What Is Past Is Prologue: Cost Accounting in the British Industrial Revolution, 1760-1850

Richard K. Fleischman and Lee D. Parker, What is Past is Prologue: Cost Accounting in the British Industrial Revolution, 1760-1850 (New York: Garland Publishing, Inc., 1997, 368 pp., $64) This book investigates the cost accounting and cost management practices in the three dominant industries of the British Industrial Revolution (BIR): the iron, textile, and extractive industries. It provides an overview of these practices and industries, before exploring "the relationship between technological change and cost management" and examining "the paradigmatic approaches that have predominated in recent costing history" [p. 4]. Many of the chapters draw heavily from previously published papers of the authors, both jointly and separately with other colleagues, while adding much original data. Followers of this literature through various journals will benefit from the consolidation of the evidence and the coherent picture that this book presents. The further development and discussion of the Neoclassical versus Foucauldian (Chapters 7 and 9) and Marxist (Chapter 9) arguments provides an added interest. Working through the book, the material gradually becomes more detailed. The first chapter introduces the reader to the environment from which the source data originate. The rapid developments of the BIR are explicated, illustrated with staggering statistics. This chapter also describes, and seeks to explain, the former misrepresentation of the cost accounting history of this period. Chapter 2 provides "The Big Picture" by summarizing the authors' "findings of managerial accounting techniques in 25 major BIR enterprises" [p. 21]. After brief detail of the firms and the basis for analysis, the techniques of the period are discussed under eight headings: expense control; responsibility management; product costing; overhead allocation; cost comparisons; costs for special decisions; budgets, forecasts, and standards; and inventory control. Within these categories, the degree of sophistication occasions surprise in view of the previous assertions by accounting historians of lack of management accounting applications at this time in Britain. Evidence from the 18th century of cost center allocations, as well as cost analyses for repair-or-sell, outsourcing, and transfer-pricing decisions, whet the reader's appetite for the more detailed later chapters. Chapters 3, 4, and 5 examine the three industries more closely, focusing on the iron, textile, and extractive industries respectively. The evidence on management accounting practices in the iron industry provides an interesting background to the study of the less sophisticated textile firms. This is then followed by the more advanced management accounting practices evidenced in the extractive firms. The presentation of analysis in these chapters is not constrained by an attempt at consistency in format. Based on data from 24 iron firms, Chapter 3 presents data from 11 individual case studies (seven briefly and four in more detail), before consolidating the evidence and analyzing the "relationship between iron industry cost management and its environmental influences" [p. 50]. Chapter 4 presents data from the "archival survivals" [p. 81 ] of 30 textile firms, categorized according to four different uses of the information produced: expense control, product costing, responsibility accounting, and non-routine decision making. While the subsequent analysis relates management accounting techniques to technological changes of the period, the conclusion specifically compares the cost accounting activities in the iron and textile industries during the BIR. Chapter 5 disproves the authors' earlier contention [Fleischman and Parker, 1991] that cost accounting would be more important and highly developed in a factory environment: "This chapter is presented in an effort to rectify our former short-sightedness" [p. 116]. Here data are classified according to the geographic location of the sites to which they relate. …