Veblen's Placebo: Another Historical Perspective on Administrative Evil
Dillard, Jesse F., Ruchala, Linda V., The Accounting Historians Journal
Abstract: Thorstein Veblen was a turn of the 20th century American economist concerned with the implications of financial capitalists directing the means of production. Veblen proposed that the rationality of "material science" as practiced by the "production engineers" is fundamentally different from the rationality of market capitalism. If this claim is valid, our previous contentions regarding accounting, as a facilitating technology, for administrative evil warrant reconsideration. Veblen's position provides a historical perspective on one dimension of administrative evil that is generally unquestionably accepted, especially within accounting. That is, technology, such as accounting and the related information systems, is amoral, and it is only through ideologically instigated applications that any moral value accrues. We discuss administrative evil and the role of instrumental rationality generally, and accounting specifically, in creating it. Veblen's characterization of financial capitalism and production engineers and his arguments for the primacy of economic efficiency versus "pecuniary gain" provide a basis for evaluating the legitimating action. We consider how Veblen's work relates to notions of instrumental rationality and then undertake a critical assessment of the ideas. Some of Veblen's ideas, while Utopian, might be seen as an elixir for the detrimental influences of financial capital; however, at best, they provide a placebo for the ills of administrative evil and, as such, do not provide an amoral basis for legitimating the associated accounting systems.
Ideology and technology form a nexus in fostering and perpetuating conditions that deprive innocent people of their humanity. In previous work [Dillard and Ruchala, 2005], we argue that the ideology of capitalism and the instrumental rationality of accounting, as a facilitating technology, advance this administrative evil within work organizations. Thorstein Veblen, an American economist writing in the early 20th century, recognized the possible dangers associated with financial capitalists' control of the means of production with their sole perspective being reduced to financial returns.1 As the solution, Veblen proposed that the conduct of "business" be removed from financial capital and placed in the hands of the "production engineers." Such a move shifts control from a group whose legitimacy is based on the rationality of capitalist markets to one predicated on the rationality of "material science." Similar arguments have been made by Johnson and Kaplan  and others with regard to "management accounting." That is, the relevance of the technology of cost and management accounting (information for running the productive core of the work organization) was lost when it was colonized by the rationality and information demands of financial capital (financial reporting). If the rationality of Veblen's "material science" is fundamentally different from the rationality of market capitalism, then our previous contentions regarding accounting and administrative evil warrant reconsideration.
By gaining an historical perspective on instrumental rationality, we extend the previous analysis exploring the nexus between ideology, technology, and accounting and how instrumental rationality has been used to legitimize the actions within and through large work organizations. Veblen's work represents an early socio-economic analysis of large corporate enterprises [Raines and Leathers, 2001], providing a critique of capitalist ideology and the role of technology and technicians and being severely critical of the former while adamantly embracing the latter. He proposes the shift in control as a response to the dehumanizing and inefficient march of financial capital. If Veblen is correct, then it may be possible to ameliorate the effects of administrative evil by "returning" to the spirit of the halcyon days before management accounting became colonized by financial accounting. …