Habermas and accounting: reflections on the contributions of richard laughlin to accounting research

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C. Richard Baker

Adelphi University

Garden City, New York 11530

Telephone: 516-877-4628

E-Mail: Baker3@Adelphi.edu



The purpose of this article is to offer some reflections on the contributions of Professor Richard C. Laughlin to accounting research, with a particular emphasis on those aspects of Laughlin’s work informed by the German social theorist, Jürgen Habermas. Along with his co-authors, Jane Broadbent and Michael Power, Richard Laughlin has been one of the most prominent interpreters of the work of Habermas in the field of accounting research. The current article is based on the belief that Richard Laughlin’s contributions to accounting research are significant and deserve greater attention from the accounting research community. In this article, we first examine Laughlin’s interpretation of Habermas’s ideas concerning communicative action. This is followed in turn by a discussion of “middle range” approaches to accounting research, and then a discussion of Power and Laughlin’s (1996) analysis Habermas’s ideas concerning the tension between facts and norms. We then take a look at Broadbent and Laughlin’s (1997) application of Habermas’s approach to communicative action in an empirical accounting research. We conclude with a counterfactual thought experiment regarding the possibility of extending Laughlin’s work on Habermas to the topic of globalization.




  1. Introduction1

The work of Jürgen Habermas has been employed in various ways in accounting research (see for example: Laughlin, 1987; Arrington and Puxty, 1991; Broadbent et al., 1991; Power and Laughlin, 1992; Chua and Degeling, 1993); Laughlin and Broadbent, 1993; Power and Laughlin, 1996; Yuthas and Dillard, 2002; and Broadbent and Laughlin, 2005). Most of these authors have applied Habermas’s ideas within the critical perspectives approach to accounting research. Lehman (2006) notes, for example, that critical accounting scholars have used Habermas’s work to examine connections between accounting and democratic theory (Arrington and Puxty, 1991), to explain how accounting colonizes the social world (Laughlin, 1987), and to develop a normative model of rational argumentation (Shapiro, 1998). The purpose of the current article is to provide some reflections on the contributions of Richard Laughlin to accounting research, with a particular emphasis on those aspects of Laughlin’s work based on Habermas. The remainder of the article is organized as follows. Section 1.1 provides a capsule summary of Richard Laughlin’s academic career. This is followed in Section 1.2 by a brief discussion of the work of Habermas in relation to accounting research. Section 2 provides a discussion of Laughlin’s interpretations of Habermas’s ideas concerning communicative action. Section 3 highlights some of Laughlin’s ideas regarding “Middle Range” approaches to accounting research. Section 4 discusses Power and Laughlin’s analysis of Habermas’s essay entitled Between Facts and Norms. Section 5 discusses Broadbent and Laughlin’s (1997) application of Habermas’s approach to communicative action in an empirical research setting involving the public schools and health service of the United Kingdom.

    1. Richard Laughlin

Richard Laughlin is an Emeritus Professor of Accounting at King’s College London. His most recent research focuses on analysing public private partnerships and performance management systems in public sector. Richard received an MSocSc in Accounting (Birmingham) and a PhD in Accounting (Sheffield). He is a FCA (Fellow of the Institute of Chartered Accountants in England and Wales), a FRSA (Fellow of the Royal Society of Arts) and a FHEA (Fellow of the Higher Education Academy). Richard worked in professional accounting and as a consultant accountant before joining the University of Sheffield as a Lecturer in Accounting and Financial Management in 1973. He was promoted to Professor of Accounting in 1991 and moved to the University of Essex in 1995. From 1995 to December 1998 he was Professor of Accounting at the University of Essex. From January 1999 until his retirement in September 2010 he was Professor of Accounting in the Department of Management at King’s College London. Richard is the author of numerous academic articles, books and book chapters in both British and international journals. He is the Associate Editor of Accounting, Auditing and Accountability Journal, as well as the Journal of Accounting and Organizational Change. He is also on the editorial boards of four other international journals (Critical Perspectives on Accounting, Financial Accountability and Management, Accounting Forum and The British Accounting Review). In 2005 Richard received the British Accounting Association’s Distinguished Academic Award for his contributions to academic accounting.  He has held a number of visiting academic appointments in Australia, New Zealand and Fiji and made numerous presentations to conferences and workshops in the UK, Continental Europe, Canada, USA, Australia, New Zealand, Japan, Brazil and Fiji.
1.1 Habermas and accounting research

