Intangible or Invisible? : On the Compossibility of the Human Capital Asset

Hesketh, Anthony John (2017) Intangible or Invisible? : On the Compossibility of the Human Capital Asset. In: Third international conference on cultural political economy conference 2017, 2017-09-07 - 2017-09-08, Lancaster University.

Abstract

Companies comprising the UK’s FTSE 100 collectively spent £200bn on their people in 2013 (Hesketh, 2014). It is the first time this figure has been reported. Were analysts interested in calculating the same number for companies headquartered outside the European Union they would be disappointed: the expenditure on people by companies in the rest of the world is included in the accounting construct known as the cost of goods sold or COGS. Drawing on over 100 interviews over a four year period (2013-17) with senior financial executives, industry regulators and senior figures in leading audit firms, this paper examines the discursive and calculative imaginaries underpinning the symbolic violence perpetrated by the accounting industry in ensuring the most important factor of production - labour - is excluded from the income statement, let alone the balance sheet. It discusses how this not only precludes labour from forming accurate estimates as to the economy of experience on offer in the globe’s leading corporations but also highlights important implications for the continuing problems relating to the secular stagnation of low productivity plaguing capitalism in its mature form. Adopting a cultural political economy perspective enables us to examine the discursive practices dominating the regulation of accounting practices in modern capitalism. The starting point is Baruch Lev’s recent The End of Accounting? in which Lev calculates 80 percent of the value of today’s companies comprises intangible value, and how forty years ago, the reverse was true: the assets captured on the balance sheet could account for 80 per cent of a company’s value. What are the factors driving this turnaround? Moreover, if accountants can only audit one dollar in every five, does this not make the accounting industry itself immaterial? If labour is so important, why is it described as ‘water in the balance sheet,’ hence refuted by leading accounting academics as a contender for asset status (Penman, 2009)? Why then has the accounting industry recently reviewed its definition of what constitutes an asset and why has the workforce been included as an example (IASB, 2013)?