Abstract
Accounting at War: The Politics of Military Finance is a wide-ranging, well-researched and well-written chronicle of the challenges and political nature of accounting for military finances whether in war or at peace. The authors base the book chapters on eight previously published articles from several well-known accounting journals. The authors use a critical accounting perspective throughout the book as the underlying theory of history that posits that accounting is no longer a neutral mechanistic activity to accumulate and report financial data. Rather, accounting can be “used to benefit individuals, institutions, and social groups by providing the means by which particular meanings and viabilities which are favorable to them are created and accepted” (p.184). This underlying theme of the book allows the authors wide latitude for research findings and interpretations. Readers should also be aware that in several of the chapters, the authors have a ‘left-leaning’ political bias that may have influenced their historical perspective on the governmental and military actions that they discuss.
After a short introductory chapter explaining the nature of subject matter and the organization of the book, Chapter 2 explains that the debacle that was the Crimean War (1852–1856) occurred not only from the standpoint of military strategy, but also from British constitutional constraints designed to keep the English Crown from controlling the army. These constraints led to bureaucratic lethargy within the civilian-run British Army Commissariat in carrying out its duty to acquire and supply troops in the field. The one telling comment was that the Commissariat organization held its allegiance to the British Treasury and not to the soldiers fighting the war. The authors do an admirable job of explaining – through a short legislative history – how parliamentary politics led to onerous recordkeeping and hesitation among commissariat officials to actually distribute supplies for fear of being held personally responsible for any mistakes or losses under the regulations. These administrative problems also led to inadequate supplies making it to the army, thus contributing to the deaths of many from starvation, disease and exposure – a scandal that the War Office could not hide from the British public.
In Chapters 3 and 4, the authors examine the complicated evolution of British army accounting reforms before, during and after the South African War (also called the Boer War) from 1898 to 1902. Before the war, the British army attempted to institute several reforms that allowed army officers to handle some transactions in the field. However, a lack of authority and training made the reforms meaningless, with the financial authority ostensibly remaining with the civilian officials in the War Office. Through this authority, the officials reportedly interfered and “micromanaged” the finances of the war from London without proper cost information. According to one reform Commission, the Accountant-General’s office had “jeopardized the prospect of a decisive victory, contributed unnecessarily to the pressure under which the generals operated and to the ‘unreasonable’ cost of the war” (p.43). After the end of the war, governmental entities created several Commissions to review the events of a second disastrous war in half a century. The problems caused by the financial mismanagement of the Boer War led the British government to finally begin the reform of the administration and bring the army out of a “state of financial ignorance” (p.55).
Chapter 4 continues this theme through an explanation of pre-World War I military accounting and financing reforms, beginning with the British army’s move towards a “professional” army in the early part of the twentieth century, as opposed to being an “amateur army” led by titled aristocrats. There were calls for the army administration to become more professional and more efficient through better training. This process included the opening of the army officer school at Sandhurst. It was also felt that officers needed an understanding of basic business administrative principles and proper accounting practices, including cost accounting. The reforms led in the direction of developing “Soldier Business Men” through the creation of a 20-week course that centred on commercial law and accounting at the London School of Economics. Leading up to World War I, this so-called “Army Class” was the avenue for financial reform within the institution. The chapter notes anecdotal evidence that the accounting portion was the area most useful to the army officers selected for the programme. After World War I, the so-called “cost accounting experiment” led the way by showing the efficacy of such systems to efficiently monitor army spending. Regardless of the efficacy of these reforms, the continuing impediment to lasting reform was the long-standing constitutional imperative for a weak standing army and entrenched financial officers at the British Treasury Office, which put an end to the experiment in 1924.
As fascinating and well researched as the first half of the book is – especially regarding the conflicts between Parliament’s constitutional fears of a standing army and the evolution of reforms to make the army’s finances more efficient and effective – the book never completes the story. There is no indication whether the accounting process from the 1850s ever changed or was reformed. This leaves the question of what accounting procedures were used during World War II and into the Cold war and new millennium. This would have closed the historical loop on the story for the reader. This is one of the very few weaknesses in the book.
The second half of the book is a collection of six chapters on accounting for modern war related to various aspects of budgeted military expenditures and the accounting and reporting of the actual costs of war. The first two chapters in this part (Chapters 5 and 6) deal with American problems related to military finance and accounting in the 1960s. The context of the first of these chapters (Chapter 5) is the evolution of civilian control of the US Department of Defense (DOD) under the leadership of Secretary of Defense Robert McNamara that divorced much of the military leadership from planning, programming and budgeting (PPB). Through mathematical gaming theory, this methodology “related inputs on defense to the outputs in an economically rational manner, creating the impression that there were objective, scientific solutions to every defense problem” (p.104).
