Cultural and Environmental Consequences of Globalisation and International Accounting Harmonisation Processes

This article explores some of the cultural, environmental and social impacts of the harmonisation of international accounting. Taking up Hopwood’s (1994) challenge postmodern and communitarian-republican frameworks are considered to investigate whether Transnational and Multinational Corporations benefit the most from the harmonisation of accounting approved by accounting standard-setting bodies around the world. International accounting harmonisation processes extend notions of accounting decisionusefulness and representational faithfulness which reflects an instrumental stance toward accounting and its communities. This way of thinking about accounting can be compared with more radical theories that emerge from postmodern and post-structural critiques of accounting and management practices to consider their effects on the social and natural environments. Organisational Change in a Transnational Global Market 3 Introduction In an era of globalisation1 and international financial harmonisation it is pertinent to examine cultural, environmental and social implications (see Johnson and Kaplan, 1987; Held, 1995; Nobes and Parker, 1995; Peters and Waterman, 1987; Stace, 1997). Recently, globalisation and the processes of international harmonisation of free-markets have accelerated which pose a series of new environmental and social dilemmas for accounting and notions of accountability. In particular, I argue that in harmonising accounting standards we affirm free-market notions of accountability which can adversely affect communities and their relationships with the natural environment (see Cooper and Sherer, 1987; Neu, 1999, 2000). Some of the more obvious effects of global accountability are on notions of citizenship within local communities which also impact on their relationships with the natural environment. I argue that free-market notions of accountability have created a consumerist world which has decimated other cultures (Neu, 2000) and created a governable person who has lost the means and power to control their own destinies (Hopwood, 1994). The dominant discourse of procedural liberalism, therefore, has created a technology of citizenship control through efficient and effective management. This, it is said, achieves harmonisation and fair terms of cooperation within, and between enterprises and nation-states (cf. Purvis, et al. 1991). 1 Central to this argument is the supposition that international accounting is a component in the globalisation process, which imposes an overarching tectonic structure over modern communities. Organisational Change in a Transnational Global Market 4 International accounting is assumed to lead to win-win financial and political opportunities together with an open and accountable world that respects other cultures and recognises natures’ value (see Neu, 1999, 2000). Consequentially, new free market global accounting institutions have been created at both the national, and international level. We have witnessed the International Accounting Standards Committee (IASC), the OECD Working Group on Accounting Standards, the UN International Governmental Working Group of Experts of Accounting and Reporting, the European Union’s Accounting Advisory Forum and regular local moves towards harmonisation (see Hopwood 1994). Yet, global accounting reflects and supports a procedural conception of citizenship and accountability. This is based on the supposition that global financial accounting is a marker of identification which belongs to a Western state which is associated with packages of rights and responsibilities. I argue that a procedural understanding of accountability impacts on how we think about citizenship and its associated conception of ‘being’ which reflects cultural, social and environmental values. This Western conception of accountability suggests that competition throughout the world will realise the natural capacities of each state to foster the rights of its citizens. Thus, the standardisation process works through a notion of a cosmopolitan and global accountability which assumes that procedural market reforms will benefit everyone. Yet, another conception of accountability can be developed using communitarian-republican notions of governance to distil an awareness of the common goods from divergent interests as they are represented throughout the Organisational Change in a Transnational Global Market 5 global commons.2 This way of thinking offers a different normative means to consider the effects of a ‘cosmopolitan’ and ‘international’ framework and the role of accounting in tackling issues associated with corruptibility, identity, and governance. This conception of accountability, it is argued, provides a strategy to counter-act the adverse effects of financial power to create civic virtue in communities and accountable relationships between communities (Francis, 1991; Nelson, 1993). In particular, a communitarian conception of accountability is suspicious of closed horizons and those imperialist discourses, which affect the ability of the individual to lead their lives in the way that they want (see Hopwood, 1994; Barber, 1995; Taylor, 1998).3 A communitarian-republican framework aim to transcend the limitations of decision-useful modes of accountability and glimpse the ‘otherness’ of being. Accounting and accountability can be reconstructed thereby allowing other voices and values to be expressed which are otherwise submerged within procedural and technical accounting standard-setting. In exploring the effects of global accounting reform, a communitarianrepublican framework is discussed in six steps. First, I investigate international accounting and its links with processes of financial deregulation and privatisation. Second, the relationship between liberal accounting and harmonisation arguments are examined to determine the possibilities of creating an accountable and cosmopolitan world order. The third and fourth sections compare communitarian 2 Where the global commons is an environmental terms which refers to the effects of Western modernity throughout the globalised world. 3 Instrumental reasoning has been criticised in the wider field of international relations and political theory in that it does not explicitly theorise the implications of nationalism and the rise of fundamentalism. Organisational Change in a Transnational Global Market 6 notions of authenticity with Foucaultian insights as means to unlock the processes of control implicit in technologies of international accounting. The final two sections point toward a critical focus implicit in republican thought to expose modernity’s concealed mechanisms of power that are often destructive of the natural environment and inattentive to cultural differences. Thus, the central issue to keep in mind is how global accountability can be reconstructed and benefit from critical-republican thought to develop our understanding of accounting and accountability processes. International Globalisation Effects of Accounting Recent work exploring the processes of accounting harmonisation and standardisation have maintained that the aim of neo-liberalism and a liberal freemarket are to ‘lock-in’ initiatives to secure investor freedoms and property rights for transnational global enterprises (Gill, 1995a, Gray, 1998; Soros, 1998). It is assumed that these processes lead to fair and just accounting frameworks that create efficient structures, which are capable of accommodating environmental and social reform. The