IDEAS home Printed from https://ideas.repec.org/a/eee/crpeac/v30y2015icp63-82.html
   My bibliography  Save this article

Accounting for the fictitious: A Marxist contribution to understanding accounting's roles in the financial crisis

Author

Listed:
  • Cooper, Christine

Abstract

This paper presents a contribution to the debates surrounding the culpability of accounting in the recent financial crisis. It adopts a Marxist theoretical perspective concentrating mainly on Marx's work on fictitious capital. Fictitious capital is any form of investment (for example bonds, stocks, derivatives, and collateralized debt obligations) which is based upon the expectation of future returns. According to Marx while fictitious capital is useful to capitalism, it cannot create value – only human labour can do that. The recent crisis was exacerbated by the significant amounts of investment which were made in extreme forms of fictitious capital. The paper argues that the accounting profession's adoption of financial economic rationalities meant that it helped to animate the form of financialised neo-liberalism which dominated at the time of the crisis. The accounting profession and accounting academia have implemented and propagated technologies and rationalities which enabled, legitimised, and drove the activities of business in general and financial institutions in particular in the run up to and since the crisis. While, accounting could be seen as being complicit in the crisis, it is important to remember that it was a capitalist crisis. The intuitional structures of accounting mean that it is susceptible of being captured by the most powerful in society.

