IDEAS home Printed from https://ideas.repec.org/a/eee/aosoci/v35y2010i2p205-221.html
   My bibliography  Save this article

Calculating profit: A historical perspective on the development of capitalism

Author

Listed:
  • Toms, J.S.

Abstract

The paper introduces the notion of different methods of calculating and analysing profitability as signatures of capitalism at different stages of development. Its point of departure is Bryer's thesis of the capitalist mentality, which is subject to theoretical and empirical critique and developed in new directions. Interactions between the development of the productive forces and the socialisation of capital ownership jointly impact on these signatures, such that profit calculations are historically contingent. Aspects of feudalism, particularly restrictions on usury impacted upon accounting calculation, retarding their development. In the industrial revolution calculations reflected the scale and scope of specialised investment in plant, whilst the progressive socialisation of capital prompted a separate set of calculative practices. It was only in the 20th century, with the unification of large scale industry and finance capital that the modern notion of profitability as return on capital employed finally developed.

Suggested Citation

  • Toms, J.S., 2010. "Calculating profit: A historical perspective on the development of capitalism," Accounting, Organizations and Society, Elsevier, vol. 35(2), pages 205-221, February.
  • Handle: RePEc:eee:aosoci:v:35:y:2010:i:2:p:205-221
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0361-3682(09)00059-2
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

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

    Other versions of this item:

    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. Richard Fleischman & Richard Macve, 2002. "Coals from Newcastle: an evaluation of alternative frameworks for interpreting the development of cost and management accounting in Northeast coal mining during the British Industrial Revolution," Accounting and Business Research, Taylor & Francis Journals, vol. 32(3), pages 133-152.
    3. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
    4. Stefano Zambon, 1996. "Accounting and business economics traditions: a missing European connection?," European Accounting Review, Taylor & Francis Journals, vol. 5(3), pages 401-411.
    5. Roy Church & Trevor Baldwin & Bob Berry, 1994. "Accounting for profitability at the Consett Iron Company before 1914: measurement, sources, and uses," Economic History Review, Economic History Society, vol. 47(4), pages 703-724, November.
    6. Bryer, R. A., 1993. "The late nineteenth-century revolution in financial reporting: Accounting for the rise of investor or managerial capitalism?," Accounting, Organizations and Society, Elsevier, vol. 18(7-8), pages 649-690.
    7. 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.
    8. Toms, J. S., 1998. "The supply of and demand for accounting information in an unregulated market: Examples from the lancashire cotton mills, 1855-1914," Accounting, Organizations and Society, Elsevier, vol. 23(2), pages 217-238, February.
    9. Mahmoud Ezzamel, 2005. "Accounting for the activities of funerary temples: the intertwining of the sacred and the profane," Accounting and Business Research, Taylor & Francis Journals, vol. 35(1), pages 29-51.
    10. J. Toms, 2001. "Information content of earnings in an unregulated market: the co-operative cotton mills of Lancashire, 1880–1900," Accounting and Business Research, Taylor & Francis Journals, vol. 31(3), pages 175-190.
    11. Zambon, Stefano & Zan, Luca, 2000. "Accounting relativism: the unstable relationship between income measurement and theories of the firm," Accounting, Organizations and Society, Elsevier, vol. 25(8), pages 799-822, November.
    12. 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.
    13. Trevor Boyns & John Richard Edwards, 1997. "The Construction of Cost Accounting Systems in Britain to 1900: The Case of the Coal, Iron and Steel Industries," Business History, Taylor & Francis Journals, vol. 39(3), pages 1-29.
    14. Walsh, Eamonn J. & Stewart, Ross E., 1993. "Accounting and the construction of institutions: The case of a factory," Accounting, Organizations and Society, Elsevier, vol. 18(7-8), pages 783-800.
    15. Grassby,Richard, 1995. "The Business Community of Seventeenth-Century England," Cambridge Books, Cambridge University Press, number 9780521434508, October.
    16. Eve Chiapello, 2007. "Accounting and the birth of the notion of capitalism," Post-Print hal-00466515, HAL.
    17. Raymond de Roover, 1951. "Monopoly Theory Prior to Adam Smith: A Revision," The Quarterly Journal of Economics, Oxford University Press, vol. 65(4), pages 492-524.
    18. Lopez,Robert S., 1976. "The Commercial Revolution of the Middle Ages, 950–1350," Cambridge Books, Cambridge University Press, number 9780521290463, October.
    19. Wayne Visser & Alastair Macintosh, 1998. "A short review of the historical critique of usury," Accounting History Review, Taylor & Francis Journals, vol. 8(2), pages 175-189.
    20. North, Dudley, 1691. "Discourses Upon Trade; Principally Directed to the Cases of the Interest, Coynage, Clipping, Increase of Money," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number north1691.
    21. Neal, Larry, 2000. "How it all began: the monetary and financial architecture of Europe during the first global capital markets, 1648 1815," Financial History Review, Cambridge University Press, vol. 7(02), pages 117-140, October.
    22. 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.
    23. Jones, Haydn, 1985. "Accounting, Costing, and Cost Estimation in Welsh Industry," University of Chicago Press Economics Books, University of Chicago Press, number 9780708308820, Febrero.
    24. Steve Toms & Mike Wright, 2002. "Corporate Governance, Strategy and Structure in British Business History, 1950-2000," Business History, Taylor & Francis Journals, vol. 44(3), pages 91-124.
    25. Martha Campbell, 1998. "Money in the Circulation of Capital," Palgrave Macmillan Books, in: Christopher J. Arthur & Geert Reuten (ed.), The Circulation of Capital, chapter 6, pages 129-157, Palgrave Macmillan.
    26. de Roover, Raymond, 1967. "The Scholastics, Usury, and Foreign Exchange," Business History Review, Cambridge University Press, vol. 41(3), pages 257-271, October.
    27. Luca Zan, 1994. "Toward a history of accounting histories," European Accounting Review, Taylor & Francis Journals, vol. 3(2), pages 255-310.
    28. Janette Rutterford, 2004. "From dividend yield to discounted cash flow: a history of UK and US equity valuation techniques," Accounting History Review, Taylor & Francis Journals, vol. 14(2), pages 115-149.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bryer, Alice Rose, 2014. "Conscious practices and purposive action: A qualitative study of accounting and social change," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(2), pages 93-103.
    2. Toms, Steven & Shepherd, Alice, 2013. "Creative accounting in the British Industrial Revolution: Cotton manufacturers and the ‘Ten Hours’ Movement," MPRA Paper 51478, University Library of Munich, Germany.
    3. Charl de Villiers & Matteo La Torre & Vida Botes, 2022. "Accounting and social capital: A review and reflections on future research opportunities," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4485-4521, December.
    4. 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.
    5. Mohamed Ali Dakkam, 2018. "qui et à quoi sert la comptabilité ? Un état de l'art et quelques réflexions théoriques pour dépasser le déterminisme des différents paradigmes," Post-Print hal-01907865, HAL.
    6. Toms, Steven & Shepherd, Alice, 2017. "Accounting and social conflict: Profit and regulated working time in the British Industrial Revolution," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 49(C), pages 57-75.
    7. Toms, Steven, 2014. "‘Cold, Calculating Political Economy’: Fixed costs, the Rate of Profit and the Length of the Working Day in the Factory Act Debates, 1832-1847," MPRA Paper 54408, University Library of Munich, Germany.
    8. Sam Jones & Peter Gibbon, 2022. "What drove the profitability of colonial firms?: Labour coercion and trade preferences on the Sena Sugar Estates (1920-74)," WIDER Working Paper Series wp-2022-70, World Institute for Development Economic Research (UNU-WIDER).
    9. Yannick Lemarchand & Laure Pineau-Defois & Cheryl Mcwatters, 2011. "Comptes et récits de la maison Chaurand, retour sur les liens entre comptabilité et capitalisme," Post-Print hal-00650546, HAL.
    10. Zanini, Andrea, 2021. "Pratica degli affari e prescrizioni morali: interesse e sconto nei manuali di aritmetica mercantile (secoli XVI-XVIII) [Business practices and moral precepts: interest and discount in commercial ar," MPRA Paper 108308, University Library of Munich, Germany.
    11. Macve, R.H., 2015. "Fair value vs conservatism? Aspects of the history of accounting, auditing, business and finance from ancient Mesopotamia to modern China," The British Accounting Review, Elsevier, vol. 47(2), pages 124-141.
    12. Markus Lampe & Paul Sharp, 2017. "ÔRationalÕ Farmers and the Emergence of Modern Accounting in Danish Dairying," Working Papers 0115, European Historical Economics Society (EHES).
    13. Edwards, John Richard & Dean, Graeme & Clarke, Frank, 2009. "Merchants' accounts, performance assessment and decision making in mercantilist Britain," Accounting, Organizations and Society, Elsevier, vol. 34(5), pages 551-570, July.
    14. Robertson, Jeffrey & Funnell, Warwick, 2012. "The Dutch East-India Company and accounting for social capital at the dawn of modern capitalism 1602–1623," Accounting, Organizations and Society, Elsevier, vol. 37(5), pages 342-360.
    15. Gervais, Pierre, 2014. "Early modern merchant strategies and the historicization of market practices," economic sociology. perspectives and conversations, Max Planck Institute for the Study of Societies, vol. 15(3), pages 19-29.
    16. Arnold, A.J., 2015. "Accounting's representation of industrial expansion and decline: Some evidence from practice at Vickers Shipbuilding, 1910–24," The British Accounting Review, Elsevier, vol. 47(2), pages 191-203.
    17. Toms, Steven & Fleischman, Richard K., 2015. "Accounting fundamentals and accounting change: Boulton & Watt and the Springfield Armory," Accounting, Organizations and Society, Elsevier, vol. 41(C), pages 1-20.
    18. John Richard Edwards & Trevor Boyns, 2022. "Published Accounts, Stewardship, and Decision Making: A Case Study 1863–1940," Abacus, Accounting Foundation, University of Sydney, vol. 58(2), pages 300-333, June.