increased power of MNCs (multi-national corporations) gain the most from global free-markets and its informal, discretionary and spatially diverse modes of coordination. Advocates of globalisation and international accounting harmonisation argue that an expanding world economy has caused dislocations and adjustments to domestic economies, which increase the vulnerability of economies to external shocks. Adjusting to these shocks, argue proponents of harmonisation, require Organisational Change in a Transnational Global Market 7 markets that function effectively thereby providing funds to remedy any adverse environmental and social impacts (see Lehman, 1995, Milne 1995). It is assumed that in facilitating a free market the capital markets create efficient and optimal allocations of scarce economic resources. Often these arguments emanate from Frederick Hayek’s (1976) work where the intensification and integration of international capitalism is assumed to be conducive to the rule of law, and a peaceful world order. When thinking about new organisational structures formed through globalisation, a range of postmodern and some left-wing thinkers argue that global processes support neo-liberal free-market efficiency and the rule of law. Postmodern reasoning, in this respect, overlaps with those organisational and management frameworks, which assume that a successful organisational structure is achieved when barriers to competitiveness are removed. Accounting professionals, such as Michael Sharpe, have advanced this strategy to achieve global financial accountability. He reports: At the World Accounting Conference held in Sydney in 1972, accounting leaders conceived the idea of forming an International Standards Committed (IASC) to develop and publish a comprehensive set of accounting standards which would produce high-quality financial statements, and to encourage their use throughout the world. Today, international accounting standards (IAS) are the basis of the financial reporting rules of most countries, and provide an international example to encourage improvement and harmonisation of accounting standards set by experienced and wellresearched national standard setters. (Sharpe, 1998, p. 16). Sharpe argues for a way to organise businesses along the lines of a deregulated, free-market company with limited social and environmental restrictions. At the macro-political level market oriented solutions call for a shift a transmutation of human consciousness as the only viable response to social and ecological danger in a global world order. The processes of globalisation are assumed to provide Organisational Change in a Transnational Global Market 8 incentive structures to finance projects such as protection for the natural environment. This conception of international accounting, in conjunction with free-market structures,4 connects each nation with the common good where the common good includes the protection of the environment. If accounting is to act in the public interest, however, it must also interpret the social and environmental benefits of trade and investment. The current and future prosperity of living standards, therefore, will depend on communities relationships with the natural environment (see Carlson, 1997; Taylor, 1987, 1998).5 Harmonising international accounting is based on the assumption that different nation-states linked through a co-federation of nation-states will lead to fair terms of cooperation. This form of organisational structure is assumed to achieve fair terms of cooperation between and within communities. Globalisation offers new opportunities and organisational incentives that create efficient outcomes in conjunction with the rule of law and justice (Gaa, 1986; 1988; Habermas, 1996; Power and Laughlin, 1996). Yet, harmonising accounting structures between nation-states perpetuates the problems that market critics such as Cooper and Sherer (1984) noted when they explored the political economy of accounting. That is, processes of neo-liberalism and global financial reform have given rise to the notion of ‘postmodern’ corporations which are independent of the 4 For example, consider the attempt to implement a ‘Multilateral Agreement on Investment’ in Australia and other signature nations. There was very little or no public debate concerning its introduction into liberal-democracies. 5 Interestingly, Foucault objected to the portmanteau classificatory term ‘post-structural’. A more encompassing term is that of ‘perspectivism’ which has been used in accounting studies to explore, deconstruct and interpret accountability and decision-useful processes. Organisational Change in a Transnational Global Market 9 nation-state and no longer subject to its regulative powers.6 Often emanating from explorations into liberal discourse and regulatory theory, efficient and effective management is assumed to be the outcome of deliberation concerning what is a good society, community or nation-state.7 Accounting, however, remains caught within a fundamentally flawed global economic-liberal system that perpetuates poverty, alienation and anomie (see Tinker, 1981). The concern is that international accounting processes are efficient in dominating other sectors of the economy and leads to a totalising consumer society which appeals primarily to the economic appetite of consumers.8 Globalisation, Free-Markets and World Government Harmonising international accounting is based on decision-useful models which maintain that corporations can continue their operations on the assumption that they achieve efficient and effective outcomes (Peters and Waterman, 1982; Watts and Zimmerman, 1986).9 Nevertheless, in exploring the limitations of global 6 This argument is based on the perspective that a good deal of organisational and accounting thought steers managerial and corporate reporting practices to good effect and implement social change (see Laughlin, 1987; Habermas, 1984, 1987; Palan, 1998; Teubner, 1997). 7 Habermasian inspired arguments lead to a role for accounting as an information system through which relevant publics inform stakeholders (see Power and Laughlin, 1996; Neu, et. al., 1998). 8 Researching the effects of corporations in South Australia it is worth pointing out that WMC in Roxby Downs uses 15 million litres of water per day and is being given free of charge by the local government. There is no resource tax, no royalties, nor are there water rates being charged. In short the water is considered to have no value and the only incentive to minimize water use is the cost of pumping it and of desalinating a portion (found in Nuclear Information Centre, The Conservation Centre, Adelaide, Sept. 1999, p. 2). 