A BANGLADESHI SOAP OPERA: PRIVATISATION, ACCOUNTING, CONSENT

AND CONTROL

Shahzad Uddin
and
Trevor Hopper
Manchester School of Accounting and Finance
University of Manchester

1.0 INTRODUCTION
Policy prescriptions within development economics, influenced by neo-classical economics,
assume an infusion of private property rights into failing public enterprises will increase their
efficiency via better controls, including accounting ones. This research, based on an intensive
case study of a recently privatised Bangladeshi corporation, argues that such beliefs can be
simplistic and erroneous: privatisation does not necessarily transform controls to the public
good.
Participant observation studies of accounting remain small: those constructed bottom-up from
the perspective of labour are even fewer. This study addresses this lacunae through labour
process theory, especially the contributions of Burawoy, with respect to the following research
questions:
1.

How have control systems at the shopfloor level changed following privatisation? (the
empirical question)

2.

Are these practices and changes consistent with the control and consent theory of
Burawoy and how do they relate to the political economy of accounting more
generally? (the theoretical question)

3.

What are the ramifications of these changes upon organisational performance, its
participants, public policy and economic development issues more generally? (the
policy questions)

2.0 THE POLITICS OF THE BANGLADESHI ECONOMY AND PRIVATISATION

Bangladesh is a largely homogenous society in terms of culture, language, race and religion.
With nearly 120 million people, it has the world's ninth largest population with the highest
density in the world among non-city states. Despite reductions to poverty almost half the
population still below the poverty line partly because Bangladesh's rapid population growth
outstrips gains from economic growth.
Bangladesh (previously East Pakistan) was liberated on 16 December 1971 and the new
government led by Sheikh Mujibur Rahman was committed to socialism - including the

nationalisation of heavy industries. Whatever, significant readjustment to the industrial sector

was essential as fleeing West Pakistanis abandoned their substantial share of industrial and
commercial enterprises leaving a leadership and management vacuum. The Awami League
Government responded by nationalising all abandoned property and hundreds of industrial and
commercial enterprises. Unfortunately the enabling legislation was imprecise, disorganized and
confusing (Sobhan and Ahmad, 1980) and it was functionally untenable since the Ministry of
Industries did not have the personnel to discharge their responsibilities on the resulting boards.
As a consequence of these events, the running of enterprises came to rest with a fluctuating
coalition of union leaders, managers and nominated outsiders with deleterious effects. In some
enterprises inventories of finished goods and raw materials were sold to pay the wages of the
staff and workers and/or to line the pockets of the board members (Sobhan and Ahmad,
1980).
The Bangladesh government faced acute problems as the nationalized industries had huge
liabilities along with the loss or damage to physical facilities and personnel; the destruction of
power lines, bridges and road culverts; and damage of port facilities and rolling stock. The
new socialist government adopted policies aimed at agricultural self sufficiency, import
substitution and industrialization through state intervention and central planning. This
interventionist approach to development resulted in serious macroeconomic difficulties. Owing
to the cost of capital, subsidies, and huge investments in the unprofitable public sector, the
public sector budget deficit rose. Public enterprises were responsible for 25% of gross
domestic capital formation and their inefficiency had a direct impact on the allocation and
quality of public investment (World Bank, 1993). Their losses hit 30% of annual project aid
disbursements thereby diverting resources from other high priority activities. The poor
performance of nationalised industries in Bangladesh strengthened the hands of their critics.
Ghafur (1976) argued that the poor performance of the public sector was a result of poor
government decisions, managerial failure, political interference and misconceived price policy.
As a consequence of socio-political factors it was not easy to maintain proper control systems
in public sector enterprises which were officially structured through three tiers: the Ministry,
the Corporation Board, and Enterprise Management. Individual units have little power as a
World Bank report indicated, "Though autonomous in theory, public enterprises are still de
facto under government control and government interference is the rule rather than the
exception." (reported in "The Bangladesh Observer", 24 March, 1992). Public sector
enterprises are principally controlled by their respective Ministries but the financial authority is
the Ministry of Finance. This dual authority can impede proper financing decisions and control
systems. Theoretically Parliament is the highest tier of control but performance reports are
rarely presented to it. Even if a report is submitted politicians do not take action. The weak
controls are exacerbated by excessive bureaucracy. As public enterprises tend to be in chronic
deficit and Bangladesh Annual Development plans are dependent on international aid (World
Bank, 1996a) international agencies such as the World Bank and the IMF are major players
and an uncomfortable source of pressure over public enterprises. Public enterprise labour
unions in Bangladesh are organised on political lines being affiliated to parties such as the
Awami league and the Bangladesh Nationalist Party (BNP). They follow the orders of their
parent: and in turn politicians frequently intervene into the management of public enterprises:
even labour appointments and promotions are politicized (Murshed, 1989).
In 1975 a military coup overthrew the Sheikh Mujib government killing Mujib. Three months
later General Ziaur Rahman came to power through another coup assuming full power in

1977. His government initiated liberal economic policies: some Bengali-owned enterprises
were returned to their former owners and the scope of state intervention was limited.
However, these reforms were organised poorly and lacked policy orientation. In 1982 General
Ershad overthrew the BNP Government and his administration reshaped the post 1973
reforms. In 1982 a turning point in the post-independence economy of Bangladesh was
produced through a new economic policy encouraging the private sector and readjusting the
public sector. In 1987, many public sector enterprises were put into a joint stock holding
company whereby all industrial units within corporations were treated as subsidiaries. Under
the partial privatisation policy, termed the 51-49 plan by government (Humphrey, 1990),
subsidiary companies tried to sell shares with 51% of total shares remaining under government
control.
After long and turbulent mass movements BNP were elected to power in 1991 but they
pursued privatisation consistent with previous industrial policies. In 1991 they liberalised
foreign trade, including considerable relaxation of exchange controls and restructured import
tariffs. Following the 1996 elections, the Awami League formed the government but they too
remained committed to privatisation policies (The Daily Star, 14 June, 1996) believing that
public enterprises in Bangladesh are inefficient and under-utilized (World Bank report, 1993,
1995, 1996b).
The World Bank were influential in shaping opinion: their 1995 report justified privatisation
thus: fiscal considerations; impediments to improving efficiency under public ownership; low
productivity, high costs and poor services of state owned enterprises (SOE's); and superior
private performance. As the report admitted, some of these reasons were not empirically
supported. By 1995, 125 large and medium industries had been privatised leaving 225 SOE's
still in the public sector. However, privatisation efforts had not run smoothly as is revealed in
World Bank reports noting delays (World Bank, 1995). The World Bank responded with new
privatisation ideas in 1995, arguing for an accelerated program of privatisation, the sale of
larger state owned enterprises, private participation in infrastructure, public enterprise reform,
rationalising labour whilst developing a safety net for displaced labour, reforming key aspects
of the enabling environment, proper regulatory structures, a better approach to preparations
for sale, a wider range of financing options, mechanisms such as the Poverty Alleviation Trust
to allow widespread ownership, and strengthened administrative arrangements (World Bank,
1995).
All these recommendations make one central assumption, namely that ownership changes will
bring superior management controls, increased efficiency and fiscal benefits. The
recommendations fly in the face of reports that previous policies were unsuccessful (World
Bank Reports, 1993, 1994, 1995, 1996a; 1996b; 1996c). Studies of the performance of postprivatisation firms in Bangladesh have been inconclusive on the question of relative efficiency
(Lorch, 1990-from World Bank, 1995). Sobhan (1991) evaluated post-privatisation
performance by a cross-sectional comparison of privatised and public sector reporting that:
The Board of Investments (BOI) has 497 disinvested enterprises (small, medium and
large) registered with it. Of these units the BOI managed early in 1991 to survey for
the first time 290 or 58% of the registered units. Of these surveyed units only 137 or
47% were found to be in operation. 75 or 26% of the units had ceased production.
Another 78 or 27% of the disinvested units had been abandoned altogether and were
using the premises for other purposes than for running an industry. Whilst this is not

reported the impression of the BOI field surveys was that of the 137 units in operation
many were not in good shape. (p.148).
Monopoly power in several industries, the immobility of labour due to huge unemployment
problems, the uneven distribution of income, and low saving rates combine to frustrate such
reforms. Moreover, as Alamgir (1978) pointed out, public sector enterprises operated in
important socio-economic sectors of infrastructure and basic manufacturing providing
essential trade and management within previously abandoned industrial and commercial units.
3.0 THE RELATION OF ACCOUNTING CONTROLS TO OWNERSHIP AND
DEVELOPMENT
Whilst privatisation policies in developing countries are framed partly by public sector
inefficiencies they are also embedded in ideological pressures emanating from developed
countries through agencies such as the IMF and the World Bank. Internal politics and external
pressures become interlinked leading to privatisation policies in developing countries (Adam et
al., 1992; Hemming and Mansoor, 1988; Cook, 1986; Ramanadhan, 1988). Some
governments based industrial policies on ideologies from developed countries, especially
Thatcherism and Reaganism, to legitimise non-democratic actions. For example, the Ershad
Government in Bangladesh formulated industrial restructuring policies in the face of huge
political outcry against its rule. Given that donor agencies such as the World Bank and the
IMF are prime sources of external aid, and their tendency to offer loan facilities conditional
upon privatisation (whether public enterprises are loss-making or not), their policies are often
adopted in an attempt to shore up domestic support by vulnerable governments. The
development literature informing aid agencies policies advances privatisation on the basis of
two sets of efficiency gains: productive efficiency and allocative efficiency. Productive
efficiency is rationalised by property rights and agency theory (see Adam et al., 1992).
Property right theory suggests that managers have a direct interest in cost minimisation if
rewards are directly related to economic performance (Furubotn and Pejovich, 1972). It is
argued that private owners induce more efficient managers by implementing controls and
incentives that maximise profits and increase the value of property rights (Hanke, 1986)
whereas under public ownership, where net benefits do not accrue to individuals, nobody has
an incentive to do so. Thus in the public sector there is a missing link between ownership and
management control. In the private sector owners must produce efficient management control
and restructure by buying or selling assets: failure to do so will lead to market failure or takeover. However, because public assets are not individually owned they lose transferability
character and are thus immune from market disciplines (Hanke, 1986 p-16). Many researchers
(Commander and Killick, 1988; Adam et al., 1992) have taken issue with claims that the
creation of property rights are a precondition for effective control over management. Adam et
al. (1992) argue that depictions of the public sector as a homogeneous social welfare
maximiser and the private sector as a pure profit maximiser are naive or analytical
simplifications; in reality, neither sector can conform to these types. Carrying such theoretical
assumptions to the practical context of privatisation obscures rather than clarifies the links
between ownership and efficiency (Adam et al., 1992). Such theorisation may be relevant for
classical small firms but in the modern large limited liability corporation the property rights of
owners are more diluted, leaving managers with considerable discretionary power to further
their own interests (Commander and Killick, 1988; Adam et al., 1992).

