Accounting and economics: The psychopathic siblings: A review essay

British Accounting Review (1990) 22, 375388

ACCOUNTING AND ECONOMICS: THE PSYCHOPATHIC SIBLINGS: A REVIEW ESSAY ROB GRAY University 0fDundee

Pearce, D., Markandya, D. & Barbier, (London, 1989). 192~~. k6.95 (pbk)

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a Green Economy. Earthscan

ENVIRONMENT’

Exploration of any relationship between accounting and the physical environment has not had a long or an active history. The social responsibility debates of the 1960s (for a review see, for example, Davis & BlomStrom, 1975; Mintzberg, 1983; Luthans & Hodgetts, 1976; Gray, Owen & Maunders, 1987) stimulated the experiments with social accounting and corporate social reporting of the early 1970s. It was not, however, until the early 1970s that environmental issues were active in the social responsibility debates but this recognition was quickly translated into the social accounting experience (see, for example, Linowes, 1972; McComb, 1978; Dierkes & Preston, 1977; Ullmann, 1976; Gray, Owen & Maunders, 1987). The brief history of the analysis of the relationship between accounting and environmentalism is thus one part of the (somewhat less than triumphant) short history of social accounting. In a general sense social accounting* is about some combination of: (a) accounting for different things (i.e. other than accounting strictly for economic events); (b) accounting in different media (i.e. other than accounting in strictly financial terms); (c) accounting to different individuals and groups (i.e. not necessarily accounting only to the providers of finance); and (d) accounting for different purposes (i.e. not necessarily accounting only to enable the making of decisions whose success would be judged in financial, or even only cash flow, terms).3 All of these dimensions of possible accountings are inevitably inter-related, the relationships deriving, generally, from the purpose assumed for the accounting. The present concern with environmental issues has enabled 08Y&8Y3Y/YO/O40373

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social accounting-and, in particular, the questions of assumed purpose and the ‘things’ for which one is accounting-to be more openly reexamined. Unfortunately, whilst understanding how traditional accounting is ‘implicated and intertwined with the social’, it has developed an orthodoxy of its own, and the examination, exploration and invention of broader (social) accountings has remained a largely marginalised element of academic (and professional) accounting.4 Thus the depth of experience in this field remains relatively shallow. Within the (predominantly pluralistic) social accounting literature itself, the concern is principally with four groups of issues: employees, community, consumers and the environment. Of these, the environment has generally received the least attention [see, for example, Brockoff (1979); Lessem (1977); Preston et al. (1978); Schreuder (1979)]. It was not until mid- to late 1970s that social accounting was recognised as having potential ecological impact at all (see Ullman, 1976; Dierkes & Preston, 1977; Perks & Gray, 1978, 1979, 1980; Gray, Owen & Maunders, 1987). There was little observable reaction to this5 in the wider accounting literature until 1989 when (in Britain at least) suddenly everybody and everything went ‘green’. The relatively low level of apparent interest in environmental matters in accounting before 1989 perhaps makes it appropriate to raise the question as to whether the accounting research agenda is influenced too much by the current agenda of the political and business world. That is, whilst there are obvious exceptions, casual observation might suggest that the popularity of areas of enquiry is closely linked to the contemporary importance attached to and profile of that area in the business world. Social and, specifically, environmental accounting may well be a good example of the corrollary. (For some support for this contention see Parker, 1986.) If this is so then we can expect to see a significant rise in the numbers of researchers with an active interest in ‘green’-related accounting and finance issues in step with the importance being attached to environmental matters in the business and political spheres. But the issues currently under discussion have been in the public domain for 20 years and have not found their way into any prominence in the accounting literature. These observations are not, in principle, original (see Tinker et al., 1982), but they do raise again the wider issue of how research matters are chosen and thus how knowledge is identified, established and legitimated. Such a matter would clearly be of critical importance to the academic community. The greatest manifestation of the new respectability of environmental matters in the UK is the response of the Government and, especially, in its response to the ‘Pearce Report’ (Pearce et al., 1989). It would appear that the Report is intended to form the basis of the government’s environmental

