The making of uniform costing in a war economy: The case of the Uniconti Commission in Fascist Italy

Introduction

The research presented in this article is based on the 1941 documented experience of the Commissione Uniconti (Uniconti Commission). The Commission was promoted by the Confederazione dell’Industria (Industry Confederation) and by the Fascist Government to study uniform standardized procedures in accounting and schemes for financial and cost accounting practices. In this respect, the Uniconti Commission acted as an accounting standard setter in Italy during WWII.

In reporting this experience, the research sheds light on the relationship between accounting and society, in a way that makes accounting not a purely technical matter. The article provides an interpretation of accounting change using a “genealogical” approach; that is, by looking in detail at the archival documents related to cases or events of one period in the history of accounting, and examining the interplay between knowledge, power, techniques, institutions in that context (Foucault, 1977; Loft, 1986; Hopwood, 1987; Miller and Napier, 1993; Kearins and Hooper, 2002). Most of the “genealogical” research in accounting history seeks to illuminate the power/knowledge relationships embedded in historical contexts and the role of accounting as a “technique of knowledge” through which power is exercised (Loft, 1986).

More broadly, this Foucauldian framework allows the problematization of accounting as a complex phenomenon, whose emergence and functioning is linked to the context and is dependent on the interplay of many different influences. This perspective is far from that of accounting history interpreted as a deterministic, unidimensional linear progress, or accounting practices “as the timeless products of the need for information for decision making or control, or the push for efficiency” (Stewart, 1992: 66). Thus, it contributes to the stance of “new” accounting history (Miller et al., 1991).

Foucault’s framework (1982) identifies the elements which are essential to analyze power relations, namely: the system of differentiations (for example, cultural, economic or knowledge-based); the types of objectives pursued (for example, maintain privileges or accumulate profits); the meanings of bringing power relations into being (for example, by means of economic disparities or by surveillance); the forms of institutionalizations of power (for example, through law); and the degrees of rationalization for the exercise of power (Kearins and Hooper, 2002).

In this article, a description is made of the context under which the new accounting rules and techniques were fixed, by providing a documented account of the ideological and historical conditions of the period and by analyzing the documental evidence of the work of the Uniconti Commission to set the uniform accounting rules. Further, starting from the aims of the Italian fascist government that promoted the Commission, the different interests and knowledge expressed by the participants in the process are unveiled. Thus, the visibility of the interplay among the actors in the process of rule setting (the German ally; representatives of institutions, the academy and enterprises) highlights the interaction between the domains of interests and knowledge – political, ideological, technical and economic – in that process of setting a uniform costing system. Through the minutes of the Commission meetings, these different roles are depicted in action within the dynamics of making the new accounting rules.

In this way, the research on the Uniconti Commission highlights the dialectic among different participating actors and the presence in the accounting discourse of a complex interaction between knowledge, interests, institutions and ideology. The dynamic of this interplay is at the base of the possibility to appreciate accounting as a social – not merely technical – activity (Loft, 1986).

In this exploration, the article also provides evidence of the impact in the accounting field of the prominent role of the State in the last century, especially in the period of war economy (Armstrong, 1987; Loft, 1986), recognizing this role as a driver of change in accounting practices within a definite historical, political and ideological context (Gilling, 1976; Hopwood et al., 1979; Miller, 1990; Miller et al., 1991; Canziani, 1994). In particular, the article contributes to this theme by reference to one of the European States experiencing a socio-political context of totalitarism between the two World Wars. Accounting in such a context is still little explored in accounting history. Although the theme of accounting and ideology has been viewed in accounting from different perspectives (e.g. Anthony et al., 1982; Robson et al., 1994; Cooper, 1995), few studies have been conducted in accounting history to explore the relationships between the totalitarian ideology of the State that affected a significant number of the European countries between the two World Wars, and accounting. Among these, Walker (2000) documented how the fifth International Congress on Accounting held in Berlin in 1938 represented for the Nazi regime a significant opportunity to promote the national socialist ideology applied to the development of accounting, while Cinquini (2007) explored how the strong ideological commitment of Fascism had an influence on the field of accounting and business studies in Italy, on the degree of adhesion to the “corporative” ideology of some academics, and on subjects and the post-war development of accounting and business research in Italy. With respect to the research stream on the linkages between the ideology and accounting in the totalitarian State of the last century, this article contributes by considering the importance of ideology on the process and direction of change within the accounting domain. In shedding light on the influence the German ally had on the work of the Uniconti Commission in the development of uniform costing rules in Italy, a facet is unveiled on the role the ideological foundation of the State may play in accounting discourse. The political and ideological affinity between Italy and Germany at that time, in fact, constituted an influential condition in the Italian process of accounting rule-setting described in the article, considering also the results that Germany had achieved in accounting standardization.

Further, the experience of the Uniconti Commission supplements and enriches accounting history research on the uniform accounting movements that characterized the industrialized countries since the beginning of the last century (Mueller, 1965), within different institutional contexts and with different aims (Mitchell and Walker, 1996, 1997; Ahmed and Scapens, 2003; Zelinschi, 2009; Singer, 1943; Solomons, 1950). ¹ More broadly, the research contributes to the stream of accounting history research on the accounting trends that have significantly characterized the industrialized countries since the beginning of the last century (Bisman, 2012).

