinker
(1988) point to the normative origins of positive theories of accounting
[proponents of positive theory now confess that normativity, belated and
partial though such confession might be (see Watts & Zimmerman, 1990)].
Shearer and Arrington (1989) critique the masculine ideology embedded in
accounting’s income calculus, and Puxty and Chua (1989) correlate different
conceptions of the rationality of accounting with different configurations of interests.
Many more studies could be cited here, and they all point to the
descriptive accuracy of Hopwood’s claim with respect to contemporary
research and its understanding of accounting as an interested and contestable
Practice. The number of ways of configuring or contesting accounting’s
relation to interests is, for practical purposes, infinite-as different as all the
many ways of organizing economic action and communicating with respect to such
organizations.
We want to illustrate two quite different examples of the renascent concern with
accounting’s relation to interests in a bit more depth. Positive accounting
34 C. E. A~~~~~~~ md A. (6.
theory represents a radical paradigmatic shift inside neoclassical approaches to
accounting. Here, accounting comes to be seen as an economic good-a
factor of production to be managed strategically and efficiently in self-
interested pursuits. As Watts and Zimmerman (1990) state, positive theory
overcomes earlier “information perspectives” which subordinated accounting
to financial models and thereby ignored accounting’s relevance to appropria-tive
self-interests. These earlier approaches presumed that
II . . . accountingchoice per se could not affect firm value. fnformation is
costless and there are no transactioncosts in the Modiglianiand Miller
(1958) and capital asset pricing model frameworks. Hence, if accounting
methods do not affect taxes they do not affect firm value. In that situation
there is no basis for predicting and explaining accounting choice. Account-
ing is irrelevant” (1990, pp. 132-133).
Positive theory moves from the abstractcategory of “firm
value” to the
microeconomic and game-theoretic models of individuals strategically com-peting
for private wealth and utilizing accounting as a factor of production
with respect to that wealth. Accounting gets configured in between the interests of
creditors and debtors (Jensen & Meckling, 1976; Smith & Warner, 1979; Leftwich,
1983); owners and managers (Smith & Watts, 1982; Watts &
Zimmerman, 1978); and equity-holders and regulators (Zmijewski & Hager-
man, 1981; Zimmerman, 1983; Ball & Foster, 1982). Accounting can be
managed to coordinate actions (to, for example, write contracts that har-
monize reciprocal self-interests) or to produce wealth transfers that are
suspect in light of the various Lockean presuppositions embedded in neoclas-
sical property rights theory, a theory which provides the moral-political as well as the
economic context of positive accounting theory.
Tinker (1980) and Cooper and Sherer (1984) describe a political economy
approach to accounting that can, broadly speaking, umbrella a number of studies of
accounting’s relation to interests which take very different perspec-tives than those
of positive accounting theorists. Here, as with the “Cambr-
idge Controversies” in economics, the legitimacy of neoclassical theories of
interests (including property rights) is not presupposed but is instead the subject of
broader debates in welfare economics, the sociology of profes-
sions, and social, moral, and political philosophy (for accounting examples, see
Tinker, 1980; Tinker, Merino & Neimark, 1982; Armstrong, 1985; Neimark,
1986; Arrington & Francis, 1988; Lavoie, 1987). Social practices become
contestable on a number of fronts, and accounting is one of those practices.
Unlike the equilibrium-based and subjectivist perspectives on interests of
positive theorists, political economy approaches accent the conflictual and public
character of accounting’s relation to interests:
“Instead of assuming a basic harmony of interests in society which permits
an unproblematic view of the social value of accounting reports, a political
economy of accounting would treat value as essentially contested, with
accounting reports operating in specific interests (e.g., of elites and classes)”
(Cooper & Sherer; 1984, p. 218).
Like positive theory then, a political economy approach to accounting
recognizes accounting’s interested status. But unlike positive theory, political
economy approaches attempt to reintegrate the economic sphere into the
 A~~~~Q~~g, interests, and ratisnatity 35

broader domain of socially contestable interests, after particular 20th century

notions of marginalist economics (including positive accounting theory)
bracketed production off from that social sphere and presumed the sovereig-
nty of the appropriative and ahistorical interests of the autonomous self exercised
through the mechanism of the market. In many ways, the notion of political
economy is an attempt to recover the breadth of an earlier Enlighten-ment tradition,
albeit in the context of a very different set of social-economic tensions. Habermas
writes:
“As political economy, economicsstill held fast at the start to the relation of
society as a whole that is characteristic of crisis theories. It was concerned
with questions of how the dynamic of the economic system affected the
orders through which society was normatively integrated. Economics as a
specialized science has broken off that relation. Now it too concerns itself
with the economy as a subsystem of society and absolves itself from
questions of legitimacy. From this perspective. it can
tailor problems of
rationality to considerations of economic equilibrium and questions of rational
choice” (1984, p. 4).
A return to the spirit of political economy in accounting does not let
accounting “absolve itself from questions of legitimacy” by assuming the
sovereignty of the economic sphere and its contemporary fixation on the
individual’s private interest in wealth. Indeed, the “self-interests of the
self-interested” is perhaps more of the problem rather than the key to the solution in
a political economy approach.
These two examples-positive theory and political economy-not only confirm
Hopwood’s claim that accounting is becoming seen as an interested
endeavour, they demonstrate very different approaches to interests, action,
and the problematics of their alignment in accounting. We have detoured through
them in order to set the stage for the question before this essay-Can accounting’s
relation to interests be made rational all the while preserving the
space for a multiplicity of conflicting interests in accounting? Like positive theory, we
offer a rationality criterion for that relation. Unlike positive theory, we do not embrace
a singular substantive interest (economic self-interest) as the grounds for our
criterion. Like political economy, then, we embrace the
contestability of accounting as interested action due to the presence of a multiplicity
of interests that can be brought to bear upon it. Unlike political
economy approaches, we offer a rationality criterion that is (theoretically)
sufficient to the task of mediating contestability.

Rationality and Interested Action

With Habermas (and in general the neo-Aristotelian tradition of practical
philosophy), we understand the term rationality as having to do with the provision of
reasons for beliefs (e.g., interests) or actions (like accounting). Richard Norman’s
example illustrates very well how the notion of rationality
as the provision of reasons surpasses the solipsism of more common
conceptions of rationality like, say, “economic” rationality:
“To want simply a saucer of mud is irrational, because some further reason
is needed for wanting it. To want a saucer of mud because one wants to
enjoy its rich river-smell is rational. No further reason is needed for wanting
 to enjoy the rich-river smell, for to characterize what is wanted as ‘to enjoy
the rich river smell’ is itself to give an acceptable reason for wanting it, and
therefore this want is rational” (1971, pp. 63-64; cited in Habermas, 1984, p. 16).

