I’ve been teaching moral accounting to EMBA students. Attached are the slides I’ve used for various lectures. I also have cases and other materials. Let me know if you are interested.
Moral Acconting Teaching Materials
Category: What is Accounting
I gave a talk to Cornell University’s Moral Psychology Brown Bag series on September 21st, 2021. Here are my slides. I’ll post the video once it’s available.
How do you make a sculpture of an elephant? Start with a huge block of marble, and chip away at everything that doesn’t look like an elephant!
It’s an old joke, but a good summary of how moral accounting works toward its twin ambitions for accountability systems: to improve moral performance, and to do so in a moral way.
It’s really hard to sculpt an elephant from the inside out, and it’s also hard to improve moral performance from the inside out. Let’s start with the very center: moral character. Sure, people can be selfish, cowardly, sadistic, or otherwise fall short of most people’s moral aspirations. But good luck changing that! Character attacks (like calling someone racist) create predictable resistance. And even if people will listen, can you really change them? After all, the very definition of character is that it is a persistent trait of a person. One of most important rules of a moral accounting engagement is that it doesn’t evaluate anyone’s character–ever! That’s like trying to sculpt an elephant from the inside out.
If we take one step away from the center, we have social norms. These come up a lot as an alternative to character attacks, especially when we are talking about people from cultures long ago or far away, who fall short of today’s moral aspirations. Sure, that famous dead writer, or that international business partner, might have some pretty awful views, but that just reflects their society. Again, good luck changing that! Moral accounting doesn’t try to change a society’s morality. Instead, a moral accounting engagement just attempts to document that society’s moral aspirations, and then works from there. If they differ from our own, so be it.
But as we move to the next step, we can finally see the parts of the marble that don’t look like an elephant–how does that society enforce their moral system? Now we are talking about accountability systems (which we can also call “governance”), and that’s something that we can actually work with–people will listen to us without too much defensiveness, and change is actually possible.
Sometimes what we’re doing does cut into some pretty sensitive parts of the elephant, because it reveals that a society doesn’t fully understand its own moral aspirations. Lots of accountability practices that feel like morality are actually just a collection of loosely related norms, like “when someone does this bad thing, do that to them.” And those norms can conflict in ways that violate the Moral Accountability Principles (The MAP).
For example, consider the case of abortion. Moral views on abortion vary quite a bit from society to society, and moral accounting has nothing to say about whether one view is better than another. But it does have something to say about a society that, for example, takes a lax approach to rape, punishes women severely for having abortions, punishes them very severely if they fail to take care of their children, provides women with little support for raising children.
Taken separately, each of these accountability practices might reflect moral aspirations that reflect the moral elephant we’re trying to sculpt. But taken together, they represent an accountability system that (in my estimation, anyway) violates the Bookkeeping, Proportionality and Entity principles. A poor mother who has become pregnant without her consent has two pressing obligations–to bring her unborn child to term, and to care for her other children–but no assets with which to settle both obligations. Bookkeeping says that it’s not moral to punish someone for not accomplishing the impossible, and Proportionality says that punishment must fit the extent of the moral failing. But despite the high stakes, the woman can’t fail much, because no one could possibly live up to these competing obligations with no assets. And the person who actually caused this problem–the father–is not being punished at all, violating the Entity Principle.
These violations of the MAP have many solutions that don’t require changing the society’s moral aspirations. Instead, moral accountants can just evaluate accountability practices, show that collectively they conflict, and show the range of ways they could be changed.
Of course, societies change their moral aspirations over time, and some activists might work to change them. But moral accountants only chip away at the edges, to reveal the elephant of a particular society’s current moral aspirations, whatever they may be.
There’s an interesting article in Strategic Finance about measure management and narrative reporting, based on research by Jeremy Bentley (a former doctoral student of mine). It’s a great opportunity to clarify how moral accounting fits together with more traditional managerial accounting, particularly as I present it in What Counts and What Gets Counted–so also a great opportunity to introduce the Managerial Reporting course I’m about to start teaching in the EMBA Americas program this month.
Central to moral accounting is a set of Moral Accountability Principles, which I call the MAP. The MAP spells out seven rules for holding people accountable in a moral way. You can read about them in detail here, but that’s for an audience of accountants. If you are new to moral accounting, especially if you are a philosopher, you should probably start here first, but here’s the MAP in plain English:
Accounting is famously “the language of business”. But linguist George Lakoff sees it as the language of morality as well.
We all conceptualize well-being as wealth. We understand an increase in well-being as a “gain” and a decrease of well-being as a “loss” or a “cost.” This is combined with a very general metaphor for causal action in which causation is seen as giving an effect to an affected party (as in “The noise gave me a headache”). When two people interact causally with each other, they are commonly conceptualized as engaging in a transaction, each transferring an effect to the other.
An effect that helps is conceptualized as a gain; one that harms, as a loss. Thus moral action is conceptualized in terms of financial transaction. Just as literal bookkeeping is vital to economic functioning, so moral bookkeeping is vital to social functioning. And just as it is important that the financial books be balanced, so it is important that the moral books be balanced.
Of course, the “source domain” of the metaphor, the domain of financial transaction, itself has a morality: It is moral to pay your debts and immoral not to. When moral action is understood metaphorically in terms of financial transaction, financial morality is carried over to morality in general: There is a moral imperative not only to pay one’s financial debts, but also one’s moral debts.
You would think Lakoff’s observations would generate some interest among accountants, but I guess not–I searched Google Scholar for papers citing Lakoff’s Metaphor, Morality and Politics and found none in accounting journals! But it’s definitely worth thinking about, and I’d like to make a few points.
What is Accounting? Many accounting scholars have confronted this question, often paired with a rejection letter from an editor, or a dismissive criticism in a workshop. Don’t feel bad–as Anthony Hopwood noted, Ball and Brown (1968)—now a foundation of financial accounting research—was rejected by The Accounting Review, “the reason for the rejection being that it was not accounting.” Now, of course, it is one of the seminal works in accounting, simply for showing that stock markets react to earnings announcements.
For some reason, accountants keep letting their gatekeeping instinct overpower desires to make the most of what accounting could be.