In this respect, this study further disseminates and extends the findings of Cinquini et al. (2009). The previous research has been theoretically refocused, enriched, refined and integrated with further archival evidence and interpretation of the findings. The “genealogical” perspective adopted in this article aims to investigate the power/knowledge relationships (ideological, political, economic and academic) among the actors involved in designing accounting rules. Therefore, new evidence concerning the Italian government, the academicians and the business representatives was extracted, analyzed and interpreted from the documents database used in the previous research (Cinquini et al., 2009). This new documental analysis has highlighted the influence of the different actors – with their objectives and the emerging of power relations – on the design of accounting rules. In this way, a new contribution has been obtained, illuminating the presence of a complex interaction between knowledge, interests, institutions and ideology in accounting discourse.

The remainder of the article is structured as follows. After a section in which the method adopted and the documental sources are discussed, the article presents a section on the background to accounting standardization in Italy between the two World Wars. The subsequent sections are based on the archival documents collected: the fourth section deals with the expectations of the government in establishing the Commission and the influence on its work of the previous German experience in uniform costing, by reporting the evidence of a specific bilateral meeting in 1942; the fifth section focuses on the expectations and interplay among the main actors of the process (politics, business, academy). The sixth section provides insights into the orientation of the accounting solutions, presenting a discussion of the critical aspects of the main documents constituting the outcome of the Commission. These considerations will be the basis for the discussion and conclusions section, based on the significance of the activities of the Uniconti Commission in the ideological, political and economic context in which it was established and worked, and on the contributions of this article in the context of accounting history research.

Research method and archival sources

The methodological perspective assumed in this investigation, as aforementioned in the Introduction, is that of the “new accounting history” realm (Miller et al., 1991), i.e. a critical research project “grounded firmly in the archive” (Carnegie and Napier, 1996). In the vein of “new accounting history”, research breaks away from the traditional evolutionary approach of “reading the past in the light of the present” and aims at looking for interactions within the space and time in which accounting developed.

In particular, this article can be considered within the “critical history” stream of research, as it aims at emphasizing the relationship between accounting and its organizational, social and political context and the extent to which accountancy may reflect and influence economic, institutional, political and social environments (Burchell et al., 1980; Hopwood, 1983; Previts et al., 1990a; Carnegie and Napier, 1996, 2012; Fleischman et al., 1996; Parker, 1997, 1999; Napier, 2006). Changes in the theory and practice of accounting are not considered as occurring in a vacuum, but are rather influenced by the dynamics of (public or private) institutions that claim a social, political and economic role: their interactions exerting a regulatory influence on accounting practices. Therefore, institutional, social, economic and political conditions have to be extensively considered and understood for a study of trends and change in accounting theories and practices (Hopwood et al., 1979; Hopwood, 1987).

In reporting and interpreting the work performed by the Uniconti Commission the article adopts a narrative research approach aiming to establish and/or describe items of fact and to relate episodes in a particular, specific, non-analytical manner. This narrative approach is considered as the opposite of other approaches to history, which are rigorously patterned in the investigative (interpretational) style of the physical sciences (Previts et al., 1990a; 1990b).

In this research, the narrative is rooted in primary sources gathered in the Historical Archive of Confindustria (the Italian industrial confederation of entrepreneurs). In this respect, it can be considered as belonging to the stream of studies in accounting history concerning accounting rule-making, in which “it is important to enquire into what factors have impacted on the growing concern with the standardization of accounting practice in both the private and public sectors” (Carnegie and Napier, 1996: 25). In this way, the relevance of the contribution that archival research may give to the accounting history literature finds confirmation, particularly if conducted with reference to the period between the two World Wars in Europe.

An ad-hoc accounting standard setter is considered (the Uniconti Commission) in its establishment and work by using primary archival sources. In fact, the research is based on documents, minutes and letters reporting the work of the Commission and on related papers found as annexes to the minutes. The archival sources examined are listed in Appendix 1. ² In addition, secondary sources have been considered, namely publications of Italian scholars reporting on that experience and other books and papers on the accounting topics under discussion.

Considering the archival sources, two main stages can be identified in the rule- setting work carried out by the Commission in the period 1941–1942. In a first stage, the Commission focused more on operating purposes and defined general principles to unify accounting practices for all the industry sectors, with a total of 13 meetings from 13 December 1941 up to 17 September 1942 (see Appendix 2).

A second stage of work then began. The Commission created special Sub-Commissions for categories of businesses, whose task was to resolve the specific problems of the specific industry sector based on general preset criteria. A total of 40 Subcommittees were established, only 23 of which actually operated and delivered their report to the Commission. The work of the Commission was focused on the manufacturing industry, with the explicit exclusion of banks and insurance companies from the accounting unification project, and with an indication that application to commercial companies would be postponed. The idea of focusing on accounting unification efforts in the manufacturing industry was connected with the public procurement sector, consistent with the Government objective: to reduce public expenditure, mainly due to the war, through a control of the pricing processes and, consequently, of the prices of suppliers.

The dramatic escalation of war events in Italy in 1943 stopped the project, which was never resumed afterwards and did not produce substantive results, as there was no time and space for implementation. Before elucidating the content of the documents and their interpretation within the aforementioned perspective, in the next section a concise background on accounting standardization in Fascist Italy is provided as a contextual frame.