9 In an accounting context, Watts and Zimmerman used similar forms of instrumental reasoning to explain that calls for more regulation are another excuse for inefficient practices (see also Friedman, 1976). Organisational Change in a Transnational Global Market 10 accounting processes it is worthwhile considering the implications of Hopwood’s argument that international accounting has been characterised by ‘very skillful orchestration of the worldwide lobbying pressures of the audit industry’ (Hopwood, 1994, p. 245). He provides a framework to explore and understand the machinations through which large populations are managed and offers the observation that the processes of harmonisation involve political and institutional forces which constrain a broader philosophical and institutional reformation of accounting (Hopwood, 1994). Hopwood analyses the means through which accounting discourse has been framed and constructed using an essentially Foucaultian inspired framework (see also Miller and O’Leary, 1987, 1990). He points out that powerful accounting groups influence the harmonisation/standardisation process which reinforces the argument that accounting supports a narrowly construed range of users. Foucault’s ‘perspectivism’ uncovers the structures of power which perpetuate an instrumental global world order that use control technologies such as those provided by the accounting craft. Arguments advocating globalisation and international harmonisation, therefore, are seen to be based principally on free-market notions of efficient financial reform that satisfy financial user needs within nation-states.10 The owners of capital are invariably located in the Western world who demand ever increasing financial returns. In searching for increasing wealth, corporations search for new markets is often at the expense of those local communities who do not have the power to monitor corporate effects on their local communities and 10 It is now clear that a procedural conception of accountability satisfies the needs of those financial users who are owners of share capital (see Cooper and Sherer, 1984). Organisational Change in a Transnational Global Market 11 environments.11 Further, corporations can withdraw their economic role in local communities when more profitable opportunities become available which reinforces the exclusive conception of citizenship implicit in Western discourse. Outsiders do not share the benefits associated with this conception of cosmopolitan globalisation. Here, Hopwood’s (1994) work on power structures can be extended to consider how global accounting reform impacts on culture and the natural environment. This has created a climate where each person is governed according to the dictates of instrumental liberal structures where the individual becomes a governable person where populations are managed to achieve a vision of the common good which excludes others (see Miller and O’Leary, 1981; Hindess, 2000). As a consequence, people have lost the means to lead their own life free from intrusion by others. In applying Foucaultian insights to global accounting processes, we can better consider the alienating and unjust practices associated with the utilisation of power in modern societies. Within the accounting literature the unjust practices associated with calculation and time management practices have been exposed as part of a broader understanding of how accounting limits the ability of people to lead their individual lives (see Miller and O’Leary, 1981). Extending our analysis beyond mechanisms of control and calculation we can begin to investigate the real world effects of globalisation on local communities. What happens when companies move offshore taking their financial capital offshore? 11 Consider, for example, the indigenous Papua New Guinean’s who resent the presence of mining corporations and have actively thwarted the development of mining activities. We need a broader moral vision to understand their values and how our practices impact on their being-in-the-world. Organisational Change in a Transnational Global Market 12 Hopwood (1994) has invited broader philosophical frameworks be constructed to respond to processes of calculation and control as they related to international accounting and transnational global capitalism. I suggest that one way to begin is to explore the accountability implications that follow from Kant’s republican advocacy of a cosmopolitan and procedural, liberal global world order. More particularly, this provides an opportunity to consider the debates between Kantian and Foucaultian interpretations of citizenship as they impact on different accountability processes. In considering these two different conceptions of citizenships, it is then possible to chart the critical and political effects of different trajectories of accounting. New pathways might be forged which are mindful of the cultural, environmental and social effects of international accounting reform. Kantian insights can be developed to re-orientate our accounting direction to acknowledge environmental and social effects of international harmonisation and globalisation processes. Furthermore, it is possible that Kant’s work on cosmopolitanism can be incorporated in a framework which works toward developing sites of resistance against the adverse effects of globalisation (Miller and O’Leary, 1990, Nelson, 1993). The notion of accountability developed in this article, explores international accounting and globalisation processes while using Foucault’s genealogical method to explain the sources of power and control. I aim to go further to think about how we might create better moral relationships which respect other cultures and their way of being with the land. The usefulness of Foucault concerns his explanations about how structures of power seep through Organisational Change in a Transnational Global Market 13 the pores of society.12 Accounting work in this tradition can consider how conceptions of citizenship and accountability are implicated in the processes that govern people’s lives. In this way, accounting could be re-figured to interpret the social and environmental implications associated with different notions of accountability and global governance as they affect culture and people’s environmental location. Here, republican ideas not only deconstruct accounting, but also interpret how different user groups can be provided with additional information to understand the processes of globalising capitalism (Neu, et. al. 1998). This line of reasoning utilises the Foucault-Nietzsche tradition to expose the effects of procedural international accounting frameworks which rely on voluntary codes, due processes, and narrowly construed notions of stakeholder theory (FASB, 1978). The net effect on accounting and management has been to support power structures in communities which perpetuate a consumerist society which adversely affects both social and natural environments. It is important, therefore, to consider the processes through which capitalism perpetuates an instrumental accounting structure offering only a partial glimpse of the factors shaping people’s being-in-the-world (see Taylor, 1984). Foucault provides a wider lens that can be applied to consider not only the financial implications of international harmonisation and liberal globalisation, but also the cultural impacts of liberal cosmopolitanism. I argue that while procedural accountability imposes an instrumental means-end culture over our lives Foucault’s method can be adapted to consider the possibilities and opportunities 12 I shall not delve into Foucault’s notions of bio-power and its relationships with governance in this article. Organisational Change in a Transnational Global Market 14 for reforming modern communities. This is based on the supposition that Foucault’s method tells only a part of the story of the development of the modern identity and it can be supplemented with a critical perspective (see Taylor, 1984). Foucault’s focus on power as pervading all levels of society leaves room to consider other cultural and historical dimensions of what it means to be a person. It allows us to retrieve and consider a role for accounting through global accountability as a moral criterion (see Francis, 1991). This conception of accountability is based on citizen self-rule won through democratic debate13 where there is full and open dialogue (see Taylor, 1998 extending Heidegger, 1962). This is a world which interprets and explores the effects of corporate power on different communities, and works toward a respectful global system that acknowledges social and environmental relationships. Useful accounting insights can be gleaned from Foucault’s commentary on Kant’s ‘What is Enlightenment?’ Foucault describes this change of focus from the universal to the singular. It seems that Foucault’s purpose is to turn the Kantian question into a positive one: ...what once was given to us as universal, necessary, obligatory, what place is occupied by whatever is singular, contingent, and the product of arbitrary constraints’ (Foucault, 1986, p. 45). For our purposes, there is a sense of continuity and discontinuity in how we think about power and its effects within organisations. The differences between the universal and the local, which are isolated by Foucault in his work, boil down to his refusal to propose a normative ideal for humanity to follow as a mechanism to 13 This way of thinking about accounting consider traditional decision-useful assumptions that notions of due processes as means to implement new accounting standards. Our Western communities at present are committed to dismantling the state and its institutions Organisational Change in a Transnational Global Market 15 escape the ubiquitous effects of power and control. If we are to understand the effects of accounting harmonisation, then, this Foucaultian way of orientating our thinking is of considerable importance. For reform accounting, it points toward the procedural limitations with technical accountability and posits a need to deconstruct the dominant discourses of capitalist hegemony, which impose a calculable and manipulable conception of the self on communities. Yet, Foucault’s major work14 seems to associate the civilising processes of modernity almost entirely with repression.15 Barry Hindess has developed this insight in arguing that Foucault submerges the regenerative potential implicit in projects to emancipate citizens from their everyday lives. Here, accounting through notions of accountability might manifest another will to power (see Hoskin, 1996). Another way, however, exists to think about accountability using ideas developed by Foucault that have their roots in the work of Martin Heidegger.16 He offers a different interpretation of the role of language as an expressive force that considers different people’s values before any form of citizenship, or accountability is imposed on other communities (discussed later). which contrasts with republican calls for avenues that allow citizen participation to the processes of deliberation in communities. 14 In his later work he develops an ethic of care for the self which can be developed as part of a framework that shares with that strand of liberalism that works to understand and respect what it means to be a person (see Lehman, 1999; Taylor, 1989). 15 It is important to remember, however, that some accounting researchers have posited a positive ideal from within the work of Foucault in restructuring accounting. In this regard my utilisation of communitarian theory works toward this positive ideal in developing what it means to be a person in the modern world. 16 I use Heidegger’s work on language and being as a component in my communitarian refraction of liberalism. Organisational Change in a Transnational Global Market 16 This broader communitarian way of thinking about what it means to be a person links with a conception of accountability, which questions the simple notion that accounting is simply a financial technology. It offers a moral vision which links with the supposition that culture and nature’s intrinsic value are noninstrumental goods (Heidegger, 1962). He explained how it is through language that we can explore people’s being-in-the-world which is an important observation for accounting, as it attempts to understand a world of half-understood structural domination. The clear implication is that accounting’s role ought to be a community mechanism that reports for all members in society about how resources are used and distributed. This is because an expressive understanding of language guides accounting to interpret different notions and effects of accountability (see Laughlin, 1988; Power and Laughlin, 1996; Lehman, 2000). This conception of accountability works to integrate Foucault’s insights through a way of thinking which is committed to minimising modes of domination. In doing so, accounting’s commitment to the public might be affirmed through explaining and narrating to communities the effects of corporations on their land and local environments. This argument, emanating itself from within Foucault’s critique of modernity, maintains that while power is often unavoidable, emancipation from systems of power is another matter entirely. In fact, when thinking about processes of globalisation and harmonisation it is worthwhile examining limited and specific strategies to emancipate citizens (new notions of civil society then require different reporting technologies). In fact, these strategies might be regarded as desirable in some cases (see Hindess, 1996, p. 152). Foucault himself states: I prefer the very specific transformations that have proved to be possible in Organisational Change in a Transnational Global Market 17 the last twenty years in a certain number of areas that concern our ways of being and thinking, relations to authority, relations between the sexes, the way in which we perceive insanity or illness...(Foucault, 1986, pp. 46-47) Foucault’s analysis implies that the best that can be achieved is the substitution of one set of power relations with another. Unfortunately, as Charles Taylor (1984) has reminded us, things are not as simple as this argument would have us believe. The above passage suggests that his treatment of domination is not so straight forward. For example, Foucault’s work on an ‘ethic of care’ for the self discusses different means to minimise domination where the ‘practices of the self which would allow these games of power to be played with a minimum of domination’ (Foucault, 1998, p. 18). Following Foucault’s explorations into modernity it is the criterion of domination, which is critical when thinking about global accounting and processes of harmonisation. However, if the Kantian-Foucault dichotomy can accommodate our understanding of the effects of globalisation then the division of accounting on different communities presents us with a far more serious challenge. This brings us to my second set of concerns about how we are to reform those institutional structures which might lead to justice and fairness in accounting (Gaa, 1988). Authentic Democracy and Republican Self-Rule Accepting the challenge proposed by Hopwood (1994) it is possible that accountability mechanisms can be developed as a means to regulate new organisational forms such as virtual corporations who have the ability to avoid local regulations. A communitarian-republican framework offers one means to explore the logic of capitalism, and its effects on local communities and how accounting might be transformed (see Lehman, 1999). This communitarianOrganisational Change in a Transnational Global Market 18 republican framework goes further to consider not only the processes of governmentality, but also the contexts in which different accounting discourses operate. Thereby providing a means to consider the effects of accounting processes on different communities and their environments. Globalisation processes have accelerated through new virtual corporate structures which have been associated overwhelmingly with