In the days when Britannia ruled the waves and Britain was the workshop of the world, the engineer was the unacknowledged backbone of all that mighty edifice, sustaining it for the administrators and the traders. From Sao Paulo in Brazil to the Punjab in India railways were constructed, cotton mills and steel mills built, shipyards and pumping stations, oil fields and factories established. All designed and made by the engineers with a sense they were building structures to endure. The world was hungry for their products and the need was never in doubt.

It was only after the massive upheaval and destruction of the first world war that doubts began to be raised about the world order and in such cases it is always the far sighted who see that change is imminent although it is harder to see what those changes will be. The first world war did not itself bring about subsequent global changes but it certainly created their inevitability. These can be said to have been initiated by the USA during the second world war.

Making war equipment for its allies Britain and the Soviet Union, speed was the essence and what was the point of making armaments to last; they were meant to destroy and, in the logic of things, to be destroyed. Therefore new manufacturing techniques were developed to make warships, tanks, armoured cars, guns and all the gamut of tools for war. ┬áRe-tooling the war machine for civilian usage post world war two and the logic of manufacturing things to last as the British had done, was questioned. ‘You’ll never sell a second one if the first one lasts forever,’ was the businessman’s view, and this was the beginning of ‘built-in obsolescence,’ – the trimming of quality to ensure that things made for domestic consumption, and sometimes capital goods, did not last forever.

But how can you ask an engineer to betray his belief in the quality of his product? It was tried but went against the grain of his professionalism, so the engineers were eased out of the decision making posts in industry and accountants brought in.

Everything manufactured is made from design drawings and these, by the nature of things, have to have specification tolerances showing maximum and minimum limitations. Quality Control checks against these. The engineer would always try for the upper limit to aim for a more perfect product. The accountant, seeing cost as paramount, would try to see that the lower limit was the norm and still satisfy Quality Control. Other measures that the engineer would shun were encouraged by the accountant; prolonging the life of machine tools, re-working rejected parts, automating hand crafted items and many more cost saving and quality reducing measures.

This was the dawn of mass production, mass consumption and the lowering of quality levels and was shepherded through by the accountants. The increasing accumulation of capital achieved by mass production was furthered by the growing wealth of oil production and, as there is only so much profit to be made from mass producing goods by the rich developed countries unless they were to make heavy investments and pay trained workers well, it was found to be more profitable making goods in less developed countries with cheaper labour costs.

Investment banks found that there were bigger and quicker returns in putting their capital into world-wide growing markets, entering and leaving these, even manipulating markets or creating false ones. This was found to be so profitable that non-investment banks convinced the political class to remove the restrictions on their trading in global investments which had been prohibited since the 1930’s crash.

It was here that the accountants’ lost their way and were overwhelmed by the pressures on them to ease their strict code of accountability. Caution was replaced with risk acceptance; balance sheet standards were diluted to allow off-balance sheet concealment and excessive leverage, non-regulated or only partially regulated organisations such as hedge funds, private equity funds, derivative trading were allowed to spring up without being required to adhere to mainstream standards. Many organisations acted with inside information or fraudulent prospectuses and by degrees the accountancy profession became either complicit with what was going on or was simply by-passed as an irrelevancy.

When, post World War 2, the bookkeepers started to call themselves ‘accountants’ and elbowed the engineers aside, it took little time for the new Capitalists unleashed by Margaret Thatcher and Ronald Reagan to force through the dilution of the regulatory safeguards that had protected the economy from melt-down since the Great Crash of the 1930’s. There had, of course, been numerous recessions, but containable ones. But with the accountants caving in to the ever increasing pressure from laissez-faire neo-cons – as they were now known as – to strip away more and more of these safeguards, the compliant Accountancy Profession ensured that the Crash of 2008 was virtually inevitable.

The engineers had rarely bowed to the Capitalists’ pressure in the past; the pride in their profession was too engrained; but the accountants were easier to suborn and it is clear they will have to be shown through the same door they had ushered through the engineers over half a century ago.

The crash of 2008 sealed the accountants’ fate. Who can trust a watchdog that failed to bark? If the engineers epitomised the 19th century and the accountants the 20th century, the question now is – which group or profession will next be trusted to steer the broken western economies to health again and what is needed for this to happen? If the neo-liberal Capitalists are allowed to choose or even participate in choosing then the cycle of boom and bust will continue.

26th June 2012