Background: The issue of accounting standardization in Fascist Italy

After Mussolini’s rise to power in 1922, a new economic policy agenda was issued in Italy in the name of building the “corporative economy” that was tentatively developed throughout the 1930s. ³ Notwithstanding the role of this “revolutionary economic project” assumed in the propaganda of the regime, the “Fascist corporations” as representatives of economic categories of different trade and industrial sectors never became strategic centers of the national economy, and the debate they spurred was seldom of any relevance in practice. Their activity was mostly of a consultative nature, while the issuing of rules regulating economic activities in different sectors – the real “revolutionary” issue – was very limited (Cassese, 1974; Franck, 1990; Aquarone, 2003: 193 ff.). Fascist corporations allowed social conflict to be appeased in a context of internal and international economic difficulties, while the real centers of power were elsewhere in banking and industry. They were especially located in the State-owned firms, the most effective instruments of the Italian Fascist State’s interventionist economic policy. The IMI (Istituto Mobiliare Italiano) was founded in 1931 for the purpose of relieving the banking system of the pressure that arose from the large demand for loans from enterprises, by granting them long-term loans. This action was, however, insufficient and the situation of the banks that also owned shares in firms deteriorated until 1933, when the IRI (Istituto della Ricostruzione Industriale) was instituted in order to cut the ties between banks and industry. The IRI bought shares from the banks with the intention of giving them back to the private entrepreneurs after restructuring the firms. Instead, in 1937 the IRI became a permanent institute with the objective of assuming additional participation in great industrial firms involved in national defense, autarky and the valorization of the (Fascist) Empire.

In the end, the “corporative” economic system in action proved to be primarily bureaucratic in its nature and effects; the actions carried out by Fascist corporations (drainage in certain parts of Italy, settlement of disputes between manufacturers, rationing control and retail prices, bank control, mandatory unions) were neither particularly original, nor effective. Nevertheless, the development of the corporative economy and fascist ideology did not keep accounting and business studies free from influence. Several scholars tackled general corporative economic issues and the relationship with business economic disciplines. The subject of “corporative economics” was a recurring topic in the Italian Accounting Review (IAR) and in other publications of the 1930s (Cinquini, 2007).

Among the recurrent themes, the “problem of costs” and “standards” was considered central to the development of an economic policy for the planning and statutory requirements gradually established (credit sector, import/export, taxation, prices) (Donnini, 1938; Santarelli, 1938a, 1938b; Trovati, 1938). It is also worthwhile noticing that significant academic contributions to the debate on costing were produced during the 1930s in Italy. Although accounting history research in Italy has been largely focused on the development and heritage of Zappa’s thought, namely on the revolution of the “income-based accounting system” and the establishment of Economia aziendale ⁴ (Canziani, 1994; Galassi, 2002; Antinori, 2003: 43 ff.), in this period works on cost issues – that would later prove to be essential references in Italy after the Second World War – were published (Viganò and Mattesich, 2007). Publications of Italian scholars such as Pacces (1934), D’Ippolito (1935), Giannessi (1935, 1943), De Minico (1935), Ceccherelli (1936), Amodeo (1941), all dealt with such issues from different perspectives. ⁵

The gradual increase in size of manufacturing firms in the Italian economy also affected and spurred developments in the literature, due to the new control issues that were being introduced. Furthermore, the war economy stressed the significance of cost in relation to the perspectives of economic planning and regulation, as was the case in the development of unified accounting in Germany (Amaduzzi, 1943). After Italy entered into WWII (10 June 1940), the quest for setting uniform accounting rules became unequivocally urgent in the Italian fascist government agenda. Thus, cost accounting standardization became a way to contribute to the institutionalization of the power of the Fascist regime (Kearins and Hooper, 2002).

The next section explains the reasons for the establishment of the Commission by the Fascist Government and the role that the longstanding experience of its German ally played in the development of its work.

The role played by the Fascist Government and its German ally

In a meeting held on 21 November 1941, the Council of Ministers of the Fascist Government entrusted the Ministry of Corporations (Ministero delle corporazioni) with the issue of setting rules to unify accounting and costing practices in Italian industry. On behalf of the Ministry of Corporations (Minister Renato Ricci), the Confederation of Industrialists founded a central organ called the Central Commission for Accounting Unification, also named Uniconti.

The reason for the introduction of a uniform accounting system is expressed in a letter, dated 29 December 1941, sent by the Minister of Corporations to the Ministry of Finance, the President of the Council of Ministers, the Minister of Justice and the Fascist Party National Directorate. In this letter, the need for a measure by which the Ministry of Corporations could have the power to issue “provisions for the unification of accounting systems” is mentioned, together with reference to the German experience:

[S]uch a measure responds to the requirement for simpler tools to control production costs, in order to better regulate maximum selling prices. The concrete provisions that will be issued for this purpose are currently being prepared by taking into account the results achieved with the German experience. In particular, the aim of these principles, in addition to simplifying production cost control in order to fix better selling prices, is to provide appropriate comparison to determine the costs incurred by the same enterprise in different time periods and the costs incurred by other companies of the same industry sector over the same time period. Through a technical and administrative rationalization of manufacturing and trade businesses, and by keeping analytical records of each individual production cost item, production processes may also be controlled in order to evaluate their economic convenience. (LET., Ricci, 29 December 1941: 1–2)

The intentions of the Minister of Corporations highlight the general purposes of the initiative: to control enterprises, within the framework of a corporative economic policy, without any explicit reference to the war economy, but rather emulating German practices. From the beginning, Germany is identified as the model to consider for the Italian initiative.