ad hoc, discretionary and minimal conceptions of the law (see Bailey, et al., 2000). They support a technical accounting, as opposed to an interpretive and open accounting (see Taylor, 1989). It will be recalled that Kant’s argument rested on an assumption that the natural capacities of human individuals correspond to the capacities of rationality and morality that modern constitutional republics promote in their citizens. Though cosmopolitanism and notions of accountability have significant and systemic effects in the managing and partitioning of populations as a means to maximise corporate wealth. This partitioning of populations provides a means for corporations to dominate local populations thereby imposing an external financial structure that submerges local and intrinsic values. The usefulness of Kantian cosmopolitanism and citizenship helps to explore the effects of globalisation through a cosmopolitan law based on positive legal law. It is apposite that in the 1990s this way of thinking about liberalism has been usurped by an even more narrow liberalism, which relies on free-market reform supported through a benign and limited government (United Nations, European Union). This has given rise to new deregulation and privatisation trends which are found in documents which advocate Total Quality Management, Activity Based Costing, The Balanced Score-Card and the Harmonisation of Accounting Standards to implement efficient management. The net effect of these Organisational Change in a Transnational Global Market 19 new technologies is that they perpetuate the instrumentalism associated with the processes of globalisation. Where instrumentalism projects a culture of calculation and control which runs roughshod over other cultures and values which might provide a different trajectory to administer and govern human communities. Moreover, one wonders how democratic are these trends where the accounting profession defines the direction concerning what is to be reported and how (FASB, 1978). Are citizens given access to the processes of accounting deliberation in liberal-democratic societies? (SAC 2, 1992). Thus, the republican dialectic developed here works at the ontological level to explore citizenship and accountability effects.17 It recognises Kant’s commitment to respect and a ‘peaceable federation. But Kantian liberalism’s commitment to procedure could be used to support those harmonisation processes where accounting is assumed to be a neutral arbiter of organisational reality (see FASB, 1978). Thus, my argument works toward a communitarian-republican model to think about globalisation with a view to avoiding some of the darker implications of capitalism’s logic of accumulation. Capitalism, and its logic of accumulation, creates a sub-altern existence for many citizens which rewards those with power and prestige while submerging the adverse effects of calculation and competition (see Taylor, 1995). Taylor’s communitarianism offers a way for us to consider how procedural conception of accountability limits our understanding of citizenship. It leads ultimately to a vision of the person as 17 Interestingly, from a philosophical perspective Kant’s notion of a world republic in his ‘On the Common Saying, ‘This may be true in theory but it does not apply in Practice’’ (Kant, 1971). Organisational Change in a Transnational Global Market 20 consumer where the natural environment is considered to be a reservoir for humanity’s convenience (Taylor, 1989, Lehman, 1999). In working to develop a global understanding of accountability it is useful to extend the Foucaultian position thereby exposing those power structures which dominate people’s lives. This extension takes place by extending our investigation into processes of domination to consider those sources of the self which shape people’s being-in-the-world. This accountability works within a community committed to the development of people’s freedom which would ‘bring into view the historically sedimented underpinnings of particular “problematizations” that have a salience for our contemporary experience’ (Barry, Osborne and Rose, 1996, p. 5). In destabilising the present we might not only explore the problematic effects of global accounting reform, but work through and with post-structuralism to widen the role of our public institutions where environmental and social accounting provide means to imagine the otherness of humanity’s being-in-theworld. Central to the Kantian tradition of reconstructing modernity, is Habermas’ advocacy of deliberative public spheres where citizens are provided with means to explore different effects on their lives and communities. Habermas developed Kant’s republicanism to offer a different way to think about globalisation and accounting reform (Habermas, 1997). It might be possible to counter-pose Foucault’s ‘perspectivism’ through a republican lens to reform modern global capitalism and its relationships with the local level. Interestingly, republican ideas can be detected in the accounting work of Power and Laughlin (1996) who use Habermas’ communicative mechanisms to explore the role of accounting as an Organisational Change in a Transnational Global Market 21 institutional mechanism in modernity. Habermas extended Kant’s perpetual peace. Kant claimed in ‘Perpetual Peace’: The peoples of the earth have...entered into varying degrees into a universal community, and it has developed to the point where a violation of laws in one part of the world is felt everywhere. The idea of a cosmopolitan law is therefore not fantastic and overstrained: it is a necessary complement to the unwritten code of political and international law, transforming into a universal law of humanity. (Kant, 1971) Kant developed the idea of a slowly spreading federation of internally peaceful republics to civilise the world based on liberal notions of tolerance and respect. Furthermore, Kant was ever insistent on the internal sovereignty of nations to preserve each nation-state’s autonomy. It might be argued that Foucault’s conception of an ethic of care intersects at this point with Kant’s cosmopolitan republicanism. If we are to reduce patterns of domination and issues of culture associated with international accounting processes it is important to extend Foucault’s work on power in a global context. This accountability is achieved by counter-posing Foucaultian frameworks through an extension of Kantian republicanism. The notion of a global world citizen, in a liberal world order, echoes the notion of the moral person criticised by Foucault but it is possible to construct a different conception of accountability. This notion of accountability not only deconstructs, but cares for others and their cultural values and ideals. According to Foucault’s framework, the modern self is moulded by forces of power which is reflected in accounting’s treatment of the person in a narrow and technical framework where everyone is assumed to benefit from free-trade (see Miller and O’Leary, 1993, Cooper et al., 1998). Neo-liberal processes of free-market harmonisation, operate in a stealth like fashion, thereby civilising the world and its nation-states. Here, Kant’s federal solution is similar to those arguments which support harmonisation Organisational Change in a Transnational Global Market 22 processes where instrumental reason and procedural accountability are assumed to create accountability, democracy and perpetual peace (Kant, 1971, p. 102). Of course, extending this argument to the debates raging in the accounting literature is not to deny that post-structural accountants