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

3.

The Plain Citizen versus the Professional Propagandist of Bureaucratization

The aim of the popularization of economic studies is not to make every man an economist. The idea is to equip the citizen for his civic functions in community life.

The conflict between capitalism and totalitarianism, on the outcome of which the fate of civilization depends, will not be decided by civil wars and revolutions. It is a war of ideas. Public opinion will determine victory and defeat.

Wherever and whenever men meet for discussing any affairs of their municipality, state, or nation, public opinion is in the process of evolving and changing, however trifling the immediate topic concerned may be. Public opinion is influenced by anything that is spoken or done in transactions between buyers and sellers, between employers and employees, between creditors and debtors. Public opinion is shaped in the debates of countless representative bodies, committees and commissions, associations and clubs, by editorials and letters to the editor, by the pleading of lawyers and by the opinions of judges.

In all these discussions the professionals have an advantage over the laymen. The odds are always in favor of those who devote all their effort exclusively to one thing only. Although not necessarily experts and often certainly not more clever than the amateurs, they enjoy the benefit of being specialists. Their eristic technique as well as their training is superior. They come to the encounter with rested mind and body, not tired after a long day’s work like the amateurs.

Now, almost all these professionals are zealous advocates of bureaucratism and socialism. There are, first of all, the hosts of employees of the governments’ and the various parties’ propaganda offices. There are furthermore the teachers of various educational institutions which curiously enough consider the avowal of bureaucratic, socialist, or Marxian radicalism the mark of scientific perfection. There are the editors and contributors of “progressive” newspapers and magazines, labor-union leaders and organizers, and finally leisured ambitious men anxious to get into the headlines by the expression of radical views. The ordinary businessman, lawyer, or wage earner is no match for them.

The layman may brilliantly succeed in proving his argument. It is of no use. For his adversary, clothed with the full dignity of his office or his professorship, shouts back: “The fallacy of the gentleman’s reasoning has long since been unmasked by the famous German professors, Mayer, Müller, and Schmid. Only an idiot can still cling to such antiquated and done-for ideas.” The layman is discredited in the eyes of the audience, fully trusting in professional infallibility. He does not know how to answer. He has never heard the names of these eminent German professors. Thus he does not know that their books are simple humbug, full of nonsense, and that they did not touch the problems which he raised. He may learn it later. But that cannot alter the fact that he has been defeated on the spot.

Or the layman may cleverly demonstrate the impracticability of some project suggested. Then the professional retorts: “This gentleman is so ignorant as not to know that the scheme proposed succeeded very well in socialist Sweden and in red Vienna.” Again our layman is silenced. How can he know that almost all English-language books on Sweden and Vienna are propaganda products badly distorting the facts? He has not had the opportunity of getting correct information from the original sources.

The climax of the professional’s oratory is, of course, always the reference to Russia, the paradise of the workers and peasants. For almost thirty years only fanatical communists and fellow travelers were permitted to enter Russia. Their reports are uncritical glorifications of the Soviets, some of them utterly dishonest, the rest childish in their naive credulity. It is one of the most comforting facts that some of these travelers abandoned in Russia their pro-Soviet leanings and, back home, published unvarnished accounts. But the professionals easily dispose of these books by calling their authors “Fascists.”

What is needed is to make the civic leaders fit for such encounters with professional preachers of bureaucratization and socialization. It is hopeless to stop the trend toward bureaucratization by the mere expression of indignation and by a nostalgic glorification of the good old times. These old days were not so good as they appear to some of our contemporaries. What was great in them was their reliance on the tendency toward improvement inherent in the system of unhampered market economy. They did not believe in the government’s godlikeness. This was their glory.

The most detrimental outcome of the average citizen’s repugnance to a serious concern with economic problems is his readiness to back a program of compromise. He looks upon the conflict between capitalism and socialism as if it were a quarrel between two groups—labor and capital—each of which claims for itself the whole of the matter at issue. As he himself is not prepared to appraise the merits of the arguments advanced by each of the parties, he thinks it would be a fair solution to end the dispute by an amicable arrangement: Each claimant should have a part of his claim. Thus the program of government interference with business acquired its prestige. There should be neither full capitalism nor full socialism, but something in between, a middle way. This third system, assert its supporters, should be capitalism regulated and regimented by government interference with business. But this government intervention should not amount to full government control of all economic activities; it should be limited to the elimination of some especially objectionable excrescences of capitalism without suppressing the activities of the entrepreneur altogether. Thus a social order will result which is allegedly as far from full capitalism as it is from pure socialism and, while retaining the advantages inherent in each of these two systems, will avoid their disadvantages. Almost all those who do not unconditionally advocate full socialism support this system of interventionism today and all governments which are not outright and frankly pro-socialist have espoused a policy of economic interventionism. There are nowadays very few who oppose any kind of government interference with prices, wage rates, interest rates, and profits and are not afraid to contend that they consider capitalism and free enterprise the only workable system, beneficial to the whole of society and to all its members.