Examining the documents related to the establishment of the Commission, the correspondence between the Minister of Corporations and the Minister of Justice (Achille Grandi) reveals different interpretations as to the role of the State in the economy of the corporative system (Santomassimo, 2006). Minister Grandi emphasizes the fact that the provision was intended to limit the “regulation of maximum sale prices”, therefore having a temporary “objective closely connected with the specific conditions of the war period” (LET., Grandi, 10 January 1942). The Minister of Corporations, on the contrary, suggests a much more ambitious objective of “controlling production processes in view of economic convenience”, which may be supported by the accounting unification (LET., Ricci, 29 December 1941).

After its establishment, in a letter dated 12 January 1942 sent to Renato Ricci (Minister of Corporations) submitting its work plan, the Commission stated its intention to follow the method already used in Germany, based on its consolidated experience since 1937. The German legislation on accounting unification was also discussed in several letters exchanged between the Commission and the Minister of Corporations. In a letter dated June 1942, probably sent by the secretary of the Commission (Guido Carli) to the Minister of Corporations, we read:

I also considered the option of sharing the main rules issued in Germany in this field, so that the Ministry’s technicians may examine the project by taking into account the German experience. In this respect, I think that a direct contact between the office of the Ministry and the offices of the Confederation responsible for the study of business accounting issues is desirable. A joint debate could bring about improvements to the project. (LET., Carli, June 1942: 1)

The relevance of the influence of the German experience in the work of the Uniconti Commission is supported by the presence of three additional documents in the archive folder on which this research is grounded.

The first bears the title “Position of accounting in the framework of the German rationalization movement” (without author or date) and consists of a long introduction to the accounting unification process carried out in Germany to reorganize the industry in view of achieving the highest possible manufacturing efficiency level in enterprises. This document covers the fundamental stages of this process. The second document, called “First report to the Minister of Corporations on the unification of accounting in Germany” (without author or date), details the criteria followed by the Reich to identify a unified scheme for cost accounting. Guido Carli might have written the document, since pieces of its contents can be found in an article (Carli, 1941). The third document, “Use of the depreciations of industrial companies for financing the war”, dated 28 January 1942, is the translation of the “NeueZürcherZeitung” of 21 January 1941, where the proposal on depreciation developed in Germany by the Vienna economist Nöll v.d. Nahmer (published by the journal Die Deutsche Volkswirtschaft on 1 December 1941) is discussed.

Contact between Germany and Italy on issues that were closely connected with the work of the Commission were intensified, and the Reichsgruppe Industrie and the Fascist Confederation of Industrials held a conference in Rome on 26 and 27 May 1942. During this meeting, the representatives of the two organizations exchanged views, particularly about price determination and control in the manufacturing industry.

The President of Reichsgruppe Industrie, Zangen, illustrated the economic pricing policy implemented by Germany in detail: the Reichsgruppe Industry worked as a consultant for the Price Commission in every circumstance – he stated – and industry was involved in all issues regarding prices (DOC., “Minutes of the second meeting held by the Fascist Confederation of Industrialists”, 26 May 1942). This contrasted with the strictly hierarchical price determination and control method used in Italy so far. The former Finance Minister and President of the Confederation of Industrialists, Giuseppe Volpi, also took the floor at the conclusion of the meeting and reported the following considerations about the Italian system, based on his German colleague’s views: “I believe that this system [in Italy] cannot be used in the long-term and needs to be reviewed” (DOC., “Minutes of the second meeting held by the Fascist Confederation of Industrialists”, 26 May 1942: 14).

What appears from these sources is that the aims given to the Italian uniform accounting and costing systems were multiple in the minds of the governmental actors that lead the process. Althought the Uniconti Commission was primarily promoted by the Italian Government for reasons related to the wartime need for control on prices, some of the leaders of the Fascist regime considered uniform costing as a fundamental accounting device for implementing a new interventionist economic policy. This initiative was seen indeed as the possibility of a “further step forward” toward the making of the “fascist corporative economy”. The pressure by Government to embed these objectives into operative statutory rules represents one relevant element in analyzing the power relations among the actors involved in the Commission’s activity (Kearins and Hooper, 2002).

Another point is that Germany had been considered as the main reference for the Commission’s work since the beginning of the initiative. This circumstance is certainly related to the ideological and political alliance between the Nazi and fascist regimes at the time. Beside this, it is a matter of fact that when Italy faced the price control issues of the war economy, together with the problem of standardizing accounting practices, the German ally already had long-term experience that represented an important reference.

In fact, the German economic system at the beginning of the Second World War had experienced significantly advanced uniform accounting processes, both in financial reporting and costing. They were realized through an elaboration that commenced in 1914–1915 in a well prepared context (Carli, 1941), as the result of co-operation between companies and private groups, institutions and universities long before the rise to power of Nazism. Afterwards, a further development was imposed by the Nazi centralized economic policy (Frei, 2002): uniform accounting, which had been a voluntary choice until then, became mandatory within the context of the controlled National Socialist economy and a tool of its economic policy (Matz, 1940a; 1940b).

In Italy, on the contrary, no statutory requirements were developed for accounting in the 1930s – definitely a different situation than in Germany. Companies had extensive freedom to select their preferred criteria, accounting methods, charts of accounts, costing methods, financial reporting forms, according to the principles that seemed to them to be the most appropriate for their organization and for the purposes of each individual enterprise (Fabrizi, 1942: 1–2).

