The Online Library of Liberty

A project of Liberty Fund, Inc.

• 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

2.

Economics versus Planning and Totalitarianism

This is entirely an economic problem. It cannot be decided without entering into a full scrutiny of economics. The spurious catchwords and fallacious doctrines of the advocates of government control, socialism, communism, planning, and totalitarianism cannot be unmasked except by economic reasoning. Whether one likes it or not, it is a fact that the main issues of present-day politics are purely economic and cannot be understood without a grasp of economic theory. Only a man conversant with the main problems of economics is in a position to form an independent opinion on the problems involved. All the others are merely repeating what they have picked up by the way. They are an easy prey to demagogic swindlers and idiotic quacks. Their gullibility is the most serious menace to the preservation of democracy and to Western civilization.

The first duty of a citizen of a democratic community is to educate himself and to acquire the knowledge needed for dealing with civic affairs. The franchise is not a privilege but a duty and a moral responsibility. The voter is virtually an officeholder; his office is the supreme one and implies the highest obligation. A citizen fully absorbed by his scientific work in other fields or by his calling as an artist may plead extenuating circumstances when failing in this task of self-instruction. Perhaps such men are right in pretending that they have more important tasks to fulfill. But all the other intelligent men are not only frivolous but also mischievous in neglecting to educate and instruct themselves for the best performance of their duties as sovereign voters.

The main propaganda trick of the supporters of the allegedly “progressive” policy of government control is to blame capitalism for all that is unsatisfactory in present-day conditions and to extol the blessings which socialism has in store for mankind. They have never attempted to prove their fallacious dogmas or still less to refute the objections raised by the economists. All they did was to call their adversaries names and to cast suspicion upon their motives. And, unfortunately, the average citizen cannot see through these stratagems.

Consider, for instance, the problem of mass unemployment prolonged year after year. The “progressive” interprets it as an evil inherent in capitalism. The naive public is ready to swallow this explanation. People do not realize that in an unhampered labor market, manipulated neither by labor-union pressure nor by government-fixed minimum wage rates, unemployment affects only small groups for a short time. Under free capitalism unemployment is a comparatively unimportant temporary phenomenon; there prevails a permanent tendency for unemployment to disappear. Economic changes may bring about new unemployment. But at the wage rates established in a free labor market everyone eager to earn wages finally gets a job. Unemployment as a mass phenomenon is the outcome of allegedly “pro-labor” policies of the governments and of labor-union pressure and compulsion.

This explanation is by no means peculiar to those economists whom the “progressives” call “reactionaries.” Karl Marx himself was fully convinced that labor unions cannot succeed in raising wage rates for all workers. The Marxian doctrinaires for many years firmly opposed all endeavors to fix minimum wage rates. They deemed such measures contrary to the interests of the great majority of wage earners.

It is an illusion to believe that government spending can create jobs for the unemployed, that is, for those who cannot get jobs on account of the labor unions’ or the government’s policies. If the government’s spending is financed by noninflationary methods, that is, either by taxing the citizens or by borrowing from the public, it abolishes on the one hand as many jobs as it creates on the other. If it is financed by inflation, that is, either by an increase of money and bank notes in circulation or by borrowing from the commercial banks, it reduces unemployment only if money wages lag behind the rise of commodity prices, that is, if and so far as real wage rates drop. There is but one way toward an increase of real wage rates for all those eager to earn wages: the progressive accumulation of new capital and the improvement of technical methods of production which the new capital brings about. The true interests of labor coincide with those of business.

The approach to a grasp of economic problems does not consist in an indiscriminate assimilation of more or less disconnected facts and figures. It consists rather in a careful analysis and examination of conditions by reasonable reflection. What is needed above all is common sense and logical clarity. Go right to the bottom of things is the main rule. Do not acquiesce in superficial explanations and solutions. Use your power of thinking and your critical abilities.