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policy-and so has a wide currency for that alone-but its implementation in the cajolery-not-regulatory, free-market world rhetorically inhabited by the current Conservative administration depends to a great extent on the ‘voluntary co-operation’ of organisations. That co-operation will need a fairly well-developed new set of accountings to enable it to become practicable. Hence, the potential importance of the Pearce Report to accounting. But there is a second importance. Traditional accounting is bonded to traditional economic thinking in ways we rarely think about. The environmental debate casts into relief, not only this bonding but also the way in which economics and accounting together could be said to have contributed considerably to the growing environmental crisis we may yet live through. A broad examination stimulated by the Pearce Report allows this to be brought out. The rest of this essay is organised as follows. In the next section the principle relevant elements of the Pearce Report are reviewed followed by an attempt to place the Report in context by reference to environmental economics, ethics and systems theory. The final substantive section returns to accounting and attempts to draw out a number of the major implications for the subject. THE

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Blueprint fir a Green Economy (the Pearce Report) arose out of a report originally commissioned for the UK Department of the Environment (DOE). In general terms, there is little that is new in the Pearce Report. It was written, principally, as an attempt to summarise the last 20 years or so of development of environmental economics in a manner both accessible and politically digestible. This it achieves with success. It is this success, illustrated by the response that the Report has generated as part of its political weight, rather than the feast of fresh ideas that makes the Pearce Report remarkable. More remarkable is that Pearce et al. achieve this whilst making one or two significant steps outside what that straw-manthe traditional neo-classical economist-would consider to be legitimate economics. More of this below. Chapter 1 of the Pearce Report introduces its principal ideas, the main one of which is ‘sustainable development’-a hotly contested term. In the case of the Pearce Report, ‘development’ is seen to include the desirability of rising real per capita income and the ‘sustainable’ element relating broadly to the sort of level of continuing growth that the species (or at least some of it) can/should expect. Pearce et al., however, recognise that traditional measures of income (e.g. GDP) do not and cannot capture that additional essential element-‘quality of life’. The ‘quality of life’ must be in danger of decline if we do not rectify our standards, measurements,

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policies and approaches. Pearce et al., first depart from conventional economic analysis in arguing that we must expand our thinking to embrace three additional concepts: environment (we must recognise that the environment has value);futtrrity (we must extend our time horizons); and equity (we must seek greater intra-generation and inter-generational fairness). An essential element in this process is a re-examination of the nature of capital. In what is probably the major departure from conventional economics, the Report then argues that ‘capital’ or ‘wealth’ must be seen as consisting of two elements--man-made capital (called in the report ‘capital wealth’) and natwul capital (called ‘natural wealth’). Man-made capital is all manmade things from roads through plant and machinery to human intelligence, whilst natural capital consists of all the environmentally given assetsfrom air and water through wildlife and minerals to the ozone layer. One of the things with which the equity concept is concerned, is ensuring that this generation passes to subsequent generations the same value of capital. In general, the natural capital is diminished in the creation of manmade capital. To what extent (if at all) are they substitutes for each other? And how (if at all) may we best estimate rates of substitution between man-made and natural capital? One question inevitably follows-to what extent has the enormous per capita rise in income in the West been at the expense of the capital of future generations? Have we been living off the world’s capital and, therefore, the capital of future generations? Have we been failing to maintain the earth’s capital? And, finally (although given less profile in the report-but see, for example, Turner & Pearce, 1990; Barbier, 1987) to what extent has this Western binge been at the expense of both the income and the capital of Third World countries? Pearce et al. do not attempt seriously to answer those questions. Instead the report looks forward-less concerned with how we got here and more concerned with where we can get to. For this, there has to be some recognition of the political exigencies in which any policy prescription is set. This Pearce does implicitly although much of his earlier work shows similar orientation (see, for example Alexandre et al., 1980; Markandya & Pearce, 1988). In the end, the Report provides an excellent introductory review of some of the (to my eyes) traditional economic, ‘market-based’ possibilities by which, it is argued, ‘environment’, ‘futurity’ and ‘equity’ may be enhanced. The Report goes on to rehearse the considerable literature on how to attach economic values to everything for which there is no market price. Although the authors are a great deal more sensitive to these issues than many economists it nevertheless seems, within the Report at least, that a major provenance of the problems which exist in ‘Pearce-world’ must arise from ‘imperfections in the markets’ and, it may follow, such problems

