Lars Östman towards a general theory of financial control

Starting points 

 

I have two fundamental logical prerequisites: first, each individual has his or her unique life 

– conditioned by biological and physical circumstances – and the possibilities of and 

interests in satisfying personal and family functions are varied and vary over time; and 

second, the earth is a unique and common settlement for human beings – conditioned by 

biological and physical factors that operate primarily irrespective of what views people may 

have on them.  

To a large extent, the economic system as a whole is self-organising. However, there are 

many organisations with a range of roles.

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 Every alternative that is carried out by an 

organisation may be related to the basic premises for personal functions and the global 

system, naturally most often vaguely and at a very remote distance. Dependencies and 

independencies between economic activities and between human beings are my analytical 

starting points: whether two phenomena or two subjects affect each other. These terms may 

have positive or negative connotations, but I refer only to relationships as such. In principle, 

dependencies on natural systems are also included. However, it is difficult, or even 

impossible, to survey many of these relationships in the short and the long term.  

How, and to what extent, does a single human being affect his or her situation within 

these frames? Each individual has his/her own view of the dependence on highest powers of 

a spiritual or worldly nature, and such ideas have varied between epochs and between 

outlooks on life. Dependence can be tied to gods or saints, fate, royal power or various social 

organisations with different degrees of people´s influence. Some people emphasize that 

human beings basically stand alone or together with a few fellows, others recognize more of 

a dependence on the highest powers of various kinds. 

However, organisations are strong driving forces.

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 Financial impulses from the outside 

and internal methods to maintain economic control are decisive for their actions. I have an 

instrumental view of organisations and of the constructions of financial control tools for 

organisations in a society. Instrumentality concerns the effects of tools on certain functions. 

Ultimately, the personal functions of human beings, present and future, constitute the 

fundamental reference point in a theory of financial control. As a key intermediate step, 

existing and possible functions of financial tools for organisations are most essential. 

Payments, financial instruments, accounting, control models, economic calculations, and 

related considerations – within and outside an organisation – should be discussed with regard 

to inner characteristics but also possible effects. From a financial control point of view, 

identifying relationships between activities and financial processes is a general and basic 

issue. How are the financial limits for activities set? What are the consequences? 

I regard instrumentality as an inevitable and necessary guide line for any control system 

that relates resources to functions and visions. Thus, philosophically I have a pragmatic view 

of this issue. However, economic systems and the “lifeworld” of individuals cannot really be 

 

  

                                                            

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 In his book The Self-Organizing Economy, Paul Krugman discusses characteristics of economic systems but, 

like most other economists in their analyses, he does not at all mention organisations as phenomena. .  

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 For a review of  the re-emergence of the institutional perspective on economic systems problems in the late 

20

th

 century, see, for example, the introduction to Groenewegen, John, Pitelis, Christos & Sjöstrand, Sven-Erik, 

eds, On Economic Institutions: Theory and Applications.  

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separated.

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 What happens in economic systems provides not only material conditions for 

people´s lives but also has many deep repercussions in social and other dimensions in 

“lifeworlds” that have another rationality. When financial control instruments are introduced, 

the economic system is primarily affected, but dependencies for individuals in a wide sense 

are also affected, and therefore their “lifeworlds”. The effects on people´s “lifeworlds” are, 

in principle, relevant when a control system is fully assessed.  

Time is a main aspect. It is vital to capture how control problems are handled in the 

immediate perspective, but so are the contexts over time to which these problems belong. 

The resource issues of an organisation involve a dynamic problem: so is their underlying 

character even if it appears in the form of financial crises on certain occasions. The 

prerequisites for activities are changing all the time. From a rationalistic point of view, the 

question is how an organisation and its members can and should consider this factor in each 

urgent situation.  

An empirical basis is important, as well as attention to phenomena that are difficult to 

observe. The possibility to conceive and describe is one further aspect that is important for 

construction of a theory according to my approach.