It would be a serious blunder to believe that this recommendation of economic studies aims at a substitution of another brand of propaganda for the propaganda of the various governments and parties. Propaganda is one of the worst evils of bureaucracy and socialism. Propaganda is always the propaganda of lies, fallacies, and superstitions. Truth does not need any propaganda; it holds its own. The characteristic mark of truth is that it is the correct representation of reality, i.e., of a state of affairs that is and works whether or not anybody recognizes it. The recognition and pronouncement of truth is as such a condemnation of everything that is untrue. It carries on by the mere fact of being true.

Therefore let the false prophets go on. Do not try to imitate their policies. Do not try as they do to silence and to outlaw dissenters. The liars must be afraid of truth and are therefore driven to suppress its pronouncement. But the advocates of truth put their hopes upon their own rightness. Veracity does not fear the liars. It can stand their competition. The propagandists may continue to spread their fables and to indoctrinate youth. They will fail lamentably.

Lenin and Hitler knew very well why they abolished freedom of thought, speech, and the press, and why they closed the frontiers of their countries to any import of ideas from abroad. Their systems could not survive without concentration camps, censors, and hangmen. Their main instruments are the GPU and the Gestapo.

The British champions of socialization and bureaucratization are no less fully aware than the Bolsheviks and the Nazis of the fact that under freedom of speech and thought they will never achieve their ends. Professor Harold Laski is frank enough to declare that a restriction of Parliament’s powers is necessary to safeguard the transition to socialism.2 Sir Stafford Cripps, the favorite candidate of the self-styled liberals for Prime Minister, has advised a “Planning and Enabling Act” which, once passed by Parliament, could not be discussed, still less repealed again. By virtue of this act, which should be very general and leave all “details” to the Cabinet, the Government would be endowed with irrevocable powers. Its orders and decrees should never be considered by Parliament; neither should there be a recourse to the Courts of Justice. All offices should be manned by “staunch party members,” by “persons of known Socialist views.”3 The British “Council of Clergy and Ministers for Common Ownership” declares in a pamphlet to which the Bishop of Bradford wrote the foreword that the establishment of real and permanent socialism requires “that all the fundamental opposition must be liquidated, i.e., rendered politically inactive by disfranchisement, and, if necessary, by imprisonment.”4 Professor Joan Robinson of Cambridge University, second only to Lord Keynes himself in the leadership of the Keynesian school, is no less intolerant in her zeal to realize socialism. In her opinion “the notion of freedom is a slippery one.” It is “only when there is no serious enemy, without or within, that full freedom of speech can be safely allowed.” Mrs. Robinson is not only afraid of independent churches, universities, learned societies, and publishing houses, but no less of independent theaters and philharmonic societies. All such institutions, she contends, should be allowed to exist only “provided the regime is sufficiently secure to risk criticism.”5 And another distinguished advocate of British collectivism, J. G. Crow ther, does not shrink from praising the blessings of inquisition.6 What a pity the Stuarts did not live to witness the triumph of their principles!

Thus the most eminent advocates of socialism implicitly admit that their tenets and plans cannot stand the criticism of economic science and are doomed under a regime of freedom.

But as happily there are still some free countries left there is still some hope for a resurrection of truth.

[2. ]Laski, Democracy in Crisis (London, 1933), p. 87. For a masterful refutation of Laski’s anti-democratic ideas cf. Rappard, The Crisis of Democracy (Chicago, 1938), pp. 213–16.

[3. ]Cf. the brilliant article of James Truslow Adams, “Planners See Where Planning Leads” in Barron’s National Business and Financial Weekly of January 31, 1944, p. 3.

[4. ]Ibid.

[5. ]Joan Robinson, Private Enterprise or Public Control (Handbooks for Discussion Groups, published for the Association for Education in Citizenship by the English Universities Press Ltd.), pp. 13–14. It is strange that in the Preface to this booklet the Association declares “we advocate democracy” and points out that its objective is to train the citizens “in respect for the equal rights and freedoms of others.”

[6. ]J. G. Crowther, Social Relations of Science (Macmillan, 1941), pp. 331, 333.