The basic tenet of agency theory is that agents will act in self-interested ways therefore the
principal must structure their incentives to make them act for him. However, relationships in
public enterprises are more complex than envisaged in agency theory and almost certainly
beyond its scope to model them. The first link in the public sector is between the electorate as
principals, and the legislature and executives of enterprise as agents. The public sector
conventionally consists of many complex chains and agents are often responsible to more than
one principal. The links between efforts, efficiency and outputs (profitability) are frequently
very weak. Lastly, performance-related-pay systems, which are central to agency theory, are
often difficult to derive in public sector organisations (Rees, 1985). The principal-agent
relationship in the private sector is relatively simple: owners or shareholders have access to
information to monitor management and sanction its actions accordingly (Adam et al, 1992).
In an efficient capital market, share prices accurately reflect performance so management
inefficiency results in share values lower than the potential profit maximisation level. Failure to
perform renders a company liable to hostile take-over bids the threat of which creates a
self-regulating incentive scheme (see Jensen and Meckling, 1976). However, this makes two
major assumptions of dubious empirical validity. The first is access to complete information:
information processing is highly complex and conflicts within organizations can create
transmission barriers. The other assumption of perfectly competitive markets is unlikely to
occur in developing countries where imperfect markets and unorganized capital markets tend
to prevail.
Allocative efficiency stresses the macro-economic benefits of privatisation claiming that the
sale of public assets generates capital revenue leading to reduced net budgetary transfers
freeing resources for private sector investment. Again, this assumes efficient capital and
perfect trading markets which rarely exist in developing countries (Commander and Killick,
1988; Adam et al., 1992; Cook and Kirkpatrick, 1995).
Research results on the performance of privatised industries in other developing countries are
as inconclusive as those done in Bangladesh. Some studies report that public sector enterprises
in developing countries fail to generate significant contributions to GDP and they are weaker,
in terms of profitability, than the private sector (e.g. World Bank, 1981; 1983; IMF, 1986;
Ayub and Hegstad, 1986; Killick, 1983; Kim, 1981; Funkhouser and McAvoy, 1976). Others
argue that public sector performance cannot be evaluated by essentially private sector criteria
because governments have pursued non-commercial objectives in the public sector (Prager,
1992; Cook and Kirkpatrick, 1988; 1995). Some researchers even claim that public enterprises
are more or no less efficient than those run by private interests (Millward, 1982; Weiss, 1995,
Wortzel and Wortzel, 1989).
The claims that privatisation will induce superior organisational control systems (Vickers and
Yarrow, 1990) is not conclusively supported in development research (Cook and Kirkpatrick,
1995). Potts (1995) found that two states in Tanzania improved effective and innovative
management after denationalisation but in many others their effectiveness declined. Macroeconomic studies fail to demonstrate how internal organisation responds to ownership
changes. Despite desired outcomes being contingent upon management control practices in
their underlying theories of privatisation, development economists have little theoretical or
practical knowledge of such matters. The organisation is seen as a black box with outcomes
being tweaked by structural policy changes such as privatisation. The nearest development
economists have come to detailed study of privatisation and organisational changes involving
accounting, planning and control is Karatas's (1995) comparative evaluation of enterprise

performance during pre-privatisation and post-privatisation periods drawing on financial

performance measures such as turnover, profit margins and productivity. He concluded that it
was difficult to demonstrate that privatisation had an impact on overall performance. The
empirical evidence that ownership changes affect performance is ambiguous and inconclusive.
Fortunately, some accounting researchers, more au fait with managerial matters than most
economists, have attempted to relate the shape of controls to ownership (see Jones, 1985;
Espeland and Hirsch, 1990; Jones, 1992; Wright et al., 1993; Ogden, 1993; Wickramasinghe
1996. Espeland and Hirsch (1990) studied the role of accounting in financial transformations
arguing that it played an important role in justifying the change of ownership. Wright et al.
(1993) found a privatisation through management buy-out had several positive impacts
including the introduction of more appropriate financial control systems, employment
contracts and negotiating machinery, and the release of investment constraints on subsidiaries.
Ogden's work (1993, 1994) is the most comprehensive accounting study of privatisation and
control. Through a Foucauldian analysis of economic governance he shows how customers
and markets were constructed by newly privatised UK Water companies. Management
accounting played a central role in translating political objectives into an apparently
organisational performance matter. Only Wickramasinghe studied accounting and privatisation
in a developing country (Sri Lanka).
4.O BURAWOY: CONTROL AND CONSENT
Given the importance of political and institutional factors on privatisation in under-developed
countries a political economy approach was deemed to be necessary for the research (Burchell
et al., 1980; Neimark and Tinker, 1986; Hopper et al., 1986, 1987; Hopwood and Miller,
1994). Previous research on controls in Bangladeshi organisations had traced the importance
of shop-floor conflict and the intervention of trade unions and political parties upon
management accounting practices (Hoque and Hopper, 1994, 1997) but its theorisation
required development. Given this preliminary work it was felt that the role of accounting
needed to be understood in the context of conflict and contradictions of labour processes
(Hopper et al., 1987, 1986; Armstrong, 1991).
Burawoy's work in a labour process tradition was chosen as his 1979 study focused on
shopfloor consent as well as conflict, trade union behaviour and managerial strategies of
control: all of which were known to be key issues in Bangladesh. Also, it was based on
research methods deemed appropriate to this study - participant observation - which gave
replication and comparison opportunities. In addition, Burawoy's later (1985) work relates
processes of control to a macro socio-economic analysis of states and markets cross-nationally
including developing countries1. As this study sought to extend its analysis beyond intraorganisational processes into external effects of institutions and markets, Burawoy's later work
provided an attractive framework for doing so. Unfortunately, like so much industrial
sociology within a labour process tradition it has been ignored by accounting researchers who,
insofar that they address sociology, appear more attracted by discourse and rhetoric rather
than the analysis of action. In short, there appears to be more interest in talk than behaviour.
1

The relation of our empirical findings to broader theorisations involving

capitalistic development, organisations and the role of states is not presented in this
paper which focuses on the case study results and Burawoy's 1979 theorisation of the
manufacture of consent.

Neglect of the subject is a major criticism of labour process theory (Knights, 1990; Aronowitz,
1978; Knights and Collinson, 1985; Elgar, 1979; Cressey and MacInnes, 1980; Littler and
Salaman, 1982) though few of the critiques offer a comprehensive alternative theorisation.
Despite Marx's insistence that `structural contradictions would result in the overthrow of
private property only once the proletariat became constituted as a class-for-itself (Knights,
1990, p.303), few labour process theorists have examined the constitution of subjectivity. For
example, Braverman (1974) quite consciously viewed subjects as determined by the objective
class structure leaving the examination of subjectivity to others. Burawoy's work is important
because incorporates subjective dimensions of class in an attempt to address the economistic
and deterministic deficiencies of labour process analyses its basic premise is that capital needs
not only to coerce workers but must also secure their cooperation. Burawoy s observations in
Allied revealed that workers were not involved in resistance that questioned basic production
relations because they were diverted into petty economic struggles and games operating within
parameters set by management.
In contrast to the more Foucauldian approaches of his critics (Knights, 1990; Sturdy, 1992) whose theorisation of power and discourse is markedly different, Burawoy (1979) did not find
any saturation of workers consciousness by discourses and practices in his ethnographical
study in Allied. Instead, Burawoy (1979, 1984, 1985) saw work contexts within three
inseparable dimensions: economic (production of things), political (production of social
relations), and ideological (production of an experience of those relations) (Burawoy, 1985, p25). Given that one of the major empirical papers on the role of accounting within shopfloor
control (Knights and Collinson, 1987) is so firmly rooted in a Foucauldian tradition
emphasising factors such as masculinity and discourse, in sharp contradistinction to the
findings of Burawoy, this research provided an opportunity to test the claims of both.
Burawoy s concern is to explain how capitalism has continuously secured increasing volumes
of surplus value whilst obscuring the exploitative character of its control over labour
processes. Burawoy reveals how the 'manufacture of consent from shopfloor workers occurs
through the interplay of internal labour markets, the internal state and the games workers are
induced to play. Workers develop informal responses to systems created by managers directed
at relieving boredom and achieving production targets. Their participation in game-playing has
the consequence of generating consent to the rules, which define the conditions of choice and
the limits of managerial discretion (Burawoy, 1979, p. 199). Thus consent or self-discipline is
produced not from ideological inculcation or socialisation but, paradoxically, through
workplace participation (Sturdy, 1992, p.117).
Figure One shows the basic elements of Burawoy's theory of control and consent based on the
interactions of production politics which include; changes in internal labour markets, the
construction of games and the internal state. These are extended to include accounting
information systems in the belief that they are an integral and related feature neglected by
work in this tradition.

Figure One: The Model

4.1 Gaming Behaviour

Burawoy's identification of gaming behaviour to subjective elements of labour was not new to
the labour process literature (see for example, Hanri De Man, 1958; Baldamus, 1961;
Roethlisberger and Dickson, 1939; Crozier, 1976). Baldamus in particular identified the
relative satisfactions of shopfloor games which reduce the strain of an endless series of
meaningless motions (Whyte, 1955, p.37). Burawoy's contribution was to link this to the
manufacture of consent and management control.
To facilitate shopfloor games and consent (Burawoy, p. 71-2, 1979), management relaxes
workplace rules such as inspection procedures, rate fixing and shopfloor bargaining, and
enhances workers' autonomy, for example, by designing machines so workers can put them
into motion singlehandedly, in the knowledge that changes allowing more manipulations
paradoxically produces greater individual performance and effort, and ultimately helps mask
potential sources of conflict. Reward systems based on individual rather than collective effort
reinforce this as they generate competition and conflict amongst workers. The constitution of
workers as competing and conflicting atoms helps mask any perception of common class
membership with other of agents of production dependent upon selling their labour power for
wages distinct from another class of agents who appropriate their unpaid labour (Burawoy,
p.81, 1979). Labour's participation in capitalist choices within games generates consent to
capitalist rules.
The obscuration of production relations and the generation of consent is an insufficient
explanation of why workers cooperate in the pursuit of profit for Burawoy. Whereas Taylor
and his associates argued that piece rate systems coordinate the interests of management and
worker through a mutual interest in financial gain (Taylor, 1947), Burawoy's experience was
that monetary incentives were an inadequate explanation of cooperation and making out
compared to the organisation of labour processes into a game, the goals of which come to
define shopfloor values and workers' constitution of self (Burawoy, p. 84, 1979).
4.2 Internal Labour Markets
Gaming behaviour is not the only factor which produces shopfloor consent. Burawoy noted
that in Allied workers had to be recruited, retained and provided with incentives and internal
labour markets were integral to this. He detailed six aspects of internal labour markets: "a

differentiated job structure, an institutionalised means of disseminating information about

submitting applications for vacancies, non-arbitrary criteria for selecting employees for
vacancies, a system of training on the job, ways of generating a commitment to the firm that
makes jobs in other firms unattractive, and, finally, maintaining the allegiance of employees
after they have been laid off." (p-98; 1979).
Neoclassical economists examine internal labour markets in terms of organisational efficiency
(Doeringer and Piore, 1971). However, internal labour markets increase individualism and
redistribute conflict thereby obscuring and helping secure surplus value (Doeringer and Piore,
1971; Edwards, 1975; Braverman, 1974; Polanyi, 1944). Burawoy (1979) argues that they
reproduce a basic feature of external labour markets - competitive individualism - alongside an
internal labour market characteristic of systematic objective job mobility. The latter helps
resolve worker/management tensions whilst producing competitive tensions between workers.
Both promote individualism preventing workers from mobilising collectively as a class.
Moreover, internal labour markets help cement workers' commitment to the enterprise by
rewarding seniority. Thus, whilst internal labour markets expand workers' choices with the
prospect of greater reward, it constrains their behaviour within narrower managerial limits.
4.3 The Internal State
Burawoy (1979) saw the internal state (normally commensurate with the trade union) as a set
of institutions that organise, transform, or repress struggles over production relations at the
enterprise level. The union acts as an umpire: protecting the rights of industrial citizens and
overseeing the punishment of offenders against contractual obligations (p-113, Burawoy,
1979; see also Weinstein, 1975; Selznick, 1969; Habermas, 1975).It constrains managerial
prerogatives to fashion and direct labour processes and it endows workers with rights as well
as obligations. Through collective bargaining it dissolves conflict between shopfloor agents of
production by reconstituting it into a framework of negotiation (see also Reuther, 1958) that
generates a common interest between the union and company based on the survival and
growth of the enterprise (Przeworski, 1978). Thus, the mediating role of collective bargaining
agents protects capital-labour relationships and, by negotiating on marginal changes it deflects
attention from more fundamental capitalist relations of ownership and control thereby
rendering subjects the object of consent. Burawoy (1979) saw collective bargaining as another
game - "this time a game about rules and outcomes of other games, such as making out". (p.
115)
The internal state is relatively autonomous (Burawoy, 1979) and makes management and
workers subject to rules and regulations in labour contracts. This autonomy is crucial for the
preservation of production relations so long as it protects management from itself - especially
arbitrary interventions that would undermine consent at the point of production. Companies
maintain the relative autonomy of union leadership and legitimise the union as a bargaining
instrument as long as it coordinates union and management interests through grievance
procedures and collective bargaining to expand profits, which in turn provide material
concessions in the form of employee benefits and wage increases (ibid, p.119). Burawoy notes
the fragility of the internal state. The interests of capital, labour and managers are not easy to
coordinate as each seeks increased control over the labour process and, unlike the global state,
the internal state explicitly recognizes classes thereby potentially renders organisations
vulnerable to class struggle.