The reasons for the different development of uniform accounting in Italy and Germany are twofold. A first reason can be linked to the different types of economic policy and regulation mechanisms that prevailed in the two countries. In Italy, as aforementioned, the direct intervention by the State in certain sectors of the economy was realized through State-owned companies (such as the IMI and the IRI). Differently from Nazi Germany, this implied the development of specific regulatory and governmental tools. The issue of cost standardization was more urgent in Germany due to the need for regulating prices and eliminating excess profits in large private monopolistic companies. In Italy, such companies had become State owned and played a pivotal role in the industrial development of the 1930s (Carli, 1941: 6). A secondary reason related to a general suspicion of the Italian academy’s attitude toward the over-regulation of business activities, ⁶ even within the ideological prominence of Fascist ideology.

These were the reasons for the different stages of development of uniform accounting between Italy and Germany. The position of Italy appeared backward with respect to Germany in this field, as evidenced by the reports of the conference held in Rome in 1942. Different paths toward standardization were followed in each of the two countries and differences were maintained in price determination and control in their manufacturing industries. Hence, another point emerges affecting power relations according to Foucault (1982), namely the system of differentiations (Kearins and Hooper, 2002). In the case of the Uniconti Commission, there were relevant differences between Italy and Germany (economic and cultural) and this was a premise to the dialectic among the actors involved in the Commission activity.

The role played by business representatives and academics

The members of the Uniconti Commission were academicians in accounting and Economia aziendale, chartered accountants and managers of manufacturing companies. ⁷ There is no evidence in the source documents about the criteria followed for the selection of the academics and the chartered accountants in the Commission. The origin of the accounting profession in Italy can be located in the first decades of the twentieth century, during a period in which the Italian industrial revolution was completed, business studies had progressed and Higher Schools of Commerce underwent considerable expansion. Nevertheless, only a decree of 1929 determined the origin of the actual organization of the chartered accountant profession (Camodeca, 2005). From the documents collected, it seems that the involvement and the contribution of the accounting profession in the Uniconti Commission were not relevant. As the accounting profession in Italy had only been formally established not long before the establishment of the Commission, it did not have a recognized institutional and influential status in the domain of the standardization of accounting principles promoted by the Government.

In contrast, the role played by the representatives of the Italian academy in the Commission ⁸ in the making of the accounting rules is clear from the first meeting, when principles and arrangements for conducting the work were defined. We read in the minutes of the first meeting a speech pronounced by Prof. Onida, who was the chairperson of the meeting and had the task of planning the work. In the end, Prof. Onida summarized the discussion as follows:

(a) We have the problem of trying to standardize administration practices (financial accounting, cost accounting, and connections between the two);

(b) We have the problem of trying to standardize cost recognition criteria. There are as many cost configurations as purposes. For example, the costs arising from financial accounting – in which the costs incurred for the achievement of a certain product contrast the revenues achieved with the sale of the same product – do not provide indication for the purposes of pricing policy; for these purposes we will have to assume the cost as determined on the basis, for example, of materials evaluated not at the purchase price but at the repurchase price. (MIN., first meeting, 13 December 1941: 2)

On other occasions, the curiosity of the researcher seems to be mixed in with the necessary pragmatism drawn from the situation. In the fourth meeting of the Commission, attended also by some representatives from the iron and steel industry, an issue was raised which stirred Prof. D’Ippolito’s interest; that is, the link between financial and cost accounting:

Prof. D’Ippolito took the floor and pointed out that it was time for attendees to express their opinions about methods to connect financial and cost accounting practices. Since such a connection could strongly affect the structure of financial accounting, it would be impossible for the Central Commission to formulate broad principles of financial accounting unification without having clarified this aspect first. (MIN., fourth meeting, 15 January 1942: 5)

Finally, the commitment of academicians in the creation of a common technical language to be shared by all the participants appears evident:

While a study will be carried out on each individual sector of the industry, the Central Commission will select uniform cost accounting criteria. For this purpose, professors D’Ippolito, Onida and Pacces have been invited to draw up a terminology unification draft. (MIN., third meeting, 23 December 1941: 6)

The acknowledgement of the role of academicians emerges also at the end of the eleventh meeting of the Commission, where the guidelines for the work of Sub-Commissions were traced. A university professor member of the Central Commission was entrusted with the role of chairing the Sub-Commissions (MIN., eleventh meeting, 1 May 1942: 1), thus adding consistency to the scientific foundation of the solutions proposed. In sum, the Italian accounting academic community offered a scientific contribution on the relevant accounting themes of the Commission, as we will discuss in more detail in the following section.

Concerning the role of business representatives, there was noteworthy difference between the attitude of German and Italian entrepreneurs toward the accounting standardization initiative. German manufacturers’ associations had played a significant protagonist role in the development of uniform accounting schemes long before the advent of the Nazi regime, particularly in the steel and machinery industries. ⁹ According to the considerations of the president of the German manufacturers’ associations, Zangen, presented during the already mentioned meeting held between the German manufactures and the Confederazione dell’Industria (hereinafter: Confindustria) on 26–27 May 1942:

[I]n cost control and pricing, we are proud to be able to say that we have achieved a significant success, particularly due to the pre-existing control organization and to the manufacturers’ self-discipline. (DOC., “Minutes of the second meeting held at the Fascist Confederation of Industrialists”, 26 May 1942: 1)

On the contrary, Italian Confindustria did not appeared fully convinced about the aims of the initiative of the Uniconti Commission. It was perceived as potentially dangerous, both in the control exercised by the State on the businesses’ management boards and in the practical enforcement of the new principles. In this respect, the industrial organizations feared that it could be applied with the aim of increasing the tax area.