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will be amenable to further economic analysis. Pearce lays out the notions of ‘total value’, ‘use value’, ‘option value’ and ‘existence value’ and goes on to outline how far economists have got with estimating such ‘values’. From here, the report flows nicely into national income accounting. Chapter 4, after a review of the French and Norwegian methods of national resource accounting, progresses to a review of some of the more immediate failures of traditional national income accounting. These are principally of two sorts: (i) those arising because the environment has a price only when property rights have been established over it and those rights then exercised; and (ii) those arising because of the bizarre habit of treating income as one measure of welfare. The report does not address the idea that the weakness it has illuminated might be taken as examples of why national income accounting is a fundamentally improper way of recording human existence. Speaking of which, chapters 5 and 6 are simple, technical chapters on methods of project appraisal and estimates of discount rates. Chapter 7 is the chapter of recommendations, which will have the political and policy influence. The authors are clear that their brief only extends to a review of market-based incentives so other possibilities-such as the alarmingly entitled ‘full-privatisation’ option (in which ‘we could create markets in previously free services’)-are not explored. Furthermore, it is a necessary article of faith in conventional economics (see e.g. Baumol & Oates 1979) and, to my eyes at least, one fondly thought of in Pearce-world that ‘market-based’ solutions are more eficient than ‘regulatory’ solutions and are thus, definitionally, closer to godliness. This issue is not seriously addressed. The chapter discusses (strictly in the fashion of what looks to me like traditional economics): calculations of ‘marginal social cost’ pricing; the polluter pays principle; pollution taxes, in particular the much mooted tax on carbon fuels; tradable pollution licences where the ‘right’ to pollute can be bought and sold; and various forms of incentives, particularly with energy conservation and waste recycling in mind. THE

PEARCE REPORT, ENVIRONMENTAL ECONOMICS, ETHICS AND SYSTEMS THINKING

As an attempt to raise the environmental agenda, the Report has been a considerable success. As Turner notes, a fuller, better argued, ‘greener’, more radical text would not have been anywhere near as successful. But nevertheless the report must be set in some sort of context. This, however, runs into the problem of ‘straw-men’ in terms of the terminology used to

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describe various strands of economic thinking. Pearce has argued elsewhere (Turner & Pearce, 1990) in a way which suggests that he sees himself as being a considerable distance from (to use the Turner/Pearce term) conventional economics. Certainly the Pearce Report is informed by matters of ecology, systems theory and so on, and thus does go beyond the confines of strict economics. However, to the (it would seem) relatively untutored eye a number of these differences do not look very dramatic and when compared with work by, for example, Daly or even Turner (see below) still look l’k I e neo-classical economics even if the differences to other economists might appear like shifts of paradigm. With this said, the Pearce Report sits in a middle ground of environmental economists-where traditional economics recognises problems but sees them as amenable to largely traditional solutions (see, for example, Fisher & Peterson, 1976; Devarajan & Fisher, 1981). Traditional economic growth is (often implicitly) believed desirable, if not essential (see, for example, Lowe & Lewis, 1980; but see Mishan, 1969) and it is in this ground that, for example, the ‘Brundtland Report’ (UN 1987) took root. It is on this ground that inter-generational equity is much debated (see, for example, Bossel, 1987; Dobbs, 1982), the market-based solution is king (see, for example, Thomas, 1980; Peskin et al., 1981; Bjork, 1980; Baumol & Oates, 1979) and tax solutions are the natural outcome of the reasoning (see, for example, Baumol, 1975; Kneese, 1977; Alexandre et al., 1980). For the bulk of economists, however, Pearce and his ilk are heretical and radical-outside mainstream thinking. Some would refuse to recognise a problem (see, for example, Jones, 1974; Smil, 1987) whilst for others, the environmental issues will bring their own solutions-the markets will sort it all out (see, for example, Simon, 1981; Simon & Kahn, 1985, but also Richardson, 1985; Daly, 1985; Pearce, 1985). I make this point because whilst from a ‘less-economistic’ point of view, Pearce-world looks predictable and safe, it is useful to remember that Pearce has been fighting a battle to retain even this ground for over 20 years and that battle should not be underestimated. The problem, as I see it, lies in the foundations of modern economics which can be argued to be of dubious ontology. The seeds of this were sown by Adam Smith and John Stuart Mill. These two, who gave us (or helped give us) the ‘invisible hand’, ‘rational economic man’, and the utilitarian manifestation of consequentialist reasoning might well not of their ideas-although Jeremy recognise the narrow application Bentham and James Mill might well be altogether happier about the outcome (see Daly, 1980). Smith is best known for his Wealth ofNations published in 1776 and yet his ‘economic man’ can be argued to have been premised on his earlier work, The Theory of Moral Sentiments published in 1759. Smith, it seems, was concerned with the whole man, not just economic