4.4 Accounting Information Systems

Burawoy did not explicitly study the role of accounting in controlling labour processes though
others have subsequently done so (Hopper et al. 1986, 1987, Armstrong 1985, 1991, Hopper
and Armstrong, 1991). Also the importance of game spirit to accounting controls has been
noted within traditional and human relations schools of accounting research. Hofstede's (1968)
observations on budgeting behaviour as a game and its consequences for motivation differ
little from those of Burawoy. However, their implications for organisational objectives and
control systems are markedly different. Hofstede, in a Human Relations tradition argues:
....planning and control, essential factors for any organisation, can be seen as a game
by managers. The trick, then, is to get managers to approach the budget as if it were a
game - in a positive and high-spirited way. A well-played budget game means
involvement, co-operation, excitement, and a positive contribution (p.16: illustration
from Macintosh, 1985)
On the other hand, in Burawoy's account, accounting plays no direct role in shopfloor gaming
but rather, according to accounting researchers (Knights and Collinson, 1987), it acts as an
invisible hand justifying and shaping controls such as bonus systems.
The relationship of accounting to internal labour markets is poorly understood. Hopper et al.
(1987) argue that accounting provides an ideological reinforcement of labour relations:
'The manner in which accounting portrays, inter alia, the nature of organisations, their
goals, the employment contract and the necessity of hierarchy are all pertinent to the
analysis of how capitalist relationships are reproduced in the work organisation.' (ibid,
p. 446).
Accounting shapes and is shaped by internal labour markets: individual bonus systems call for
prospective and retrospective calculations of performances; accounting plays a decisive role in
shaping organisational boundaries and rendering individual performance visible.
Previous research noted that industrial relations involving the internal state of was one of the
major management control features within the Bangladeshi public sector (Hoque, 1993; Alam,
1990; Uddin, 1987). As a consequence of political interference, often in cahoots with trade
unions, into the management of public enterprises formal accounting planning and control
systems had come to bear little resemblance to actuality. Not surprisingly, the import of
accounting controls had withered. In Burawoy's terminology, the internal state had failed to
coordinate the interests of workers, management and the state under public ownership. As a
consequence, expanding profit and thereby increasing employee fringe benefits had little role
to play in coordinating worker and corporate interests.
It is reasonable to surmise that under private ownership this would be reversed. Profit would
become the major organisational goal; accounting data and controls would become central in
this; and the internal state would revert to coordinating owners' and employees' material
interests. Accounting has a significant role to play in such a reactivated internal state. For
example, it can make visible the scope for material concessions such as employee benefits and
wage increases which, as argued previously, individualise workers and give an impression of
worker rights and responsibilities within the organisation. On the other hand, the internal state

10

if it uses accounting calculations and logic can, perhaps unwittingly, justify managerial
practices that obscure capitalist relations of production.
4.5 Control Practices
The Burawoy model perceives control practices as the interaction of the control factors
described above, the configuration of which may lead to control strategies such as coercion or
consent. For example, management uses coercion or direct control strategies such as hiring
and firing, in the absence of strong worker resistance and/or weak state protection. On the
other hand when the latter are present, management may emphasise consent through changes
to internal labour markets and the promotion of gaming and the internal state (see also, Littler
and Salaman, 1982; Thompson, 1990).
Armstrong (1996) suggests that the use of budgetary controls in large UK companies is
intimately connected to issues of labour control. They are used most when management have
the freedom to act on the information, normally when the power of workforces are weakest.
Put crudely, they may be most prevalent under more coercive strategies of control. However,
as Knights and Collinson (1987) argue accounting can also be a means of manufacturing
consent because of its apparent objectivity and imperatives. It was known that in PC pre-full
privatisation, when labour resistance was considerable and trade union influence high,
accounting played no significant role within control. The research sought to test whether
accounting played a role in shopfloor control after privatisation, as implied by development
economists, or by supporting managerial efforts to produce subjective consent by
underpinning changes to internal labour markets and the internal state as claimed accounting
researchers, and whether the Burawoy model could be extended to incorporate this.
Burawoy's arguments regarding the politics of production have been criticised for neglecting
the theorisation of individual subjectivity in the production of consent and gaming behaviour
(Sturdy, 1992; Knights and Collinson, 1985); the challenge posed to management control by
labour resistance (Thompson, 1983); and for failing to distinguish between various types of
consent (Littler, 1982); and for undermining the significant role of tacit skills in the production
processes (Manwaring and Wood, 1982). Whilst the study did not expect to resolve these
issues it hoped to inform the debate through a detailed examination of shopfloor controls in an
important phase of transformation by addressing: How do control rationalities emerge over
time? How is worker s resistance diverted to petty economic struggles? How are workers
individualised by changes in internal labour markets and the internal state? How are workers
subjectified by their own gaming behaviour? How is consent is manufactured within PC s
shopfloor, if at all? and, How does accounting play a role in shopfloor controls?
5.0 RESEARCH METHODS
This research used various methods of collecting data including interviews, participation
observation, analysis of relevant documents and examination of newspaper reports. The data
was gathered over seven months (from February to September 1995). This paper draws mainly
from the participant observation phase supplemented by interviews with managers, employees
and bureaucrats. Despite participant observation being a method of social inquiry in cultural
anthropology and organisation studies for some time e.g. Dalton (1964), Roethlisberger
(1939), and its frequent espousal in accounting circles most accounting case study research

11

rests mainly on interviews. This is surprising given the latter's limitations and the additional
insights offered by the former. As Friedrichs (1975) argues:
'Participation observation is suitable for research on processes into complex fields of
activity with numerous situations and persons, or as a method of exploration to
discover relevant variables of the behaviour of actors or in their relations to an
organisation; in other words in areas where interview data can be invalid, e.g. because
subjects are too involved in a context to see the obvious, because of the social
desirability effects ....., or because of social perception .....' (ibid p.85).
To obtain a good experiential understanding about the behaviour of managers and workers on
the shopfloor, the researcher worked in the soap division of PC for one month as a casual
worker like Burawoy (1979) in Allied. Personal and company anonymity was a condition of
research access. As a participant observer it was neither practicable nor desirable to keep
notes during work or in front of fellow workers as it might inhibit them from talking freely.
Consequently, observation notes on incidents and conversations, including the researchers'
feelings and reactions, were taken upon returning home.
In addition, 55 interviews were conducted with managers (past and present), accounting staff,
foremen and local trade union leaders plus seven civil servants (two each from the Ministries
of Industries and Labour, two from the Privatisation Board and one from Ministry of
Planning), two Bangladesh Bank officials, one World Bank official and two national trade
union leaders were interviewed. Questions were asked in an open-ended fashion to help
interviewees respond freely and to avoid predefinition of issues. Normally, interviews lasted
between one and two hours and notes were taken during each. Cross-checking and crossreferencing similar points was done manually and notes of the interviewer's reactions were
made immediately after each interview. Reports, many of which were unpublished, were
collected from government offices, the World Bank, trade unions and PC itself in addition to
the normal library and newspaper searches to help validate and supplement the interview and
observational data.
6.0 THE HISTORY OF PC
6.1 Products, Production and Performance
PC is a mix of automated and non-automated production with most products produced
continuously. The main products are made in two separate production departments: soap and
cosmetics. The researcher chose to work in the Soap division as it is the largest production
department in PC. Three kinds of soaps (laundry, toilet and glycerine) are made in separate
plants. Each processes the raw materials in boiling kettles transferring it to soap storage tanks
as processed and liquid soaps. The tanks are directly connected to machines which convert
liquid soap into a hard form. Laundry soap dominates the total production of soaps, possibly
because its production is quicker than other soaps. The soap division has three shifts: morning
(6 a.m. to 2 p.m.), evening (2 p.m. to 10 p.m.) and night (10 p.m. to 6 a.m.). Machine set-ups,
say to change product lines, are usually made on the night shift.
6.2 Private Ownership (1959-71)

12

PC was established in 1959 at its present premises by a group (anonymised as X) as a private

company to produce a cold cream. After a few years the company started to produce soap
products becoming the market leader. PC was profitable immediately: it faced little
competition from domestic producers and it was protected from multinationals by government
import restrictions. Taking advantage of this, PC rapidly expanded and by 1971 it had
increased its product range and production volume.
6.3 Public Ownership (1972-1988)
The Pakistani owners of PC fled after the Great Independence War and the new government
nationalised the company on 26 March, 1972, placing it within one of the newly formed public
sector corporations anonymised as `Y . The independence war and its aftermath had a great
impact on the economy and PC was not unaffected. The dearth of managerial expertise was
addressed by either promoting bottom level managers or hiring inexperienced managers from
outside. There were no rigid rules for appointing managers or workers and consequently
politicisation over management became chronic.
Trade union leaders were highly influential due to their connections with ministers. This was
evident during major industrial relations disputes when politicians intervened into
organisational affairs at the behest of trades unions. During public ownership there was a
continuous struggle between managers, their systems and trade unions for day-to-day control
of operations in PC. Nevertheless, despite its politicised management and bureaucratic control
systems, PC made a profit under state ownership. One past manager commented:
PC s products had a reputation and they were cheaper than other competitors'
products. There was a belief that profit was inevitable for PC. PC never faced any
losses during the period of state ownership.
PC s products were popular during the public sector period despite being severely hampered
by the ownership changes. PC had 70% (average) capacity utilisation and it maintained
satisfactory levels of sales and remained highly profitable. For instance, in 1985-86, PC s sales
were Tk. 466.88 million and it earned Tk.30.75 million profit.
Bureaucratic management structures for state control over the organisation were instituted but
these were ineffective as in other Bangladeshi public sector organisations (Alam, 1982; Uddin,
1987; Hoque, 1993). After nationalisation PC became part of a centralised formal planning
and control structure running from the Ministry of Industries through Y down to the enterprise
where the chief executive had very limited power (Hoque, 1993; Murshed, 1989; Uddin,
1987). Consistent with public sector practices, the accounting systems in PC were extensive,
consistent with then conventional good practice and, on the face of it, rational. In practice they
were highly bureaucratic and rule-bound behaviour abounded. The information produced bore
little relation to day-to-day decisions or operations thus it was largely ignored by managers
who tended to use accounting as a means of legitimation.