Reasons are necessary to warrant a need or desire (an interest in mud or an

economic self interest). Merely wanting something can only rationalize that
want as a characteristic of consciousness-a utility function that obeys certain
axioms of preference for example. Economic rationality begins and ends as a
theory of consciousness. But as social action, any action (including something as
mundane as acquiring mud) may not be viewed as a rational act because the
context of action must be accounted for in a way that shows the act to be a
reasonable one, reasonable in a way quite more complex and indeterminate
than grounding rationality in the consciousness of actors can accommodate. To
steal the mud, or to pollute the river, or to sling the mud in other people’s faces
probably are irrational acts. Since action takes place in a social context,
it is always appropriate to ask the agent to give an account of that action through
the provision of reasons that go beyond the noetic world of privatized wants and
desires. Other interests are at stake in action. Even at the level of
rationalizing a noetic desire, rationality requires reasons that can be
differentiated in terms of their sincerity as expressions of subjectivity. For example,
we would not count a desire for mud as equally rational when the
subject is deranged rather than sane, is a compulsive liar rather than one whom we
can trust, or is in the business of selling mud to others.
In the same sense of a public concept of rationality, to
say that someone
acted in his or her self-interest is not the same as to say that the act was
rational-there is always a background of social norms and expectations that make
actions rational only in terms of the consent of others to the validity of reasons. To
murder, cheat, or steal because it is in one’s self-interests to do so (we might, with
Walter Benjamin, think of the history of Western property acquisition here), is to
perform an irrational act. To enter a market and buy high and sell low is likewise
irrational. Thus to speak of self-interest is to offer
a reason for an action. It is to make a criticizable validity claim that the action is reasonable
in its public context. The rationality of that action depends upon
intersubjectiveconsent to the adequacy of that validity claim, and, for our
purposes, actions can be viewed as rational when a consensus-of-belief is
formed (under certain political-instutional conditions that we will discuss
later) that the action is warranted by reasons. Such a warrant depends upon
processes of argumentation, not solipsistic inferences about other people’s
motives:
“We use the term argumentation for that type of speech in which
participants thematize contested validity claims and attempt to vindicate or
criticize them through arguments. An argument contains reasons or
grounds that are connected in a systematic way with the validity claim of a
problematic expression. The ‘strength’ of an argument is measured in a
given context by the soundness of the reasons; that can be seen in, among
other things, whether or not an argument is able to convince the
participants in a discourse, that is, to motivate them to accept the validity
claim in question” (Habermas, 1984, p. 18).
 Accounting, interests, am! ~~t~~~a~~ 37

Accounting’s rationality seems, to us, more adequately approached in terms

of human communication with respect to reasons for actions that in terms of
solipsistic and mentalistic grounds in subjectivity.7 That is because accounting is a
nublic report on the actions of others, and the value of accounting depends upon its
assistance in helping others seek reasons that justify such actions in their social
context. We choose then in favour of a concept of rationality wherein individuals
must surpass their private interests and arrive
at intersubjective understanding of tne reasonableness of social action.
Accounting ought to be more concerned, in our view, to participate in
processes of intersubjective understanding through discourse than to ground
its rationality in enhancements to the self-interested appropriate activity of solitary
subjects (see Habermas, 1984, p. 378).
Thompson’s somewhat lengthy passage describes Habermas’ notion of
communicative rationality in a manner consistent with our use of it in this
essay, a manner that distinguishes it from other approaches:

“When we use the term ‘rational’, observes Habermas, we assume that

there is a close connection between rationality and knowledge. We assume,
it seems, that actions or symbolic expressions are ‘rational’ insofar as they
are based on knowledge which can be criticized. In calling an action ‘rational’
we may presume that the actor knows, or has good reason to believe, that
the means employed will lead to success; in calling an expression ‘rational’ we
may presume that it bears some relation to the world and hence is open
to objective-that is, intersubjective-assessment. The former case, by
linking the term ‘rational’ to the notion of action oriented to success, offers
an intuitive basis for what Habermas calls cognitive-instrumental rationa-
lity’. The latter case links the term ‘rational’ to the notion of intersubjective
assessment and thereby points towards a broader concept of
communicative rationality ‘in which various participants overcome their
merely subjective views and, by virtue of the mutuality of rationally
motivated conviction, assure themselves of both the unity of the objective
world and the intersubjectivity of their life relations (Habermas, 1984, p.
28)’ ” (Thompson, 1983, p. 282).

From grounds in communicative rationality, there are two directions for theorizing
accounting’s relation to interests. They share in common a faith in
the possibility of rationally adjudicating between interests, and they are both fully
aware of the fact that aligning accounting with certain interests is both necessary
and injurious to other interests. They differ in terms of attitudes taken with respect
to that alignment. In the first case, accounting
theory seeks positive enhancements to accounting’s ability to serve the needs and
desires that it has opted for. Carl Devine’s view summarizes this position:

“Accountants, as representatives of a service function, must designate

(implicitly or explicitly) their host groups whose objectives are to be
accepted. Presumably the objectives of accounting become a set of
sub-objectives-means-that are consistent with those of the host
system.. . . This attachment-to whatever group-is the result of value
judgments!” (1985, p. 12).
33 e. 83.ArtigtoanandA. G. PM&J
From Devine’s perspective, a Deweyan-pragmatic perspective, the task of
accounting is to embrace certain interests and go about the business of
enhancing those interests. We think here of the way in which much
accounting research assumes that accounting serves the interests of capital
growth. The theorist then sets about the task of finding ways to improve the
efficiency of that service.
The second alternative is what we will call an emancipatory attitude toward
accounting’s relation to interests. Here, the theorist is less concerned to
“build” an accounting that serves a given interest and more concerned to
critique how existing regimes of accounting create and sustain social
pathologies that are injurious to other interests. Neimark (1986) uses the
terms of public interest accounting to adequately summarize what an
emancipator-y attitude toward interests that accounting impedes means for the
theorist:

“In recent years a growing number of accounting researchers have

recognized that public interest and social accounting are not autonomous
realms for cultivating ‘good deeds’ and paternalistic liberal ideas. . . They
are situating public interest accounting at the very center of an accounting
problem that concerns itself with the basis for adjudicating exchanges
between corporations and various social constituencies and factions
thereof (shareholders, creditors, nation-states, employees, suppliers, con-
sumers, and so on). In siting the accounting problematic in this fashion,
public interest accounting researchers are not redefining accountancy, for
adjudication of exchanges has always been the social function of account-
ing. What they are doing, however, is to make explicit the allegiances that
underlie contemporary and historical accounting practice and research in
order to increase the social self-awareness of accountants and to encourage
them to assume both a new set of alliances and greater responsibility for
the profession’s social role” (pp. xii-xiii).’

Habermas’ model of communicative rationality preserves a positive space for

progress in both serving given interests (e.g., Devine) and emancipating
other interests (e.g., Neimark). That is because it obligates theorists to provide
criticizable reasons for perspectives on accounting’s alignment with interests.
We now turn attention to more specific features of Habermas’ triptych of
interests-action-rationality, and. we begin with a typology of the three
“world-relations” that conflate interests, action, and rationality.

AGloss of Accounting as Interested Action

From origins in human interests, accounting action stands in a relation to and

has potential consequences for three worlds:’ (1) the objective world of the existing state
of affairs in which accounting intervenes; (2) the social world of
a polity for which accounting is done; and (3) the subjective world of the
individuals influenced by accounting. It follows then that the kinds of interests
that can be grounds for accounting action can perhaps be differentiated into
these three worlds-the objective, social, and subjective interests in account-
ing are different.
Table 1, which we modify from Habermas, schematizes the relation
 AccQ~~t~~, Merests, and rati~~a~~ 39
Table 1. Three relations between interests, action and validity
claims
Ontogenesis of Action: Human Interests ’
Type of interest Form of action Validity claim

Objective Teleological Success

Generalizable Norm-conformative Rightness
Private Dramaturgical Truthfulness

between interests, action, and claims about accounting as interested action.

At the outset of this essay, we fixed the ontological origins of accounting action in
human interests. We now start to move through Table 1 in a way
that differentiates interests and correlates them with theories of social action as
well as the kinds of reasons (validity claims) necessary to rationalize such action.
By a validity claim, we mean a reason offered as a candidate for the
rationalization of action.