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man, and the ‘self-interest’ is presumed to be set within an enlightened mind and to be governed by moral law. It is not obvious that the great wisdom of Smith can provide the justification and foundation for modern economics (see Coker, 1990). We find similar lacunae in the use of John Stuart Mill’s work. In particular it is probably useful to remember that Mill was a supporter of the stationary state economy (no-growth). Neither was Mill a supporter of man’s total dominance of nature and he recognised the dangers and undesirability of controlled ecosystems, reduced bio-diversity and the disappearance of wilderness. (For more detail, see, for example, Daly, 1980). In general, traditional economics believes itself to be free of such valueladen notions as ‘ethics’ (see, for example, McKee, 1986). In so far as they do arise they are dealt with scientistically within the utilitarian, consequentialist framework. Even from a non-radical perspective (but see Tinker, 1984) This is a dangerous narrowing of the issues. First, the consequences of everything cannot be known--destruction of the ozone layer probably could not have been predicted 50 years ago-therefore consequentialist analysis must be partial. Secondly, in its more brutal manifestations, consequentialism depends only upon the trade-off of financial values, i.e. all consequences have costs and benefits to which financial numbers are attached and the ‘ethical’ decision is that one which generates the largest positive number. We have already touched upon two major problems here-attaching financial numbers to non-market phenomena is very difficult and the problem we find ourselves in arises from the environment only having a number attached when it comes into private ownership. Furthermore, it can not be seriously argued that the prices of resources, etc., reflect some value-free ‘true’ value. Some, or all of income, wealth, information, intelligence, altruism, faith and power are unevenly distributed throughout the world and throughout history thus producing distortions of preferences of one group over another, for one generation over another, for one country over another, and so on (Gray, 1989). Of particular significance is the way in which consequentialist thought has driven out motivist and deontological reasoning (see, for example, Donaldson, 1988; Gray, 1990~) and thus left the environmental issues largely unprotected. These are issues taken up (in different ways) by Turner (1989; forthcoming) and by Daly (1980). Traditional economics does not recognise that there might be some intrinsic ‘rightness’ or ‘wrongness’ in the way man approaches his use of and interaction with the environment (Turner & Pearce, 1990). This need not be a religious concern-there are serious intellectual reasons for considering that any decline in bio-diversity as a result of man’s actions is fundamentally unethical and therefore is ‘wrong’ action-whether or not consequentialism would come to the

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same conclusion. How are the rights of non-human life to be integrated into our values, reasoning and policy decisions? The question is far from trivial, but conventional economic analysis might struggle to supply solutions. The second issue raised by Mill was that of ‘growth’. Mishan (1969) has argued that ‘economic growth is embedded in our psyche’ so much so that we are unable to consider it and discuss it. Certainly the attachment to it makes no rational sense unless one takes Daly’s argument, developed from Ruskin, that ‘politic economics tries to buy off social conflict by abolishing scarcity’. Scarcity shows no sign of being abolished whilst inequality shows every sign of increasing. A central argument between the deep and light greens has been over the question of the desirability and possibility of sustained growth. ‘Sustainable development’ which appears in one of its manifestations in the Pearce Report is an attempt at a compromise. Suffice it for now to point out that there is a significant body of opinion that believes that Western (traditionally measured) economic growth cannot be sustained without either (a) continued exploitation of the Third World and/or (b) increasing the likelihood of ecological disaster within a fairly short space of time. Although Pearce, in other work (see, for example, Pearce, 1985), has recognised the value of setting environmental analysis in a systems framework such influence is much muted in Blueprintfor a Green Economy. The intellectual history of environmentalism has been dominated by systems thinking. From its earliest start (see, for example, Carson, 1962; Ward, 1966; and especially Boulding, 1966) through its take-off period (see, for example, Goldsmith, 1972; Commoner, 1972; Ward & Dubos, 1972; Meadows et al., 1972; Schumacher, 1973; Dickson, 1974) through to more recent analyses (see, for example, Ward, 1979; Daly, 1980; Boulding, 1982; UN, 1987) writers have explicitly or implicitly adopted a broad systems frame of reference. The contribution of systems theory lies, first, in its conception of planet Earth as a virtually closed system and, second, in its recognition of the considerable interaction and interdependence of all life in that closed system. This leads to a recognition that if the planet is no longer able, for example, to sustain life then life ceases. There are no other alternatives. Economics, whilst able to recognise specific scarcity, has been unable to internalise this recognition of general and total scarcity (see, for example, Brown, 1981; Zaikov, 1985; Daly, 1980). It also leads us to recognise that mankind’s impact on the ecosphere is likely to be profound and largely unknowable in the short term and so raises crucial questions about the point at which bio-diversity, habitat destruction, warming, pollution, destruction of forest, algal bloom etc., become critical. Again, a systems conception reminds us that the answer is unknowable until it is too late.