Jürgen Habermas is a German social theorist, sociologist and philosopher. His work has been influential in many academic disciplines. Habermas created a comprehensive social theory drawing on a number of different intellectual traditions, including the philosophical thought of Immanuel Kant, the Marxian tradition of the Frankfurt School, the sociological theories of Max Weber, the linguistic theories of Ludwig Wittgenstein and J.L. Austin, the developmental psychology of Jean Piaget and Lawrence Kohlberg, and the American pragmatist tradition of Charles Sanders Peirce and John Dewey (Calhoun, 2002).

One important aspect of Habermas’s work involves his theory of communicative action, which situates human rationality within the structures of interpersonal communication. While the overall goal of communicative action is human emancipation, the achievement of this goal is intended to be achieved, according to Habermas, through procedurally based, non-violent means. Habermas's ideas follow in the tradition of Enlightenment rationality through an emphasis on the potential for transforming the world and arriving at a more humane, just, and egalitarian society through the realization of the human potential for reason. Habermas has expressed a consistent faith in the importance of Enlightenment ideals, and he has distanced himself in this respect from the Frankfurt School, as well as postmodernist thought, citing their tendency towards pessimism and radicalism (Calhoun, 2002).
Among Richard Laughlin’s first articles based on the work of Habermas was one entitled “Accounting systems in organizational contexts: a case for critical theory” (Laughlin, 1987). The primary thrust of Laughlin’s article was on a critique of accounting’s focus on instrumental reasoning and its colonization of the social, political and economic life-worlds. However, in this article Laughlin also provided a helpful explication of Habermas’s ideas concerning communicative action. These ideas are examined in the next section.
2. Laughlin’s discussion of Habermas’s views on communicative action

According to Laughlin, Habermas’s notion of communicative action involves three interrelated constructs: ‘life-world’, ‘systems’, and ‘language decentration’ (Habermas, 1984; Giddens, 1982; Laughlin, 1987). The ‘life-world’ encompasses the realm of everyday social reality, which is constituted and re-constituted by the culture, values, habits and myths of a particular social group (e.g. nation-state; community; ethnic or racial group; institution or organization). Distinct from the life-world, are ‘systems’, which are the organizing and operating procedures of organizations and institutions that guide and direct human behaviour in social settings (e.g. laws and regulations; religious precepts; values imparted in schools and universities; operating procedures of organizations and institutions). The third aspect of social evolution, ‘language decentration’, involves the ability of human beings to deal with complexity in the life-world and in the systems that control the life-world (Laughlin, 1987).

Following Habermas, Laughlin indicates that human beings have developed a capacity “for coping with the external world, the social world and the world of inner subjectivity” (Laughlin, 1987, p. 486). When individuals learn to successfully differentiate and integrate the requirements of the external world (thereby achieving technical competence), and the social world (achieving social competence), as well as the personal world (achieving emotional competence), then social progress can take place. When there is an imbalance between the technical, the social, and the psychological, problems occur, leading to ‘colonization of the life-world’ by systems and steering media (Laughlin, 1987, p. 486). Sustainable social practices can therefore be achieved only if there is a re-assertion of the social over the technical, and this re-assertion can be best accomplished through a procedural approach focusing on communicative action.
2.1.1 Habermas’s procedural approach to communicative action

Habermas’ procedural approach to communicative action focuses on improving the ability of human beings to manage relationships between the external world, the social world and the personal world (Laughlin, 1987, p. 487). In Theory and Practice, Habermas (1974) delineated three procedural stages, namely: ‘formulation of critical theorems’, ‘processes of enlightenment (or understanding)’, and ‘selection of strategies (for change)’. Each of these stages has the purpose of achieving a better understanding of the relationships between the social and technical aspects of social phenomena and re-asserting the dominance of the social over the technical (see Figure 1).