Suggested Citation

  • Cooper, Christine, 2015. "Accounting for the fictitious: A Marxist contribution to understanding accounting's roles in the financial crisis," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 30(C), pages 63-82.
    • Handle: RePEc:eee:crpeac:v:30:y:2015:i:c:p:63-82
    DOI: 10.1016/j.cpa.2014.08.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1045235414000926
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.cpa.2014.08.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Toms, Steven, 2005. "Financial control, managerial control and accountability: evidence from the British Cotton Industry, 1700-2000," Accounting, Organizations and Society, Elsevier, vol. 30(7-8), pages 627-653.
    2. John Quiggin, 2012. "Zombie Economics: How Dead Ideas Still Walk among Us: With a new chapter by the author," Economics Books, Princeton University Press, edition 1, number 9702.
    3. Cooper, David J. & Sherer, Michael J., 1984. "The value of corporate accounting reports: Arguments for a political economy of accounting," Accounting, Organizations and Society, Elsevier, vol. 9(3-4), pages 207-232, October.
    4. Bryer, R. A., 2000. "The history of accounting and the transition to capitalism in England. Part one: theory," Accounting, Organizations and Society, Elsevier, vol. 25(2), pages 131-162, February.
    5. Michel Magnan & Garen Markarian, 2011. "Accounting, Governance and the Crisis: Is Risk the Missing Link?," European Accounting Review, Taylor & Francis Journals, vol. 20(2), pages 215-231.
    6. Toms, J.S., 2010. "The labour theory of value, risk and the rate of profit," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 21(1), pages 96-103.
    7. Ravenscroft, Sue & Williams, Paul F., 2009. "Making imaginary worlds real: The case of expensing employee stock options," Accounting, Organizations and Society, Elsevier, vol. 34(6-7), pages 770-786, August.
    8. Engelbert Stockhammer, 2004. "Financialisation and the slowdown of accumulation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 28(5), pages 719-741, September.
    9. repec:dau:papers:123456789/15215 is not listed on IDEAS
    10. Bryer, Rob, 2006. "Capitalist accountability and the British Industrial Revolution: The Carron Company, 1759-circa. 1850," Accounting, Organizations and Society, Elsevier, vol. 31(8), pages 687-734, November.
    11. Nihel Chabrak, 2012. "Money talks: the language of the Rochester School," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 25(3), pages 452-485, March.
    12. Gendron, Yves & Smith-Lacroix, Jean-Hubert, 2015. "The global financial crisis: Essay on the possibility of substantive change in the discipline of finance," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 30(C), pages 83-101.
    13. Nihel Chabrak, 2012. "Money talks : the language of the Rochester School," Post-Print hal-01332004, HAL.
    14. Smith-Lacroix, Jean-Hubert & Durocher, Sylvain & Gendron, Yves, 2012. "The erosion of jurisdiction: Auditing in a market value accounting regime," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 23(1), pages 36-53.
    15. Toms, Steven & Beck, Matthias & Asenova, Darinka, 2011. "Accounting, regulation and profitability: The case of PFI hospital refinancing," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(7), pages 668-681.
    16. repec:dau:papers:123456789/1338 is not listed on IDEAS
    17. Harney, Stefano, 2010. "Accounting, risk, and revolution," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 21(1), pages 14-17.
    18. Cooper, Christine & Coulson, Andrea & Taylor, Phil, 2011. "Accounting for human rights: Doxic health and safety practices – The accounting lesson from ICL," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(8), pages 738-758.
    19. Michael Power, 2010. "Fair value accounting, financial economics and the transformation of reliability," Accounting and Business Research, Taylor & Francis Journals, vol. 40(3), pages 197-210.
    20. Laux, Christian & Leuz, Christian, 2009. "The crisis of fair-value accounting: Making sense of the recent debate," Accounting, Organizations and Society, Elsevier, vol. 34(6-7), pages 826-834, August.
    21. Arnold, Patricia J., 2009. "Global financial crisis: The challenge to accounting research," Accounting, Organizations and Society, Elsevier, vol. 34(6-7), pages 803-809, August.
    22. Walker, Stephen P., 2004. "The genesis of professional organisation in English accountancy," Accounting, Organizations and Society, Elsevier, vol. 29(2), pages 127-156, February.
    23. Saravanamuthu, Kala & Tinker, Tony, 2003. "Politics of managing: the dialectic of control," Accounting, Organizations and Society, Elsevier, vol. 28(1), pages 37-64, January.
    24. Hopwood, Anthony G., 2009. "The economic crisis and accounting: Implications for the research community," Accounting, Organizations and Society, Elsevier, vol. 34(6-7), pages 797-802, August.
    25. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    26. Roll, Richard, 1977. "A critique of the asset pricing theory's tests Part I: On past and potential testability of the theory," Journal of Financial Economics, Elsevier, vol. 4(2), pages 129-176, March.
    27. Bengtsson, Elias, 2011. "Repoliticalization of accounting standard setting—The IASB, the EU and the global financial crisis," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(6), pages 567-580.
    28. Jacques Richard, 2015. "The dangerous dynamics of modern capitalism (from static to IFRS’ futuristic accounting)," Post-Print hal-01267732, HAL.
    29. Sikka, Prem, 2011. "Accounting for human rights: The challenge of globalization and foreign investment agreements," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(8), pages 811-827.
    30. Nölke, Andreas & Perry, James, 2007. "The Power of Transnational Private Governance: Financialization and the IASB," Business and Politics, Cambridge University Press, vol. 9(3), pages 1-25, December.
    31. Arnold, Patricia J. & Sikka, Prem, 2001. "Globalization and the state-profession relationship: the case the Bank of Credit and Commerce International," Accounting, Organizations and Society, Elsevier, vol. 26(6), pages 475-499, August.
    32. Richard, Jacques, 2015. "The dangerous dynamics of modern capitalism (from static to IFRS’ futuristic accounting)," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 30(C), pages 9-34.
    33. Whittle, Andrea & Carter, Chris & Mueller, Frank, 2014. "‘Above the fray’: Interests, discourse and legitimacy in the audit field," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(8), pages 783-802.
    34. Bryer, R. A., 2005. "A Marxist accounting history of the British industrial revolution: a review of evidence and suggestions for research," Accounting, Organizations and Society, Elsevier, vol. 30(1), pages 25-65, January.
