Abstract
This chapter explores the unusual symbiosis between accounting and economics in the first century of the Cambridge Economics Faculty. Faculty members have pushed back the boundaries and extended the scope of accounting in many directions, developing accounts to inform branches of economics ranging from macroeconomics to industrial and environmental economics, and deploying economics to enlighten accounting. The impact of the Faculty’s work is seen in, inter alia, the decisions of Nobel Prize Committees, the work of national finance ministries, the policies of industrial and accounting regulators, and the education of many of the leading practitioners in the accountancy profession.
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- 1.
As the contributions in accounting were generally ‘quiet’, and were dispersed across many areas of the Faculty’s work, I guess that I will have failed to include some important work. I apologise for this; and would welcome advice of such omissions.
- 2.
I am taking an inclusive view of the ‘Faculty’—DAE (Department of Applied Economics) research officers and college economics Fellows, as well as University teaching officers.
- 3.
For an account of Clark, see Peters (2001).
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- 5.
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By which time commercial providers offered databases suitable for such work. The 1948–1990 data are available from the ESRC Data Archive at Essex University.
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- 8.
Although based on UK data, such studies, and subsequent ones by Cosh, Hughes, and their colleagues (discussed below), influenced the US literature. For example, there were many citations of these authors in the standard industrial organisation text of Scherer and Ross (1990), as well as references in the standard US text on financial statement analysis (Foster 1986).
- 9.
From the (unpublished) report of the ESRC Evaluation Panel.
- 10.
There was a lively interest throughout this period among Faculty members in how to measure profit. Publications include King (1975), Meeks (1974), and Meeks and Meeks (1981). There were vigorous debates, discussion papers, and newspaper articles involving, among others, Wynne Godley, Bob Rowthorn, and Adrian Wood (the latter working on his 1975, A Theory of Profits).
- 11.
The Economics Faculty provided a very active environment for analysing regulation in this period. Whittington participated in the work of David Newbery’s team on the regulation of utilities and helped inform Meeks’s work on estimating the costs and benefits of accounting regulation (Meeks and Meeks 2002; Gwilliam et al. 2005; Meeks and Swann 2009).
- 12.
Harcourt is also well known for his work on the capital controversies involving the ‘two Cambridges’. Since much of accounting is devoted to measuring capital, it is perhaps surprising that those controversies were not more evident in the accounting studies in the Faculty at the time. In relation to one of the qualified accountants, Feinstein, Offer comments in his chapter in this book: ‘Charles took no part in the theoretical debates convulsing Cambridge, on whether capital was a coherent and tractable category. His job, he said, was merely to measure its historical cost. But the acrimony of the debate unsettled him’. Although the debate and some of the participants were indeed acrimonious, this is not a description that could ever be applied to the generous Harcourt. Those controversies will be presented elsewhere in this book—by experts.
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Their theoretical discussion was buttressed with data from the Cambridge/DTI databank of company accounts discussed earlier.
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Writing on the ‘National Dividend’, and building on the work of Marshall, Pigou observes, for example, ‘It is a paradox…that the frequent desecration of beauty through the hunt for coal or gold…must, on our definition, leave the national dividend intact, though, if it had been practicable…to make a charge for viewing scenery, it would not have done so’ (Pigou 1920: 32). Another distinguished contributor to this long-running discussion, who spent two spells working at Cambridge is Nobel Laureate Amartya Sen (see, for example, Stiglitz et al. 2009).
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See Dasgupta (2001) for a more extended discussion.
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Dasgupta has also been appointed by the Indian government to lead the effort to create Green National Accounts for India.
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Who in my limited time on the Project included a future President of the American Economic Association, a Governor of the Bank of England, a Director of the National Institute of Economic and Social Research, a Chief Economist for Scotland, and holders of many prestigious professorships.
- 18.
The bibliography to this chapter (far from comprehensive) gives a clue as to the extent of accounting-related publications by Faculty members. Much of this is in sister disciplines of accounting. Within the more conventional boundaries of academic accounting observed in most universities, an indicator of publication rates by Faculty members (and faculty elsewhere in the University who had been trained in the Economics Faculty) is given by Chan et al. (2006): they report that Cambridge accounting was fourth in Europe in its per capita rate of publications in the main accounting journals.
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I am extremely grateful to officers in the University Careers Service, in particular Mary Blackman, Gordon Chesterman, and Alan Fawcett, for access to their excellent long-term records of destinations of graduates.
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More recently the primary destination has become the banking industry: in the decade up to the 2007–2008 financial crisis value added in the financial sector of the UK economy grew at around 6% per annum, twice the rate of GDP (Burgess 2011), and this meant that the sector absorbed many Cambridge graduates. Even after the crisis, 143 of those graduating from the Economics Faculty went into banking in the four years after 2008. Only 29 joined accounting firms (University Careers Service data).
- 21.
Except in the MPhil in Finance in the 1990s the Faculty did not have an exam paper devoted just to accounting. Peterson gave a course on national income accounting within the Part 1 Statistics paper from the 1980s, and Whittington, then Meeks, gave one on traditional business accounting in the 1990s. Nevertheless, national income accounts were for decades an important part of the regular diet in applied economics for Tripos students: the Blue Book was a required purchase when I joined the Tripos in 1969.
- 22.
Although this post-dates the Faculty’s withdrawal from accounting, this reputation was built up by members of the Economics Faculty or Cambridge academics in other departments who had been trained in the Faculty.
- 23.
Declaration of interest: I have benefited from an ICAEW Fellowship, research funding and their platform to engage with the profession, for example, the 2008 P.D. Leake Lecture.
- 24.
Carly Fiorina, of Hewlett-Packard.
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Meeks, G. (2017). Theories Came and Went, Good Data Endured: Accounting at Cambridge. In: Cord, R. (eds) The Palgrave Companion to Cambridge Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-41233-1_9
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