Aware of this feeling, at the first meeting held on 13 December 1941 Giovanni Balella, General Director of Confindustria, during his introductory speech invited the Commission, “to develop a unification program, without being distracted during the development of the work regarding the objectives that unification should fulfil in the Ministry’s mind”. The concern we read in these words also echoes in other minutes of meetings held by working groups and representatives of the businesses.

The meeting minutes reveal the frequent criticism and concerns expressed by the representatives of Italian enterprises about the fiscal implications of accounting unification. A first issue was the fear that the tax burden could increase, looking to what had happened with the accounting unification process in the war period, as the German experience had showed:

[F]rom the components referred to the manufacturing industry [Ghezzi, Ghiglione and Teani], we have serious concerns for the possible tax implications of unification. (MIN., first meeting, 13 December 1941: 2)

During the debate, the representatives of the hydroelectric companies expressed their concern about the tax implications that may result from unification. (MIN., second meeting, 22 December 1941: 2)

The attitude of Sub-Commissions in respect of the unification movement is largely influenced by the tax concern. (DOC., “Note for the Director”, 9 November 1942: 5)

A second set of worries of the industrial representatives was strictly operational in nature, but in the Commission’s opinion it would have heavily affected the implementation of a unified accounting system. These problems were highlighted in a note for the director of the Confederation, dated 9 November 1942 (when the work was almost completed):

Most reports delivered so far describe the enormous technical difficulties companies would face in the event that unified accounting schemes were enforced immediately, and this for two reasons: a) lack of administrative staff, determined by the current war contingencies; b) lack of qualification for most small and medium size companies [whose accounting systems are rather rudimentary] to apply the unified schemes. (DOC., “Note for the Director”, 9 November 1942: 5–6).

The worries of the industrial representatives about the tax implications and the difficulties affecting the implementation of a unified accounting system related to the objective of firms to preserve their profitability. This objective contrasts with those of Government and represents a further element useful to explain power relations (Foucault, 1982) and to understand why the unified accounting system was settled in the way explained in the next section.

Furthermore, in accordance with the Fascism historiography, another circumstance that is important to the role of entrepreneurs’ representatives in the Uniconti Commission is that Confindustria substantially acted as an operating instrument used by the Ministry of Corporations to govern the economy during the Fascist era (Rossi, 1966; Santomassimo, 2006). In fact, since the so-called “Palazzo Vidoni Pact” with Fascism in 1925 ¹⁰ Confindustria became an institution “enjoying both the independence of a private organization and the power of a public institution” (Sarti, 1971: 14). Confindustria was entrusted with the daily management and direction of the entire economic mechanism, and its technical officers became a sort of operational staff of the Fascist corporations. In the case of the Uniconti Commission, it is understandable that the Fascist Government considered the cooperating role of industrial organizations crucial for the implementation of a uniform accounting plan useful for the economic policy – as the German experience had widely demonstrated. Nevertheless, the evidence of the work in the Uniconti Commission shows how the commitment of industry representatives to developing accounting standardization in the Italian context was problematic. In Italy, the issue of accounting standardization had not been developed gradually as in Germany, and the entrepreneurs remained suspicious of State intervention. We can also perceive from the evidence the limited penetration of “corporative ideology” in the capitalistic class in Italy at that time, although it was supporting the Fascist regime (Rossi, 1966). Hence, Confindustria can be considered for the Fascist regime as a way of bringing power relations into being (Focault, 1982), even if the mindset of the Italian capitalistic class made it more difficult than in Germany and required a different approach.

The outcomes of the Commission: Cost accounting rules between economic rationality and State-intervention ideology

In the previous sections, the main expectations from Government and business representatives of the uniform cost system and the cultural and economic differences between Germany and Italy have been discussed. The evidence shows that the Government’s purpose in adopting the uniform costing system was twofold (LET., Ricci, 29 December 1941: 1–2; LET., Grandi, 10 January 1942). From one side, it was considered a tool for controlling enterprises within the framework of a corporative economic policy. In this view, it was a “mechanism” useful for implementing ideological constructs and political targets in the real world. From another side, the Government was interested in controlling war expenses and reducing inflation as much as possible. In this perspective, the uniform costing system had a more contingent role.

The role of business representatives appears to have been that of counterparts, rather than allies or partners, of the Government. They wished to fix cost accounting rules for economic reasons, as they tried to maintain/increase the profitability of their firms (see, for example, fears of the tax burden, mentioned above).

Academicians in accounting and Economia aziendale had to manage their position within the match between these two parties, while remaining consistent with their doctrinal background. Furthermore, as documented, the process of formulating cost accounting rules was influenced by the German experience, even though there were some relevant differences between the allies. How did the German experience and the differences in the objectives of each actor involved in the Commission’s work affect the cost accounting rules proposed by the Commission?

In order to provide an answer to this question, the two documents produced by the Commission and the process behind these documents are examined in this section. To facilitate the interpretation of the primary sources, we will use also as a secondary source an article published at that time (De Minico and D’Ippolito, 1943), whose purpose was to analyze certain subjects related to the Commission’s work. This article is dated September 1942 (published in 1943), and one author (Teodoro D’Ippolito) was a member of the Uniconti Commission. Consideration is given to the following issues in examining these sources:

The cost accounting system

The document entitled “Ordinamento della contabilità generale e delle determinazioni dei costi nelle aziende delle industrie siderurgica e metallurgica” [General accounting and costing regulations applicable to the iron and steel industry, hereinafter: “Iron and steel industry cost regulation”] is the only detailed document available in the archive that was developed taking into account the previous general guidelines. The document bears no date. It was found in the historical archive of Confindustria together with the other records concerning the Commission, and its content is in line with the main document concerning unified cost accounting by the same Commission. Therefore, we believe that it may have been drawn up during 1942 – that is, the year in which the Commission produced its main results. As regards product costs, information is obtained according to the scheme presented in Figure 1.

