The Governance of Corporate Governance: the Discourse of Publicity in the
Early Twentieth Century
Mitchell Stein, Vaughan Radcliffe, and Crawford Spence
Outline of Paper:
Stein et al. offer a study of the regulatory attempts to exert control over large
industrial corporations around the turn of the last century in the US. In a history
of how accounting disclosure came to be a central focus of the policies of
successive US federal regulatory bodies, Stein et al. examine how political
programmes, based on the idea that publicity is an effective tool of control, failed
to enact either effective control or legislation over large industrial corporations.
Stein et al. suggest that these “programmes of reform” were successful only in
leading to more reforms, also based on the same misguided principle.
Stein et al. are challenging the notion that “society can progress…through
improved or successive rounds of regulatory reform”. (p. 8). They do this
through an analysis of the political programmes based on progressivism,
activities of which underpinned the creation of the Industrial Commission, and
successively the establishment of the Bureau of Corporations, and the Federal
Trade Commission. The authors link the inception of these regulatory bodies to
the emergence of accounting as a taken for granted tool of disclosure, a premise
which persists to this day.
The authors place their study in the corporate governance literature, as they
explore the “governance of corporate governance”. In so doing, they criticize
heavily the extant literature, which they see as taking an “ahistorical”, and
alternatively “neo-classical” and “neo-liberal”, view of corporate governance
issues. Their aim, conversely, is to view corporate governance as a “historical
phenomenon”, embedded in a “larger, social, political, and economic context”
(page 7). Their sociologically informed approach appreciates the “…broader
issues of the exercise of corporate power within society” (page 6).
Employing a Foucauldian approach in a governmentality perspective on analysis,
Stein et al. liken the regulatory reforms aimed at controlling trusts to the
“congenitally failing operation” identified by Rose and Miller (1992). Rather
than constraining the growing corporate power, the regulatory reforms
succeeded only in perpetuating further reforms, which were also based on the
same premise of publicity. They identify these successive reforms as a precursor
to the 1933 Securities Act, and its reliance on the notion of financial disclosure as
a way of controlling behaviour.
These reforms were underpinned by a progressive mentality. Stein et al.
describe this mentality in terms of its anti-trust sentiment, and its support for
government intervention into business affairs in order to ensure free
competition. It is this progressive movement that forms the basis for emerging
programmes of control over trusts, of which Stein et al. focus on the idea of
publicity.
The emergence of publicity as a means for controlling trusts rested upon the
notion that subjecting business to scrutiny would thus identify “bad” trusts as
opposed to “good” trusts. Through the study of the historical processes of
regulatory reform enacted through government bodies, Stein et al problematize
the use of disclosure in the control of corporations. This problematization is
pertinent, as the belief that regulatory action aimed at effective disclosure
remains a foregone conclusion to present day legislators.
Critique
In advancing the governmentality approach to the study of accounting
regulation, Stein et al. offer both a valuable empirical site of analysis and a
potentially informative theoretical approach to the history of accounting as a tool
for control. By demonstrating the relationship between programmatic attempts
and legislative action, the authors illustrate the interdependence of political
initiative, tools of enactment, and context. The authors also raise important
questions about the value of attempts at regulatory reform, and the main
premises upon which reform was based, from a very early beginning. These
questions remain relevant to the present day.
To add to the insight they provide, Stein et al. could develop some areas of the
paper further. Their theoretical development would be enhanced by
demonstrating how a governmentality approach is both employed and extended
beyond the standard approach, and through specifying the meanings of certain
key components. The application of their theoretical base to their empirical
analysis would be augmented by following through with the “web of expertise”
identified early in the paper to further explore the discourses amongst the
relevant actors. Writing their version of events to acknowledge and reveal the
road not taken, through an analysis of the other solutions put forward by the
relevant “experts” to solve the trust problem, would enrich their writing of
history. By thus offering a fuller history and deeper analysis of the discourses,
they could show how the path to publicity, and its perpetuation, is fractured and
non-linear.
Expanding, defining, and advancing their governmentality approach
To demonstrate that a governmentality approach is insightful here, an exposition
of some elements of this approach would be useful. To show how the
programmes failed, perhaps it would be useful to expand upon how they could
have worked. For instance, how publicity would control the trusts. Merino and
Neimark (1982) suggest that publicity of successful companies was intended to
reveal the profit potential of certain industries, thus attracting other corporate
entrants to those markets, and increasing competition. In addition to offering
more in terms of how publicity was supposed to show the “good” trusts from the
“bad” trusts, also beneficial would be a discussion of the efficacy of publicity
itself at the outset. Is publicity a tool that is doomed to fail in its own
impossibility, as Roberts (2009) suggests of a similar concept, that of
transparency? Stein et al. could further illustrate how the programme was
supposed to work, clarifying how their theoretical base is relevant in an analysis
of how it failed.