6.4 Partial Privatisation (1988-1993)

Following the fall of Awami League government in 1975, the public sector faced structural
adjustments involving ownership and redundancies, often at the behest of external aid agencies

13

(Adam et al., 1992; Cook and Kirkpatrick, 1995; Hemming and Mansoor, 1988). PC came on
to the privatisation lists of government in the late 1980's and it was partially privatised in
1988: officially to try and rectify its inefficiencies and to increase private participation in the
manufacturing sector generally. PC was made a public limited company: 34% of its shares
were offered to the public and 15% to employees. As a result of the partial privatisation, PC
became subject to dual ownership - private and public. This was reflected in the composition
of the nine member board of directors: five nominated by the government; three from
shareholders; and one from employees. Although the direct authority of Y and the Ministry of
Industries was officially reduced, Y continued to influence important decisions through the
Board of Directors of PC. This was often unacceptable to directors representing private
shareholders which resulted in delayed decisions due to conflicts amongst directors. The
infusion of private ownership merely enhanced the already severe conflicts and contradictions
within the organisation.
Management structures and control systems, including accounting and budgetary control ones,
remained unchanged after partial privatisation and they remained ineffective. One accountant
remarked with a laugh:
Accounting and budgeting systems were only changed in terms of its amount of
reporting. Now we had to make several reports to governments as well as to private
directors which only increased our workload.
Trade union agitation increased and, through demonstrations and lockouts against partial
privatisation, they strengthened their control over labour processes. One trade union leader
commented:
We knew the next step would be full privatisation. We wanted to keep pressure
on government to get it back. Workers had full support for us because they were
also afraid of losing their jobs.
Despite being partially automated, PC maintained a large workforce totalling 1091 employees
which seriously affected its productivity. Capacity utilisation dropped to 25%. One manager
commented:
Workers and trade unions were very involved in demonstrations and they were
also less motivated to do work since they were uncertain about their jobs. Under
these circumstances it was hard for us to control them or make them produce.
The trade union leaders became even more powerful when the already frequent worker s
strikes and lockouts dovetailed with broader political resistance against the Ershad
government. The labour federation (SKOP), of which PC's trade union was a member,
mobilised workers against the government raising broader political issues including the partial
privatisation of PC. PC's elected trade union leaders had to join worker resistance and fight
for worker s welfare even though they were the labour wing of the government party. It
transpired that this was just a strategic step to maintain their influence over workers
dependent upon trade union leaders' political contacts essential to influencing enterprise
decisions. For example, the trade union leaders achieved a production bonus for workers
despite actual production deteriorating. A manager commented:

14

We gave this opportunity to workers in order get their cooperation. Definitely it was
not allowable in a sense as the company had already incurred huge financial losses.
Sometimes we had to consider the political situation within the organisation.
PC's profitability, sales and productivity deteriorated to a point where it was making major
financial losses. In 1990-91 sales were only Tk. 267.88 million and it incurred a loss of Tk.
56.46 million. Interviews with managers revealed various reasons, for example one remarked:
"Due to the imminent privatisation of PC, workers observed demonstrations, strikes and a
lockout. Consequently production was seriously hampered". Another commented: "It was an
intentional move of policy makers and directors (potential buyers) because this situation laid
necessary grounds for complete privatisation". Paradoxically, partial privatisation merely
exascerbated control system problems by merging external politics with those of PC.
6.4 Post-Privatisation (1993-95)
PC was fully privatised in 1993. The government's shares were transferred to one person, who
became the managing director of PC. The other two top posts, executive director and
marketing director, were held by his younger brothers. Effectively PC became familycontrolled as the family owned 75% of PC's shares. The new managers quickly made almost
two thirds of the permanent workforce redundant and appointed a large number of casual
workers. By 1995 its workforce (including casual workers) had been reduced to 615.
Full privatisation brought major changes to the control systems of PC. The new ownermanagers (three directors) dominated PC. Middle management was reconstituted as a mixture
of managers who survived the purge of redundancies and imported managers with private
enterprise experience. Almost immediately, they stopped trade union leaders' influence over
operations and they reconstituted informal and formal controls over managers and workers. In
brief, the new senior management secured control over labour through a series of changes to
internal labour markets, trade union activities and shopfloor games. The role of accounting
changed substantially. However, its contribution lay in helping institute other control
mechanisms on the shopfloor rather than playing a direct role over workers. These changes are
examined more fully below.
7.0 THE CASE STUDY
7.1 Changes to the Internal State
Trade union agitation against privatisation extended to the initial privatisation period. Trade
unions occupied the factory and prevented the new private owners entering their offices. Then,
after dealings which are not fully revealed, management secured an agreement with a fraction
of the trade union leadership. After long negotiations the one month lockout was withdrawn.
One worker commented:
We were stubborn about our steps. But some trade union leaders came up with
proposals such as no redundancies will be made and no financial incentives will be cut
off.
The promises broke down with the help of the aforementioned trade union fraction. The new
owner-managers immediately made redundant almost 75% of their work force i.e. 700

15

workers and employees, including the leaders of other trade union fractions. They withdrew
some financial benefits such as provident contributions, bonuses and the workmen
participation fund. These actions were a body-blow to trade union activities at PC and trade
union influence evaporated at the shopfloor level. For example, during shift hours trade union
leaders were not allowed to open their trade union offices. When the researcher wanted to
interview them they had to find another location. The new management managed what was
left of shopfloor trade union leadership through a mix of tangible covert actions - including
excusing union leaders from working and giving them lump sum payments. This was a
constant cause of complaint by many workers. One trade union leader admitted:
We have now limited power because of the job insecurity. Workers are not interested
in taking part in any demonstrations although we have been trying to get the financial
benefits back for workers.
Trade union activities became limited to formal negotiations with the executive director (ED)
but to little effect. Management reigned supreme over trade union activities. One production
manager commented:
Now we are worried about the production targets. We can use workers in what ways
we want. Before privatisation, this wasn't possible at all since trade union leaders and
workers had a strong influence over target production and operations.
The owner-managers took advantage of trade union conflicts, for example, by choosing which
rival fractions they made redundant. Workers repeatedly reported that their leaders worked for
the owners and not them. Burawoy (1979) also found continual complaints by workers about
trade union leaders but he also observed how workers relied on trade unions to solve
shopfloor grievances. In PC the researcher found nothing that suggested trade unions were
involved with worker affairs. The union was unable to act as an umpire protecting the rights of
industrial citizens or overseeing contractual obligations as Burawoy observed in Allied. Trade
unions at PC were far from an internal state, being unable to protect workers interests but
their symbolic presence protected management from the legal sanctions of industrial
ordinances. The new management's abandonment of any internal state was crucial to realising
production targets and hence capital accumulation in a manner different from that elaborated
by Burawoy.
Why are the results in PC different from Burawoy's in Allied? In Allied the internal state
reflected a form of western advanced capitalism2 where trade unions had grown relatively
independently rather than stemming from the growth of political parties when trade unions had
influence over governments regarding workers interests. In contrast, in developing or
colonialised countries the trade union structure often became politicised (Murshed, 1989;
Hoque, 1993; Wickramasinghe, 1996), with trade union activities primarily shaped by political
leaders. This was evident in the changes in trade union power at PC. During the preprivatisation period trade unions could protect members' interests through their political links
to the responsible minister. The internal state imposed constraints on managerial discretion but
this was contingent on political parties allowing trade union activity insofar as it met their own
2

Time and space precludes a consideration of how and whether changes in

western capitalism subsequent to Burawoy's study in Allied have affected trade union
activities and the role of internal states within western corporations.

16

political ends. Workers relied on leaders who could bring benefits for them, not on the
institution itself. This was reflected in trade union elections: government-patronised leaders
always had strong support from workers.
Burawoy noted the relative autonomy of the internal state whilst emphasising its conditionality
upon capital in cases of crises. In PC, full privatisation came during a profitability crisis and
wrested control from trade unions to preserve private accumulation aided by state policies of
structural changes. The theoretical model argued that trade unions displace conflicts between
different agents at the point of production thereby preventing work disruption by
reconstituting conflict in a framework of negotiation. This was not so at PC: collective
bargaining failed to generate any common interests between company and union rather it gave
way to private accumulation with little challenge.
7.2 Changes to Internal Labour Markets
About 75% of the work in PC is classified as unskilled. A production manager explained:
The industry has provided easy access for all workers who are physically strong
because it needs very few technical people. We train general workers to have technical
knowledge of operations during their works.
Nevertheless, the scale of job classification at PC is considerable. In terms of functional titles,
there are four types of workers: operators; general; service; and maintenance. Operators are
skilled workers who operate machine. General workers include store and unskilled production
labourers. Service workers include mainly clerical workers in factory administration. In skill
terms, there two types of workers technical and non-technical. Technical workers include
operators, some service and maintenance workers. These workers are the life blood of PC as
they possess a broad range of skills. General workers are classified as non-technical workers
as they need few skills to perform their activities. Technical workers are supervised by
foremen (who also have technical knowledge). On the other hand, non-technical workers are
monitored by supervisors who are not technically skilled and are promoted from general
workers. Before privatisation almost all workers were permanent. Permanent workers then
had six grades based on seniority of service. All permanent workers could be promoted, be
they technical or non-technical, to the next grade. Such promotions only affected salary - not
authority, power and responsibility. There were also hierarchical promotional opportunities.
For example, workers could be promoted to supervisory posts and operators could be
promoted as high as superintendent-a managerial post. Initially, after privatisation, casual
workers were appointed in place of permanent workers in non-technical jobs. Later many were
trained by the new management to perform technical jobs such as machine operation but their
states remained casual. Some casual workers promoted to permanent posts at the whim of
management. In the mill, differentiation within grades was perceived by workers in terms of
jobs and shifts allocated to a single worker. All workers except some administration, store and
day crews had to work shifts but there were different shift cycles which changed over time.
Nontechnical workers (75% of the workforce) work in very unhealthy dusty areas that are
risky to health. The Soap Processing Department requires hard work in unpleasant conditions
due to the high temperature needed for mixing soap materials, the dust produced upon mixing
and risky plant layout. Workers have to work in these conditions irrespective of their health
concerns. As one worker complained:

17

They should have paid us more than the other easy works but we are exploited.
Before complete privatisation, nearly all workers were permanent. New workers were
allocated the hard and risky jobs: after privatisation they were filled exclusively by casual
workers rather than mainly permanent workers as previously. The Deputy Chief Chemist
(DCC) told the researcher that allocating hard jobs to new casual workers was part of their
training. The same occurred with the appointment of casual workers to nontechnical jobs. For
instance, when the researcher was talking to the Executive Vice President (the top
administrative post liable only to the Directors), about working as a casual worker he was
informed:
You have to do hard work since we generally allocate hard jobs to casual workers.
At the beginning of the shift, casual workers assemble in front of the office of a supervisor
responsible for scheduling general workers. Operators jobs are distributed by foremen,
whereas previously they were fixed. Primary task allocations for casual workers are at the
beginning of the week but later redistributions are necessary to cover absences or the
supervisor's deals with casual workers. Once tasks are allocated though, it is unusual to
change jobs mid-week and the supervisors' powers to do so are not absolute. For instance, the
researcher failed to go to the factory at the beginning of one week. Next day he bargained with
the supervisor for the same job as in the previous week and managed to convince the
supervisor of his incapacity for other jobs. Then the supervisor tried to put the researcher back
on the original job requesting the casual worker affected to do another. However, the
supervisor's attempts were of no avail.
Before privatisation, wages and promotions were determined by government rules and
regulations, including minimum wage policies. The wages structure was based on seniority.
This changed due to worker resistance in which trade union leaders were prominent.
Subsequently, promotions were influenced by trade union politics and workers needed the
recommendation of trade union leaders to gain internal promotions. A manager said:
Although wage structures are guided by government regulations, those regulations
were being exploited by trade union leaders through their ministerial power.
Trade union conflicts made things more complicated. PC s trade union politics were divided
between two or three unions and workers had to support one to secure wage increments or
promotions. Past managers described how promotions and appointments had had to be
balanced between trade union fractions to prevent major disputes. Thus in the pre-privatisation
period labour recruitment and promotion policies were simultaneously highly politicised and
bureaucratically regulated.
After privatisation this changed substantially: power switched to the new owner-managers
who did not follow any institutionalised vacancy filling systems. Instead they immediately
declared redundancy programmes. PC's workforce is now 60 per cent that previously of which
a half are now casual workers hired and paid by contractors on a daily basis. Casual workers
are cheaper than permanent ones because they have no rights to minimum wage policies or
welfare provisions such as medical clothing and leave allowances. They have no right to join
trade unions so they bring less political costs. PC now will normally not hire the same worker

