Thursday, September 12, 2013

An Overview of Ludwig von Mises' "Bureaucracy"

In giving the overview of the content of Bureaucracy, Mises divided the Introduction into five sections. I want to reduce them into four for I think the second and the fourth sections (the critique of bureaucratism and the connection between bureaucratism and totalitarianism) are interconnected. These sections are the negative reputation of the term "bureaucracy", critique of bureaucracy, " progressives' " view of bureaucratism, and the choice between bureaucratic management and profit management. 

Bureaucracy - An Ugly Term 

The term "bureaucracy" has an ugly reputation. Nobody wants to be called a "bureaucrat". Even "progressives" deny its need in their dream of an earthly paradise. They will never accept that bureaucracy is the foretaste of their "Promised Land". To their mind, bureaucracy is a necessary evil inherent in capitalism that will finally be abolished with the ultimate victory of socialism in the future.

Critique of Bureaucratism

The critique of bureaucratism focuses on five areas. I decided to remove the fifth point, which is the choice between free market and statism and placed it instead in connection to the last section of the introduction. The four areas are the increasing power of a bureaucrat, its totalitarian nature and enmity against the free market, its statist source manifesting in the increasing power of the government, and its role in the achievement of the assumed inevitability of statist socialism as the future destiny of humanity.

1. Increasing power of the bureaucrat. Mises described this increasing power of the bureaucrat: "The bureaucrat does not come into office by election of the voters but by appointment of another bureaucrat. He has arrogated a good deal of the legislative power. Government commissions and bureaus issue decrees and regulations undertaking the management and direction of every aspect of the citizens' lives. . .By means of this quasi-legislation the bureaus usurp the power to decide many important matters according to their own judgment of the merits of each case, that is, quite arbitrarily. . . Every day the bureaucrats assume more power; pretty soon they will run the whole country." (p. 3). 

2. Totalitarian nature of bureaucracy and enmity towards the free market. And concerning the totalitarian nature of bureaucracy and its hatred towards the free market, Mises saw that the expected paradise would actually result into deeper suffering: "There cannot be any doubt that this bureaucratic system is essentially antiliberal, undemocratic, . . . and that it is a replica of the totalitarian methods of Stalin and Hitler. It is imbued with a fanatical hostility to free enterprise and private property. It paralyzes the conduct of business and lowers the productivity of labor. By heedless spending it squanders the nation's wealth. It is inefficient and wasteful. . . Poverty and distress are bound to follow." (ibid.). He added, " . . . bureaucracy is imbued with an implacable hatred of private business and free enterprise. But the supporters of the system consider precisely this the most laudable feature of their attitude. Far from being ashamed of their anti-business policies, they are proud of them. They aim at full control of business by the government and see in every businessman who wants to evade this control a public enemy." (p. 9).

3. Statist source of bureaucracy. Bureaucratic management is just a manifestation of statism, which basically is most evident through the increasing power of the government. Mises described the process how statism is achieved: "The characteristic feature of present-day policies is the trend toward a substitution of government control for free enterprise. Powerful political parties and pressure groups are fervently asking for public control of all economic activities, for thorough government planning, . . . There is no sphere of human activity that they would not be prepared to subordinate to regimentation by the authorities. In their eyes, state control is the panacea for all ills." (p. 4). And in order to attain statism, growing number of government agencies needs to be established and they actually "thrive like mushrooms" (p. 4) gradually restricting the citizens' freedom to act. (ibid.).

However, Mises distinguished between the legitimate and the totalitarian use of bureaucracy. He recognized the limited use of bureaucracy for social cooperation for without it, it is impossible for a civil government to function. What both Mises and the people oppose is not the appropriate use of bureaucracy, but its interference into almost all aspects of the citizens' life. He narrated that this kind of bureacratism is very old and a tool in the hands of a totalitarian state, which is evident once again in modern socialism where the goal is to control "the individual in tight rein from the womb to the tomb." (pp. 17-18).

