Towards a political economy of accounting: an empirical illustration of the Cambridge controversies - an update

Since Adam Smith's ambiguous endorsement of neo–classical thought in his 18th Century Wealth of Nations, mainstream economists have followed his lead, and embraced neo–classical economics or marginalism and 'forgot' its forerunner: Classical Economic Theory (sometimes called the Labour Theory of Value). Until recently marginalism has held centre–stage. Things changed however with the Cambridge Controversies and Sraffa's 1960 critique of marginalism. This 1960 intellectual knockout languished for some 40 years (demonstrating the triumph of ideology of intellectual verity). Fast forward to today's economic crisis: neo–classicism is in crisis: failing to anticipate and explain market failures, market disequilibrium and the rise of oligopolies and monopolies - exposing the fallacy of competitive market discipline. This paper revives the critiques of marginalism provided by the Cambridge Controversies and illustrates how accounting ideas impact accounting statements using evidence from an empirical study of a Scottish multinational - Delco.