314 ACCOUNTING FOR MANAGERS
and managerial accounting practices to the changing forms of control over the
labor process that are in turn linked to different phases of capitalism.
Accordingly, Hopper and Armstrong (1991) suggested that for the early factory
organizations of the mid-nineteenth century (they especially consider Lyman
Mills which was also the focus for Johnson and Kaplan (1987)), increases in profits
were secured primarily from extending the number of hours worked without
significantly changing the wages and from applying a closer degree of control
over the labor process. Such ‘‘innovations’’ as the ‘‘stretch-out (an increase in the
number of machines supervised by each operator), the speed-up (an increase in the
operating speed of machines),’’ and ‘‘a premium bonus system’’ for overseers to
enforce productivity, were monitored and achieved by accounting records, while
such labor practices as firing workers for trade union activity and disciplining
dormitory behavior of workers by the ‘‘moral police’’ ensured a relatively docile
labor force which was the precondition for managerial action that is based on
cost accounting information (Hopper and Armstrong 1991, 414 – 415). Hence, they
argued that some of the accounting and cost information was not used for making
the production process more efficient but rather used to intensify the extraction of
labor from the labor force.
Moreover, the decline of internal contracts (outsourcing products and skilled
labor) during the late nineteenth century was based on appropriating the profits
made by subcontractors, though it involved increased costs for the companies
(from replacing contractors with college trained executive who lacked knowledge
of production processes). Where previously ‘‘companies kept no records of the
hours worked by the contractors’ employees, or of how much and on what basis
they were paid,’’ by paying workers directly, companies began to keep a host
of new records including ‘‘work records’’ (Hopper and Armstrong 1991, 416).
Consequently, the creation of these new records, which also ‘‘laid the foundation
for the later development of standard costing systems’’ had ‘‘nothing to do with
the efficiency of the conversion process...but was a means of redistributing [the]
profits...made by the contractors to the companies’’ (Hopper and Armstrong
1991, 417). Furthermore, these records not only transferred ‘‘financial knowledge
from the worker to the factor owner’’ but also fostered the ‘‘imposition of an
additional system of activity surveillance’’ (Hopper and Armstrong 1991, 417).
Again, they argued that accounting records are hardly neutral but are deeply
intertwined with the expropriation of profits, the intensification of the labor
process and the surveillance of worker activities.
Regarding the late nineteenth and the early twentieth century, Hopper and
Armstrong (1991) said that such developments as standard costing, ROI measures,
and budgets cannot be understood except in the context of the correlative destruc-
tion of craft labor. Management accounting was one element in the development
of a vast paper bureaucracy (measured by the increase in record-keeping and
the swelling ranks of white-collar employees) by which the production process
should be replicated, monitored and controlled. In the continual attempt to con-
trol the labor process, owners, and by now also managers, sought to redesign,
fragment and simplify the labor process ‘‘so that skill levels were reduced and