18

for 90 days continuously as he would be deemed permanent in law. Shop managers handle this
carefully, having informal arrangements with contractors about who to hire and fire when, as
instructed by ED. Before privatisation, appointments were politicised due to the interference
of trade union leaders whereas after privatisation they became personalised by the family
owners.
Two worker streams were created - casual and permanent - which resulted in lateral conflicts.
Management provide an opportunity for casual workers to be promoted to permanent on the
basis of ability and loyalty. The promotion system remained the same for permanent workers
although it is hardly practised - possibly because of the dramatic absence of trade union
leaders. A manager stated:
After privatisation, it is managers or the owners-managers who take decisions on
labour matters not the trade union leaders.
When the researcher pursued these matters with the General Secretary of the present trade
union he replied:
It is not a good time for a fight but we are trying to implement previous financial
benefits for workers. We have nothing to do with casual worker matters.
Management altered the wage structure following privatisation, withdrawing the collective
production bonus and replacing it with ad hoc and arbitrary reward systems ultimately decided
upon by ED. Job allocations within the shopfloor were made in a differentiated fashion
between casual and permanent workers. Permanent workers got preferential treatment being
employed in easier jobs. The new management also provided opportunities for casual workers
to become operators or technical hands with the possibility of sometime becoming permanent.
For casual workers, job allocation, promotion and training are dynamic: as a supervisor told
the researcher as a casual worker, You have to know everything about the plants. .
The above shows how the privatised PC established differentiated job structure in terms of
promotion, mobility and training on the job and differentiated controls and recruitment for
workers: personalised and somewhat coercive for casual labour - potentially bureaucratic
through the internal state for permanent labour. However, the new management of PC did not
follow any of the institutionalised systems of filling vacancies that Burawoy found in Allied,
rather the ED did this personally in an ad hoc and informal manner.
The internal labour market of PC post-privatisation was marked by the differentiated controls
on the shopfloor level which increased the lateral conflict and reduced hierarchical conflict.
Thus whilst the structure of internal labour markets in PC and Allied were not similar their
consequences were. The nature of internal labour markets may be contingent upon local
circumstances but their role in reproducing external labour markets within organisations to
wreak uncertainty and competition amongst workers may be universal.
Whilst the features of internal labour markets at PC is somewhat different from Burawoy s
model their consequences upon controls are similar. In both managers separate and
individualise workers to secure a surplus from labour whilst securing commitment to the
enterprise. Moreover, they generate tensions between workers and reduce opposition against
owners. During the pre-privatisation period of PC, state capital failed to internalise the

19

characteristics of external labour markets due to the politicisation of internal labour markets.
After privatisation, the new management were able to do so after dominating trade union
politics. This is in sharp contrast to Burawoy who emphasised that the effective operation of
internal labour markets depends on the existence of strong union protection for the labour
force and non-arbitrary decisions.
Neo-Classical economists judge internal labour markets from the criteria of efficiency but this
study sought to determine how internal labour markets help promote an ideological basis for
masking and securing the extraction of surpluses. PC s management action in the external
labour markets after privatisation were justified by the neoclassical arguments of efficiency.
However, the changes to internal labour markets at PC, especially casualisation, had a
significant impact on lateral shopfloor conflicts and controls. The appointment of casual
workers in place of permanent workers and the diminishment of overtime opportunities have
made permanent workers impatient with casual ones. The supervisor s controls added fuel to
this conflict. The supervisor, being a temporary worker, followed a softer approach for
permanent workers but exercised somewhat coercive controls over casual workers. The
management division of the workforce into two groups kept workers in constant tension with
one another.
7.3 Changes in Gaming
In the pre-privatisation period, the primary role of supervisors was to supervise and monitor
production. However, given the unreality of official plans due to the bureaucratic and
politicised processes attached to them, these duties were relatively light and not of major
import. They had little involvement in allocating tasks as they were pre-fixed in the politicised
work distribution for permanent workers through trade union officials. Few casual worker s
tasks needed to be distributed as there were few casual workers. Thus supervisors and
foremen were often involved with trade union negotiations: indeed many used to be trade
union leaders. As an older permanent worker commented:
Very few supervisors and foremen used to be present during the shift period. Most of
the supervisors and foremen were busy with trade union matters though they had
responsibility for checking up progress.
Another stated:
Due to their trade union connections, they never pressed for making out - rather they
were more interested in making space for overtime during holidays for us.
After privatisation this changed dramatically: supervisors and foremen assumed more
responsibilities including: distribution of tasks; ensuring production targets were met; and
directly urging workers to make more effort. Their roles within trade unions and the internal
state withered. Most supervisors were now temporary: permanent supervisors being
transferred to other jobs or laid off after privatisation. By contrast, foremen were kept on as
permanent workers as they had technical skills.
In the pre-privatisation period, shop management had a longer chain of command and
managers were not prominent on the shopfloor. One manager explained stating that:

20

They had no power on the shopfloor or control over the first line of management. It
was the area of trade union leaders.
They had strong incentives to make deals with supervisors and trade unions on behalf of
workers. As a past trade union leader, presently a supervisor of the soap division, commented:
Before privatisation there was a production incentive for managers. If the shop
production reached a certain level then they could enjoy the incentives. Therefore, the
shop management wanted to maintain good relationships with workers and trade union
leaders for production bonuses. They had no reservations in allocating overtime to
workers for bonus production.'
Although the production of the soap division is a continuous process it can be subject to
considerable manipulation. Before privatisation it was a common practice for first line
management and operators to reduce or halt the machine speed. Trade union leaders were the
major instigators though shop management could do so to smooth worker relations by
creating overtime and bonus production opportunities. However, privatisation brought
dramatic changes: following pressure from the empowered owner-managers, shop
management started to frequently visit the shopfloor to ensure the continuous speed of
machines.
The relationship of shopfloor managers to supervisors changed after privatisation since
managers no longer had a need to maintain good relationships. After privatisation, almost all
supervisors were made redundant except for a few with strong relationships with the current
trade union leaders. New temporary supervisors were appointed. Now managers had more
authority and power over them. Supervisors and also foremen (who are mostly permanent)
became disciplined by the new managerial practices emphasising performance in terms of the
productivity of the shift. The perennial question of shop management to the first line
management became: "How many packages are finished? How many trolleys are gone?".
The major responsibility to get jobs finished on time tended to fall on the shoulders of
supervisors rather than on foremen or superintendents. Due to their temporary job tenure
supervisors now sought to display good performance to senior management by increasing
production of their shift. However, it was difficult for them to do so as they could not directly
supervise the whole production process and they lacked authority over operators formally
responsible to foremen. Supervisors had to be very careful in handling operators. Thus they
entered 'making out' deals with them to maintain production.
This was evident from the researcher's experiences when working on the packaging section as
a casual worker. The packaging workers started work early before the shift began. All
packages are numbered to indicate the shift number and date. Supervisors are very careful
about this because the number of packages (each containing 72 soaps) shows their
productivity. As supervisors must maximise output, they must get involved in chiselling
processes, including getting another shift's output into their shift and stealing time from other
shifts by continuing their shift a bit longer. Since workers and operators have less interest in
production, supervisors must earn their cooperation in chiselling processes to maintain high
production. Supervisors try hard to cooperate with operators (having no formal authority over
them) and permanent workers (since supervisors are themselves temporary and comparatively

21

new). On the other hand, casual workers are deemed to be unimportant and supervisors tend
to control them more coercively.
This frequently resulted in conflict between workers. An example from the packaging section
is described below from field notes:
In some cases I found the sticking material is very thin which makes the job more
messy. The supervisor loves to make me responsible for not doing proper work
although it is not my fault. At the end of the day it makes me angry towards the
permanent worker responsible for the preparations of sticking materials because I must
make sure that my work has a good standard.
Since the researcher was a casual worker the supervisor was happy to blame him rather than
the permanent worker. Such discrimination made casual workers jealous of permanent
workers. This was compounded by supervisors preferring permanent workers when
distributing tasks. Each shift began with a contingent workforce of general workers, operators,
supervisors and foremen. Although permanent workers had fixed tasks, sometimes they sought
to change them. Since supervisors were temporary and in need to show good performance to
shop management, they always gave permanent workers' preferences high priority in contrast
to the harsher regimes exposed to casual workers.
Overtime allocations were another source of lateral conflict. Permanent workers were not
allowed overtime since it was costly: shop management always tried to appoint casual workers
instead. However, on occasion some permanent workers were given overtime due to
shortages of casual workers or technical hands which made other casual workers angry. Whilst
logically their resentment should be directed at the practices of shop management it tended to
be diverted into lateral conflict. For example, one day a permanent worker was gossiping and
laughing with a supervisor - it seemed the worker had a good relationship with management.
A casual worker pointed to him saying to the researcher:
He is a number one telbaz [someone who always keeps good relationship with their
bosses]. That s why that mother fucker sometimes gets overtime opportunities.
Thus some lateral conflicts arose from the new management practices. During the preprivatisation period supervisors were not involved in such chiselling processes: securing votes
from workers and operators was more important. They used a softer approach than now. One
permanent worker commented:
In those days we didn t have to work so hard and supervisors always tried to allocate
overtime to us rather than urging us to work hard.
Before privatisation shopfloor conflict was directed at worker and management differences
and trade union matters rather than lateral conflicts exascerbated by managerial actions. This
was reflected in an older worker's comment:
They still believe that managers are mainly responsible for their sufferings. In the old
days they always fought with management for their demands. During the public sector
period, management seemed to be the enemy of the workers.

22

Burawoy (1979) argued that conflicts between workers and management were diminished by
controls arguing that where games do take place, they are usually not independent of or in
opposition to management:
'..... the games workers play are not, as a rule, autonomously created in opposition to
management, as claimed by Elton Mayo, who views the matter from one perspective,
and by Cornelious Castoriadis, who views it from another. Rather they emerge
historically out of struggle and bargaining, they are played within limits defined by
minimum wages and acceptable profit margins. Management, at least at the lower
levels, actively participates not only in the organisation of games but in the
enforcement of its rules.'
It was evident that workers continued to have a strong belief that line managers were
responsible for their sufferings. One permanent worker complained:
Production managers always earn money by using illegal ways. They did it before and
now they are doing it with the collaboration of owners.

However, though PC workers' perceived conflicts with management did not diminish after
privatisation their focus altered significantly. The new management practices often came to be
attributed to shop management rather than the new owners despite the changes flowing from
the ownership changes. They formed major topic of conversations amongst permanent
shopfloor workers: What benefits had been taken off? (tiffin breaks had just been withdrawn
by management) What managers are doing? How they fuck them off? What the new facility is
taking off? Casual workers were rarely involved in such conversations, possibly because they
were aspiring to promotions (permanent status) or they were unaware of lost facilities.
These conversations were dissimilar to those Burawoy found in Allied where they were
dominated by the idiom of making out:
When someone comes over to talk, his first question is, Are you making out?
followed by what s the rate if you are not making out, your conversations are likely
to consist of explanations of why you are not: The rate is impossible , I had to wait an
hour for the inspector to check the first piece (Burawoy, 1979, p.63).
In PC these questions were asked by the shop management. In most cases they were answered
by workers without any interest. For instance, one day, the DCC came to the shopfloor and
asked a permanent package worker how many packages were finished. As the worker
hesitated to take time to answer, a casual worker smartly answered the question. Later the
permanent worker was furious with the casual worker shouting, Bastard, is it your father s
factory? Why did you answer this question? The contrasting observations may be due to the
different contexts of each company. PC s shopfloor had faced a dramatic deterioration in
conditions following ownership changes whereas Allied Corporation was more stable and
enjoyed relatively benign conditions for labour. Nevertheless, the resentment and shopfloor
conversations in each were focused on petty economic struggles unquestioning of basic
production relations.