Objective Interests, Teleological Action, and Success as a Reason for Accounting

Action
By objective interests, we mean the need or desire to intervene in the world of
existing state of affairs to. bring about a different state of affairs. Accounting’s
service to the economics of production is the best example here. An objective
interest materializes as te/eological’0 action, where:
“The actor attains an end or brings about the occurrence of a
desired state
by choosing means that have promise of being successful in the given
situation and applying them in a suitable manner. The central concept is that
of a decision among alternative courses of action, with a view to the
realization of an end, guided by maxims, and based on an interpretation of
the situation” (Habermas, 1984, p. 85).
Action guided by objective interests is best rationalized as “a game against
nature” such that all phenomena (including other people) are means toward
the “realization of an end” presumed given. The actor stands in a relation to
precisely one world, and she approaches that world as something to be
transformed into an alternative world. The validity of action is measured against a
validity claim to success, and success is evaluated in terms of-
(1) A criterionof truth-”whetherthe actor has succeeded or failed in
bringing his perceptions and beliefs into agreement with what is the case in
the world”; and,
(2) A criterion of efficacy-” whether (the actor) succeeds in bringing what is the
case in the world into agreement with his desires and intentions”.
When reasons are given for accounting in terms of truth and efficacy, those
reasons are grounded in an attitude toward objective interests. Objective interests
and their alignment with a teleological concept of action are the most
Common orientation toward the evaluation of accounting. Whenever, for example,
goals and objective functions are presumed given and without need
for further rationalization, then the task of accounting is success in achieving
 C. IJL Amiqton and A. G. Pmty

them. In the broadest sense, the notion of an objective function expresses the
desire to move from one objective world to another.
The economics of information-in the broadest possible sense-is a good example
of rationalizing accounting in terms of objective interests, teleologi-
cal action, and validity claims to success. Here, accounting is a form of
information designed to reduce uncertainty with respect to “what is the case
in the world” (the state of nature) with an already presupposed objective
function (say, maximization of profits) and accounting-conditioned probabil-ities of
success in bringing about alternative states efficaciously. This broad
thematic takes various metonymic forms like accounting’s cartographic role
(the representation of “facts”), its role in efficiently coordinating instrumental
action (budgeting, incentives, contracting, organizational design), its tech-nological
adequacy (i.e., its value as an economic good as measured by
standards of its efficiency with respect to the conversion of inputs-an
existing state of affairs -to a desired output-an alternative state of affairs);
and, finally, its usefulness in game-theoretic processes. Anytime accounting is
cast as a means toward ends presumed given and unproblematic, then it is
best rationalized as teleological action oriented toward success in fulfilling
objective interests. There are as many ways of construing and contesting
accounting here as there are ways of interpreting “what is the case in the world”
(empirical validity) and ways of organizing relations of production to
arrive at an alternative objective world. The dominant metaphors here are
accounting as accurate representation of facts and accounting as an efficient
technology.
The triptych of objective interests/teleological action/validity claims to
success sets aside both the question of the rationalization of ends and the question
of constraints on the means to achieve them. In that sense, it is a regime of
accounting where any end and any means to arrive at that end are presumed
admissible. The poverty of this triptych as a totalizing theory of accounting as
interested action is that it suspends the context of social norms
which constrain both the kinds of worlds (ends) we can legitimately pursue
and the means we can employ in that pursuit. Accounting cannot, for
example, legitimately function in our society as action oriented toward a terrorist’s
interest in the production of nuclear weapons. Nor is it exempt from critique by those
who view its service to the production of such weapons for our military institutions
with suspicion. Likewise, the efficiency of production
cannot, in our society, reach to means like institutionalized slavery or the
overt dumping of toxic waste on our neighborhoods. Such dramatic examples
perhaps ought to yield to more mundane ones like contestability with respect
to the organization of production, a public choice certainly contestable in ways that
surpass the technical efficiency of various economies of production.

Generalizable Interests, Norm-Conformative Action, and Rightness as a Reason

for Accounting

The teleological model of a single actor legitimately treating the rest of the
world as something to be objectified and acted upon instrumentally in a
“game against nature” suspends arguments with respect to generalizable
 Accounting, interests, and rationality 41

interests and approaches the social world as a means to be used toward a

presumed end. To move toward a more comprehensive theory of
accounting’s relation to interests, we draw upon Habermas’ concept of the
lifeworld of a community as a “totality of interpretations presupposed by the
members as background knowledge”” to posit generalizable interests as
those intersubjective needs and desires that position action in the context of
values, norms, laws, mores, etc.” that are definitive for a polity. These
interests are not attributable to origins in individual (subjective) needs and desires,
despite the archaic and modernist tendency of accounting theory to
presuppose that anything greater than the autonomous subject is a “fiction”
(see Jensen & Meckling, 1976; Jensen, 1983). The capacity of nations,
organizations, communities, families, etc. to preserve a meaning and an identity
apart from the finitude and fancy of individual members is empirical evidence for a
positive concept of generalizable (or public) interests, as is the fact that identity as
an individual (including a sense of one’s self-interests,
preferences, etc.) can only come from the learning processes embedded in social
history that give rise to the very concept of “self”.
Generalizable interests have their complement in theories of action that
Habermas describes as normatively regulated action:
“The concept of normatively regulated action does not refer to the behavior of
basically solitary actors who come upon other actors in their environ-ment, but to
members of a social group who orient their action to common values. The
individual actor complies with (or violates) a norm when in a given situation the
conditions are present to which the norm has applica-tion. Norms express an
agreement that obtains in a social group. All members of a group for whom a given
norm has validity may expect of one another that in certain situations they will
carry out (or abstain from) the
actions commanded (or proscribed). The central concept of complying with
a norm means fulfilling a generalized expectation of behavior. The latter
does not have the cognitive sense of expecting a predicted event, but the
normative sense that members are entitled to a certain behavior. This
normative model of action lies behind the role theory that is widespread in
sociology” (Habermas, 1984, p. 88).

Adding normatively regulated action to teleological action means that the agent
now stands in a relation to two worlds: the objective world toward
which success-oriented action is directed and the social world that brackets
that action inside generalizable norms and expectations. The rationality of an
action-which depends upon the provision of and adjudication of reasons for
action-now draws not only upon truth and efficacy but also upon claims
about the rightness of that action, with rightness understood as a claim that
the action is grounded in the collectively recognized expectations of a
community with respect to norms of action. These norms are “. . general
ought-sentences or commands that count as justified among the addresses”
(Habermas, 1984, p. 88).13
The relevance of generalizable interests and norm-conformative action to
accounting is obvious. We will mention a few examples here and defer some to a
later section of this essay. Paul Williams (1987) points out how accounting
functions primarily as a restraint on action, and he argues the priority of
restraint over facilitation for the rationality of accounting. Accounting is seen
 42 C. E. ~~~~~ ared A. G. B&y
as enforcing certain norm expectations on what would otherwise be uncon-

strained teleological action (e.g., a “free” market for production, labour

relations, technology, investment, etc.). Relatedly, all the academic work that
has to do with accounting’s relation to governmentality, regulatory structures,
statutory law, etc. is articulated in terms of a generalizable interest in
commercial activities. The audit function fits here, and so do any number of
concerns like the relation between accounting and culture, organizational
contingencies, the politics and morality of multinational profit-making, the
intrusion of Western modes of production and capital markets into the Third
World, the distributive consequences of taxation, public policy, etc. Similarly,
other studies examine accounting in terms of its relation to class interests, to
budgetary and organizational politics, and to other socio-political categories
that can be isolated as embedding accounting inside the ethos of particular
people at particular times and places. Accounting can thus be judged against
standards of rightness embedded in a given ethos.
Our point is a simple one-accounting is contestable in terms of its relation
to identifiable generalizable interests that can be differentiated in any number
of ways (cultural, legal, organizational, social, political, etc.). And in a
self-designated pluralist democracy,14 especially one like ours, one without a
consensus with respect to the summum bonum, interpretations of rightness
are many and varied. And perhaps because such diversity makes arguments about
the rightness of action heated and complex, or perhaps because of our confused
attempt to model the social sciences after a science of stars and
rocks, it has become a particular character of our modernistic Western
anthropology not to want to engage in public argument with respect to norms. As
Alasdair Maclntyre (1984) and Habermas both point out, questions
of rightness thus get adjudicated in the only place they can-the courts. That is
because a practice that disclaims its normative influence still has to respond
to the normative contestability of its actions. If accounting is concerned about
its vulnerability to litigation, evading questions about its normativity might be
one reason why that predicament exists.
By adding the triptych generalizable interests/norm-conformative
action/validity claims to rightness, we stand accounting in relation to two worlds, the
objective world (of objective interests and teleological action) and the
intersubjective world of a polity’s norms and values. Rationalizing account-ing now
requires reflection on both the ends and the means of action, and the
validity of ends (presupposed in the teleological model) becomes contestable
intersubjectively. Unlike the teleological model, interventions in the world are
now conditioned by, social expectations with respect to what is and what is
not legitimate action (what ends are acceptable and what means can be
utilized to arrive at those ends). Accounting, perhaps more so than any social
practice, tacks between an interest that appeals to teleological action (e.g.,
unconstrained economic production) and norm-conformative action (con-
straints placed on economic production) (see Williams, 1987).