have not explained the limitations of annual reports, conceptual frameworks and the power structures that underpin harmonisation projects. The notion that power is the variable left unanalysed in accounting reform projects is an important observation when it comes to understanding the processes through which accounting dominates and controls people’s ordinary lives (see Nelson, 1993; Taylor, 1989). While Foucault’s framework usefully explores notions of power, it is through consideration of his critique of Kantian liberalism which sheds light on the role of communicative mechanisms of the global economic system (see Power and Laughlin, 1996). At the intersection between Kant and Foucault a republican structure distils elements from divergent positions as a means to consider the direction of communities. This leads to a model that does not simply accept capitalism as a given, but critically reflects on the processes of globalising capitalism. According to some accounting theorists notions of accountability mediate people’s being-inthe-world through accounting symbols (McIntosh 1999). In a similar way, communitarian-republicans develop the ideal of authenticity to create a different way to think about the world and is based on ‘being’ rather than ‘choosing’ (Heidegger, 1962). This conception of accountability involves developing political ‘insight’ into the effects of accounting reform where the practices of accounting have submerged the ‘ideal of authenticity’ in those conceptual frameworks which assume that uniform accounting processes will achieve efficiency (see FASB, Organisational Change in a Transnational Global Market 23 1978). One wonders whether free-market global accountability can achieve a satisfactory standard of living and respectful work practices. Another way to consider the effects of accounting can be traced back to the work of Cooper and Scherer (1984) who argued that accounting is implicated in society’s distributional problems. One response to these problems involves developing a process of democratic deliberation to consider how organisations impact on local communities. This involves reformulating how we think about the role of accounting and how it is mediated through new republican structures so that we can weigh and consider how accounting effects communities. It proposes a different conception of cosmopolitanism and accountability: I prefer a third option: cosmopolitanism as the provocatively impure but irreducible combination of a certain privilege at home, as part of a real belonging in institutional places, with a no less real but much less common (and therefore highly desirable) extension of democratic, anti-imperial principles abroad (Robbins, 1993, p. 211) Robbin’s argument suggests that globalisation involves balancing the rights of trans-national corporations to enter developing economies together with the need to provide aid and infrastructure. Traditional accounting approaches, for example agency theory, are ill-equipped to consider these effects as they ignore the background contexts which shape people’s way-of-being in the world. These dilemmas clearly require more, not less global governance. It requires an accounting framework which is sensitive to local cultures and values. A republican polity, mediated through accounting structures, promises political sovereignty that requires local communities retain control over their own destinies (see Neu, 2000, p. 282, 283). Accounting would have a different role to monitor and regulate transnational corporate effects at both the enterprise, national and global levels. In Organisational Change in a Transnational Global Market 24 this way, local communities and people regain control over their own life-goods and author their own accounts and lives (Nelson, 1993, p. 220). Critical Republicanism and International Accounting Reform In retrieving a role for the state and accounting ideas from Foucault to Habermas provide a lens to discern the effects of accounting (see Power and Laughlin, 1996, Neu, 2000). Within the accounting literature the central question posed concerns whether the liberal rule of law supported by a rule-driven accounting provides political space for each individual to make decisions that are free and equal. The task at hand is to consider whether accounting can facilitate global reform through a democraticised civil society, or whether it only perpetuates different wills to power. That is, in developing our appreciation of the global effects of accounting harmonisation it is useful to consider Foucaultian accounting insights that where there is power there is already resistance. Sites of resistance against techniques of calculation and control involve re-asserting civil society on behalf of the public against the new monopolies. Here, it is important to imagine accounting as a part of a civil society which acts as a site of resistance to monopoly capitalism. The nexus between accounting and global civil movements offers a different response to postmodern and poststructural frameworks which advocate the fragmentation and disintegration of macro-social institutions such as accounting. Postmodern and Foucaultian accounting frameworks do not explicitly analyse, nor explore the way that social and environmental relationships frame our way of being-in-the-world. From a critical perspective, accounting must not only be developed as a site of resistance but to develop those sites of resistance which already exist to tackle corruption, power and develop participation for people Organisational Change in a Transnational Global Market 25 politically and at work (Cooper, 2000). Nevertheless, a simple post-structural emphasis on discourse through accounting could lead to neglect of considerations of structural power wielded by trans-national corporations. A postmodern ‘new age’, at worst, could be a destructive or simply distracting attempt to create the ‘hyper-real’ world. The political question for accounting involves an open-ended political process which defies attempts at theorisation. More seriously a contempt for ontology and revolution, does not suggest good prospects for the development of a critical-postmodern accounting ethic.18 Global Republicanism: A Critical Perspective to Reclaim the State In some ways, my communitarian-republican transformation of accounting offers similar conclusions to those of agency theory in that economic incentives play a role in moderating behaviour. What differs, however, is an avowed acknowledgment of the broader contexts in which accounting operates and a method to ‘explore more extensively the constitutive effects on accounting practice at various levels of the regulative ideal’ (McSweeney, 1997, p. 708). This would involve taking accounting in a different direction associated with winning back the position of the state to regulate and monitor corporate effects. This would involve explicitly acknowledging the limits of free-markets and incentive schemes. In winning back the role of the state at the national level we can begin to interpret and wrong harms done in those situations where ‘the lands, the 18 A useful concept for accounting researchers to consider is the notion of fortuna which was to be handled through to republican virtue (virtu) and offers a means to escape the restrictions of procedural rationality (see Nelson, 1993). The implication is that accounting is based on the Enlightenment assumption that humanity can control the world, but that this does not seem to be happening (see Lehman, 1996). Organisational Change in a Transnational Global Market 26 reproductive ability, and