Yet, the reasoning of the advocates of this middle solution is entirely fallacious. The conflict between socialism and capitalism is not a struggle between two parties for a greater share in the social dividend. To see the matter this way is tantamount to a full acceptance of the tenets of the Marxians and the other socialists. The adversaries of socialism deny that any class or group would fare better under socialism than under outright capitalism. They contest the thesis that the workers would be better off in a socialist commonwealth and are, consequently, wronged by the very existence of the capitalist system. They do not recommend capitalism for the sake of selfish interests of the entrepreneurs and capitalists but for the sake of all members of society. The great historical conflict concerning the problem of society’s economic organization cannot be dealt with like a quarrel between two businessmen concerning an amount of money; it cannot be solved by splitting the difference.

Economic interventionism is a self-defeating policy. The individual measures that it applies do not achieve the results sought. They bring about a state of affairs, which—from the viewpoint of its advocates themselves—is much more undesirable than the previous state they intended to alter. Unemployment of a great part of those ready to earn wages, prolonged year after year, monopoly, economic crisis, general restriction of the productivity of economic effort, economic nationalism, and war are the inescapable consequences of government interference with business as recommended by the supporters of the third solution. All those evils for which the socialists blame capitalism are precisely the product of this unfortunate, allegedly “progressive” policy. The catastrophic events which are grist for the mills of the radical socialists are the outcome of the ideas of those who say: “I am not against capitalism, but . . .” Such people are virtually nothing but pacemakers of socialization and thorough bureaucratization. Their ignorance begets disaster.

Division of labor and specialization are essential features of civilization. But for them, both material prosperity and intellectual progress would be impossible. The existence of an integrated group of scientists, scholars, and research workers is an outcome of the division of labor just as is the existence of any other class of specialists. The man who specializes in economics is a specialist like all other specialists. The further advancement of economic science will in the future also be an achievement of men devoting all their endeavors to this task.

But it would be a fateful error for the citizens to leave concern with economic studies to the professionals as their exclusive domain. As the main issues of present-day politics are essentially economic, such a resignation would amount to a complete abdication of the citizens for the benefit of the professionals. If the voters or the members of a parliament are faced with the problems raised by a bill concerning the prevention of cattle diseases or the construction of an office building, they may leave the discussion of the details to the experts. Such veterinarian and engineering problems do not interfere with the fundamentals of social and political life. They are important but not primary and vital. But if not only the masses but even the greater part of their elected representatives declare: “These monetary problems can only be comprehended by specialists; we do not have the inclination to study them; in this matter we must trust the experts,” they are virtually renouncing their sovereignty to the professionals. It does not matter whether or not they formally delegate their powers to legislate or not. At any rate the specialists outstrip them. The bureaucrats carry on.

The plain citizens are mistaken in complaining that the bureaucrats have arrogated powers; they themselves and their mandatories have abandoned their sovereignty. Their ignorance of fundamental problems of economics has made the professional specialists supreme. All technical and juridical details of legislation can and must be left to the experts. But democracy becomes impracticable if the eminent citizens, the intellectual leaders of the community, are not in a position to form their own opinion on the basic social, economic, and political principles of policies. If the citizens are under the intellectual hegemony of the bureaucratic professionals, society breaks up into two castes: the ruling professionals, the Brahmins, and the gullible citizenry. Then despotism emerges, whatever the wording of constitutions and laws may be.

Democracy means self-determination. How can people determine their own affairs if they are too indifferent to gain through their own thinking an independent judgment on fundamental political and economic problems? Democracy is not a good that people can enjoy without trouble. It is, on the contrary, a treasure that must be daily defended and conquered anew by strenuous effort.

Conclusion

The analysis of the technical characteristics of bureaucratic management and of its opposite, profit management, provides a clue for a fair and unbiased valuation of both systems of doing things under the division of labor.

Public administration, the handling of the government apparatus of coercion and compulsion, must necessarily be formalistic and bureaucratic. No reform can remove the bureaucratic features of the government’s bureaus. It is useless to blame them for their slowness and slackness. It is vain to lament over the fact that the assiduity, carefulness, and painstaking work of the average bureau clerk are, as a rule, below those of the average worker in private business. (There are, after all, many civil servants whose enthusiastic fervor amounts to unselfish sacrifice.) In the absence of an unquestionable yardstick of success and failure it is almost impossible for the vast majority of men to find that incentive to utmost exertion that the money calculus of profit-seeking business easily provides. It is of no use to criticize the bureaucrat’s pedantic observance of rigid rules and regulations. Such rules are indispensable if public administration is not to slip out of the hands of the top executives and degenerate into the supremacy of subordinate clerks. These rules are, moreover, the only means of making the law supreme in the conduct of public affairs and of protecting the citizen against despotic arbitrariness.