Private Interests, Dramaturgical Action, and Truthfulness as a Reason for

Accounting
Finally, we address the relation of accounting to private interests-those needs and
desires that stand inside a subjective world of what is not common
 Accowting, imterests, and rationality 43

and to which only one individual has privileged access (Habermas, 1984, p.
52). This is the domain of preferences, beliefs, imaginations, wills, desires,
motives, etc. that are not legitimately abstracted beyond the individual.
Accounting is a form of action that has unique consequences for private
interests-it is a complex human practice that affects the lives of millions of
people in millions of different and non-innocent ways.
Private interests can be aligned with accounting through the concept of
dramaturgica/ aCtiOn :

“From the perspective of dramaturgical action we understand social

action as an encounter in which participants form a visible public for each
other and perform for one another. ‘Encounter’ and ‘performance’ are the
key concepts. . . . A performance enables the actor to present himself to
his audience in a certain way; in bringing something of his subjectivity to
appearance, he would like to be seen by his public in a particular way”
(Habermas, 1984, p. 90).
Accounting is a form of action that represents the actions of others in ways
that are obvious in terms like performance evaluation, responsibility account-ing,
efficiency, etc. The accountee is ‘on stage’ so to speak, and the accountant
records her. actions in ways that feed back into self-identity (see Miller &
O’Leary, 1987; Roberts, 1988), economic well-being (Watts & Zimmerman, 1978,
1979), the overall quality of an individual life (see Cherns, 1978; Roberts, 1988),
and third-party images of the accountee (Williams, 1987). Indeed, the subject
comes to see herself through the language of accounting, such that
the very notion of self-identity (ego) is constructed, in part, through account-ing
(alter).

The validity of accounting depends here upon a somewhat ambiguous

sense of the truthfulness of accounting as it presumes to represent the
subject15in an authentic and meaningful language of the presentation of self.
This representation has consequences for the private needs and desires of the
subject presented (terminations, promotions, stress, despair over work, etc.)
as well as for others (erroneous evaluations of performance, etc.). Accounting is
thus seen to stand in relation to interests that are not identified as objective
or generalizable interests simply because the private lives of those about
whom accounting reports and the force of accounting in those lives are not
completely accessible. There is always a uniqueness and specificity to needs and
desires in private experience, and accounting is an empirical force in the
construction of and responses to those needs and desires.

Summary
Accounting’s relation to interests can be construed in terms of a three-world model
of interested action. Accounting stands in relation to (1) the needs and desires of
humans to intervene in the objective world; (2) the needs and
desires of humans to recognize themselves as members of a community sustained
by norms and values that go beyond the private desires of each individual citizen;
and, (3) the needs and desires of an individual, needs and desires to which she
alone has privileged access. We cannot imagine an
accounting act that escapes any of these three relations to interests as accounting
is always at least (1) a means toward economic ends that (2) are
the norm-governed ends of some particular polity and that (3) are consequen-
44 C. I!.. ~~~to~ and A. 6. Buxty

tial for individuals with unique needs and desires. Accounting thus stands in
contestable relation to three worlds:
1. The objectiveworld (as the totality of all entities about which true statements
are possible). Here, accounting becomes contestable in terms
of success (and the two conditionsfrom which success can be
evaluated-truthand efficiency);
2. The social world (as the totality of all legitimatelyregulated interpersonal
relations). Here, accounting becomes contestable in terms of the norma-tive
rightness of accounting action; and,

3. The subjective world (as the totality of the experiences of the individual
to which he, and he alone, has privilegedaccess). Here, accounting
becomes contestable in terms of its consequences for private experience.
(adapted from Habermas, 1984, p. 100).
What makes accounting both important and contestable is precisely the complexity
of acting in a way that assimilates these three worlds and thereby accepts
attendant obligation to rationalize such action through the relevant types of validity
claims. We now turn attention to a brief excursus into the
social-political conditions that would make such rationalization possible.

The Rationalization of Accounting as Interested Action

The Ethical Grounds for the Very Possibility of

Rational Social Action
The contribution of Habermas as a social theorist is the paradigmatic potential he
offers to reconstruct the rationality of social systems from the metatheoret-
ical spheres of (1) communicative (rather than teleological) action and (2) the
philosophy of language (rather than the philosophy of consciousness)
(adapted from Thompson, 1983). Social action is not first “goal-directed”
(teleological) nor is society first a place for solitary subjects to materialize the
noetic (consciousness). That is because goals are themselves constructed out
of the dynamics of intersubjective assent to (or refusal of) them. Goals cannot then
be first understood from inside a social space where language is simply
a means toward their public representation, nor are they brought to language by a
Cartesian subject presumed fully armed with them. Instead, goals are
themselves products of communicative interaction where-in interaction with
others, and in drawing upon the background presuppositions embedded in
the life-world shared with others-the possibility of social action and the
materialization of the goals that drive that action are born and rationalized
contemporaneously with the raising and questioning of validity claims
intersubjectively; that is, attributable neither to subjectivity nor to the imperative to
act upon the objective world:
“This concept of communicative rationality carries with it connotations
based ultimately on the central experience of the unconstrained, unifying,
consensus-bringing force of argumentative speech, in which different
participants overcome their merely subjective views and, owing to the
mutuality of rationally motivated conviction, assure themselves of both the
unity of the objective world and the intersubjectivity of their lifeworld”
(Habermas, 1984, p. IO).
 Accounting, interests, and rationality 45

Casting the fate of rationality absolutely and completely to the dynamics of

‘unconstrained argument” means that the grounds for social actions like accounting
are not first teleological and epistemic but ethical in the broadest
sense-the moral conditions that inform discursive relations between moral
subjects. In this case, the case of communicative action, we can speak of
“teleology” only in the sense of the goal of arriving at a rationally motivated
consensus with respect to the shape and rationality of accounting action, and
we can speak of the validity of accounting knowledge (epistemology) only
a&r conditioning that knowledge by the ethics that informed intersubjective
adjudication of competing interests (objective, generalizable, and private interests).
In a word, we first need knowledge of how a polity interacted to produce a practice
like accounting before we can make intelligible judgements
about the objective success of accounting, the normative rightness of
accounting, and the validity of accounting’s influence in the private lives of those
affected by its practice.
Habermas provides an ethical-political model-what he terms the “Ideal Speech
Community” -as a regulative ideal to guide public argument oriented
toward the formation of a rational consensus with respect to the shape and
rationality of interested social actions. That model binds public argument to
the following procedural conditions of justice-in-argument, and it is the ethic
that provides the foundation for his social theory. The morally-binding norms of
argument oriented toward deciding the course of interested social action are:

1. Every subject who so desires is allowedto participate in discourse

oriented toward determiningthe shape of accounting action.
2. Each subject is allowed to offer any proposal (raise a validity claim).
3. Each subject is allowed to question any proposal.
4. No subject is coerced by forces either inside the discourse or outside the
discourse in using the rights expressed in (I), (2), and (3).16

That is, to our knowledge, the best available model of democracy-democracy

as a social order in which an intelligible public will takes shape as a
consensus-of-belief about how to coordinate actions through the uncon-
strained arguments of the citizenry. It is a model which recognizes that
societies (especially complex ones like ours) must trade-off competing interests
since they must coordinate collective action and build institutions that are injurious
to particular interests at particular times and places. Thus no one is going to “have
their way” all the time, and rational communication
requires each to surpass his or her merely “subjective” interests in favour of a
public consensus. If the axioms of “Ideal Speech” were to be actualized,” then that
consensus will form around, in Habermas’ terms, the “unforced force of
the better argument”. It is a consensus that recognizes the pragmatics of conceding
one’s private needs and desires at times, and it is a consensus that recognizes the
rights of those chosen against to contest the shape of social
action-to always be able to criticize the validity claims on which public action is
seen to depend. What matters is not that we get our way but that we are
46 6. E. Barrington and A. G. Putty

able to accept those dysfunctions without compulsion:

“the consequences and side-effects for the satisfaction of the interests of
every individual, which are expected to result from a general
conformance,. . can be accepted without compulsion by all” (Habarmas,
1982, p. 257).

Discourse-rather than money or power- is the only available medium

through which the course of social action is determined “without compul-
sion”. In the case of money (e.g., a theory of markets), compulsion takes the
form of differential command of resources. In the case of power-either in the
vulgar form of an authoritarian will or the more subtle (but perhaps more
effective) form of “bureaucratic expertise”-compulsion takes the form of differential
command over language [e.g., central planning, agenda setting, or
privatized social languages (like accounting, legalism, expert systems, the press,
etc.) I. l8 In the case of money, one can “speak” only until the money runs out, and
one can speak longer and louder the more one has. In the case
of -“power” one can speak only if one “knows” the language (linguistic
competence) and has a forum to use it. Thus Julia Kristeva can define a
“victim” as one who lacks language; and, to the extent that public choice “speaks”
through money or power, it takes on the decidedly undemocratic shape of
victimization. Money and power are both media of public choice that
violate axiom (4) of our rendering of the Ideal Speech Community, our rendering of
a democracy.

The System Imperatives that Confront Rational Social Action: A Conclusion

about Trust
It would be perverse indeed to offer the Ideal Speech Community as an
empirical hypothesis about the machinations of accounting in toto. The
complexities of post-industrial economic experience are hardly the place to always
insist upon the town meeting or ,the Greek agora, and to assume as
much is to lapse into what Habermas calls “the hermeneutic idealism of
interpretive sociology” (Habermas, 1987, p. 151) at the theoretical level or
something like the unwieldy Swiss notion of “democracy through plebiscite” at the
practical level. In place of such idealism, Habermas gives a positive sense to the
notion of social systems that function routinely to “steer” social
action according to structural (and not communicative) criteria. Like stop
lights, queues, and the Ten Commandments, accounting coordinates social
actions efficiently by institutionalizing such actions according to systemic
“rules” that are presumed immune from contestability in the course of ordinary
experience.”
And this is where we would locate Devine’s notion of
the theorist choosing
in favour of positive enhancements to accounting under the assumption that the
alignment of accounting with interests can be presumed, at least for the
moment, unproblematic. Accounting is certainly an efficient means for the
coordination of action-it is a simple economic calculus that can be applied to a wide
range of exchanges and social interactions with fairly minimal effort.”
Under a set of background assumptions like (1) unproblematic ends; (2)
normatively legitimate hierarchical structures inside organizations; (3) the
 Acwunting, ih=m2sts, and ratisnali 47

moral innocuousness of the relations of production embedded inside an accounting

system; and, (4) the validity of measuring “value” (or people) in
terms of money-then accounting can be approached as a form of teleological
action contestable in terms of its success in objective transformations of the world.
This is precisely the systemic level at which most accounting research
gets done.
But this does not mean that the actions that accountants perform can be
legitimated with a simple appeal to their “efficiency” with respect to a set of
background assumptions. It means that the systemic need to coordinate social
action in a complex economy makes it (1) impossible to routinely submit
action to the empirical realization of communicative rationality; but, nonethe-
less, (2) obligatory to bind actors to stand ready to redeem validity clairr~s when
(and if) called upon to do so. There is then, in the course of ordinary
accounting experience, a presumption that validity claims are grounded and that
they could be made rational if called into question. Habermas refers this
sort of “redemption by exception”, this presupposition of validity and willingness to
redeem that validity, to the metaphor of a warranty:
“We are now in a position to say that a speaker can rationally motivate a
hearer to accept his speech act offer because.. . he can assume the
warranty [GewZhrtl for providing, if necessary, convincing reasons that would
stand up to a hearer’s criticism of the validity claim. Thus a speaker owes the
binding (or bonding: bindende) force of his illocutionary act not
to the validity of what is said but to the coordinating effect of the warranty
that he offers: namely, to redeem, if necessary, the validity claim raised
with his speech act.”
The notion of a warranty suggests that, in an important sense, social systems like
accounting do not first coordinate action. They first coordinate trust, and
Peter Armstrong has made an excellent beginning in a research programme
oriented toward the centrality of trust to accounting as a social system (1990). As
close readings of Habermas have suggested to us, the rationality of social systems
is not grounded in success (or efficiency) but in the trust that binds
members of a community through the warranties (with respect to truth,
rightness, and truthfulness) always already presupposed in social action. A
sustainable society is not one that binds itself through success-as the history
of solidarity among oppressed and “failed” groups demonstrates-but thro-
ugh trust. Accounting has always made much ado about trust: and in implicitly
raising a validity claim of trust, accounting actors may or may not be
able to redeem this claim. Indeed, since in current social formations their actions
are essentially strategic, governed by a nexus of power and wealth, they are
unlikely to be able to do so. But such a warrant is, in a free society,
normatively obligatory; and, the social tensions that confront accounting are
symptomatic of the crisis that accounting faces with respect to redemption of that
warranty.

Summary and Conclusions

We have offered here merely a sketch that offers some potential for radically
shifting the rationality of accounting action away from a focus on technical,
48 C. E. Arlington and A. G. Pwty

economic interests and toward a broader notion of structures of communica-

tive action with a consequent significance for both accounting theory and practice.
We can summarize our theoretical sketch as follows:
1. That accounting‘sorigins reside in human needs and desires; and, for that
reason, accounting is a form of moral action.
2. That human needs and desires (interests) are infinitely different. There is
an inexhaustiblereservoir of perceptionsof “the good and just life”
each of which has much to commend it. In this sense, accounting’s relation
to human interests is infinitely contestable.
3. That Habermas’three-worldmodel of interests/action/validity claims
with respect to objective/social/privateexperience is a theoretically
useful way to reduce the infinity of ways of configuring accounting as
interested action.
4. That accounting acts always have consequencesthat bear upon all three of
these worlds.

5. That the rationalityof accounting depends upon the adjudication of validity

claims as governed by the axioms of the Ideal Speech Com-
munity. This entails not only certain ethical-political relations but also a
recognitionthat individualsmust surpass their subjective needs and
desires and ground action in an intersubjective consensus to which all
can, theoretically,assent without compulsion.
6. That in the complex, post-industrial world in which accounting operates, the
validity of accounting need not and cannot be established at every turn; rather,
there is a warrant behind that action such that the
accountant could-if called upon to do so-redeem the requisite validity claims.