***Insert Figure 1 here***
2.1.2 The formulation of critical theorems

The formulation of critical theorems begins at a point where there is little or no information about a particular social phenomenon (‘quasi-ignorance’). There may be partial knowledge about tangible features of the social setting, but it is unlikely there will be sufficient understanding of the history of the systems and the constraints that these factors impose (i.e. ‘the steering media of the systems’, Laughlin, 1987, p. 491). To move from a state of ‘quasi-ignorance’ towards understanding (‘enlightenment’), it is necessary to develop critical theorems about the social setting (see Figure 2).

***Insert Figure 2 here***

The formulation of critical theorems begins with participants in a social discourse advancing statements about the elements of the system (see Figure 2, Step 1). Borrowing from Austin (1962), Habermas calls these statements ‘constatives’ (i.e. statements that impart information about participants facts). In the second step, participants offer theoretical explanations regarding to the social, historical and cultural roots of the constative statements (Figure 2, Step II). These theoretical explanations require support in the form of logical arguments and empirical evidence in order to convince discourse participants about the validity of the theoretical explanations. If the theoretical explanations gain acceptance, they then must be critically appraised (Figure 2, Step III; Laughlin, 1987, p. 493). The ultimate purpose of formulating critical theorems is to reach a consensus leading to understanding (i.e. ‘enlightenment’; Figure 2, Step IV).

2.1.3 Discourse ethics

Participants in the procedure described above need to agree to observe certain procedural guidelines, which are referred to as ‘discourse ethics’. Figure 2 provides a brief list of the primary elements of discourse ethics. “Discourse ethics claims that there is a set of norms that is presupposed by communicative rationality. The idea is that we commit ourselves to advancing arguments that conform to these norms, if called upon to do so, insofar as we engage in the activity of rationally communicating with other people” (Kelly, 2000, p. 225).

Rational communication has a practical purpose, which is to coordinate the action plans of several actors. Communicative action takes place “when actors are prepared to harmonize their plans of actions through internal means, committing themselves to pursuing their goals only on the condition of agreement about the definitions of the situation and the prospective outcomes” (see Figure 2; Habermas, 1990, p. 134). The goal of communicative action is to reach a mutually acceptable agreement among discourse participants which will harmonize their actions plans. Communicative action is contrasted with ‘strategic action’, where the goal is to achieve success by overcoming another actor’s position (Kelly, 2000, p. 226). Thus, when we want another person to understand us, we try to establish a relationship with that person that depends upon their acceptance of the validity of our statements. Consequently, there is need for inter-subjective recognition of validity claims (Habermas, 1990, p. 58). Communicative action requires the possibility of rational argumentation.

“The rationality proper to the communicative practice of everyday life points to the practice of argumentation as a court of appeal that makes it possible to continue communicative action by other means when disagreements can no longer be repaired with everyday routines and yet are not to be settled by the direct or implied use of force” (Habermas, 1984, p. 18).

Habermas indicates that citizens of modern, pluralistic societies “find themselves embroiled in global and domestic conflicts in need of regulation” (Habermas, 1998). These citizens would like their conflicts to be resolved in a rational manner, but the shared ethos that may have previously allowed conflict resolution to take place has disintegrated. Discourse ethics tries to move us away from the content of the disagreement towards a discourse principle which is summarized in the following way: “Only those norms can claim to be valid that meet with the approval of all affected in their capacity as participants in a practical discourse” (Habermas, 1990; Kelly, 2000, p. 228).
Rational argumentation requires the observation of certain principles, including: freedom of access to the discourse; equal rights to participate; truthfulness on the part of participants; and the absence of coercion in reaching positions (Habermas, 1993; Kelly, 2000, p. 229). Finally, it is argued that: “A norm is valid when the foreseeable consequences and side effects of its general observance for the interests of each individual could be jointly accepted by all concerned without coercion” (Habermas, 1998). In other words, the interests of each person are morally important. Thus, moral norms are not based on self-interested bargaining and compromise, but rather they involve a consensus that participants consider fair and in the best interests of all concerned (Kelly, 2000, p. 231).
This procedural approach to communicative actions has been criticized by critical accounting researchers for its lack of realistic potential for success, and its lack of recognition of unequal power relationships existing in society (see Arrington and Puxty, 1991; Lehman, 2006). Laughlin (Power and Laughlin, 1996, p. 451) has acknowledged these deficiencies. However, in his discussion of “middle-range thinking” in an article appearing in Accounting, Auditing & Accountability Journal in 1995 (Laughlin 1995), it appears that Laughlin generally accepts the procedural aspects of communicative action, if not its overall achievability. Laughlin’s 1995 ideas about middle range thinking are discussed in the following section.
3. Laughlin and Middle Range Thinking