It is easy for an observer to indict the bureaucratic apparatus for extravagance. But the executive with whom the responsibility for perfect service rests sees the matter from another angle. He does not want to run too high a risk. He prefers to be on the safe side and to be doubly sure.

All such deficiencies are inherent in the performance of services which cannot be checked by money statements of profit and loss. Indeed we would never have recognized that they really are deficiencies if we were not in a position to compare the bureaucratic system with the operation of profit-seeking enterprise. This much-abused system of the “mean” striving for profit made people efficiency conscious and eager for the utmost rationalization. But we cannot help it. We must put up with the fact that one cannot apply to a police department or to the office of a tax collector the well-tried methods of profit-seeking business.

Yet the whole matter takes on a quite different meaning in view of the fanatical endeavors to transform the entire apparatus of production and distribution into a mammoth bureau. Lenin’s ideal of taking the organization of the government’s postal service as the pattern of society’s economic organization and of making every man a cog in a vast bureaucratic machine1 makes it imperative to unmask the inferiority of bureaucratic methods when compared with those of private business. The aim of such a scrutiny is certainly not to disparage the work of tax collectors, customs officers, and patrolmen or to belittle their achievements. But it is necessary to show in what essential respects a steel plant differs from an embassy and a shoe plant from a marriage license bureau, and why it would be mischievous to reorganize a bakery according to the pattern of the post office.

What is called in a very biased terminology the substitution of the service principle for the profit principle would result in an abandonment of the only method making for rationality and calculation in the production of necessities. The profit earned by the entrepreneur is expressive of the fact that he has well served the consumers, that is, all the people. But with regard to the performance of bureaus no method for establishing success or failure by calculation procedures is available.

In any socialist system the central board of production management alone would have the power to order, and everybody else would have to carry out the orders received. All people except the production czar would have to comply unconditionally with instructions, codes, rules, and regulations drafted by a superior body. Of course every citizen might have the right to suggest some changes in this immense system of regimentation. But the way from such a suggestion to its acceptance by the competent supreme authority would at best be as far and onerous as the way is today from a letter to the editor or an article in a periodical suggesting an amendment of a law to its passage by the legislature.

There have been in the course of history many movements asking with enthusiasm and fanaticism for a reform of social institutions. People fought for their religious convictions, for the preservation of their civilization, for freedom, for self-determination, for the abolition of serfdom and slavery, for fairness and justice in court procedure. Today millions are fascinated by the plan to transform the whole world into a bureau, to make everybody a bureaucrat, and to wipe out any private initiative. The paradise of the future is visualized as an all-embracing bureaucratic apparatus. The most powerful reform movement that history has ever known, the first ideological trend not limited to a section of mankind only but supported by people of all races, nations, religions, and civilizations, aims at all-round bureaucratization. The post office is the model for the construction of the New Jerusalem. The post-office clerk is the prototype of future man. Streams of blood have been shed for the realization of this ideal.

In this book we are discussing not persons but systems of social organization. We do not mean that the post-office clerk is inferior to anybody else. What must be realized is only that the straitjacket of bureaucratic organization paralyzes the individual’s initiative, while within the capitalist market society an innovator still has a chance to succeed. The former makes for stagnation and preservation of inveterate methods, the latter makes for progress and improvement. Capitalism is progressive, socialism is not. One does not invalidate this argument by pointing out that the Bolshevists have copied various American innovations. So did all oriental peoples. But it is a non sequitur to deduce from this fact that all civilized nations must copy the Russian methods of social organization.

The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office. Every man but one a subordinate clerk in a bureau, what an alluring utopia! What a noble cause to fight for!

Against all this frenzy of agitation there is but one weapon available: reason. Just common sense is needed to prevent man from falling prey to illusory fantasies and empty catchwords.

The typeface used in setting this book is Electra, designed in 1935 by the great American typographer William Addison Dwiggins. Dwiggins was a student and associate of Frederic Goudy and served for a time as acting director of Harvard University Press. In his illustrious career as typographer and book designer (he coined the term “graphic designer”), Dwiggins created a number of typefaces, including Metro and Caledonia, and designed as well many of the typographic ornaments or “dingbats” familiar to readers.

Electra is a crisp, elegant, and readable typeface, strongly suggestive of calligraphy. The contrast between its strokes is relatively muted, and it produces an even but still “active” impression in text. Interestingly, the design of the italic form—called “cursive” in this typeface—is less calligraphic than the italic form of many faces, and more closely resembles the roman.

This book is printed on paper that is acid-free and meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials, z39.48–1992. (archival)

Book design adapted by Erin Kirk New, Watkinsville, Georgia, after a design by Martin Lubin Graphic Design, Jackson Heights, New York

Typography by Newgen

Printed and bound by Worzalla Publishing Company, Stevens Point, Wisconsin

[1. ]Lenin, State and Revolution (1917; New York ed., 1935), p. 44.