Moreover, though Mises recognized that in this kind of political atmosphere, "the officeholders are no longer the servants of the citizenry but irresponsible and arbitrary masters and tyrants", he did not want to place the blame on bureaucracy itself, but on the kind of political system dominated by an idea that "assigns more and more tasks to the government. " (p. 9).

4. The role of bureaucracy to achieve the socialist paradise. Another point of critique against bureaucracy is about its critical role as a tool to attain the statist goal. Socialists believe that socialism is the future of humanity. It is inevitable and no force on earth can stop it. Free market capitalism is destined to die. Mises explained such optimism: "The trend toward socialism, . . . is inevitable. It is the necessary and unavoidable tendency of historical evolution. With Karl Marx they maintain that socialism is bound to come 'with the inexorability of a law of nature.' Private ownership of the means of production, free enterprise, capitalism, the profit system are doomed. The 'wave of the future' carries men toward the earthly paradise of full government control." (p. 4). 

"Progressives" View of Bureaucratism

Under this section, we see the response of the "progressives" against the critique of government bureaucratism. Instead of accepting the backward outcome of government bureaucratism, "progressives" justify its existence by pointing out that the real danger lies in the bureaucratism of the business enterprise rather than the state's. They argued that if the growing power of corporations is not stopped, the government would just serve as their "mere puppets" (p. 11) and that would be harmful to the people. And this is the rreason why it is the duty of the government to block companies from expanding their power or what is more popularly known as the monopoly of business. 

In response to the misleading analysis of "progressives", Mises argued that corporate bureaucratism does not occur under free market, but actually a result of government interference in the first place. He actually proved this in his book. He stated: "This book will try to demonstrate that no profit-seeking enterprise, no matter how large, is liable to become bureaucratic provided the hands of its management are not tied by government interference. The trend toward bureaucratic rigidity is not inherent in the evolution of business. It is an outcome of government meddling with business. It is a result of the policies designed to eliminate the profit motive from its role in the framework of society's economic organization." (p. 12).

The Choice Between Profit Management and Bureaucratic Management

In closing the Introduction, Mises presented the two options in conducting the politico-economic affairs. He claimed that there was a need to analyze these two systems with their advantages and disadvantages in order to appreciate the free market system. This is not an easy task particularly these days where anti-capitalism is dominant. However, he elaborated the significance of this task: "If we want to find out what bureaucracy really means we must start with an analysis of the operation of the profit motive within the framework of a capitalist society. The essential features of capitalism are no less unknown than those of bureaucracy. Spurious legends, popularized by demagogic propaganda, have entirely misrepresented the capitalist system. Capitalism has succeeded in raising the material well-being of the masses in an unprecedented way." (p. 18). And concerning the contrast between two, he saw it as obvious: ". . . the private citizens' way and the way in which the offices of the government and the municipalities are operated. Nobody denies that the principles according to which a police department is operated differ essentially and radically from the principles applied in the conduct of a profit-seeking enterprise." (p. 19).

The choice between bureaucratic management and profit management is inseparable from the choice between socialism and capitalism. In the earlier pages of the introduction, Mises issued a call to choose between socialism and capitalism for according to him the primary issue in political struggles during his time (which I personally believe remains true to our time) "is whether society should be organized on the basis of private ownership of the means of production (capitalism, the market system) or on the basis of public control of the means of production (socialism, communism, planned economy). Capitalism means free enterprise, sovereignty of the consumers in economic matters, and sovereignty of the voters in political matters. Socialism means full government control of every sphere of the individual's life and the unrestricted supremacy of the government in its capacity as central board of production management. There is no compromise possible between these two systems. Contrary to a popular fallacy there is no middle way, no third system possible as a pattern of a permanent social order. The citizens must choose between capitalism and socialism . . ." (p. 10). 

Reference: Mises, Ludwig von. (1944). Bureaucracy. New Haven: Yale University Press.