In a well-known paper published in 1995, Laughlin explored middle range approaches to accounting research. In this paper, Laughlin categorized accounting research into a tri-partite division of positivist, interpretative and critical. He indicates that positivist approaches to accounting research are characterized by an ontological belief about a generalizable world waiting to be discovered and a high degree of reliance on definable theory with specific hypotheses to be tested, while interpretive approaches adopt a more skeptical ontological worldview accompanied by a lack of a priori theorization or hypothesis testing. Laughlin (1995, p. 70) also indicated that critical perspectives may have clear ontological assumptions and well defined theories which may run counter to or are critical of positivist perspectives. Thus, the primary distinction between an interpretive perspective and a critical perspective is a willingness on the part of the latter to adopt a specific stance regarding the nature and purpose of the research and its political and social implications.
In his 1995 article, Laughlin developed a useful model for characterizing accounting research. This model extended prior work by Burrell and Morgan (1979) and others (see for example Chua, 1986; Hopper and Powell, 1985; and Laughlin and Lowe, 1990). Laughlin classified accounting research along three dimensions, incorporating: (1) the level of theory in the methods chosen to pursue the research (i.e. quantitative methods tend to have a high level of theory underpinning them, while qualitative methods tend to have a lesser level of theoretical basis); (2) the level of prior theorization (i.e. the extent to which previously developed theoretical models from other disciplines such as economics or psychology provide the basis for the research); and (3) the level of emphasis on change (i.e. in a social sense).
***Insert Figure 3***

The diagonal of Laughlin’s model shows that positivist perspectives are characterized by a high level of theory in the methods chosen to pursue the research, a high level of prior theorization, and a low emphasis on social change (see Figure 3). In contrast, interpretive perspectives are characterized by lower levels of theory in the methods chosen to pursue the research, lower levels of prior theorization and medium to low levels of emphasis on change. Thus, the diagonal of the model can be viewed as a dimension which extends from the positivist perspective characteristic of mainstream accounting research to the more interpretive and critical perspectives. In Figure 3, it can be seen that the work of Habermas can be found in the middle of the table, hence the term “Middle Range Thinking”. While it is not clear that Laughlin intended the Middle Range metaphor to be linked with Habermas’s procedural approach to communicative action as discussed previously Section 2, it seems reasonable to conclude that Laughlin favors the possibilities inherent in middle range thinking and communicative action.

The following section explores another aspect of Laughlin’s interpretation of the work of Habermas with respect to accounting research. In an article appearing in 1996 in Accounting, Organizations and Society, co-authored with Michael Power, Laughlin discussed the implications of Habermas’s essay Between Fact and Norms (English title) for critical accounting research.
4. Habermas’s approach to facts and norms

In their 1996 article, Power and Laughlin noted that Habermas’s (1972) seminal study Knowledge and Human Interests has had a significant influence on critical accounting scholars. This work has informed attempts to break the strangle hold of positivistic accounting research and to ground a distinctively “critical” perspective. The applied turn in critical accounting research has given rise to a greater emphasis on the constitutive role of accounting information, in that it is now well accepted that the monopoly of capital is reinforced by a monopoly of information. Accounting information systems lie at the center of a capitalism in which a fragmented political consciousness results in the transfer of power to technical elites (Power and Laughlin, 1996, p. 445).