the long-term health of the indigenous population are irreparably damaged’ (Neu, 2001, p. 282) Accounting impacts on the democratic ideal where local communities must be involved in reporting environmental and social effects at that level. In conjunction with republican self-rule, accounting might be accorded the task to ‘report’ and ‘explain’ different notions of ‘representational faithfulness’ as they effect, and impact on communities. Accountability, it will be remembered, when counter-posed with republicanism promotes discourse to work towards not just representational faithfulness, but better interpretations of these representations (Taylor, 1975; McSweeney, 1997; Mason, 1999). In winning back the role of accounting as a regulative ideal we can begin to explore different representations of global reality. This would occur through reconstituted public spheres which not only deconstruct what is reported in annual reports, but which consider also who has power, and how power is perpetuated in an instrumental means-end culture. To this point, republican ideas have been used to explore the effects of globalising accounting. Additional insights can be gleaned from the work of Power and Laughlin (1996) who have begun to consider the global implications of language and communication using Habermas’ advocacy of a ‘cosmopolitan world order’ backed by an even stronger commitment to the rule of law. Habermas argues: The correct solution to the problem of the moralization of power politics is therefore “not the demoralization of politics, but rather the democratic transformation of morality into a positive system of law with legal procedures of application and implementation”.19 Fundamentalism about human rights is to be avoided not by giving up on the politics of human rights, but rather only 19 Kluas Gunther, ‘Kampf gegen das Bose? Wider die ethische Aufrustung der Kriminalpolitik’, Kritische Justiz 17, 1994, p. 144. Organisational Change in a Transnational Global Market 27 through the cosmopolitan transformation of the state of nature among states into a legal order. (Habermas, 1997, p. 149). Habermas’ solution is a procedural transformation of politics for all states through a positive system of law. A limitation of this way of thinking that I have been pointing out is that it does not tackle structures of institutional power. Instrumental means-ending thinking such as that proposed by Habermas does not respond to Foucaultian concerns that accounting is a technology responsible for the creation of a ‘governable’ person whose freedom is severely curbed. Moreover, globalisation processes accentuate the effects of these trends, which are not uniform in their impacts and which consist, often, of mutually opposing tendencies. On the one hand, globalisation might reduce nationalist feelings at the nation-state level allowing companies into their markets. On the other, globalisation has accelerated ethnic tensions with long-run damaging effects for multi-national companies.20 Accounting processes, therefore, must consider their effects on local cultures and environments. Power and Laughlin (1996) notably retrieve a role for accounting by arguing that the craft of accounting acts to mediate different social levels in communities. Many socialists and critics of globalisation would find this way of thinking inadequate, but it is worthwhile exploring whether a republican transformation of accounting might create a revolution in our understanding of the effects of accounting and international globalisation. The complexities of globalisation, furthermore, involve not only considering the sovereignty of nation-states, but also the processes which lead to possible exploitation and transformation of economic and natural value from the host economy. A reformist strategy, moreover, might be fashioned within Organisational Change in a Transnational Global Market 28 republican theory to not only deconstruct the pretensions to universality within the project of modernity, but to recognise also Marx’s argument that in establishing the ‘rule of law’ over ‘arbitrary rule’ it is possible to transcend the alienated state. So constructed republican notions of governance might enhance people’s freedom thereby considering the collective dimensions of enterprise culture and collective social institutions. It would involve challenging the assumption that global accounting reform offers unambiguous improvements for everyone. In fashioning a new role for accounting through republican ideals the role of the accountant would be informed by post-modern and post-structural accounting insights to deconstruct the capitalist process of exploitation. This way of thinking would aim to expose those processes of repression implicit in modernity’s meta-narratives such as accounting and its impact within a changing global world economy. This is not the end of the story, however, because it is useful to consider the ideal of authenticity to explore the direction of communities. The ideal of authenticity counteracts the proceduralism of global reform offering a means to consider the identity of citizens as fundamentally importance. The focus, therefore, shifts from relying on each individual’s labour in a global free-market to consider relationships between nation-states, popular sovereignty, identity and community. When transnationals move offshore from their host economy it is likely that the lives of many citizens will be displaced and marginalised. This is deemed to be fair and just if the accounting reports show a profit. Global accounting and business reform, however, leave these problems under-theorised and pay little attention to the real material impacts accounting has on communities 20 In recent times Papua New Guinean have requested officials from the World Bank and Organisational Change in a Transnational Global Market 29 and their cultures. We need to think about what organisations are, what organisations do, and how organisations transfer certain cultural imperatives to different locations, nations and regions. Furthermore, most literature on domestic and international processes of organisational and accounting change are based on a regimes framework which assume that the current social structures are based on a fundamental separation between the private and public spheres of human activity. Developing an appreciation of global governance must also recognise that the processes of transnational capitalism have increased interaction among spatially different actors making political relationships more complex and not uniform. Globalisation of markets, however, accentuate the limitations of procedural free-market solutions by ignoring the effect that corporate power can wield on local communities. It is for these reasons that a republican ideal type is useful for accounting researchers’ committed to understanding what accounting is, and what accounting does throughout the world economy. According to a republican framework consideration of notions of the common good provide a way to think about the processes through which accounting could be reconstructed in the public interest. This strategy, however, begins by recognising that the battle for the rule of law in a transnational global world order. This, it will be recalled, necessarily entails a battle against the pathologies of neo-liberal, globalisation. Social and environmental standards must be strengthened in international bodies (such as NAFTA and the EU). It is, therefore, crucial that other international economic agreements (for example, IMF to leave their shores. Organisational Change in a