23

Workers' violations to rules can have consequences for the obscuration of production relations
and the manufacture of consent. Paradoxically, attempts by management to squeeze a little
extra out of workers can enhance shopfloor consent. Burawoy described how the experience
of being screwed by management was expressed in terms of their bosses failure to facilitate
opportunities for making out (1979; 66) or in fake allegations against management. Workers
in PC complained about managers who violated established shopfloor norms such as giving
tiffin breaks within the shift period or the granting of overtime. However, after privatisation
despite junior managers becoming less powerful in many respects, workers tended to hold
them responsible for shopfloor changes, the reduced workforce and tighter controls. The
continuous presence and visible demonstrations of apparent power by managers added fuel to
such beliefs.
Observations and interviews with managers did not support workers' perceptions. Managers
after privatisation were even more powerless than before (although they seemed to be
powerful on the shopfloor) as they too were in constant fear of losing their jobs due to the
owner-managers sole authority. Managers can be both the victim and agent of the capital and
constitute a contradictory labour process in their own right (Hopper et al., 1987).
However, Burawoy's arguments regarding the collusion of shop management in games are
supported by the observations within PC. As described earlier, managers indulged in chiselling
and actively assisted operators in making out, just as in Allied. However, unlike in Allied, task
allocation by supervisors and foremen became a shopfloor issue in PC after privatisation and
an essential component in many games. The results were sometimes compromising for casual
workers rather than coercive. Casual workers invariably tried to maintain good relationship
with supervisors to secure favourable allocations for, as one supervisor put it, I will look after
you if you look after me. Supervisors and workers were united in casual employment, the
promise of better status and the need to constantly demonstrate their performance in terms of
physical output. Thus, whilst supervisors were involved in making shopfloor games for their
own interests, especially with permanent workers, they tolerated some work avoidance by all
workers practiced in PC since nationalisation despite its official restriction, as the following
example illustrates.
The layout of the soap department led to each product line having 16-18 machine points plus
other support stages such as packaging, cleaning, recycling points for deformed soaps and
conveyance by trolleys, all of which required a large number of general workers. In the small
area for the packaging section on the toilet soap line there were three points where general
workers were required to stick together the package containing 72 soaps. Soaps came through
a wrapping machine and one general worker put those into numbered packages. Another
general worker was responsible for putting all the packages behind him so he could handle
those packages easily. Sometimes, the researcher had to fetch and position those packages due
to the absence or non-availability of the worker concerned which made the researcher very
angry. Upon this, the researcher was told that before privatisation, each point of this section
had three/four workers whereas now only two people were allocated to the same jobs.
By the second day the researcher realised that there were informal arrangements amongst
workers for taking rest: one worker worked continuously for the first half of the shift after
which another took over. The researcher was told that it was not a new practice but before
privatisation they had fewer hours to work because there were more workers. Later the
researcher realised that the shop management turned a blind eye to this practice: they were

24

content so long as output met the required level. One day the researcher was warned by the
supervisor to desist from doing this but it was generally understood that this was merely a
symbolic demonstration of his potential power over casual workers. One of the co-workers, a
permanent worker, told the researcher:
During rest hours don t stay here. Just go out and have a cup of tea and chat otherwise you will be caught by the top management. Before privatisation it was not a
problem. Now it is becoming a problem because the owners-managers (directors) or
production managers frequently visit the factory.
The researcher noticed that during such visits workers, operators, supervisors and foremen
became alert and tried to show their diligence. For instance, one day the product line stopped
temporarily due to machinery breakdown. The researcher was sitting on the table to relax.
When the foreman saw the chief production manager enter the shopfloor he shouted at the
researcher ordering him to get down from the table, possibly to demonstrate his apparent
control over the shopfloor.
After privatisation shopfloor visits by managers became more frequent and threatening to
workers and supervisors. Their continual presence on the shopfloor was silently resented by
workers. The first question of shop managers to operators and workers was invariably, 'How
many packages are finished or what is the speed?', which normally provoked the hushed
response, fuck you . The DCC moved around the shop time-to-time checking the speed of
machines and urging operators and workers to increase effort and work properly. His presence
made operators and workers alert because of his power to fire casual employees at will.
Permanent workers also seemed to be disciplined in his presence - possibly because they had
experienced a huge redundancy programme after privatisation. His presence made workers
angry - one permanent worker angrily told the researcher: He is a mother fucker and always
screws us up .
During the shift hours everyone had to be attentive and efficient to their works. If anyone lost
speed, it affected the whole shift since it was a continuous process. Therefore, co-workers
showed new workers all the tricks and techniques to finish jobs quickly. They had an interest
in making the new worker understand jobs so they could maintain their informal arrangements
such as taking rests. Workers and operators on the same production line became impatient and
angry if anybody on the line did something wrong. For example, the researcher was transferred
to the night shift with a new (to him) job. The supervisor took the researcher there telling him
that you have to learn all the corners of this product line. Presumably it seen as training to
increase flexibility for management purposes. However, on the first day of the night shift, the
researcher was executing his job shakily which inevitably caused problems for the next section
down the line. The next worker became impatient and angry and eventually called the
supervisor to move the researcher to the another job. According the researcher's own notes:
His complaint also made me more attentive and efficient in doing my job. Actually, it
was a kind of challenge for me to do the job efficiently.
Whilst practices of avoidance might show a vestige of resistance to controls equally they
maintain individual commitment to task completion and impose self-control by workers. These
observations are equivalent to the shopfloor practices of making out identified by Burawoy
(1979) and are empirically very similar to the relative satisfaction of batch traction identified

25

by Baldamus as a response to work tedium (1961; 53). Above all, they share the self-defeating
and paradoxical character of all such practices in that they reproduce the conditions of its
existence - the pressure of work. Just as Roy (1960) and Burawoy (1979) found, the nature of
work avoidance formed the primary basis of a workplace culture.
7.4 Accounting Information System Changes
According to the conventional literature, accounting provides management with financial
information for decision-making and control. Budgetary control is depicted as crucial to
delegated management within central control. Budgets are seen as a rational and iterative
process of forward planning, coordination and setting physical and financial goals for
monitoring segmental performance. Such accounting was hardly found in this case study.
The company s overall planning was determined by HO planning which was in turn heavily
influenced by state bodies responsible for national plans. Budgets often paid little regard to
actual market pressures and production constraints, for example, the sales and production
budgets were based on the previous year's figures plus an addition determined by the Ministry
of Industries and HO. The influence of line managers upon the budget was slight and,
unsurprisingly, they paid little heed to it believing (with justification) that it bore little
correspondence to operational circumstances. Thus company budgets became a routinised
rule-bound ritual produced to satisfy state bureaucrats. During this period trade unions were
powerful in Bangladeshi state enterprises including PC but accounting numbers or budgetary
considerations were rarely used in resolving industrial conflicts. However, this changed
substantially after full privatisation, though not necessarily according to the expectations of
policy makers or development economists.
7.4.1 Financial Reporting
PC retained the external reporting system of the pre-privatisation periods but its internal
reporting systems changed enormously. One accountant reported:
We have to send a daily report regarding cash and other transactions to the ownermanagers of the company. The Executive Director (ED) and Managing Director (MD)
receive these daily reports for their clear understanding about financial condition of the
company.
Accounting information was now used for decisions regarding pricing and the evaluation of
product lines though it tended to be the preserve of the three directors. One accountant
remarked:
We record the bills or memo's which are signed by MD or ED. All departmental
expenditures and income have to be signed by these two directors. Otherwise we refer
the bills back.
The Directors became the repository of all financial information which was processed
according to their instructions. One senior accountant remarked:

26

We have two systems for accounting information. One is informal which is a restricted
area only usable with the permission of ED. The other system is external reporting
which is for other shareholders, the bank, the Tax Authority and the Stock Exchange.
New computerised systems speeded up the supply of internal information to directors.
However, external reports have not been published since 1994 for no discernable valid reason.
As a listed company of Dhaka Stock Exchange PC has to submit audited yearly accounting
reports to the Stock Exchange office but somehow it has delayed publication for general
shareholders. Since the majority shares are held by present owners-managers, they are able to
take unlawful advantages3 (see company law section 81(1&2). For instance, the present
management delayed the 1993-94 Annual Reports until 1995. One accountant admitted:
We have to maintain many informal systems. You know, business is competitive. You
can't maintain all of them in a straightforward way.
Rather than using accounting information as a cornerstone of rational delegated management
there were perceptions within the company that the owner-managers used the systems to
mask financial irregularities thereby enabling them to show flawless reports to shareholders,
creditors and stock exchange officials to maintain the reputation and survival of the company.
One individual commented:
Some informal transactions are kept in the IOU fund account for irregular payments to
trade union leaders and bribery of government and tax officials. These transactions
were usually shown under other headings in the annual reports.
One senior accountant commented:
I don t know what the real transactions were in the IOU fund. It was alleged by some
individual that sometimes the heads of transactions were changed to evade tax such as
increasing the amount of tax exempted items.
It is difficult to prove the veracity of such allegations but it can be firmly concluded that upon
full privatisation accounting systems became the personal fiefdom of the ED.
7.4.2 Budgets
Budgetary control changed substantially after full privatisation but accounting information did
not play a vital role in middle management and below. As one marketing official commented:
Accounting information comes through late although it is correct. But we prepare our
sales budget on the basis of sales forces indicators and market trends which is very
dynamic.
The new management emphasised market trends in making budgets rather than a production
orientation as previously. A new marketing function was established to gather sales forecasts
3

Shareholders can take the company to the court as per section 81-2 (Company
Law 94). However, since they are scattered they do not bother about the general
meeting or publication of accounts.

27

emanating from the field. These formed the basis of the production budget. The budget
committee consisted of eight members: one apiece from accounting, production,
administration, marketing and purchasing plus the three directors. The annual budget
expressed in physical terms was reviewed monthly or even occasionally weekly in the light of
recent data from informal and formal sources. The physical budget was reshuffled continually
by ED often following telephone conversations with production and marketing managers. He
would then informally arrange a meeting with marketing officials and production managers to
fix revised targets or change product lines. The production managers rarely influenced these
decisions: they were only there to execute ED s commands. As a top production manager
remarked:
Initially we made a production plan on the basis of yearly and monthly budgets as fixed
at the beginning of the year and at the beginning of the month. Now we revise targets
as new information comes through. In this case ED plays the vital role.
Managers had little idea whether the organisation was running profitably which is unsurprising
as no internal financial reports had been distributed since 1993. Budgets in the normal sense of
routinised regular downward financial reporting disappeared. Physical budgets and quotas
were given to production managers who transmitted their messages to first line managers
(foremen and supervisors) who used informal measures, often with the tacit approval of
production managers, within the shopfloor to achieve budget.
Redundancy programmes were the main source of cost reductions aided by cuts to benefits
and allowances. The technically sound but politically corrupted systems of public sector days
were not reformed under private ownership: rather they disappeared. Cost information was
collected through the accounting systems or through the owner-managers' personal contacts
but the researcher could not find any professional cost accountant or associated systems
dedicated to providing cost information to managers outside of the family.
After privatisation, cost reduction became the main language of managers who in turn
conveyed this to the shopfloor. Production managers realised their targets by controlling
supervisors who in turn had to wrest with the problem of securing worker effort. There were
reporting systems for supervisors and foremen. They submitted daily reports to the DCC in
their Log book which contained shift information such as volume of production, working
hours of machines, causes of stoppages, the number of casual workers worked and volume
wastage. However, the volume of production was what mattered. As a supervisor commented:
Certainly managers are interested in the volume of production. As long as the volume
of production is right they have nothing to say.
The DCC commented:
I personally developed this reporting system under the present management. By the
virtue of this system, I can understand what went on during the shift. There is no scope
for supervisors and foremen to conceal the fact.
Nevertheless foremen and workers tried to do so by not reporting some incidents with
workers. For instance, one day a foreman became very angry with a casual worker and
threatened to fire him for insubordination. Nevertheless, at the end of shift he did not report