At the same time, Power and Laughlin (1996) point out that for Habermas, the fruitfulness of science, if not bound up with instrumental reason, at least involves an objectifying attitude that is a necessary component of social life. The task of critical theory is not to articulate a new “non-objectivist” form of science and technology (and accounting) but to express a balance between science and technology and other forms of life (p. 443). Using these observations as a starting point, Power and Laughlin (1996) then proceed to discuss Habermas’s Factizität und Geltung: Beiträge zur Diskurstheorie des Rechts und des demokratischen Rechtsstaats (1992) (published in English as Between Facts and Norms, 1996).
Power and Laughlin indicate that Between Facts and Norms constitutes a modernist defense of public law institutions as the foundations of constitutional democracy. They also conclude that this work may be indirectly cautioning critical accounting theorists that “any accounting practice, whether actual or desired, must move in the space of what Habermas called ‘pragmatic discourse’” (Power and Laughlin, 1996, p. 461). This caution suggests that the structure of communicative action, as discussed previously, may be compromised in concrete action settings. Power and Laughlin go on to argue that the answer to this problem may be found in a “reflective equilibrium” between a normativity derived from first principles and normativity implicit in institutions and practices (p. 461). They also indicate that critical accounting needs to work with, rather than eradicate, the tensions between facts and norms. They further suggest that it is important to acknowledge the facts of accounting systems. Power and Laughlin ultimately conclude that some accommodation to “pragmatic discourse” needs to be made. This may be an untenable position for some critical accounting theorists, but it nevertheless appears to be consistent with the perspectives on communicative action and Enlightenment rationality that Habermas has expressed over a period of years.

The following section discusses Broadbent and Laughlin’s (1997) application of Habermas’s ideas concerning communicative action to an empirical research setting.

5. Developing empirical research informed by a Habermasian approach

In their 1997 article, Broadbent and Laughlin (1997) discuss the application of middle range thinking and Habermas’s methodological approach to communicative action in an empirical setting involving a longitudinal study of public schools and general practitioners in the public health service of the United Kingdom. The authors indicate that their work provides an example of “middle range” thinking in which a skeletal framework of both methodology and theory are fleshed out in the context of an empirical situation (p. 623). The paper extends the work of Laughlin (1987), as discussed in Section 2 previously, which provided a basis for the use of Habermas’s theory of communicative action in the exploration of accounting systems in organizational contexts.

The empirical research described Broadbent and Laughlin’s paper follows the steps shown in Figures 1 and 2 of this article, as shown previously, which were derived from Laughlin (1987). These steps include: Developing Critical Theorems, Achieving Processes of Enlightenment, and Selecting Strategies for Change. Broadbent and Laughlin (1997) indicate that among the strengths of this approach was that it was possible to understand the effects of accounting systems in organizational contexts. This suggests that the development of a Habermasian approach to communicative action can be used to explore and understand organization in a general sense and not simply the accounting systems within them (p. 238). Another conclusion of their research was that while the purpose of the research was to intervene in a social setting in an emancipatory fashion which would allow actors to develop their own understandings and solutions and to reflect on their own activities and practices, the aim was not to try to impose some pre-determined conclusions or “one best way” but to seek to encourage organizational actors towards a proactive development of their own future in a way which accords with their own values (p. 241).
One observation regarding Broadbent and Laughlin’s (1997) application of Habermas’s methodology of communicative action to an empirical research setting is that it involved a relatively small and reasonably well integrated research team working closely together with well- intentioned participants in the public schools and general practices of the health system in the UK. The description of the use of the Habermasian methodological approach in this research setting was instructive and useful, but it might be subjected to criticism from critical accounting researchers regarding the difficulty of its application to a more contentious social setting. The counterfactual possibility of extending the Habermasian approach to the contentious issue of globalization is briefly explored in the following section. Richard Laughlin and his colleagues have not previously addressed the use of a Habermasian approach to globalization, therefore the attempt to do so in the following section is a tentative thought experiment.
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