    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. 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. 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.
    3. 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.
    4. 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.
    5. Constable, Philip & Kuasirikun, Nooch, 2020. "From cosmological to commercial form: A Buddhist theory of ‘form’, ‘space’ and ‘stream of re-becoming’ in mid-19th century Thai accounting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 72(C).
    6. 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.
    7. A. J. ARNOLD & S. McCARTNEY, 2011. "‘Veritable gold mines before the arrival of railway competition’: but did dividends signal rates of return in the English canal industry?," Economic History Review, Economic History Society, vol. 64(1), pages 214-236, February.
    8. Toms, J. S., 2002. "The rise of modern accounting and the fall of the public company: the Lancashire cotton mills 1870-1914," Accounting, Organizations and Society, Elsevier, vol. 27(1-2), pages 61-84.
    9. Toms, Steven & Fleischman, Richard K., 2015. "Accounting fundamentals and accounting change: Boulton & Watt and the Springfield Armory," Accounting, Organizations and Society, Elsevier, vol. 41(C), pages 1-20.
    10. A.J. Arnold & S. McCartney, 2008. "The transition to financial capitalism and its implications for financial reporting," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 21(8), pages 1185-1209, October.
    11. Suzuki, Tomo, 2007. "Accountics: Impacts of internationally standardized accounting on the Japanese socio-economy," Accounting, Organizations and Society, Elsevier, vol. 32(3), pages 263-301, April.
    12. 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.
    13. Alexandre Rambaud & Jacques Richard, 2015. "Towards a finance that CARES," Post-Print halshs-01260075, HAL.
    14. Bryer, Rob, 2013. "Americanism and financial accounting theory – Part 3: Adam Smith, the rise and fall of socialism, and Irving Fisher's theory of accounting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 24(7), pages 572-615.
    15. Robertson, Jeffrey & Funnell, Warwick, 2012. "The Dutch East-India Company and accounting for social capital at the dawn of modern capitalism 1602–1623," Accounting, Organizations and Society, Elsevier, vol. 37(5), pages 342-360.
    16. Zhang, Ying & Andrew, Jane, 2022. "Financialisation and the Conceptual Framework: An update," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 88(C).
    17. Nadia Matringe, 2016. "Ratio Pecuniam Parit Accounting and the making of financial markets in the Early Modern Age," Working Papers hal-01358129, HAL.
    18. Valerio Antonelli & Raffaele D?Alessio & Emanuela Mattia Cafaro & Michele Bigoni, 2019. "The Pope and the Train: Financial Reporting Practices in the Railroad Companies of the Papal States (1846-1870)," CONTABILIT? E CULTURA AZIENDALE, FrancoAngeli Editore, vol. 0(2), pages 7-34.
    19. Charl de Villiers & Matteo La Torre & Vida Botes, 2022. "Accounting and social capital: A review and reflections on future research opportunities," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4485-4521, December.
    20. Yannick Lemarchand & Laure Pineau-Defois & Cheryl Mcwatters, 2011. "Comptes et récits de la maison Chaurand, retour sur les liens entre comptabilité et capitalisme," Post-Print hal-00650546, HAL.

    More about this item

    Statistics

    Access and download statistics

    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:aosoci:v:35:y:2010:i:2:p:205-221. 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: http://www.elsevier.com/locate/aos .

    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.