Bureaucracy

Although the term bureaucracy was used before Max Weber’s elaboration of the notion and his well-​known analysis of the phenomenon, his work and theories framed all subsequent approaches to the subject. From this perspective, the bureaucratic organization is a professional corps of officials organized in a pyramidal hierarchy characterized by a rational, uniform, and impersonal regulation of inferior–superior relationships. That hierarchy is based on the specialization of tasks and division of labor, with clear and specific supervision and appeal systems. The officials are not elected, and they cannot appropriate their offices. A derivative, popular usage of the term has the pejorative meaning of organizational pathology, functional rigidity, excessive formalism, abuse of official influence, and even corruption.

The libertarian perspective focuses mainly on political bureaucracy. It takes as its starting point the Weberian notion, but enlarges the picture by taking a systemic and comparative view. The comparative standpoint emphasizes the fact that the real nature of bureaucracy and bureaucratic management can be fully understood only when compared to profit and market-​oriented management. When the ultimate organizational goal is profit, the method by which success or failure is assessed is clear: the assessment of profit or loss. The operational principle is unambiguous, and the degree of its application is measurable for the whole business and for any of its parts. Therefore, the structure and management of the organization are guided by it. However, organizations that do not have profit as an objective and cannot use market-​oriented operational principles must find some method to ensure that they are performing their intended functions adequately. Thus, these organizations develop rules, procedures, and monitoring and control systems. The result is bureaucratic management, whose operational principle is compliance with detailed rules and regulations fixed by a hierarchical authority. Consequently, bureaucracy must be seen as a response to the absence of the sanctions provided by profit and loss.

This comparison of bureaucratic organizations with those based on profit maximization reveals just a part of the phenomenon. We are provided an even more comprehensive picture when we consider the systemic aspect of bureaucracies. Bureaucracy is intrinsically connected to the political system; it is part and parcel of its structure and functioning. Thus, the growth of bureaucracy is a symptom of a specific dynamic associated with political systems and not something that can be studied in isolation. The main cause of the bureaucratization of a society is the appropriation of economic and social functions by the government. As Ludwig von Mises put it, “The culprit is not the bureaucrat but the political system.” Officials and bureaucratic structures are just the tools or agents for “exercising whatever powers have been acquired by government.” Once these functions are centralized and are to be exercised by the government, instead of by private enterprise, the need for bureaucratic tools increases. Thus, the number of bureaucrats and offices increases with the volume of decisions entrusted to the government.

There are several noteworthy corollaries that follow from combining both the systemic and comparative approaches to bureaucracy. One corollary is that an organization is not bureaucratic unless it can evade the sanctions of the market. The farther away from the market, the more bureaucratic an organization is. The second corollary is that the analysis of bureaucracy is clearly distinct from an indictment of bureaucracy per se. Bureaucracy and bureaucratic methods are old and they are present in every system of governance of a certain level of complexity. In some cases, some amount of bureaucracy is even indispensable. The problem is not bureaucracy as such, but the intrusion of government into all spheres of private life.

Even if they were to accept the existence and, in some cases, even the necessity of bureaucratic management, libertarians have a rather pessimistic view of its internal workings. Public choice literature initiated by Gordon Tullock is a reliable guide in this respect. First of all, the literature questions the measures by which a bureaucratic organization is able to accomplish its declared objectives. It also notes the significant slippage between what the ostensible function of such an organization is and what actually goes on. Incentives and operating procedures are rarely structured so that individual interests intermesh to achieve whatever explicitly formulated organizational goals have been set. Moreover, certain goals cannot be realized by hierarchical organizations at all. The more complex the coordination of activities needed to achieve the objective, the more inefficient the bureaucratic instrument to achieve it will be. Coordination requires supervisory relationships, and each such relationship results in slippage. In addition, the errors of one supervisory level are accumulated at each subsequent level. The more levels of coordination are necessary, the greater is the amount of cumulative error. Thus, such supervision is costly and difficult to implement, and the costs of achieving organizational objectives get higher and higher. In the end, supervision becomes completely inadequate, and the organization is totally inefficient. Nonetheless, in a bureaucracy, the tendency of the bureaucratic superior is to build ever-​larger bureaucratic structures, which fail to achieve their goals while growing increasingly inefficient. Thus, as Tullock put it, “the inefficiency of the overexpanded bureaucracy leads to still further expansion and still further inefficiency,” so that “most modern governmental hierarchies are much beyond their efficient organizational limits.” Finally, the ways in which bureaucrats advance in the bureaucratic world are structurally adversarial to the organization’s objectives. In most cases, the incentives are set up in such a way that, to secure promotion, the situation requires actions contrary to the attainment of the objectives of the organization, and the bureaucrat will never choose a course of action detrimental to one’s own advancement.

In summary, bureaucratic forms of organization have deep structural problems in effectively and efficiently accomplishing their tasks. It rests with decentralized modes of decision making, such as the market, to accomplish such tasks. That is the reason that libertarian literature considers the analysis of bureaucracy a good laboratory for the study of capitalism and socialism as forms of social organization. In thoroughly investigating the problems of bureaucracy, one is likely to discover some of the most fundamental social mechanisms and organizational pathologies that make socialist utopias entirely impracticable.

Further Readings

Mises, Ludwig Von. Bureaucracy. New Rochelle, NY: Arlington House, 1969.

Niskanen, William A. Bureaucracy and Public Economics. Brookfield, VT: E. Elgar, 1994.

Tullock, Gordon. The Politics of Bureaucracy. Washington, DC: Public Affairs Press, 1965.

Weber, Max. The Theory of Social and Economic Organization. New York: Oxford University Press, 1964.

Wilson, James Q. Bureaucracy: What Government Agencies Do and Why They Do It. New York: Basic Books, 2000.