Chapter 5 focuses on the gaming scenarios used to evaluate the efficacy of US military spending in relation to the nuclear threat posed by the Soviet Union. Such programming and gaming seemed to work well on an overall strategic basis. When it came to actual war in Vietnam, however, the application of PPB could not take into account the human dimensions of war, and its related cost/benefit analysis provided inefficient weaponry (for example, the M-16 rifle) for the army in the field. Although the authors did not make this connection, the interference of civilian authorities in US military preparedness was much like the British problems in the Crimea a century before.
American use of PPB in Vietnam is the subject of Chapter 6. The focus of this chapter is the apparent conflict that existed between the politics of the Pentagon leadership and the soldier in Vietnam as to the lack of a shared reality that confronted them both. In this case, non-military Pentagon officials thought they were fighting a limited war against a rational opponent. The truth for the soldier on the ground was that they were fighting a total war against a communist insurgency that was concerned about victory and not just “body counts”. The chapter also discusses how the PPB system hoped to get soldiers to conform to the rational nature of war as seen by Washington. This led to low morale, mutinous behaviour and the attitude of surviving to their last day “in country” rather than winning the war. Much of this was due to PPB statistics of body counts and other measures which were used to evaluate unit efficiencies and which made it appear that America had the tactical upper hand in the war when in reality America’s strategy to win the conflict was failing.
Although the authors could have placed Chapter 7 in the position of Chapter 5 for the purpose of historical continuity, they do provide an excellent summary of the historical circumstances and accounting policies used by the Nazis in World War II. Chapter 7, in an industrial sense, shows how Nazi usage of accounting data stripped the humanity away from their victims while “sanitizing” these heinous efforts and distancing the perpetrators from the events. The comprehensive nature of the record keeping was as fascinating as it was disturbing, as it explains how Germans accounted for the Holocaust victims and their possessions from arrest through transportation to the extermination camps. Overall, Chapter 7 shows how the Nazis used benign and neutral accounting principles to support a despotic regime like Nazi Germany.
Chapter 8 moves into a different realm by concentrating on several different ways to analyse both the direct and indirect costs related to war. These include three techniques to “render the cost of war invisible” to the general public through “obfuscating language” (p.150). The first relates to the budgetary deceptions used to make the cost of the 2003 Gulf war less than transparent to the public at large. The next focuses on ignoring after-war costs related to veterans’ physical and psychological injuries in determining the true cost of the conflict. Finally, the authors tackle the difficult analysis of the monetary and social costs related to (non-military) war victims and refugees. The authors do a first-rate job here in showing how costs can be manipulated to obscure meaning for the public, and it takes those with accounting skills to ferret out the truth.
This chapter also delves into ethereal and speculative types of war costs such as the opportunity costs of alternative spending for other social or security programmes rather than the highlighted military. Although such planning may sound appropriate, unfortunately it is usually set aside due to the real or perceived security threat facing the country. The chapter also discusses the “after-the-fact estimates” for the alternative uses of military funds. This seems to move the discussion into the realm of improperly using accounting as a tool to reinterpret history – something the authors would probably not want. Here, they could have better explained the speculative nature of this section and its usefulness as a means of showing what type of analysis governments could make regarding future military planning.
Chapter 9 tells potentially the most interesting story of the book. It details how accounting data from a United States civil court case helped to expose a Central Intelligence Agency terrorist interrogation operation called “extraordinary rendition”. This happened because classified information was inadvertently leaked to the public revealing the cost of transporting prisoners between interrogation sites. Here the authors have used less speculative information to tell the story, but a tinge of political agenda allows them to make the inference that the US officials committed a crime in the way they handled interrogations of terrorists. This is still a matter of opinion in many legal circles, so the title of the chapter “Commodifying State Crime” makes it sound that such actions were indeed crimes, even though they were never adjudicated in the US criminal courts. Finally, in Chapter 10 of the book, the authors make concluding summary remarks.
Overall, Funnell and Chwastiak’s Accounting at War: The Politics of Military Finance provides some very interesting information about the way governments have controlled and used accounting information over the last century and half, and how, in many cases, this control has both harmed the war effort of the military and clearly hid information from the public.