28

this to DCC: there was an informal understanding between workers and their immediate boss
to work things out within the shopfloor.
The redundancy programmes, the creation of internal labour markets and the absence of trade
union leaders from the shopfloor reinforced control over workers who were highly disciplined
by these arrangements. As one production manager revealed:
Presently we don t have to face any serious problems from the part of workers. The
deviations of production budgets are mainly due to raw material shortage or machinery
breakdown.
Top management used physical budget figures to evaluate the performance of production
managers. Production managers had to report any deviations from budget to the ED who
usually wanted to see a reasonable cause for deviations. Although the feedback systems were
improved in terms of accuracy and speed they were essentially ad hoc with arbitrary imposed
targets upon managers. The budgetary controls disciplined production managers not because
of any accepted logic and reasonableness of accounting numbers or their reinforcement by
lucrative reward systems but because of power relations within the enterprise. Top
management, who were also the owners, were the final authority on recruitment, punishments,
promotions and other all company matters including budget targets and performance appraisal.
After privatisation accounting did not become a direct means of controlling shopfloor
workers. Other methods, such as internal labour markets, the construction of games, and
controlled trade union activities were more important. However, the new management created
these shopfloor controls through the medium of accounting thereby implicating it in the
constitution of other shopfloor controlling devices (Macintosh, 1995). Accounting numbers
and controls came to play a vital role in a despotic and ad hoc form of family-based controls
over managers and thence supervisors and workers. The accounting department and the
information it supplied became an untouchable area for all managers except those from the
family of owners.
The Hofstede (1968) study showed how budget games created by managers could contribute
to the realisation of budget targets and the implementation of planning and controls. However,
this may be an incomplete analysis as it conceals structural factors underpinning budget games.
Hofstede only identifies managerialist factors such as sufficient communication, correct target
levels, judicious performance and appropriate superordinate behaviour and ignores how games
are implicated with coercion and consent. His idealistic situation of constructing games was
hardly found in PC. Accounting and budgets were important elements in constructing games in
PC after privatisation. Production managers' performance became dependant on achieving
budget targets though realisation resided with foremen and supervisors. All were subject to
new reporting systems for physicals.
In the privatised PC, accounting issues became important for instituting internal labour
markets. Burawoy noted how individualism is the major characteristic of internal labour
markets that hinders the development of collective resistance whilst promoting lateral conflicts
amongst workers. In PC the group based production bonuses were replaced by individual
bonus systems. Accounting measurement underpinned the new incentive system consistent
with Knights and Collinsons' observations (1987). Thus the rise of internal labour markets in
PC after privatisation was significantly associated with accounting language and calculation

29

with implications for controlling labour processes. The large redundancy programme
implemented after privatisation was justified using accounting measurements. This was
reflected in the most recent annual reports available which rationalised management actions by
revealing how many excess workers had been laid off and how many casual workers had been
appointed to secure cost savings and increasing productivity. However, the new owners
justifications were irresistible not because of the apparent objectivity of accounting techniques
but rather due to weakened workers resistance and the declined of the internal state as
discussed earlier.
Trade union leaders allowed to remain by management also justified their actions at PC
through the language of accounting. For instance, the General Secretary of the dominant trade
union faction commented that PC was overmanned and redundancy programmes were
necessary to revive the enterprise. Since privatisation, trade unions informally banned
demonstrations or lockouts as a form of resistance and their leaders became more interested in
bargaining to keep production running and increasing productivity. Trade union leaders
revealed that they were now fighting to reinstitute lost benefits but they had to do so within
the accounting logic they had become embroiled in. The role accounting played after full
privatisation in shaping trade union activities and the internal state is remarkable in a sense that
leaders now consider accounting language important. Trade unions are coordinating the
interests of workers and owners by bringing the worker s resistance to the bargaining table
couched in an accounting calculus figures of profit and employee benefits. Yet much of this is
a charade as this form of internal state has no control implications since trade union leaders
unable to influence production and production targets on the shopfloor where they have
neither access nor support.

7.5 Changes in Control Practices - Interaction of Control Factors

In the public sector period effective control resided with trade unions in collaboration with
politicians. Insofar as management could control, they had to do so through the internal state
and indulgency patterns towards workers (Gouldner, 1954). This was due to the political
institutions then prevailing within Bangladesh. Internal labour markets were relatively
undifferentiated and not used significantly by management as they were largely beyond their
control. The manufacture of consent through games was significant but largely stemmed from
managerial dependencies upon labour and it was geared to workers' interests. Indeed workers
were highly conscious of collective interests militantly pursued at an organisational level and
beyond. Conventional sound accounting systems existed but their influence upon events was
minimal, except to infer sound management to external funding agencies. Partial privatisation
merely exascerbated these conflicts and contradictions by introducing internal divisions within
senior management with deleterious effects upon performance.
Controls over labour processes underwent major changes following privatisation. Most
importantly, the control of the internal state was destroyed with only a token puppet trade
union presence left remaining. Collective bargaining was effectively abolished. This was
achieved by recourse to the external labour market through a widespread programme of
redundancies and the recruitment of casual rather than permanent workers. There was an
intensification of work through a much reduced labour force. Effort is engendered by a mix of
fear of losing ones job and, for casual workers, the possibility of achieving permanent status. A
much more differentiated internal labour market was introduced which engendered greater

30

lateral conflict amongst workers thereby weakening any solidarity that remained. Much of the
control was highly coercive, especially for casual workers, but a degree of gaming and
making-out continued, partly because of the supervisors need to secure cooperation and effort
from workers, especially permanent ones, and their participation in the supervisors own
chiselling practices. As noted, workers' collaboration in such games and making out did to a
degree suck them meeting managerial priorities. Nevertheless, it would be wrong to assume
that gaming produced significant consent. Workers continued to see themselves in an
antagonistic relationship to management but paradoxically their resentments became
channelled towards middle and lower level management and immediate work practices rather
than the owner-managers instituting the changes.
Accounting was integral to the changes. Managerial actions were often justified by accounting
claims arbitrarily fed down from the top stating the need for cost savings, productivity and
profitability. However, it is dubious whether these were internalised by workers or even
supervisors though their imperatives could not be ignored if employment was to be
maintained. Making out became an idiom of management and supervisors rather than workers
as observed by Burawoy. The dissemination of routine financial accounting information
externally or internally ceased for all except the owner-managers. However, physical arbitrary
budgets responsive to market changes were integral to the tight control of shop management
and thence supervisors. The findings reinforce the argument that accounting can provide a
vocabulary of motive (Batstone, 1979) that facilitates the diffusion of managerialist definitions
of situations. Within this managers devise strategies to secure consent on the shopfloor
involving internal labour markets and games. As claimed by Burawoy, in PC owner-managers
formulated the rules of the game guided by cost savings and higher production and managers
managed workers to play the game accordingly. Nevertheless, the presumed objective
mathematical expression of accounting did not directly wrest control from workers nor
eliminate their resistance nor was it implicated in a culture of shopfloor masculinity (despite
PC's almost exclusively male workforce) as suggested by Knights and Collinson (1987).
In short, the manufacture of consent as described by Burawoy whilst not being entirely absent
was secondary to coercive methods rooted in economic fears based upon loss of employment.
Burawoy's theorisation does not deny the possibility of the continuous application of coercion
- such as firing those who fail to achieve certain levels of efficiency: indeed the theorisation of
games assumes that coercion underlies any employment relationship. However, Burawoy and
Roy observed behaviour inconsistent with a monetary incentives thesis as the basis of worker
cooperation and argued that it is the erection of games that provides active cooperation and
consent. Burawoy argued:
If economic motivations were at the basis of shopfloor activities, then the preference
ranking of jobs would be in accordance with economic rewards. This was not the case.
Many of the service jobs on day rates were widely regarded as preferable to piece rate
jobs, even though the latter brought home more money. Rather, the labour process is
organised into a game, and the goals that the game defines constitute the values
current on the shop floor (1979, p. 84).
He further added:
The rewards of making out are defined in terms of factors immediately related to the
labour process - reduction of fatigue, passing time, relieving boredom and so on - and

31

factors that emerge from the labour process - the social and psychological rewards of
making out on a tough job as well as the social stigma and psychological frustrations
attached to failing on a gravy job (p. 85, 1979).
Similar shopfloor values were found at PC: workers competed for the easier jobs, were
sensitive to social stigmas and indulged in behaviour not solely explicable by monetary
rewards. For example, most general workers, be they permanent or temporary, considered an
operator as a prestigious job although it carried no monetary advantages. However, it would
be wrong to discount the role of monetary incentives in making out at PC where many
workers were on very low wages and were striving for overtime or double shift opportunities
for their survival. Overtime was also a source of conflict amongst better paid permanent
workers. Whilst Burawoy did not rule out the significance of monetary factors he argued that
they did not "concretely coordinate the interests of management and worker but rather the
play of the game itself (p-86, 1979). In PC monetary incentives permeated the coordination of
management interests, the basis of making out and the constitution of games. The suggestion
is that relative prosperity may be an important factor in explaining the differences observed at
Allied and PC: the former paid workers an acceptable wage that was high in international
terms and operated in a full employment economy whereas PC's wages were low by almost
any international standard and unemployment was huge.
One question remains: 'Does the gaming behaviour continue to reproduce the conditions of its
existence?'. Burawoy argued that there are no guarantees for its continuance since capitalists
could regulate games coercively when so desired. Games are endangered by system crises and
legitimation crises. The former occurs when capitalists threaten minimum wages and the latter
when workers withdraw from the game because it no longer has any value or it has too great
uncertainty. If this is so, one might have expected a system crisis in PC when the new owners
threatened the minimum wages for permanent workers and a legitimation crisis when they
increased workloads, imposed new rules such as no overtime, and reduced the workforce.
However, PC survived these crises and gaming behaviour was left unaffected. Why?
Burawoy argues that to avoid a system crisis minimum wages should not be threatened. PC s
management did precisely this plus launching a huge redundancy programme and replacing
permanent workers with casual workers on much lower wages. Paradoxically, the presence of
casual workers gave the surviving permanent workers a feeling of relative superiority on the
shopfloor. Casual workers especially did not withdraw from the shopfloor partly because of
the unemployed workforce waiting to replace them but also because of shopfloor
arrangements which induced them to participate in games and secure the prize of promotion or
permanency at PC.
According to Burawoy new rules can produce a legitimation crisis and again PC did precisely
this after privatisation, for example, the withdrawal of tiffin breaks and reduced staffing levels.
However, these changes did not undermine consensual relationships though they created
worker resentment. For example, casual and permanent workers in soap packaging often
expressed resistance by deliberately increasing wastage. As one worker angrily exclaimed, "If
they screw us, we will screw them up". However, such resentments and resistance tended to
be channelled into localised game behaviour directed at supervisors over issues such as tea
breaks or petty economic benefits rather than constituting generalised political and ideological
resistance.

