The Italian and Iberian Influence in Accounting History

The Imperative of Power

Michele Bigoni, Warwick Funnell, Michele Bigoni, Warwick Funnell

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351675017
• Edition: 1
• Topic: Business
• Subtopic: Contabilità internazionale
• Index: Business

The Italian and Iberian Influence in Accounting History provides compelling evidence of how accounting, when conceived of as a technology rather than simply as a tool to increase efficiency, can work as a means to sustain power relations in different sites, such as the Church, the State or the factory.

This book, drawing upon the growing body of work which focuses on Italy and the Iberian Peninsula, demonstrates how accounting practices were effective in the subjugation of single individuals or entire populations, whether Roman Catholic priests, State functionaries, inhabitants of conquered lands or workers. The effectiveness of accounting as a tool of power is linked to its neutral and technical appearance, which makes it difficult for those oppressed and controlled by its practices to oppose it. Its adaptability to different organizational contexts, as documented in The Italian and Iberian Influence in Accounting History, makes it a valuable tool for sustaining existing power relations and reproducing inequalities and exploitation.

The Italian and Iberian Influence in Accounting History is vital reading for academics and researchers in the fields of accounting, accounting history, political management and sociology and European history.

1 The Imperative of Power

Accounting in Diverse Settings

Michele Bigoni and Warwick Funnell

Introduction

Accounting has been traditionally perceived as a value-free technique which can be employed in the pursuit of rational decision making (Watts and Zimmerman, 1986). According to this view, accounting is merely a neutral practice which, through its own language, is meant to mirror in a synthetic and objective form a reality that is already “out there”. It is not meant to add anything to this reality or to influence it. As a result, early historical works devoted to the investigation of accounting focused mostly on its technicalities (Baladouni, 1977) and sought to document the evolution of this practice (Johnson, 1983) along a linear path in the pursuit of more sophisticated techniques, such as improved costing methods or more reliable reporting standards. Littleton (1966) claimed that accounting evolved after the 14th century from bookkeeping fictions to scientific facts. In the latter decades of the 20th century this limited view of accounting provoked a passionate and determined response by critical accounting researchers who believed that accounting was always an interested activity, a set of practices and discourses which were meant to promote and protect the interests of dominant power elites.

According to Miller (1986, p. 85), “if traditional explanations of accounting have expended great effort in extricating accounting from its social context, the task now is to relocate accounting categories and institutions, to place them firmly within the network of social and political practices where they belong”. This would allow the assumed, deceptive neutrality of accounting to be challenged (Hopwood, 1983; Burchell et al., 1980). Accounting ceases to be simply a value-free technique and instead becomes a technology which is deeply implicated in the processes it is merely supposed to reflect. As a result, accounting becomes a powerful means to create specific visibilities and objectify abstract phenomena which can then be acted upon (Hopwood, 1990). This critical understanding has fuelled an alternative conception of accounting history (Napier, 2006) which sees accounting as a historically contingent and socially constructed practice (Miller et al., 1991; Burchell et al., 1985). The study of accounting, in association with a complex web of organizational and social relations, contributes to writing the “history of the present” by not simply analyzing the past in the light of the present or aprioristically seeing history as constant progress (Foucault, 1979). As a result, accounting’s role has been explored beyond its scorekeeping function to understand how it shapes and is shaped by the context in which it operates.

The seemingly benign and neutral appearance of accounting makes it invaluable as a tool in the exercise of power and influence by the way in which it “can influence perceptions, change language and infuse dialogue, thereby permeating the ways in which priorities, concerns and worries, and new possibilities for action are expressed” (Hopwood, 1990, p. 9). This vision of accounting has informed an impressive, growing body of literature in which scholars from Italy, Spain and Portugal have made substantial and influential contributions to the historical study of accounting as a means to exercise power, a field traditionally dominated by Anglo-Saxon scholars (Walker, 2005; Carnegie and Rodrigues, 2007; Jones and Oldroyd, 2015). A rich collection of archives, which dates back to the beginning of the past millennium and had not received significant attention from the accounting history community, has allowed Italian and Iberian scholars to provide detailed histories of many new sites, institutions and practices which had enduring and major influences on accounting practices which were later inherited by other parts of Europe.

The histories of Italy, Spain and Portugal have provided especially fertile ground for demonstrating how accounting is not simply a value-free technique in the pursuit of rational decision making or fulfilling accountability obligations, but instead is a technology deeply implicated in the creation and perpetuation of power relations. Italy has been not only the cradle of modern accounting but also, since the collapse of the Roman Empire, has been a battlefield and competitive arena for the great European powers. Meanwhile, Spain and Portugal were able to build two of the most powerful and long-lasting Empires in the history of Europe, which fuelled the rise of some of the earliest manufacturing industries. Underlying the prominence of Italy, Spain and Portugal as imperial powers has been the influence of the Roman Catholic Church (hereafter the Church), the institution where modern technologies of power arose. Profane accounting, far from being separated from the sacred core of the Church’s activities, played a key role in protecting and perpetuating the Church’s power, not only at times of great crisis in Italy but also when Spain expanded its commercial operations.