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From whatever point of view one approaches these issues, it becomes very sensible indeed to stop messing with the planet. Such an approach may lack the precision and apparent rigour of neoclassical economics but there is no reason to suspect that its conclusions can be ignored. A brief introduction to environmental systems theory will show a very different form of analysis that, naturally, produces very different questions with very different answers. Economics can only produce one sort of answer and systems theory in general has shown us that (in Ackoff’s famous dictum) we must stop behaving as though the universe were divided up in the same way as are university departments. The major intellectual significance of the Pearce Report probably lies in its implicit recognition of these issues. Turner (1987, 1989, for example) has long argued that we must reconstruct our notion of capital. The Pearce Report recognises that the man-made/natural capital distinction is essential but it does not address the question of non-replaceable capital in sufficient detail. I suppose an essential selling-point of traditional economics is its ability to work with and through the price mechanism thus allowing all things to be reduced to a common medium-money. Thus, unless the price mechanism distinguishes between different types of things, conventional economics will not either.’ Human capital, within traditional economics, usually appears to be infinitely substitutable and virtually infinitely renewable. Natural capital tends to be considered similarly. This is precisely what is NOT the case. Ecosystems, habitats, biodiversity and many basic resources (e.g. the ozone layer) are NOT renewable or substitutable. Turner introduces the notion ofcritical capital and other natural capital to try and deal with this. Some natural resources have a higher degree of substitution-fossil fuels with solar panels, for example-whilst there are many others that mankind should just leave alone altogether regardless of what some (largely) arbitrary price mechanism has to say on the matter. By facing up to the question of ‘critical capital’ we start to face up to the central tensions between our traditional expectations of economics and the critical matters of environmentalism-there is always the chance that most of the ecosystem is ‘critical capital’ and the considerable amount of it which mankind has destroyed already may mean that many of our preferred options are no longer available to us. World plc (to use a crass but popular idiom of the UK late 198Os), may well already be bankrupt. IMPLICATIONS

FOR ACCOUNTING

The challenges to accounting practice and thought which are raised by the environmental crisis are considerable. Apart from the rather brutal observation that extinction of the species will severely dent the demand

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for accounting services, accounting is implicated in the ecological impact of investment policy, waste management, tax planning, short-termism, energy conservation, mergers and acquisitions, etc. These implications will raise challenges for every aspect of accounting and extensive thought and research into these issues is urgently required. At a more immediate level, the implications of the Pearce Report for accounting might be largely captured in three categories: the foundations of economic thinking; the development of accounting and information systems; and the methods of asset accounting. The first, and perhaps the most fundamental, of these implications for accounting lies in the light cast by environmental issues onto the prices and property rights limitations of modern economics. That is, only those things to which property rights attach can then be transacted to produce price. Only price is recognised by most economists. So it is with accountants. The basis of our accounting is book-keeping which is driven only by priced transactions. Thus all non-priced factors, e.g. the global commons, and all those aspects of things over which property rights are held but not reflected in price, e.g. habitats, are thus definitionally excluded from our accountants’ world. Thus, to the extent that our pictures of the world are influential in motivating action we must motivate actions which will be environmentally benign only by the most unlikely coincidence. It is much more likely that traditional accounting has, in articulating the world of economics, encouraged the increase in man-made capital at the unknown and unconsidered destruction of natural capital. If this observation is correct then we urgently need to reconsider whether it is possible to redefine the basis of accounting or, at a minimum, develop new accountings that address the issues. One way of approaching this is through the development of new accounting and information systems. Whilst there have been experiments in developing internal organisational accounting systems for the environment (see, for example, Ullmann, 1976; Dierkes & Preston, 1977), attempts at energy accounting (see, for example, Sellen, 1980; Dick-Larkham & Stonestreet, 1977; Edwards, 1978; Hewgill, 1977) and numerous proposals for external reporting on the environment (see, for example, Gray, Owen & Maunders, 1986; 1987) there is a more substantial need for the so-called ‘environmental audits’-including information systems on legal, ethical and policy compliance and on energy and waste usage--as well as new ways of integrating environmental criteria into investment and strategic decisions in the organisation (see, for example, Gray, 1990~; 1990b). In so far as accounting influences decisions through the information it provides, development of information systems to account for the environment will change the decisions made. Only in this way may the ‘voluntary’ ambitions of the Pearce Report and the UK government start to be realised.