32

Nevertheless, games in PC did not disappear after privatisation despite the new owners
coercion. As Burawoy notes capitalism ensnares its participants:
Just as playing a game generates consent to its rules, so participating in the choices
capitalism forces us to make also generates consent to its rules, its norms. It is by
constituting our lives as a series of games, a set of limited choices, that capitalists
relations not only become objects of consent but are taken as given and immutable. (p93, 1979).
Gaming behaviour constitutes consent and permits workers to offset their continuous
deprivation or subordination within labour processes - thus the practices of work avoidance,
chiselling and so forth. Burawoy's assertions are very close to those of a worker at PC who
said:
We are appointed for doing things - not to make any problems. We can t do anything
against the owner because he is giving me money for my breads and living.
8.0 Accounting, the Economics of Privatisation and Development
The Government justified the privatisation of PC on the grounds that private capital would
institute better controls over labour to increase private accumulation and an increased state
portion. Paradoxically, the most recently available annual reports show the privatised PC
remaining unprofitable although there are doubts about their veracity. In 1992-93, after full
privatisation, PC s sales increased slightly to Tk. 292.43 million but it still incurred losses of
Tk. 38.76 million. Table One discloses PC's contributions to state revenues from 1982-94. It
gives little support to beliefs that privatisation increases efficiency and government returns.
The related belief that this will be achieved by the new owners introducing superior modern
management technologies including accounting controls is poorly supported from the case
study evidence. The vision of privatisation bringing transparent accountability, enlightened and
effective management, and increased returns to the state appear unrealistic in a developing
country with weak capital markets.

Table One
Some Distributions of Value Added
(In Million TK)
Ownership
Public

Year
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88

Workers
25.63
39.33
46.06
49.00
35.24
47.24

Partial

1988-89
1989-90
1990-91

49.06
50.18
48.46

Government
47.77
52.58
63.72
76.43
49.08
52.24
50.52
62.31
55.39

33

Shareholders
-

6.25
5.0
-

Private

1991-92
1992-93

53.75
46.80

51.38
51.15

1993-94

37.62

52.97

Moreover, as Table One shows, there is little evidence to show that the benefits of
privatisation trickle down to labour. The case study results and Table One (taken from Annual
Reports) suggest that privatisation had a deleterious effect on distributional issues and
produced harsher controls. In particular, it traces the decline in wages and the emergence of a
very ill paid group of casual workers often paid less than one US $ per shift (8 hours) about
half of a permanent workers remuneration
As discussed earlier, the economic development literature advances privatisation on the basis
of property rights, agency theory and public finance rationalisation claims (Adam et al., 1992).
Property Right Theory assumes a simple relationship between private ownership and good
incentives and controls. In contrast, observations at PC suggest an inverse relationship
between private ownership and good incentives. Indeed, individualised incentive schemes
regulated by the internal state if anything receded in the face of coercive control emphasising
the need for production to avoid loss of a job. Similarly, there were few instances of the new
managers introducing more modern effective control systems as in the management literature.
Rather the private owners instituted ad hoc and arbitrary controls over managers and punitive
sanctions over workers even abandoning technically sound but operationally ineffective
systems. Some development researchers argue that property right theory has limitations in
large organisations with diluted ownership and hence lessened control over managers
(Commander and Killick, 1988; Adam et al., 1992). The observations in PC extend these
arguments further suggesting that even if owners have direct access to controls then property
right predictions may not materialise in the manner predicted. For instance, in PC the rise of
family domination produced non-transparent accounting systems and harsh and arbitrary
controls based on coercion rather than individualised incentive schemes marrying the interests
of workers and owners.
The principal-agent relationship is a complex one in PC. In one sense, some principals became
agents of the firm since the majority shareholding was captured by one family whose members
became the top managers. This makes the principal-agent relationship difficult to model
dynamically: minor shareholders (almost 30%) are powerless given their inability to secure
sound statutory information. Western managerial literature tends to ignore the effects of family
ownership upon internal organisation and external accountability assuming professionalised
management and a degree of separation of ownership and control. However, in many
countries - especially Asian and developing ones - families dominate ownership and
management with very different results (Ansari & Bell, 1991). Given family control in
privatised corporations working within weak and poorly regulated capital markets, market
signalling and take-over threats are irrelevant.
The public finance claim that budget support to loss-making public sector enterprises will
cease following privatisation thereby releasing funds to other more desirable projects is not
supported in this study. PC was not a loss making company during the public sector period
(debatably, this may have been assisted by protection no longer sustainable under more open
market policies). Indeed, Government policies induced by external aid agencies in the partial

34

privatisation period caused PC's profitability and liquidity to deteriorate. The argument that
privatisation proceeds can generate valuable capital revenue is dubious insofar as capital
revenues are concerned as it has no impact on government fiscal arrangements: Adam et al.,
(1992) note that such sales result in the public and private sectors adjusting their relative
liquidity positions but leaving their respective net worth unaltered. With respect to generating
additional revenue earnings and increased contribution to GDP, PC is a classic case of failure.
Since partial privatisation PC has contributed almost nothing; it has contracted significantly in
terms of sales and employment; and it is difficult to argue that it has set new standards of
enterprise management that might beneficially spin-off to other sectors of Bangladeshi society.
The arguments of political economists critical of the public finance rationalisation of
privatisation in developing countries are supported in the case of PC (Wortzel and Wortzel,
1989; Cook and Minogue, 1990).

8.0 CONCLUSIONS
The paper concludes by returning to the three central research questions in the introduction.
The answer to the empirical question of whether shopfloor controls changed after privatisation
is unequivocally yes. Despite initial ideological idealism, the public control regime was pursued
for pragmatic reasons such as weak capitalist forces and strong trade union pressures in
Bangladesh. Although state control produced bureaucratic rationalities and systems for state
accumulation of capital they became secondary to political rationalities and action. In terms of
Burawoy, this is the bureaucratic regime of the colonial state when the state can easily
intervene into production politics such as in PC.
After 1975 governments pursued structural adjustment policies. strongly influenced by the
World Bank and IMF. The initial partial privatisation merely increased managerial and trade
union conflicts and the control problems led PC to incurring large losses. Complete
privatisation brought major changes to control systems at the shopfloor level. The major
shareholders of PC came from one family who provided top management. As described
previously, they made a series of changes to internal labour markets, trade union activities and
shopfloor games. Accounting too changed and it was integral to the other changes but it
operated via middle management rather than directly upon the shopfloor. As a consequence of
coercive pressure upon shop management some informal shopfloor practices such as chiselling
grew in ways unintended by senior management. However, the latter also deliberately
introduced practices that became the sources of games over task and overtime allocations, and
securing arbitrary rewards for performance, which helped displace conflict at the shopfloor
level.
The second question was whether Burawoy's theorisation of control and consent might
contribute to the political economy of accounting. Again the answer is yes but the results
suggest that it requires modification and extension. Burawoy's identification of games, the
internal state and internal labour markets were appropriate key variables though, as argued
above, they needed extending to embrace accounting information systems and the nature of
ownership and control, i.e. owner-family rather than professional management.
This can lay the basis for understanding accounting transformation in developing countries
such as Bangladesh through a complex set of socio-political factors including international
economic forces, ideology, trade unions and state policies. Accounting issues in the third

35

world remain under researched and theorised. As the empirics demonstrate, rational decision
models from economics are oversimplified and insufficient for this purpose. Political economy
approaches that address conflicts and contradictions as well as the manufacture of consent, are
required for an understanding of the social dynamics. agency relationship within organisations.
Whilst this paper does not seek to deny the validity of other political economy approaches it
demonstrates the power of a labour process approach such as Burawoy's to combine economic
and institutional factors with processual factors leading to subjectification. The deficiencies of
alternative economistic theorisations led to policy makers expectations of privatisation not
being met as predicted. Also, in contrast to Foucauldian studies of accounting and shop-floor
control (cf. Knights and Collinson, 1987), accounting discourse whilst relevant is not a
primary means of control internalised by male workers compared to coercion based on
promotion and arbitrary rewards and sanctions - especially the fear of losing ones livelihood.
Reliance upon the analysis of discourse is insufficient for a fuller explanation.
Nevertheless, the results at PC were not identical to those of Burawoy at Allied. For example,
private ownership brought a diminution of the internal state and regulated internal labour
markets. The results may be different because the dimensions of time and space for both
enterprises are different. Locational differences have been discussed earlier and space
precludes all but the briefest discussion of time differences. Burawoy pursued his study in
1974 when trade unions were comparatively stronger world-wide, and privatisation and
liberalisation policies emphasising market economy approach in a relatively open global
economy had yet to come. Instead the emphasis was upon modernistic state planning and
corporatist government. During the past two decades this has changed dramatically.
Developing countries, caught up in this trend, have also embarked on the privatisation and
liberalisation programmes often under pressure from external aid agencies. One might surmise
whether Allied were to be revisited yet again Burawoy's observations would still fully hold.
Lastly, we wish to turn to the implications of the study for development issues and
privatisation. Public sector inefficiency in Bangladesh has been considered a main source of
rising budget deficits and poor economic growth preventing it emerging from poverty, high
unemployment and inequality (Sen, 1980). Various policies have been undertaken with the
World Bank and the IMF to eradicate these problems without any positive impact mainly due
to socioeconomic and socio-political barriers, as in many other developing countries.
Neoclassical economists have come up with several arguments to alleviate this situation,
including the improvement of individual incentives and the efficient use of resources by
improving market systems (Bauer and Yamey, 1957). Drawing from these premises other
researchers have commended trade and liberalisation reforms, stabilisation programmes, and
the new international economic order (Cordon, 1974; Johnson, 1965; Khan and Knight, 1981)
in developing countries including Bangladesh (Sobhan, 1991). Structural economic theorists
have demonstrated considerable difficulties in solving practical economic problems by using
abstract neoclassical economic values (Prebish, 1962; Seers, 1962; Streeten, 1981; Sinha,
1995 ). Yet they too have failed to deliver sustainable development policies of proven worth.
For example, the first Bangladesh government adopted structuralist policies and nationalised
all commercial enterprise with questionable benefits to the economy. Another development
economics school emphasised the importance of modes of production, identifying how the
contradictions of two modes of production impacts deleteriously upon non-capitalist firms and
behaviour and hence development (Rey, 1971; Hindess and Hirst, 1977; Warren, 1980;
Taylor, 1979). However, this school of economic thought ignores the politics of production

36

struggles even claiming that they do not exist or wrongly theorising them as non-capitalist
behaviour (Taylor, 1979; Wickramasinghe, 1996).
There is a vacuum amongst theorists formulating workable development polices, especially at
the enterprise level, partly because of a lack of understanding of worker-capital relationships,
exploitation, and internal control practices at the enterprise level. Similarly, there is a neglect
of regulation of enterprises in developing economies and the effect of political processes and
institutions upon the economic. To often these factors are swept to one side in the belief that
properties of abstract models hold in reality. In short, there is an absence of detailed empirical
research at the enterprise level. Yet the World Bank, IMF and many other external agencies
associated economic development have adopted neoclassical values advancing their arguments
into the policy sphere. These include the belief that superior management control practices will
follow ownership changes leading to greater organisational efficiency and effectiveness and
ultimately to improved economic welfare. Often these have been accompanied with
prescriptions for necessary external factors such as the improvement of market systems (Bauer
and Yamey, 1957; Little, 1982) though such changes have not been fully instituted in
Bangladesh (Sobhan, 1994; Muhit, 1978). The ignoral of socio-economic factors and
enterprise level studies in neo-classical economic policy prescriptions often renders them
unworkable. Often economic theorists assume properties of theories will materialise and
organisation processes will be transformed as assumed leading to improved economic welfare
by positive contributions to GDP and increased employment. The previous empirics show that
those assumptions have severe limitations in practice under both public and private enterprise
oriented policies. Control systems, including accounting ones, tended to be shaped by complex
power struggles governed by structural and socio-political issues - often with adverse
consequences for organisational performance. If the theorisation of internal factors are
important in attaining organisational performance and if privatisation has been introduced to
achieve economic growth, increase employment, improve the quality of life, and eliminate
poverty then development studies should incorporate these factors within their models.

37

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