    35. Hines, Ruth D., 1988. "Financial accounting: In communicating reality, we construct reality," Accounting, Organizations and Society, Elsevier, vol. 13(3), pages 251-261, April.
    36. Armstrong, Peter, 1985. "Changing management control strategies: The role of competition between accountancy and other organisational professions," Accounting, Organizations and Society, Elsevier, vol. 10(2), pages 129-148, April.
    37. Donald MacKenzie, 2006. "An Engine, Not a Camera: How Financial Models Shape Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262134608, December.
    38. Armstrong, Peter, 1987. "The rise of accounting controls in British capitalist enterprises," Accounting, Organizations and Society, Elsevier, vol. 12(5), pages 415-436, August.
    39. William Lazonick & Mariana Mazzucato & Öner Tulum, 2013. "Apple's changing business model: What should the world's richest company do with all those profits?," Accounting Forum, Taylor & Francis Journals, vol. 37(4), pages 249-267, December.
    40. Zhang, Ying & Andrew, Jane, 2014. "Financialisation and the Conceptual Framework," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(1), pages 17-26.
    41. Cooper, Christine & Taylor, Phil, 2000. "From Taylorism to Ms Taylor: the transformation of the accounting craft," Accounting, Organizations and Society, Elsevier, vol. 25(6), pages 555-578, August.
    42. Bay, Charlotta, 2011. "Framing financial responsibility: An analysis of the limitations of accounting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(6), pages 593-607.
    43. Eve Chiapello, 2007. "Accounting and the birth of the notion of capitalism," Post-Print hal-00466515, HAL.
    44. Sikka, Prem, 2009. "Financial crisis and the silence of the auditors," Accounting, Organizations and Society, Elsevier, vol. 34(6-7), pages 868-873, August.
    45. Spence, Crawford & Carter, David, 2011. "Accounting for the General Intellect: Immaterial labour and the social factory," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(3), pages 304-315.
    46. Ross L. Watts, 1977. "Corporate Financial Statements, A Product of the Market and Political Processes," Australian Journal of Management, Australian School of Business, vol. 2(1), pages 53-75, April.
    47. Bryer, R. A., 2000. "The history of accounting and the transition to capitalism in England. Part two: evidence," Accounting, Organizations and Society, Elsevier, vol. 25(4-5), pages 327-381, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Napier, Christopher J., 2006. "Accounts of change: 30 years of historical accounting research," Accounting, Organizations and Society, Elsevier, vol. 31(4-5), pages 445-507.
    2. Palea, Vera & Biancone, Paolo Pietro, 2017. "Which Accounting Rules for Economic and Social Sustainable Development? Engaging Critically with IFRS Adoption in the EU," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201733, University of Turin.
    3. Murphy, Tim & O’Connell, Vincent, 2017. "Challenging the dominance of formalism in accounting education: An analysis of the potential of stewardship in light of the evolution of legal education," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 44(C), pages 1-29.
    4. Pucci, Richard & Skærbæk, Peter, 2020. "The co-performation of financial economics in accounting standard-setting: A study of the translation of the expected credit loss model in IFRS 9," Accounting, Organizations and Society, Elsevier, vol. 81(C).
    5. Zhang, Eagle & Andrew, Jane, 2016. "Rethinking China: Discourse, convergence and fair value accounting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 36(C), pages 1-21.
    6. Mihret, Dessalegn Getie, 2014. "How can we explain internal auditing? The inadequacy of agency theory and a labor process alternative," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(8), pages 771-782.
    7. Yasmine Chahed, 2021. "Words and Numbers: Financialization and Accounting Standard‐Setting in the United Kingdom," Contemporary Accounting Research, John Wiley & Sons, vol. 38(1), pages 302-337, March.
    8. Palea, Vera, 2017. "Whither accounting research? A European view," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 42(C), pages 59-73.
    9. Roberts, John & Wang, Timothy, 2019. "Faithful representation as an ‘objective mirage’: A Saussurean analysis of accounting and its participation in the financial crisis," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 65(C).
    10. Horvat Robert & Korošec Bojana, 2015. "The Role of Accounting in a Society: Only a techn(olog)ical solution for the problem of economic measurement or also a tool of social ideology?," Naše gospodarstvo/Our economy, Sciendo, vol. 61(4), pages 32-40, August.
    11. Cooper, Christine, 2015. "Entrepreneurs of the self: The development of management control since 1976," Accounting, Organizations and Society, Elsevier, vol. 47(C), pages 14-24.
    12. Morales, Jérémy & Sponem, Samuel, 2017. "You too can have a critical perspective! 25 years of Critical Perspectives on Accounting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 43(C), pages 149-166.
    13. Palea, Vera, 2015. "Journal Rankings and the Sustainability of Diversity in Accounting Research," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201546, University of Turin.
    14. Palea, Vera, 2018. "Financial reporting for sustainable development: Critical insights into IFRS implementation in the European Union," Accounting forum, Elsevier, vol. 42(3), pages 248-260.
    15. Bryer, Rob, 2012. "Americanism and financial accounting theory – Part 1: Was America born capitalist?," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 23(7), pages 511-555.
    16. Richard, Jacques, 2015. "The dangerous dynamics of modern capitalism (from static to IFRS’ futuristic accounting)," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 30(C), pages 9-34.
    17. Mantzari, Elisavet & Georgiou, Omiros, 2019. "Ideological hegemony and consent to IFRS: Insights from practitioners in Greece," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 59(C), pages 70-93.
    18. Ravenscroft, Sue & Williams, Paul F., 2021. "Sustaining discreditable accounting research through ignorance: The mainstream elite’s response to the 2008 financial crisis," Accounting, Organizations and Society, Elsevier, vol. 95(C).
    19. Haynes, Kathryn, 2017. "Accounting as gendering and gendered: A review of 25 years of critical accounting research on gender," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 43(C), pages 110-124.
    20. Gendron, Yves & Smith-Lacroix, Jean-Hubert, 2015. "The global financial crisis: Essay on the possibility of substantive change in the discipline of finance," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 30(C), pages 83-101.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:crpeac:v:30:y:2015:i:c:p:63-82. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/critical-perspectives-on-accounting/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.