7. That the alternative to communicativerationality, either as an empirical

event or as a warrant, is the coordination of social action through money or
power.
This sketch-all too brief and “unjust” in terms of the rigour and comprehen-
siveness of Habermas’ work-suggests both a need for more in-depth
exegesis of communicative rationality as a formal-pragmatic model for
accounting and a number of directions for accounting theory and its hypotheses. At
the theoretical level we have only paid close attention to the
broad and introductory moments of The Theory of Communicative Action,
and we have not even engaged in a meaningful way the most relevant
thematic of Habermas’ work for accounting-the tensions between system and
lifeworld, particularly in the context of money as a systemic coordinating
medium for social action and how such a role for money is problematic. Much of
Volume II of Habermas’ text is devoted to that tension. But the comprehen-
sibility of accounting’s place inside that tension depends upon excursus into
the theory of communicative rationality that we have outlined here. In this
sense, we view our essay as a necessary prolegomenon to more accounting-
specific particularities of critical reflection on accounting as rational social action.

We need to defend the abstract, perhaps metatheoretical, approach to accounting

that we have taken here. And to do so, we would view our work as
 Accoantiq, interests, and ra~~~~~ 49

a kind of “formal-pragmatic& that is necessary as an antecedent to empirical

inquiry, Habermas makes the point better than we can:

“An empirical pragmatics without a formal-pragmatic point of departure would not

have the conceptual instruments needed to recognize the rational basis of
linguistic communication in the confusing complexity of everyday scenes
observed. It is only in formal-pragmatic investigations that we can secure for
ourselves an idea of reaching understanding that can
guide empirical analysis into particular problems-such as the linguistic
representation of different levels of reality, the manifestation of com-
munication pathologies, or the development of a decentered
understanding of the world” (Habermas, 1984, p. 331).

We can, briefly, suggest some directions for critical theory in accounting if it

desires to take the formal-pragmatic and normative structure of communica-
tive rationality as its theoretical point of departure. In this way, we redeem our
promise to motivate Habermas for emancipatory work in accounting (recall
Neimark, 19861.
Accounting offers perhaps a more fertile ground for empirical inquiry into
distortions in communicative rationality than any other social science. That is
because accounting, more so than any other practice, replaces communicative
action as the grounds for social action with the “delinguistified” media of
money. That is not in and of itself productive of social pathologies. As we
have argued, the warranted character of validity claims permits systemic
analogues to communication.
A system like accounting becomes social-pathological-and thereby a
candidate for critical empirical inquiry-when the turning over of communica-
tive action to accounting produces side-effects that are injurious to certain
interests and preclude the rights of the disaffected to a genuine form of
protest: a right to originate a public argument in terms of critique of a
warranted validity claim. In this simplest and most profound sense of protest,
to detour around communicative rationality-to deny its claim-is to suggest
to the “other” that she has no right to speak, no right to be taken seriously. It
is accounting’s capacity to take away rights to serious speech that is the task
of critical theory. We see three lines of inquiry that we will mention without
argument.

(1) The Reification of Communicative Practice. Accounting is a discourse of

expertise and, as such, retains an invisibility in the public sphere: the very notion of
“public discourse” with respect to accounting begins to seem like
nonsense because the public cannot speak accounting. The subjection of humans
to the control and discipline of accounting systems takes place “over their heads,”
and their capacity to protest that subjection is erased at the outset because they
are illiterate with respect to how accounting embodies an objective, social, and
private semantics. Absent the linguistic competence to participate in accounting
those about whom accounting accounts lack critical
force over accounting.Accountingtherby reifies the objective, social, and

Private spheres by privatizing structures of communication. The sociology of

Professions (e.g., Larson, 1977) articulates the political-economic reasons for
58 C. E. Amington and A. G. Pwty
the privatization of accounting language and its requisite consequences for

the polity, and Armstrong (1985), Loft (1986), and Miller and O’Leary (1987;
1989) all take different routes to empirical inquiry into accounting’s profes-
sionalized “delinguistification” of public argument. These studies provide
models for subsequent research, research which can take constraints on
rational communication as its thematic.
A second direction for research is evident in Roberts (1988) and
Arrington and Francis (1989). Here, a hermeneutic of suspicion is adopted
with respect to orthodox accounting practice because of its reified structure.
The sense is that orthodox accounting is not accounting in any positive sense,
and the research task is to find alternative theories of accounting and
alternative modes of its practice. Roberts reveals how most accounting takes
place in structures of informal organizational discourse outside the hierarchi-
cal structures of professionalized accounting. Arrington and Francis suggest
that accounting can be structurally differentiated as a form of language that is
manifest in ordinary conversation, journalism, and even literary texts. The
goal of such research is to stand outside the taken-for-granted presupposi-
tions about what accounting is and what it is not in order to differentiate a
communicatively rational discourse theory of accounting from the delinguis-
tified professional and institutional practices that reify communication. Such
rational practices of accounting are likely to be empirically available in small
groups without constraints on discourse and mutual action.

(2) The Differentiation of Interests and the Shqalacity of Action. Habermas’

model provides a way to retain a pluralistic view on interests and the
contestabilityof accounting’salignmentwith identifiableinterests. This
insures the process of continuousreflectionand debate with respect to
accounting.At the same time, it is a model groundedin a philosophy of
action-thesocial theorist is compelled to recognize that action must not only
be aligned with interests but also that action, as a singularity, contem-
poraneously has consequences for objective, generalizable, and private interests.
The actor, unlike the theorist, cannot afford the solipsistic luxury of
choosing one interest, inferring one appropriate response to that interest, and
evaluating that response in terms of one validity claim. The recognition of the
tension between a plurality of interests on the one hand and the singular
character of accounting action on the other has implications for the two approaches
to accounting as interested action that we identified earlier.
Positive theory concedes accounting’s interested status and then proceeds
to adopt a singular interest (wealth appropriation) as a telos for accounting. In
extreme forms (e.g., Jensen, 1983) a political theory and a moral theory are
appended to the sovereignty of this singular interest. The good society is seen as
one where each individual can pursue private wealth, and the normative order of
that society is one in which the “fittest survive”. This is an argument as old as
Thomas Hobbes and rehearsed recently in Robert Nozick’s Anarchy,
State and Utopia-objective interests are interests in private property; generalizable
interests call for a minimal state that functions only to protect
property; and private interests (subjectivity) can be elided with a utility
function. In this way, positive theory tells a coherent story about action-it can
 Ascounting, interests, and raGmality 51

specify what action ought to be taken to realize the objective, generalizable, and
private interests that it adopts. But it cannot tell a coherent story about a
multiplicity of interests -those that contest the adequacy of appropriative self-
interests as a theory of economics (objective interests) of society (genera-
lizable interests) and of self-understanding (private interests). The political
economy approach can, on the other hand, account for a multiplicity of interests but
has difficulty coming to terms with the singularity of action as it
confronts its own contestability-something has to get done, and in getting
something done accounting always injures certain interests.
Habermas’ formal-pragmatic model can respond to the weaknesses in these
two approaches. Like positive theory, it recognizes the singularity and imperative of
action. Like political economy, it does not try to tell a singular story that treats
interests as a unity. What it does provide is a normative
model of procedures for the adjudication of interests in public discourse which must
culminate in a rational assent to a singular course of action. In this way, it does not
confuse the complexity of questions about “the good life” with the theorist’s
imperialist view of that life (e.g., positive theory’s
implication that everyone wants to be an appropriator of property and a
libertarian driven by his utility function), nor does it let that complexity
paralyze action. The model of rational communicative action distinguishes
between a morality of just action that follows from just adjudication of interests and
an obligation to keep questions of the good life maximally open:
“moral questions which, under the aspect of universalization or justice, can
in principle be decided rationally, (are distinguished) from evaluative
questions. . . which present themselves under their most general aspect as
questions of the good life, and which are accessible to a rational discussion
only within the horizon of a historically concrete life form or individual life
history” (Habermas, 1982, p. 251).