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If the Pearce Report is to become a part of practice, in addition to the new information systems and audits, there will need to be a re-examination of our capital maintenance and income concepts as well as a substantive redefinition of ‘assets’-in part as a re-definition of ownership, see Daly (1980). This redefinition, along with a new related accounting, will have to recognise the distinction between man-made and natural capital and, if Turner’s view is to count, critical capital also. Somehow, accounting must find a way of recording and communicating these different categories of assets in order that these capitals can be maintained. The implication in the Pearce Report is that any of our current measures of profit definitionally exclude the transfers from critical and natural capital to manmade capital. Long-term profit (under any of our current ideas, based as they are upon price and economic thinking) must, in any realistic sense, therefore be grossly overstated. Furthermore, we, the score-keepers, cannot really expect people to maintain things which do not exist until we tell them they exist (Hines, 1988). In scoring and reporting only pricedtransactions, accounting is fully implicated in the environmental destruction all around us. However, unless systemic change is just around the corner (and that seems unlikely), a radical reconstruction of accounting may be one of the very few mechanisms for getting to the heart of the environmental issues and doing something about them. Accounting may be even more important than we have learnt to think of it! CONCLUSIONS It has become something of a truism that the mental framework one employs determines the questions one asks (Tinker et al., 1982). The questions one asks inevitably influence the answers one finds. Furthermore, the faith one holds will greatly influence the weight one attaches to evidence, the evidence one will acknowledge and, even, what one will consider to be evidence. It is not possible (either epistemologically or evidentially) to prove, within the positivistic functional world of neoclassical economics, any of the serious assertions about environmental issues. Only when the species is extinct will we have successfully proved that the environmentalists were right. Furthermore, within many Western economies, there would appear to be a belief that any challenge to totems of ‘growth’, ‘enterprise’, ‘change ’ , ‘business’, ‘investors’, and so, are somehow improper. This means that one is severely bounded in the range of politically acceptable things one can say about environmental issues and, consequentially, much of the environmental systems analysis starts from and produces ideologically improper ideas. The Pearce Report has a considerable amount to recommend it-having gone as far as it is currently possible to go and still not completely alienate those of the traditional

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economic faith and/or seeking to provide environmental solutions acceptable to the present government (or most previous UK governments come to that). For those with differing faiths and/or with differing objectives one can only be counselled to beware of economics in green clothing. Neo-classical economic thinking and analysis-ably abetted by traditional accounting-got us into the mess. Both economics and accounting will need to be substantitively reconstructed if they are to help get us out of it. NOTES 1. Many of the themes in this essay are taken from Gray (1990b) from which more detail may be obtained. I gratefully acknowledge the considerable help given to me by Kerry Turner who, although he may very well wish to disclaim all association with the essay, has greatly assisted my journeys into the minefields of economics and environmental economics. 2. ‘Social Accounting’ comes under many names such as corporate social reporting or social responsibility accounting. The term is used in this paper as a generic term to cover the points which follow this note. (See also, Parker, 1986). The only issue to emphasise is that this use excludes the economists’ use of the term as part of national income accounting. 3. It is therefore probably more apposite to talk about financial accounting being a (perhaps artificially?) constrained subset of all possible accountings, i.e. of social accounting whose only limitation is the imagination of the author. This would be at variance with the usual way of considering social accounting to be an expanrion, or development, of financial accounting. 4. The only probable exception to this is the experiments in accounting to and for employees. 5. With the exception, that is, of the statistical analyses involving pollution data-with e.g. share prices, profit figures etc. It may be possible to assert that this appears to owe more to the availability of the pollution data than to any intrinsic interest or justification for a new type of accounting. For a review see Owen et al. (1987); Mathews (1987) and for a side-swipe see Cooper (1988). 6. It might be possible to typify the tension between traditional economic and environmentalist approaches to environmental crisis in relation to prices and the price mechanism. The traditional economist will consider that the prices currently generated in the market place are wrong-that they fail to take in the full costs of the product or service to which they relate. To an environmentalist, it is the process by which the price is produced that is flawed, i.e. the system of property rights and exchange by which a price is generated that is so alien to harmonious existence. It is the system of property rights and prices which focuses attention on only those things which are priced (hence the tragedy of the commons) and on only certain aspects of the thing owned (hence private resource/bio-diversity depletion). It is that set of property rights that we account for.

REFERENCES Alexandre, A., Barde, J. & Pearce, D. W. (1980). ‘The practical determination of a charge for noise pollution’, joirrnal of Transport Economics and Pooficy, May, pp. 205-220.

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