The technologies of power that matured within the Church, which sought to control both the individual and populations, a process in which accounting played a significant role, were soon adopted by modern States. Thus, accounting was an essential aid in building and reinforcing the Portuguese Empire and providing the means to gather information about distant people and places, enabling the control of populations from a great distance. Accounting regulations and practices have proved to be a fundamental disciplinary mechanism, both in Italy and the Iberian Peninsula, to gain the allegiance of State functionaries in achieving a ruler’s objectives. When Spanish manufacturing flourished as a result of the availability of goods imported from its colonies in Central and South America, managers and top-level bureaucrats needed to secure the cooperation of a growing workforce in the production process. Accounting practices provided the means for managers to enhance both surveillance of employees and the discipline of the factory.

The importance of accounting as a means to exercise power and influence is confirmed by the 11 chapters included in this collection of previously published, highly regarded studies mainly by prominent Italian, Spanish and Portuguese scholars. The functioning of accounting is documented by considering diverse settings across the Church, the State and the Empires that were created and maintained with a lethal determination. The studies collected here demonstrate that accounting has the potential to reinforce existing power relations or creating new ones by operating in non-obvious and unseen ways to sustain the action of those who hold the supreme authority, whether they are wealthy merchants, bishops, kings or emperors.

Accounting and the Church

The Church has been a key institution in the Western world for much of the past millennium (Berger, 1967), and still has a pivotal role in today’s society. It has been able to influence political struggles in most European countries, not only through its spiritual standing but also has directly exerted its own form of secular power when it established its own State and challenged imperial authority. Its economic force grew with its political standing, making the Church one of the most enduring sources of power in history. As a result, the Church has been able to influence the development of modern beliefs and customs, extending its authority to less obvious human artefacts such as the seemingly secular practice of accounting. Therefore, to understand accounting and the way it operates in the modern world, an analysis of its religious roots is essential (Cordery, 2015).

The Church has been the site where modern accounting is believed to have been born after the publication of Pacioli’s Summa in 1494, which provided unprecedented impetus to the diffusion of accounting practices by systematizing in a specialist treatise the existing practice of double entry bookkeeping (Dean et al., 2016; Sangster et al., 2011; Sangster et al., 2014; Poddighe et al., 2007; Aho, 2005). Religion has provided further motivation to the diffusion of accounting practices, especially in the Anglo-Saxon context where Protestant beliefs and values encouraged the believer to account to God not only for their everyday deeds but also for their use of economic resources. As a result, practices such as accounting which are apparently far from the world of religion become essential to ensure that the wealth generously provided by God, in all the forms it may take, was used profitably and not wasted, thereby recognizing God’s benefice and favor. Accounting can therefore be a means to fulfil one’s moral and religious obligations and, in the specific context of religious organizations, is critical to ensuring that economic resources are only used for sacred ends. Accounting can also be a powerful tool to promote ethical behavior (Flesher and Flesher, 1979; Faircloth, 1988; Jacobs and Walker, 2004; Kreander et al., 2004; Irvine, 2005; Cordery, 2006; Bigoni et al., 2013).

One of the most influential paradigms to understand accounting in religious contexts, the so-called “sacred and secular divide”, has postulated a clash between spiritual activities and mundane, even profane, resourcing practices such as accounting. This issue is explored in Chapter 2 by Bigoni, Deidda Gagliardo and Funnell, whose work is informed by Laughlin (1988) and Booth’s (1993; 1995) claim that the sacred activities of religious organizations would always be prioritized and secular practices such as accounting would only be tolerated if they did not interfere with the former. Religious beliefs would leave little room for accounting since they are “incompatible with the rational means-ends analysis that underlies secular managerial practices” (Booth, 1993, p. 57). Moreover, a strong membership of religious organizations would further oppose the use of allegedly unnecessary accounting practices. However, Bigoni, Deidda Gagliardo and Funnell in their study of the Italian Diocese of Ferrara in the 15th century, a time of crisis within the Roman Catholic Church when it was undergoing far-reaching reform by Pope Eugenius IV to tackle the spreading moral decay within the clergy, have shown how a combination of weak membership and financial problems may open religious organizations to accounting as a means to cope with this situation.

