Front Page Titles (by Subject) 3.: The Essential Features of Bureaucratic Management - Bureaucracy
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3.: The Essential Features of Bureaucratic Management - Ludwig von Mises, Bureaucracy 
Bureaucracy, edited and with a Foreword by Bettina Bien Greaves (Indianapolis: Liberty Fund, 2007).
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The Essential Features of Bureaucratic Management
The lawyers, the philosophers, and the politicians look upon the supremacy of the law from another angle than does this book. From their point of view the main function of the law is to limit the power of the authorities and the courts to inflict evils upon the individual citizen and to restrict his freedom. If one assigns to the authorities the power to imprison or even to kill people, one must restrict and clearly circumscribe this power. Otherwise the officeholder or judge would turn into an irresponsible despot. The law determines under what conditions the judge should have the right and the duty to sentence and the policeman to fire his gun. The law protects the people against the arbitrariness of those in office.
The viewpoint of this book is somewhat different. We are dealing here with bureaucracy as a principle of administrative technique and organization. This book looks upon the rules and regulations not merely as measures for the protection of the people and for safeguarding the citizen’s rights and freedom but as measures for the execution of the will of the supreme authority. The need to limit the discretion of subordinates is present in every organization. Any organization would disintegrate in the absence of such restrictions. Our task is to investigate the peculiar characteristics of bureaucratic management as distinguished from commercial management.
Bureaucratic management is management bound to comply with detailed rules and regulations fixed by the authority of a superior body. The task of the bureaucrat is to perform what these rules and regulations order him to do. His discretion to act according to his own best conviction is seriously restricted by them.
Business management or profit management is management directed by the profit motive. The objective of business management is to make a profit. As success or failure to attain this end can be ascertained by accounting not only for the whole business concern but also for any of its parts, it is feasible to decentralize both management and accountability without jeopardizing the unity of operations and the attainment of their goal. Responsibility can be divided. There is no need to limit the discretion of subordinates by any rules or regulations other than that underlying all business activities, namely, to render their operations profitable.
The objectives of public administration cannot be measured in money terms and cannot be checked by accountancy methods. Take a nationwide police system like the FBI. There is no yardstick available that could establish whether the expenses incurred by one of its regional or local branches were not excessive. The expenditures of a police station are not reimbursed by its successful management and do not vary in proportion to the success attained. If the head of the whole bureau were to leave his subordinate station chiefs a free hand with regard to money expenditure, the result would be a large increase in costs as every one of them would be zealous to improve the service of his branch as much as possible. It would become impossible for the top executive to keep the expenditures within the appropriations allocated by the representatives of the people or within any limits whatever. It is not because of punctiliousness that the administrative regulations fix how much can be spent by each local office for cleaning the premises, for furniture repairs, and for lighting and heating. Within a business concern such things can be left without hesitation to the discretion of the responsible local manager. He will not spend more than necessary because it is, as it were, his money; if he wastes the concern’s money, he jeopardizes the branch’s profit and thereby indirectly hurts his own interests. But it is another matter with the local chief of a government agency. In spending more money he can, very often at least, improve the result of his conduct of affairs. Thrift must be imposed on him by regimentation.
In public administration there is no connection between revenue and expenditure. The public services are spending money only; the insignificant income derived from special sources (for example, the sale of printed matter by the Government Printing Office) is more or less accidental. The revenue derived from customs and taxes is not “produced” by the administrative apparatus. Its source is the law, not the activities of customs officers and tax collectors. It is not the merit of a collector of internal revenue that the residents of his district are richer and pay higher taxes than those of another district. The time and effort required for the administrative handling of an income tax return are not in proportion to the amount of the taxable income it concerns.
In public administration there is no market price for achievements. This makes it indispensable to operate public offices according to principles entirely different from those applied under the profit motive.
Now we are in a position to provide a definition of bureaucratic management: Bureaucratic management is the method applied in the conduct of administrative affairs the result of which has no cash value on the market. Remember: We do not say that a successful handling of public affairs has no value, but that it has no price on the market, that its value cannot be realized in a market transaction and consequently cannot be expressed in terms of money.
If we compare the conditions of two countries, say Atlantis and Thule, we can establish many important statistical figures of each of them: the size of the area and of the population, the birth rate and the death rate, the number of illiterates, of crimes committed, and many other demographical data. We can determine the sum of the money income of all its citizens, the money value of the yearly social product, the money value of the goods imported and exported, and many other economic data. But we cannot assign any arithmetical value to the system of government and administration. That does not mean that we deny the importance or the value of good government. It means only that no yardstick can measure these things. They are not liable to an expression in figures.
It may well be that the greatest thing in Atlantis is its good system of government. It may be that Atlantis owes its prosperity to its constitutional and administrative institutions. But we cannot compare them with those of Thule in the same way as we can compare other things, for instance, wage rates or milk prices.
Bureaucratic management is management of affairs which cannot be checked by economic calculation.