OPEN IN VIEWER

Figure 1.

Unified scheme of the product cost configuration for the organizations of the iron and steel industry (source: DOC., “Iron and steel industry cost regulation”: 14).

Based on the recommendations developed in the document, estimated costs should be calculated according to the unified scheme described above for current costs. These costs would provide the basis for the determination of the prices to be set by companies in the iron and steel industry. In the document, it is recognized that costs must be used to set prices, so that a company may generally establish a suitable connection between costs and revenues to ensure the long-term survival of the business.

The first reference to determine the amount of costs for each item is given by that existing at the time of estimation (“Iron and steel industry cost regulation”: 30). But if the company can reasonably assume that costs will change in the future, then it may adopt estimated costs (as suggested in the “Costing principles” document). The department (or cost center) is the “elementary unit”, considered to forecast indirect costs (“Iron and steel industry cost regulation”: 32). It is also worth underlining that the German experience concerning the unification of cost accounting practices was grounded on a “cost-center based costing”. Cost centers were used together with multiple overhead rates (as described widely in the DOC. “First report to the Minister of Corporations on the unification of accounting in Germany”, n.d.: 2). These similarities with the German unified scheme may be a further element highlighting the influence exerted by the German experience.

Finally, the so-called “economic-technical cost” is obtained by summing up the interest on invested capital, charges that can be directly deducted from gross sales proceeds and a “remuneration for the general economic business risk” (which is not explicitly indicated in Figure 1). The latter is determined by considering the future operating conditions of the organization, according to its experience and, again, by taking into account future economic perspectives (“Iron and steel industry cost regulation”: 31–32). ¹² The scheme includes a compensation for the owners; therefore it is possible to assume that it has been accepted by the business representatives and the Government. In effect, this scheme guaranteed a profit to the firms’ owners and at the same time permitted control of the pricing of enterprises. This last aspect was relevant in order to have a costing system operating as a mechanism useful for realizing a corporative economic policy.

Discussion and conclusions

In describing and analyzing the experience of the Uniconti Commission in Fascist Italy, we emphasized the relationship between accounting and its organizational, social and political context (Burchell et al., 1980; Hopwood, 1983; Previts et al., 1990b; Carnegie and Napier, 1996, 2012). This article has used a Foucauldian “genealogical” approach (Loft, 1986; Kearins and Hooper, 2002). By providing detailed insights on the Uniconti Commission experience in Italy on the base of a contextual analysis and the original archival documental sources listed in Appendix 1 (that is, developing an accounting history research “grounded firmly in the archive”: Carnegie and Napier, 1996), the accounting discourse is revealed as a complex phenomenon, whose development and change are basically linked to the context and dependent on the interplay of many different influences (Stewart, 1992).

As a first point, the research on the experience of the Uniconti Commission sheds light on the strength of the State interventionism embedded in the totalitarian ideology of Fascism in driving the setting of a uniform costing system. It provides evidence of the forms in which the interventionist role/regulatory function of the State in the economy manifested at the time. In both the totalitarian regimes of Germany and Italy between the two World Wars the standardization in accounting – although differently in the two countries – assumed a role for the implementation of a planned political economy, rationalization and regulation of industries, particularly in Germany. Further, the process of accounting change was driven by the issue of the conduct of war, where accounting was implicated in the control of a constrained wartime economy. In this respect, this article contributes to the themes of the establishment of the State as an arena for the development of accounting discourse and practice through an extended intervention in and regulation of economic processes in the last century (Hopwood et al., 1979; Hopwood, 1987; Canziani, 1994). Further, the role that ideology may play in accounting discourse is also revealed by the influence the German ally had in the work of the Italian Uniconti Commission. The totalitarian political and ideological affinity between Italy and Germany at that time and the results achieved in the German experience of accounting standardization made the interaction between Italy and Germany in the Italian accounting rules-setting process highly influential, as evident in the minutes of the meetings. Thus, in understanding the influence of the State on accounting, the Uniconti experience addresses the importance of the ideological foundation of the State for the consequences that this may have in the process and direction of change in the accounting domain.

Secondly, the documented history of the Uniconti Commission shows the presence of a complex interplay of many different influences, which is at the base of the possibility to appreciate accounting as a social – not merely technical – activity (Loft, 1986), and accounting history as a complex, contextual and “plural” phenomenon – not a deterministic, unidimensional linear progress (Stewart, 1992). A frame of complexity and interconnection existing between the domains of ideology, knowledge, and expectations with accounting practices and their institutional contexts has emerged, providing in the research the picture that the “new accounting history” research aims to disclose in its approach (Miller et al., 1991).

In considering the different actors that participated in the process described in the article (Government, business representatives and academics) the documental analysis has unveiled the underpinning differences, objectives and means of bringing power relations into being that influenced the outcomes. Considering this, the study further extends the previous Italian article of Cinquini et al. (2009). To this aim, additional evidence concerning the Italian government, the academicians and the business representatives have been extracted, analyzed and interpreted. The “genealogical” perspective adopted in this article has allowed us to investigate in depth the power/knowledge relationships among the actors involved in designing the accounting rules.

