Towards a political economy of accounting: An empirical illustration of the cambridge controversies

For over a century economics has been dominated by two theoretical positions: classical political economy and the neo-classical economics of marginalism. From these two paradigms have come the major theories of value: the labor theory and the marginalists theory of value. Until recently marginalism has held the center of the stage, however since the Cambridge Controversies and Piero Sraffa's critique of marginalism there has been a revival of interest in classical political economy. One outcome is clear from the Cambridge debates: in so far as accounting relies on marginalism for its theoretical foundations then those foundations are fallacious. This paper reviews some of the controversies and illustrates how accounting ideas are affected by the critique of marginalism. An alternative approach to accounting (based on ideas from political economy) is then explored using evidence from an empirical study of a multinational enterprise.