Bishops Giovanni Tavelli da Tossignano and Francesco Dal Legname in Ferrara answered the Pope’s call for spiritual renovation and started visiting their Ferrara Diocese to determine if the priests’ morality, their ability to discharge their pastoral duty and use of the Church’s assets were consistent with the sacred core beliefs of the Diocese, the Constitutiones Synodalium. During these visits a key role was played by the analysis of accounting documents in the form of very detailed inventories and income and expense books. The bishops openly fostered the use of these tools and ordered that they be assiduously kept when a bishop was absent. They were regarded as essential in enabling the head of the Diocese to determine how the assets of the Church were used for the benefit of the Church by each priest and if they used their income for sacred purposes as expected. Therefore, accounting became a means to exercise control of the priests and promote the sacred values sanctioned by the Constitutiones; accounting was fully integral to, rather than conflicting with, religious values. This testified to the willingness of the bishops to fully account for their actions and use of financial resources, according to the principles of the reform.

Further insights into the relationship between accounting and religious beliefs are provided in Chapter 3. Embracing Niebuhr’s (2001; see also Hardy and Ballis, 2005) typology of social action, Baños and Funnell investigate the use of accounting practices by the Saint John’s Order (SJO) in 18th-century Spain when the State was seeking to diminish the authority of the Church, consistent with Enlightenment paradigms. Nevertheless, the Order was contracted to provide hospital care for the military due to their proven ability to offer low-cost treatment. Caring for the sick and wounded was part of the sacred duty of the SJO, the fulfilment of which required the monks to account to secular authorities through a strict accountability system imposed by the government. The need to be accountable to God and the Holy See meant that the Spanish Constituciones, the key rules which informed the functioning of the SJO, promoted accountability procedures as an integral part of the monks’ commitment to their vocation. As a result, the Order was prepared to fulfil the obligations imposed by secular authorities in the form of detailed financial and operational controls and did not see these requirements as inconsistent with its sacred mission. The need to account to the army and the Royal Treasury was thereby seen as “a necessary instrument in the achievement of the SJO’s mission whereby the sacred and the secular become indistinguishable” (Baños and Funnell, 2015, p. 451). Although the commercial relationship between the Order and the enlightened government seemed inconsistent with the aims of both, it provided secular authorities with the means to secure affordable care for injured soldiers and allowed the religious order to pursue its moral obligations. Accounting, far from being a profane secular practice, was part of the SJO’s mission both to serve God and engage with the world (Niebuhr, 2001).

Accounting can function as a powerful tool to exercise control and ensure the fulfilment of a religious organization’s spiritual mission by providing the means to reinstate the organization’s influence on its members. Thus, the Church is believed to be the site where modern forms of power arose and matured (Foucault, 1991). Drawing on Foucault’s (2007) concept of pastoral power, Bigoni and Funnell in Chapter 4 consider the case of the 15th-century Diocese of Ferrara to understand how accounting worked to secure the reinstatement of the spiritual and political standing of the Church which was threatened by the increasing moral laxity of the clergy. Consistent with the rationality of pastoral power, Bishops Giovanni Tavelli da Tossignano and Francesco Dal Legname sought to regain control of the clerics of Ferrara through a penetrating interview with each priest in the form of a confession, which took place during the bishop’s visit to the parish. A thorough analysis of accounting documents was an integral part of the priest’s confession and enabled the bishop to gain information about each and every priest (omnes et singulatim) in the Diocese in the pursuit of their salvation. Moreover, it allowed the bishop to reinstate God’s law by reinforcing the subjugation of the cleric to his master. The examination of the accounting records required of each priest became another tool to extract the priest’s truth, verifying the cleric’s assertions and uncovering any lies he might have told during the interview. Accounting reinforced the cornerstones of the Christian pastorate and sustained the reinforcement of “a form of power which has as its target people and which is both totalizing and individualizing, implying a detailed knowledge of the whole population and of each person at the same time” (Bigoni and Funnell, 2015, p. 164).

Accounting and the State

If the Church has provided the impetus for the development of accounting as a tool to exercise control and influence, it is within the State that its features have been perfected and adapted to a multitude of political programs, making accounting a key element of the infrastructure for supporting ideological, economic, military and political sources of power (Jones, 2010). Different theoretical approaches have been adopted in investigating the relationship between accounting and State power (Baxter and Chua, 2003). Drawing from Marx’s political economy, researchers have underlined accounting’s fundamental role in preserving property rights, driving inequalities between social actors and, thus, allowing capitalism to be accepted as the legitimate basis of economic and social relations (Bryer, 2000; Cooper and Taylor, 2000; Hopper and Armstrong, 1991). The State itself is never autonomous from capital and accounting mediates between the State and capital in securing the reproduction of social inequalities (Catchpowle et al., 2004, p. 1050).

Bourdieu’s sociology also has been productively employed in exploring how accounting is implicated in the reproduction of existing power relations and in the reinforcement of dominant interests, helping to hide them and hence minimize resistance (Alawattage, 2011). Bourdieu-inspired literature has sought to unmask how accounting can be used to silently reproduce social structures which favor a particular class (Cooper, 2002). Accounting is portrayed as helping to render dominant interests invisible and make strategies to pursue them look rational and disinterested. In the context of the State...