From here, we would align our essay with political economy approaches
since they keep accounting contestable in terms of different configurations of
production, of property, of welfare economics, of property rights theory, of
social, political, and organizational theory, of ethics, of subjectivity, etc. And
we would offer the notion of communicatively rational action as an enhance-ment
to political economy approaches capable of opening a research window
on questions about how interests are in fact adjudicated in accounting and how
particular accounting acts do and must transpire with both empowering
and pathological consequences. We would also offer positive theory the
opportunity to engage in debate with respect to the interests that it
fosters-instead of hiding behind the naturalistic (and ultimately religious)
metaphors of “survival of the fittest” and a solipsistic and ahistorical motive to self-
interest, this would give positive theory a chance to rigorously argue
the legitimacy of presupposing that accounting’s service to a society gov-
erned by a radically individualistic morality and the “useful tautology” of “Survival of
the fittest” is-in fact-in our “best” interests (see Jensen, 1983).

(3) Accounting as the Ontogenesis of Interests. Though differing in important

respects, our essay complementssome emergentresearch into accounting’s
52 c.

place not as a response to human interests but as the ontogenesis of those

interests. For example, Miller and O’Leary (1987; 19891, Roberts (1988), and
Cherns (1978) point out how accounting does not so much serve subjects as it
constructs the very notion of the self.” Through accounting, humans come to see
themselves as others see them, and they embed that identity inside their
subjectivity. That embeddedness in turn feeds back into private interests. In
the same way, an organization (a polity) discovers what its generalizable
interests are through accounting reports (see March, 1987)-accounting is a source
from which norms are derived. In terms of objective interests, the dialectic of
accounting as a response to interests and accounting as the origin
of interests is even more clear: the idea that accounting numbers are
“images” around which objective meaning takes shape is commonplace (see Davis,
Menon & Morgan, 1982; Morgan, 1988; Chua, 1986; Lavoie, 1987; Hopwood, 1989
and others). The objective conditions of lived experience are
not-as post-empiricist philosophy of science has shown-conditions that are
given over by physics but are instead hermeneutically-shaped constructions
of meaning through language. Thus the very notion of an asset, or an
organization, or value, or wealth and our interests in those objects is
constructed out of the communicative practice of accounting and the her-
meneutical task of making sense of our world through interpreting account-
ing. It is not things in themselves that are meaningful, or true, or false, or needs, or
desires; instead, it is the meanings that we identify with those
“things” through communicating with each other. The difference between “true” and
“false” objective worlds is the difference between rational and
irrational communicative action: to come to understand the world through
processes that are systematically distorted is to come to understand a world
that is false. Accounting, to the extent that it assists in the construction of objective
meaning, is part and parcel to that truth (or that falsity).
We will conclude with a brief comment on Habermas’ controversial status.
Like his critics, we have our doubts about his
programme; but, we would add,
vulnerability to frequent critique is a sign of a rigorous scholar. First, Habermas tells
us very little about what we should or should not argue
about.” This was more characteristic of his earlier work than it is of 7%e
Theory of Communicative Action, particularly the latter sections where he
discusses the crisis tendencies of modern systems like markets and state apparati.
Second, Habermas tells us very little about who counts as a member
of a discourse community. In an important way, he sidesteps the post-modern
question of inclusion and exclusion. Third, he embraces consensus as the
objective of social discourse, placing him squarely in the liberal tradition of
civil public participation. Consensus theories are suspect once one recognizes
that all it takes is one individual acting strategically to exploit the “trust“ of
others ethically-committed to reciprocity and mutual understanding. As
Alasdair Maclntyre notes, where the virtues flourish so do the vices (1984). The
many different ways in which bureaucrats, politicians, administrators, elites within
the profession and other sorts use the pretense of the open, public meeting to
shove their agendas down the throats of the unwitting are cases in point.

There are many other criticisms of Habermas that we will not address here.
 Accoontig, interests, arnd r&m 53

gut there is one suspicion we have about Habermas’ programme that has
profound implications for accounting. In a world of global capitalism, one
recognizes the irrelevance of public life to capital growth. In a word, capital
becomes immune from political will simply because it can span political
boundaries in milliseconds-capital does not go through customs; it bounces off
satellites. As Marx well knew, capitalism is a structural phenomenon
governed by a single objective-it must grow in order to remain capitalism.
We see the empirical manifestation of that insight today: the migration of
capital to the most “efficient” (often meaning lowest paid) sources of labour and
the resultant implications of that migration for a deskilled Western labour force and
an exploited Third World; the inability of Western countries to retain ownership of
their own lands and capital assets; the crisis of environmental devastation where
productive forces transfer incalculable costs as negative
externalities. In turn, the government cannot restrain that transfer since it depends
upon the profits driven by those externalities to support the welfare
state of those economically disenfranchised, those who, absent those transfer
payments, pose a threat to the “stability” of both the government and the
market [e.g., the underground economy with both its siphoning of resources and its
destabilizing public force (drugs, violence, etc.)]. With a technological boost
(satellite transfers, integrated markets, etc.), capital’s “efficient growth” comes at
the cost of the irrelevance of political boundaries, and, with that, the irrelevance of
public will formation. A theory like Habermas’, one that in the
final analysis is a theory of public will formation, becomes suspect in a depoliticized
economic world.23
We can respond at this level only with an act of faith-in Richard Rorty’s
terms, a “hope against hope” that rational public will formation is still
relevant to our lives, even if that hope seems ungrounded. But if recent events
in the Eastern bloc, the incredibly rapid annihilation of corrupt regimes of political
power, are the product of the public’s will to protest, then there is perhaps hope in
the promise of the public voice for the Western bloc (and others) as well. The
progressivist era decision to turn public choice over to
communities of experts presumed neutral and disinterested-a decision that
resides at the origins of the instrumental rationality of accounting practice (see
Miller & O’Leary, 1987)-is beginning to look like a bad idea. Technocratic
accounting grew out of that idea. And the task of critical theories of accounting is to
subvert that idea, to make it possible for such bureaucratic expertise to be
governed by public argument:
“I think, then, that the chief task of philosophy is to justify this way of
reason (public argument) and to defend practical and political reason
against the domination of technology based on science. That is the
point of
philosophical hermeneutics. It corrects the peculiar falsehood of modern
consciousness: the idolatry of scientific method and of the autonomous
authority of the sciences and it vindicates against the noblest task of the
citizen-decision-making according to one’s own responsibility-instead of
conceding that point to the expert” (Gadamer, 1975, p. 312).

Acknowledgements
We should like to acknowledge the helpful comments of Christine Cooper, David
Cooper, Anthony Hopwood, David Klemm, Donald McCloskey, Michael Power, William
54 C. E. Araingtcan amd A. G. Puxty
Schweiker, Tony Tinker, and three anonymous reviewers as well as workshop
participants at th’e European Institute for the Advanced Study of Management, Glasgow
University, The London School of Economics and Political Science, Louisiana
State University, Manchester Business School, The University of Strathclyde, and the
Project on Rhetoric of Inquiry at The University of Iowa.

