Panglossian accounting theories: The science of apologising in style

Abstract

Dr. Pangloss's comment about, "the best of all possible worlds", is widely remembered, but what we tend to forget is how unpleasant his world really is. Candide's life is marred by pillage, murder, rape, war, torture and natural disasters. The only relief Voltaire provides Candide after each disaster is a bizzare re-iteration of Pangloss's absurd refrain that, "this must be the best of all possible worlds". Voltaire's Candide warns us about scholarly self-deception and wishful thinking. This warning extends to theorizing about large organizations and corporate accountability: that monopolistic and oligopolistic elements may be underplayed: that the disciplining effect of market competition may be overrated; that managerial self-aggrandizement may be idealized as entrepreneurial heroics, and that research may be trivialized in the quest for objective results and tractable theories. This paper uses Agency Theory and Transaction Cost Theory to spell out the dangers of Panglossian theorizing. It rejects the notion that theories are dispassionate reflections of reality; instead, it views them as materialistically grounded in social conflict - as intellectual terrains on which social interests struggle to re-present and control their realities. In focussing on Agency and Transactional Cost Theory, three types of re-presentational distortion are considered here: those emanating from failing to acknowledge the constituitive potential of theorizing (stressing instead its natural and law-like character); those arising from overstating the empirical validity of theories, and those emerging from neglecting the interests that benefit from research. The implications of the paper are analogous to lessons that Voltaire teaches us through Dr. Pangloss: we may pay a high price if we listen to "simplifying assumptions" and "analytic approaches" of the Pangloss's of accounting thought. Their intellectual pollyannaism frequently promotes social causes that, after some reflection, we might prefer to dissociate ourselves from. Only by explicating the social underpinnings of accounting practices - contemporaneously and historically - and by investigating the social allegiances of different forms of theorizing, do we give ourselves the opportunity of such social self-awareness. © 1988.