Academic journal article The Accounting Historians Journal

The Use of Accounting Information in Governmental Regulation and Public Administration: The Impact of John R. Commons and Early Institutional Economists

Academic journal article The Accounting Historians Journal

The Use of Accounting Information in Governmental Regulation and Public Administration: The Impact of John R. Commons and Early Institutional Economists

Article excerpt

An earlier version of this paper was presented at The Academy of Accounting Historians' Accounting Biography Conference, University of Mississippi, December 3 and 4, 1994. We wish to thank Janice Mereba, Barbara Merino, John Russell, and the anonymous reviewers for their useful suggestions.

Received August 1994 Revised March 1995 Accepted August 1995

Commons' contribution has not been fully explored or recognized within the accounting literature.


A myriad of such social innovations as workmen's compensation, social security, unemployment insurance, and utility and industrial regulation had their origins within the combined intellectual/political base of John R. Commons' institutional school of economics at the University of Wisconsin, and Governor Robert La Follette's Progressive party in the State of Wisconsin. Wisconsin's efforts, in turn, became the epicenter of socio-public administrative experimentation and served as a model for reform by other states and the federal government

Roosevelt, 1912, pp. v-ix; Kolko, 1963, pp. 212-216

. The stated purposes of this combined intellectual/political base were to modify the government's role in response to changing social as well as technical/industrial conditions, and simultaneously engender and benefit from the efficient administration of the American political economy.


1959, pp. 261-276

has suggested that the turn-of-the-century Progressive movement attracted institutional economists like John R. Commons who advocated the "rational" deployment of public resources, supported by a complex of such rationalizing techniques as accounting, to solve broad social problems. This movement served to legitimize a system of decision making based on calculated criteria thought to be objective, rational and above the give-and-take of political maneuvering. It made the political seem apolitical

Rose, 1977, pp. 68-71

; it took the debatable beyond the realm of open debate

Hopwood, 1984, pp. 170-176

; and it differentiated the political and immoral from the objective and merely factual

Zucker, 1977, pp. 733-738; Miller and O'Leary, 1990, pp. 492-498

. This movement sought to substitute and legitimize one system of decision-making -- the one inherent in the spirit of modern science, technology and business -- for another -- the one inherent in stylized but subjective exchanges among overtly political social actors. Decision making and control became a more calculative, procedurally-oriented process, involving measurement and prediction, that invoked business techniques for directing the course of events toward predictable and stable outcomes

Kolko, 1963, pp. 1-10

. This shift moved decision making away from the local government to the larger networks of human interaction, and it achieved more than legitimate a new form of decision making; it also transferred power to the central executive office

Wilson, 1956, pp. 98-117

. As Hays

1959, pp. 261-276

suggested, an examination of the Progressive movement illuminates not so much the content of public policy, but the nature of the resulting political structure and the types of interactions peculiar to it.

The primary purpose of our paper is to trace the intellectual underpinnings of John R. Commons' institutional economics in order to appreciate the impact of Commons' work on the use of accounting information in turn-of-the-century governmental regulation and public administration. (1) It is proposed that John Commons joined such other pragmatists of the era as John Dewey

1910, 1922

and Thorstein Veblen

1904, 1919

to critique the inequities created by the concentration of wealth during the late nineteenth century, as embodied in such monopolies as railroads and utilities. However, departing both from pragmatists who contended that the "pecuniary calculus of accounting" was dysfunctional to the interests of society

e. …

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