Expanding upon key terms, clarifying their meaning and demonstrating how
they are using and advancing them, would serve to demonstrate the extent of the
social apparatus under analysis, would add to the reader’s understanding of the
paper’s theoretical contribution, and would supplement the researchers’
empirical analysis. This would both demonstrate the usefulness of a
governmentality approach to their empirical site, and extend their application of
Rose and Miller’s (1992) exposition of governmentality. Two of the main aspects
of governmentality that Stein et al. are concerned with are programmes and
technologies. Stein et al. could provide more specificity in their use of these
terms, and how they are key components that either fit into or constitute the
social apparatus, or dispositif (Deleuze, 1991).
In explaining what they mean by a programme, and by programmatic, Stein et al.
offer an illustration of progressivism as the programme underpinning regulatory
reform. While noting that there was some diversity within this movement, Stein
et al. describe progressivism in terms of those elements that suggest a cohesive,
unequivocal movement. According to Miller and O’Leary (1989:253) however:
“Progressivism entailed no single political program” (they cite Karl (1983), pp.
16- 20 and Waldo (1948), pp. 16-17). Further, relying on the judgment of
Hofstadter (1955, pp. 216-217) Miller and O’Leary (1989: 253) note that, at its
most cohesive, progressivism represented a "complaint of the unorganized
against the consequences of organization." Describing how they are using or
extending the term programme, before applying it to progressivism, and by
illustrating differences within and the boundaries of the progressive movement,
Stein et al. would reinforce the foundation of their analysis for publicity as part
of such a programme.
Another term used often by Stein et al., which would benefit from enhanced
specificity, is technology. More clearly defining technology, in terms of its
relation to the programme, its fit within the larger apparatus, and in relation to
publicity, would answer some questions for the reader: What does technology
include and exclude? In what way is accounting a technology? Is accounting a
part of the larger technology of publicity, and if so, what are the other elements
that make up the greater social apparatus?
Web of expertise:
As Miller and Rose suggest: “…the notion of government draws attention to the
diversity of forces and groups that have, in heterogeneous ways, sought to
regulate the lives of individuals and the conditions within particular national
territories in pursuit of various goals.” (Miller and Rose, 1990:3). For Stein et al.,
in employing a governmentality approach to their study, attention to the actors
implicated in both advancing and opposing publicity would offer a more
complete story of how discursive action resulted in the emergence of publicity,
and how accounting became central to its enactment and durability.
To do this, more attention might be given to the numerous actors and the myriad
forces that had an effect on US national policy at the turn of the century. Early in
the paper, Stein et al. state the importance of a “growing web of expertise” (p. 3),
but by not developing this further in their analysis, these experts are lost along
the way. While some proponents of publicity are picked up later on, the voice of
opposition, both within the publicity camp and in opposition to it, is not heard.
Using Foucault’s notion of the specific intellectual (Foucault, 1980: 132) to
develop the idea of “experts” and “expertise” would provide a basis for the
analysis of the discourses produced by the relevant actors who represent the
various diverse interests both in support for, and in opposition to, publicity.
The Road Not Taken
Deleuze (1991) reminds us that the development of the apparatus is non-linear.
It suffers breaks and retractions, discontinuity and obstruction. If Stein et al.
identify the experts, as noted above, and analyze their discourses, much may also
be learned about the road that was not taken on the path to publicity. What are
some of the other ways in which attempts were made to control or regulate
trusts? There must have been opponents. As Stein et al. suggest, publicity was
only one of many approaches to the trust problem: “Amongst the various
remedies discussed as a means to control trusts post-Sherman, publicity was
among the most often mentioned…”(page 17).
Moreover, there must have been disagreement amongst the supporters of
publicity. Was accounting, in the early form that it took, the only form of
publicity that was put forward? The paper’s description of the statistical analysis
employed by the Industrial Commission suggests that it was as likely to yield the
desired programmatic results, as it provided another tool for making the trusts
“known” and thus governable (page 23). Following the opposition to publicity
may say much about how publicity ultimately prevailed.
Of course, in writing about events over one hundred years hence, assumptions
must be made and certain elements must be left out. In writing their history, the
authors would have given privilege to certain actors, texts, and events over
others. More could be said, however, about the assumptions that the authors
made in writing their history of publicity.
Conclusion
To further demonstrate the value of their theoretical approach, Stein et al. would
benefit from specifying the main components of governmentality that they use:
programmes and technologies. Showing how they are using these concepts to
extend the governmentality literature and examine their empirical setting will
clarify how a political movement is enacted in a greater social apparatus through
various tools of government. Central to this is an identification of the specific
intellectuals that act as experts who give voice to competing interests while
constituting this social apparatus. Following the discourses of these experts
through the various breaks and obstructions that led to the eventual prominence
of publicity would show that, while things could have been different, certain
ideas will prevail in spite of their ineffectiveness.
Stein et al. present a useful history of the now commonplace notion that
disclosure, especially in accounting terms, is an effective tool for corporate
governance. Their study is a useful contribution to the corporate governance
literature, which seems particularly culpable in perpetuating this notion. Their
analysis of the political programme that led to the prominence of publicity as a
way to control corporate power, and accounting as a way to effect publicity,
serves to highlight that disclosure was not always as taken for granted as it is
now, in either the regulatory mentality, or the academic literature.
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