The Online Library of Liberty

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• Editor’s Foreword
• Preface to the First Edition
• Preface to the 1962 Edition
• Bureaucracy
• Introduction
• 1.: The Opprobrious Connotation of the Term Bureaucracy
• 2.: The American Citizen’s Indictment of Bureaucratism
• 3.: The “progressives’” View of Bureaucratism
• 4.: Bureaucratism and Totalitarianism
• 5.: The Alternative: Profit Management Or Bureaucratic Management
• I: Profit Management
• 1.: The Operation of the Market Mechanism
• 2.: Economic Calculation
• 3.: Management Under the Profit System
• 4.: Personnel Management Under an Unhampered Labor Market
• II: Bureaucratic Management
• 1.: Bureaucracy Under Despotic Government
• 2.: Bureaucracy Within a Democracy
• 3.: The Essential Features of Bureaucratic Management
• 4.: The Crux of Bureaucratic Management
• 5.: Bureaucratic Personnel Management
• III: Bureaucratic Management of Publicly Owned Enterprises
• 1.: The Impracticability of Government All-round Control
• 2.: Public Enterprise Within a Market Economy
• IV: Bureaucratic Management of Private Enterprises
• 1.: How Government Interference and the Impairment of the Profit Motive Drive Business Toward Bureaucratization
• 2.: Interference With the Height of Profit
• 3.: Interference With the Choice of Personnel
• 4.: Unlimited Dependence On the Discretion of Government Bureaus
• V: The Social and Political Implications of Bureaucratization
• 1.: The Philosophy of Bureaucratism
• 2.: Bureaucratic Complacency
• 3.: The Bureaucrat As a Voter
• 4.: The Bureaucratization of the Mind
• 5.: Who Should Be the Master?
• VI: The Psychological Consequences of Bureaucratization
• 1.: The German Youth Movement
• 2.: The Fate of the Rising Generation Within a Bureaucratic Environment
• 3.: Authoritarian Guardianship and Progress
• 4.: The Selection of the Dictator
• 5.: The Vanishing of the Critical Sense
• VII: Is There Any Remedy Available?
• 1.: Past Failures
• 2.: Economics Versus Planning and Totalitarianism
• 3.: The Plain Citizen Versus the Professional Propagandist of Bureaucratization
• Conclusion

EDITOR’S FOREWORD

When this book appeared in 1944, World War II was raging. Socialism then prevailed in Britain, Germany, and the USSR. In the United States also, self-styled progressives were fully convinced that socialism was the wave of the future. “Our age,” Professor Mises wrote, “has witnessed a triumphal advance of the socialist cause.” According to him, “The problems involved in the antagonism between socialism and capitalism can be attacked from various viewpoints. At present it seems as if an investigation of the expansion of bureaucratic agencies is the most expedient avenue of approach. An analysis of bureaucratism offers an excellent opportunity to recognize the fundamental problems of the controversy” (see p. xiii).

By 1962, when the second edition of Bureaucracy was published, socialism per se, i.e., “all-round planning by a central authority,” had largely been discredited. Government interventionism had replaced socialism as the guide for political policy. Mises recognized this shift in a new preface: “[S]ome of the idols of 1944 have lost their halos. But the essential characteristics of the political problems involved have not changed. The great historical conflict between individualism and collectivism is [still] dividing mankind. Therefore,” he said, “the investigation of the contrast between bureaucratic and business management is still of current importance” (see p. xvi).

In many respects, the climate of opinion has changed since 1962. Today lip service is paid to freedom and free markets, although most people believe that government must interfere with the market to preserve free enterprise. Countless government interventions have been enacted, with the best of intentions—to regulate interest rates and the quantity of money; to fix some prices and wages; to provide “social security” and medical care to the elderly; to control international trade; to restrict drug trafficking; to relieve poverty and unemployment; to regulate big business and employer-employee bargaining; to subsidize schools, farmers, and businesses; to restrict racial, religious, and sexual discrimination in schools and the workplace; etc.

Such programs have become widely accepted as integral to the American way of life. Yet all such programs introduce coercion and compulsion into the marketplace, interfere with market phenomena, and must be implemented by bureaucratic rules and regulations. They disturb the harmony that is brought about in the private property market economy by supply and demand and by free and open competition. Government interventions are no part of a truly liberal economy. They create “winners” and “losers,” help some at the expense of others, and, if not modified or repealed, may lead to problems requiring still further intervention. As Mises has written, government interventions, no matter how well intentioned, have unintended and undesired consequences: “All varieties of interference with the market phenomena not only fail to achieve the ends aimed at by their authors and supporters, but bring about a state of affairs which—from the point of view of their authors’ and advocates’ valuations—is less desirable than the previous state of affairs which they were designed to alter” (Human Action, p. 858).

A majority of the American people today believe in the need for government intervention to protect them from what they believe are dangers inherent in capitalism. Only a small minority grasp the significance of Mises’s fundamental and most important thesis—that there is in the free market economy, in a truly liberal world, a harmony among rightly understood interests. “There are in the market economy no conflicts between the interests of the buyers and sellers. There are disadvantages caused by inadequate foresight. . . . What secures the best possible satisfaction of the demands of each member of society is precisely the fact that those who succeeded better than other people in anticipating future conditions are earning profits” (Human Action, p. 665).

Mises reminded us in Planning for Freedom that trends can change; they have changed in the past and they will change again in the future. As socialism yielded to government intervention, so may political reform in the future expand free markets and reduce government interference in the economy. To accomplish that, however, the ideas of the people must be changed. “If the majority of the nation is committed to unsound principles and prefers unworthy office-seekers, there is no remedy other than to try to change their mind by expounding more reasonable principles and recommending better men. A minority will never win lasting success by other means” (Human Action, p. 150).

According to Mises, the sole legitimate purpose of government is to protect equally the lives and property of all its citizens, leaving them all free to pursue their own goals so long as they do not use force or threat of violence to interfere with the equal rights of others. Mises’s great contribution has been to explain how and why, when government fulfills that legitimate role, there prevails in the free market economy harmony among rightly understood interests. In contrasting bureaucratic and business (profit and loss) management, as he does in this book, he offers one chapter in that explanation.

Bettina Bien Greaves

September 2006