Accountability is the problem, now what’s the solution?

Individualist social organisation operates on the assumption that accountability structures and measures are the problem, not the solution. They act as a brake on the forward momentum of heroic risk. Who dares wins. The only accountability required is clearly success or failure in the market. Accountability is an obstacle to success that needs to be overcome. On this view, it’s hard to see how accountability structures could be ‘reformed’. The only thing worth doing with accountability is to dismantle it.

Now that the dust of the global financial crisis is beginning to settle, one of the key lessons learned seems to be that effective financial regulation regimes have been lacking and are now essential. The question here is how to strike the right balance between internal and external regulation. Can financial institutions in some sense ‘police themselves’, or have we learned that regulation needs to come mostly from outside the corporation?

But to think like this is to underestimate the ability of Individualism to perceive the world through lenses of its own making. A rapidly evolving Individualist rhetoric suggests that the financial crash wasn’t caused by the reckless abandon of accountability structures in the name of a misguided ‘deregulation’, but rather that deregulation didn’t take place effectively since it was stymied by government meddling (Peter Schiff is one example). This view proposes that moderate crashes can and should happen on a regular, if unpredictable basis, and that the only reason we had a big one was that government tried to regulate the financial industry away from small failures until at last the dam broke and the inevitable happened. The very worst thing the financial industry could do now would be meekly to accept further regulation. For individualism there is too much regulation and crucially, there will always be too much regulation. Just as it’s hard for environmentalists to state what would constitute ‘enough’ conservation of nature, and for Hierarchists to identify where the limits of firm discipline in the family might lie (Giles-Sims and Lockhart, 2005), deregulation is a transcendent trajectory of policy advocacy, rather than an immanent project with a firm end in view.

This is what makes me wary of claims that ‘public accounting firms need to modify their cultures if they are to police the margins effectively’ (Linsley and Shrives 2009). According to non-individualist analysis, these cultures clearly need modification. It is far less clear that they will – or even should – do it themselves.

J. Giles-Sims & C. Lockhart (2005). `Culturally Shaped Patterns of Disciplining Children’. Journal of Family Issues 26(2):196-218.

P. M. Linsley & P. J. Shrives (2009). `Mary Douglas, risk and accounting failures’. Critical Perspectives on Accounting 20(4):492-508.


“Sociology and anthropology are especially valuable in providing a critical understanding of the risk-related implications of modernity. There has, however, been relatively little discussion of the work of Mary Douglas within accounting although her pioneering writings in the area of risk have been highly influential. This paper uses Douglas’ cultural theory of risk to provide an alternative perspective on the demise of Enron and Andersen. The failure at Enron is interpreted through the grid-group model and analysed as a series of events that threaten to destabilize established cultures. Accounting is thus construed as an activity that exists on the margins of boundaries. There are two important conclusions drawn from the analysis. First, as the worldviews of both the individualist and hierarchical cultures became threatened by the ensuing crisis they collaborated to ensure their perpetuation. This also averted individuals from becoming susceptible to recruitment by subversive egalitarian groups. Second, the individualistic culture of Andersen shaped practices within the firm weakening its ability to act as a gatekeeper and therefore public accounting firms need to modify their cultures if they are to police the margins effectively.”

2 thoughts on “Accountability is the problem, now what’s the solution?

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s