Transnational Global Market 30 GATT) finally include such clauses in their terms of reference. In order for these standards to prove effective, they are going to have to take a relatively cogent form. Given the enormous power advantages enjoyed virtually everywhere by business in relation to organised labour and environmentalists, we have to assume that the business community generally is best poised to exploit legal ambiguities within these treaties. As we recently saw in Kyoto, the biggest polluters prefer open-ended, empty environmental law. Within the global economy, the biggest exploiters are similarly likely to favour vague forms of private law and toothless social and environmental regulations. Furthermore, Bailey et. al. (2000) have explored the effects of harmonisation on accounting and its relation with market reforms such as the Multi-Lateral Investment Agreement. They express a concern with the power of transnationals who have the ability to weaken community demands for accountable information. It is because global reform impacts on liberal-democratic structures as they frame how we develop citizen identity which reflects culture and context specific relationships. In the accounting literature, there have been concerns expressed that harmonisation might impact on local cultural norms and needs. A republican model distils the ‘common good’ in a way that not only deconstruct, but also interpret the effects of corporate activities on communities. While Kant’s work offers an interesting historical comparison with the processes of international harmonisation, it is important to consider whether democracy can survive the processes of globalisation (see Barber 1995). This involves thinking not only about the limitations of methodological individualism, decisionusefulness and voluntary international accounting codes, but also explore the material effects of accounting on communities. Organisational Change in a Transnational Global Market 31 A republican framework offers a pathway to break the globalisation circle thereby providing political equipment for the profession of accounting to consider what it is good for communities to be. On this view, accounting acts as a steering medium providing political insight to consider cultural, historical and social dilemmas posed by globalisation. While Foucaultian critiques advocate continual critique it is important to explore not only virtual notions of value but also the material impacts of free-market liberalism on the natural environment and people’s identity. The role of accounting, therefore, is to interpret and offer different options so that local communities choose their own directions where subaltern voices are given opportunities to express their being-in-the-world. Accounting has the potential to provide and become a mechanism in broader public space to consider the economic, environmental and social forces which impact on people’s being-in-the-world. Globalising Accountability International globalisation and accounting effects on social and natural environments is to essay a serious concern. In extending work on accounting and its social effects on communities the debates between Communitarians and Foucaultians are useful in considering the different ways accounting techniques perpetuate the status quo that allow transnationals to exploit, alienate and submerge local values. Globalisation is supported by accounting harmonisation projects which impose a means-end culture of calculation and control over people’s lives offering only a narrow way to think about social and environmental relationships. Organisational Change in a Transnational Global Market 32 Globalisation was seen to rely on procedural accountability mechanisms which support the processes of globalisation characterised by fervent market competition. Therefore, that it is unlikely that nation-states and their accounting bodies will take action to counter international capital’s preference for open-ended accounting standards and environmental laws. This has the effect of perpetuating the procedural neo-liberal preference for weak and open-ended environmental laws and standards. The net effect of international accounting and its commitment to procedural accountability is to colonise and destroy local cultures and their relationships with the natural environment. More particularly, accounting is integrally entwined with the processes of capitalist hegemony, which have not been subject to critical analysis, or reflection. While Foucault’s method offered important means to expose power structures, it did not offer a framework to understand the importance of accountability, context and what it means to be a person within cultural contexts. Accountability and accounting involve exploring different notions of the rule of law and the construction of institutions to keep business as separate from politics as possible. Moderating the processes of globalising capitalism, given that there are limited prospects for revolutionary change, involves creating an appreciation of accountability as a democratic mechanism which opens space for citizens to express their cultural values. Through a communitarian-republican framework a counter-factual model of accountability questions liberal assumptions of individuality which offer only a partial understanding of the human agent and the relationships with bring people together. A republican ideal type suggests that sovereignty can only be effective if we also consider civic virtue, participation and the structures of power which Organisational Change in a Transnational Global Market 33 determine who are the beneficiaries of global free-trade and international accounting reform. Notwithstanding the insights gained through Foucault’s method, globalisation requires a fully worked out international and accounting model that explores and explains the effects of internationalisation. One obvious effect is that decision-making occurs at the level of the global corporation while social and environmental effects are felt at the macro-, or global level. It was argued that the accounting profession and large transnational corporations prefer accounting policy determination at the level of the corporation thereby creating and freeing up the processes of self-regulation. The net effect is that this way of thinking fails to capture the international dimensions of global capitalism as they ignore the impacts of global capitalism at the level of the nation-state. Having explored notions of decision-usefulness, globalisation, harmonisation and accounting reform two interrelated premises have been developed. The first is that globalisation impacts on the sovereignty of nation-states. The second is that to manage the global commons involves democratising organisational relationships and working from the ground up to combat the adverse impacts of global capitalism. These two premises are based on a regimes framework which reflect the assumptions of a strict mode of individual liberalism which has been used to argue that a certain organisational form is the most efficient and effective. As a result, instrumental reason manifest through privitisation and deregulation to tame the direction of organisations in free-market social structures. To understand globalisation we need to consider not only the genealogy of modern conceptions of the human agent, but also our understandings of the communities to which that Organisational Change in a Transnational Global Market 34 agent belongs. Accounting is a fiction which can help in this regard, but it is something far easier to suggest than to effect.