Notes

1. There has in accounting theory generally been a distinction between images of accounting as
communication and as a means of accountability (see, for example, SATTA, 1977, Davis et al.,
1982). We propose to argue that this is a false distinction.
2. That is, we propose to move toward a definition of “democratic” (in the section “The ethical
grounds for the very.. . “) that is not tied to the assumptions of most traditional pluralist
theorizing but instead opens the way for adjudication of claims to rightness through criteria
for rational discourse. Thus. for instance, democracy here does not mean simply equality of
opportunity to vote or engage in economic activity.
3. By money, we mean the “voting power” of those who control economic resources.
Grounding accounting’s rationality in its service to the market is a good example of using
money rather than communication as a criterion of reason (and therefore rationality). We use
the term power in the coercive sense-the exercise of political or physical strength to guide
action in a way immune from critique. The economic tyrannies of Eastern bloc regimes have
constituted a good example.
4. We appropriate primarily from Habermas’ Theory of Communicative Action.
5. Here we make reference to Habermas’ earlier text Knowledge and Human Interests, a text
where the relation between interests and action is construed in terms of the distinction
between work and interaction. In The Theory of Communicative Action, Habermas treats
interests in a more diffuse and complex manner, one that depends less on economic and
noetic categories and more upon structures of communication. Stephen White (1989)
provides an adequate description of transitions in Habermas’ approach to interests.

6. Miller and O’Leary (1987; 1989) trace modern accounting’s “displacement” from interests
back to the progressivist ethos of the early 20th century. Accounting-like scientific
management, industrial psychology, eugenics, intelligence testing, and other discourses of
expertise-convinced a suspicious government that it could enhance the social product in a
way that was morally innocuous and neutral. We refer the reader to Miller and O’Leary’s work
for the relevant history of this idea.
7. For a similar claim but a very different kind of study, see March (1987).
8. The philosophically-inclined reader may find it interesting to reflect upon how the differences
between Devine’s approach and Neimark’s approach is an example of what Ricoeur describes
as a choice with respect to the fundamental gesture of all philosophical reflection:
“Is this gesture (of reflection, C.E.A. & A.G.P.) an avowal of the historical

conditions to which all human understanding is subsumed under the reign of

finitude? Or rather is it, in the last analysis, an act of defiance, a critical gesture,
relentlessly repeated and indefinitely turned against “false consciousness”,
against the distortions of human communication which conceal the permanent
exercise of domination and violence?” (1981, p. 63).
9. As will become more clear, the “three-world” typology that Habermas provides is heuristic.

Action and discourse (and therefore rationality) are always and already embedded in the
“three” contemporaneously.
IO. The term teleological takes on a more narrow sense here than the sense implied in the
introduction to this essay.
11. We do not mean to align the lifeworld concept here strictly with generalizable interests.
Indeed, as post-empiricist philosophy of science has shown, objectivity and the representation
of “what is the case in the world” are themselves dependent upon the interpretive and
hermeneutic shape of a community. Thus the intelligibility of even objective interests and
teleological action are ontologically possible only from origins in a lifeworld concept.
12. Use of terms like values in conjunction with norms is suspect. Norms are something akin to
behavioural expectations presumed binding. Values, on the other hand, are more diffuse.
 55
Hab@rmaS writes:
1, values are candidates for embodiment in norms-they can attain a general
...
binding with respect
force to a matter requiring regulation. In the light of cultural
values the needs (Bediirfnisse) of an individual appear as plausible to other
individuals standing in the same tradition. However, plausibly interpreted needs
are transformed into legitimate motives of action only when the corresponding
values become, for a circle of those affected, normatively binding in regulating
specific problem situations. Members can then expect of one another that in
corresponding situations each of them will orient his action to values norma-
tively prescribed for all concerned” (1984, p. 89).
13. Habermas directs attention here to how a norm must count as justified. The validity of a norm

cannot be assumed simply from its de facto presence. Coercive orders and commands,
control systems, and disciplinary practices, for example, may have “social currency” without
validity. Habermas writes:
“That a norm is ideally valid means that it deserves the assent of all those
affectedbecause it regulates problems of action in their common interest. That a
norm is de facto established means by contrast that the validity claim with which
it appears is recognized by those affected, and this intersubjective recognition
grounds the social force or currency of the norm” (1984, pp. 88-89).
Arrington and Francis (1989) distinguish between accountability and control in a way that

differentiates valid from de facto norms of accounting.

14. By referring to pluralism here we are not suggesting that the classical pluralist model of
democracy is descriptively valid; but, rather that, within the space permitted by the often
repressive structures that are in place, there are contests for money, power and status that
exhibit many of the characteristics of pluralist competition.
15. We are playing a bit loose here with Habermas’ conception of truthfulness. We refer the
reader to him for evaluation. In our view, accounting is very much “speaking for” the
individual subject (see Arrington & Francis, 1989). Thus when Habermas construes truthful-
ness as an attribute of self-presentation we are comfortable in viewing accounting as a form
of self-presentation. This adds another layer of contestability problematics-while Habermas
confronts the problematics of a subject speaking for herself (complex enough), we double
those problematics by assuming that accounting displaces the subject from her own speech
and thereby creates rights for the subject herself to contest accounting. John Roberts’ (1988)
essay can be helpful here; so can the notion of a “double hermeneutic” in the social sciences
(see Giddens, 1976, p. 158).
16. This is a paraphrase of Habermas’ frequent use of the notion of an Ideal Speech Community
(see particularly Chapter 1 of Communication and the Evolution of Society). Our paraphrase
is taken from the work of Alexy (1978, pp. 40-41) as translated in White (1988, p. 56). In The
Theory of Communicative Action, Habermas, to our knowledge, drops the terminology “Ideal
Speech Community” but retains the normative force of the strictures presented here (see also
Thompson, 1983).
17. It is quite important to understand Habermas’ model as a theoretical model, one that provides
critical possibilities for reflection on actual social practices rather than one which seeks to
engineer the social space according to its own dicta. One of the constraining aspects of
critical accounting theory is what we perceive as a tendency to subordinate critical reason to
the question of presumed “application”. A model like Habermas’ is a critical resource for
reflection, not a blueprint for action. We are a bit suspicious of how some of the accounting
work with Habermas confuses the question of critical reflection with the question of
application.
18. Thus information asymmetry between management and outside parties, as depicted in
financial theory, is itself a system of differential power because management controls the
agenda of information transmission. The concepts of ideology as they are variously defined
by Marx, Althusser and Mannheim (for example) are soecial cases of this differential Dower
structure.
19. We want to point out here that much of Habermas’ Theory of Communicative Action; indeed,
most of it, is devoted to working out the complex problematics of retaining a positive sense of
the relation between communication as we have outlined it here and the imperative of social
is
systems that routinely bypass communication. This the strength of Habermas as a social
theorist. He does not give in to the temptation to opt for a strictly hermeneutic or a strictly
systems-theoretic theory of society. No one, to our knowledge, has taken on such a task
56 C!. E. Anington and A. G. Busty
before and dealt with it as rigorously and systematically as Habermas. In our view, this is the

primary reason he has become so very controversial-he grapples with both sets of problems
and thereby raises the suspicions of those who take the more comfortable route of granting
priority to one or the other. In this essay, we have ignored the systems side of Habermas’
work.
20. As Miller and O’Leary (1987) point out, it is the “wide range” or the “reach” of accounting
that makes it preferable to other ways of coordinating action (e.g., engineering). Accounting-
because of its abstraction of phenomena into the terms of money can escape the bounds of
physical coefficients that constrain engineering. In this way, for example, accounting can be
used to “evaluate” the performance of the C.E,O.-which has no physical referent-as well as
the lowly labourer. Much of the power of accounting inside organizations derives from its
capacity to reach beyond the constraints of physis, and Miller and O’Leary describe the
empirical triumph of accounting over industrial engineering in precisely these terms.
21. These studies are very different in other ways.
22. Habermas’ relative silence about substantive issues of public policy can be understood in
terms of his model. That model sets out the formal pragmatic conditions for public discourse
and preserves the space of substantive claims for the citizenry, not for the theorist.
23, We note also the problem of deciding the practical boundaries of “society’‘-for although it
clearly cannot be restricted to the nation-state, the difficulties of operationalization of
communicative competence on a global scale are massive. That is wby it is important, as
mentioned earlier, to keep in mind that Habermas is developing critical rational principles
rather than practical hypotheses.

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