One key point in this respect concerns the multiplicity of objectives of the Fascist Government in promoting the setting of the Italian uniform accounting and costing systems. As we read clearly throughout the letters discussed, this initiative was seen as the possibility of a “further step forward” toward the making of the “fascist corporative economy”. Although that choice was primarily promoted by the Italian Government for reasons correlated to the wartime need for control over prices, in the context of the Fascist regime (or at least on the part of their leaders), uniform costing appeared as a fundamental tool for implementing a new economic policy coherent with the corporative ideology.

On the other hand, the fact that uniform costing was promoted in Italy much later compared to the German political ally explains why Germany was considered as the main reference for the Commission’s work from the very beginning of the initiative, and the importance given to the German experience. This difference in the degree of development of the uniform costing design and implementation was due to the different economic policies of the two totalitarian regimes with respect to economic regulation. In the process of setting a new uniform accounting system narrated by the Uniconti experience, the relevance of the Italian entrepreneurs’ association (Confindustria) and the Italian academics emerges alongside that of the Government.

Regarding entrepreneurs, if we consider the suspicions expressed by the Italian business representatives in several Commission meetings (due to the possible tax implications of accounting unification), it is clear how Confindustria had been trying to protect business from the possible implications of the deployment of a discretionary inspection power exercised by the Ministry of Corporations in assessing business costs. This is also connected with the fear of industrialists about a lack of professionalism, both at industrial and Governmental levels in making an appropriate “cost for pricing” assessment by uniform costing. It is emphasized how the accounting unification had been realized slowly in Germany and developed in a context that was technically prepared, while the position of Italy appeared backward (DOC., 12 December 1941).

Concerning the role of the Italian academy, several foremost scholars took part in the Commission as long as it worked, thus contributing to adding consistency to the scientific foundation of the solutions that were proposed. The Uniconti Commission constituted an opportunity for the Italian accounting community to offer a fine example of a scientific contribution on relevant accounting and cost accounting themes. The Commission faced important issues, which represent prominent research areas in the accounting field even today (for example, in regulated sectors such as telecommunications, energy distribution or transports): normal profitability and profit, capital cost, cost allocation principles and techniques, and asset evaluation. These issues, as the article has pointed out, were discussed during the 1930s in articles in the Italian Accounting Review and in textbooks by leading Italian scholars.

In this perspective, the Uniconti Commission experience shows how in a political and ideological totalitarian context and in a wartime economy – that established restrictions and targets (price control, planned economy) – a space was opened for economic and business doctrines to explore advancements with respect to principles, criteria and tools for accounting standardization. The Italian doctrine offered its theoretical and technical knowledge to contribute to the identification of uniform accounting development. This happened without a detachment from the affirmed principles of Italian Economia aziendale, as the corporative ideology did not deny the role of private enterprise in the economy and the legitimation of profit (Cinquini, 2007). As has been illustrated and discussed in this article, the interplay between the domains of politics and ideology, accounting knowledge and techniques, and economic and social interests implied remarkable reflections on the outcomes of the Commission.

This especially happened in the case of the rules on price setting. Price setting is characterized by high uncertainty and has no unique solution justifiable in a technical perspective. In this case, the adoption of political stances can ultimately influence how rules of cost measurement are set and how cost-based prices are consequently determined. The cases discussed in the article of depreciation and product cost-price rules show clearly how the interests of each party involved in their design and implementation have been taken into consideration. Hence, the technical solutions adopted in the uniform costing system for pricing can be considered as a result of the interplay between actors and their objectives: the objectives of the business and accounting academy (economic rationality and technical coherence); the interests of business representatives (maintaining profit); the dominant ideology (State-regulated economy); and the political targets (price control). Power relations have been analyzed taking into account these types of objectives. The steps of the uniform costing system design where this process became more evident have been examined in the article, claiming that the emerging cost accounting choices cannot be interpreted only through the lenses of economic rationality and technical coherence.

Finally, the article addresses the experience of fixing uniform cost accounting principles in Italy in the last century, so contributing to the stream of accounting history research on the uniform accounting trends that have affected industrialized countries since the beginning of the last century (Mueller, 1965). As noted above, the Uniconti Commission did not conclude its work because of the dramatic progress of the Second World War in Italy from 1943. As a consequence, we not only lack a complete picture of the outcomes of cost determination criteria in all the industrial sectors, but due to the radical changes in the institutional conditions and the new economic priorities after the war – namely, the “post-war reconstruction” phase – we have no practical application of the uniform costing principles for a real evaluation of their efficacy. Nevertheless, the judgement on the theoretical validity of the results of the work conducted by the Commission did not change among Italian academicians after the war, regardless of any reason that had inspired its establishment and of the possible political implications deriving from involvement with the Fascist regime. ¹⁴

More broadly, the research presented in this article shows the relevance of archival accounting history research under the perspective of “new” accounting history. In particular, the case of the Uniconti Commission addresses the potential of this approach applied to accounting history in the context of the totalitarian States of the last century, a context which is still not widely studied. Away from taken-for-granted or a-priori judgements, a focus on accounting within these contexts within the perspective proposed in this article may reveal to some extent unexpected and fruitful results, confirming the richness, complexity and non-linearity of the process of accounting change in a historical perspective.