Are Government Organization Immortal?; Bureaucracy

ARE GOVERNMENT ORGANIZATIONS IMMORTAL?, by Herbert Kaufman, Washington, D.C.: Brookings Institution, 1976, 79pp., $2.50 (pb).

BUREAUCRACY, by Ludwig von Mises, Reprint ed., New Rochelle, N.Y.: Arlington House, 1970, 128pp., $5.00.

In his concise study, Brookings senior fellow Herbert Kaufman offers scant comfort to citizens who would like to see a reduction in the size and scope of Federal bureaucracy. For Kaufman not only answers his question in the affirmative but suggests that some yet-to-be-born Federal agencies will make their appearance from time to time and will take on the immortality of existing organizations. Having provided excellent insights into the origin and growth of government organizations and having shown why efforts to curb such growth usually come to naught, he concludes with the melancholy suggestion that the "only course open seems to go on as before."

This is hardly surprising to students of the American mixed economy. There has not been a time within memory when political campaigns didn't include promises to hack away at the Federal bureaucracy or to make it more "efficient" and responsive to the public. But it seems to have a life of its own, and, far from eliminating bureaucracy, most political leaders do not even succeed in halting its growth.

Why is this so, when many of them actually detest bureaucratic red tape and would, indeed, like to make government less complex? Although Kaufman supplies excellent reasons for the growth of government organizations, anybody who wants to understand the bureaucratic jungle more thoroughly would do well to consult the slender volume Bureaucracy, written more than 30 years ago by the late Ludwig von Mises. Although Mises was a free-market economist all the way, he was not necessarily a foe of bureaucracy.

As Mises saw it, bureaucracy has its rightful place in the scheme of things. "It is," he wrote, "a method of management which can be applied in different spheres of human activity. There is a field, namely, the handling of the apparatus of government, in which bureaucratic methods are required by necessity. What many people nowadays consider an evil is not bureaucracy as such, but the expansion of the sphere in which bureaucratic management is applied." (pp. 56-57; all quotes are from the London, 1945, ed.)

Bureaucracy was a relatively minor affliction when the government was sharply limited. Americans had been accustomed to a system predominantly under what Mises called business or profit management, and as the scope of government increased, they were appalled by the seeming waste and inefficiency of government bureaucratic management. There was a tendency to believe that these resulted from the ineptness of bureaucrats, whereas private business ventures attracted more capable individuals who "could get things done." Mises could not agree with this conclusion. As he saw it, there are good reasons why bureaucrats behave as they do, just as there are good reasons for most business practices in a free-market economy. Here's how Mises described both methods (pp. 58-59):

"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.…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."

From these brief definitions, it's possible to understand the essential difference between a large government organization and a private commercial establishment of similar size. The government organization is set up to carry out certain policies and to follow detailed rules and regulations fixed by a higher body, such as the legislative or executive branch. But since no procedure or regulation can cover every situation, there are times when the organization seems to operate stupidly and carelessly. Actually, however, no bureaucrat is really blameworthy if he has faithfully followed the rules. If mistakes have been made, the fault often lies with those who made the rules.

A large commercial organization also has its own policies and detailed rules and regulations, but no executive who fails to maintain profitability in his operations can escape criticism by insisting that he followed the rules. The firm can survive only by maintaining profitability, so all operations within the company eventually are forced to yield to that goal. This is often described as a ruthless system, yet it is also ruthless in weeding out the very practices of bureaucracy that now dismay so many people.

As Mises saw it, any government bureau must solve problems that are unknown to business management, and it is a mistake to judge the efficiency of a government department by comparing it with the working of an enterprise subject to the interplay of market forces. Quite often, for example, certain public administration practices may be the result of special political and institutional conditions.

The U.S. postal service, for example, has been operated as a bureaucracy since the early days of the republic. It has never been really efficient in comparison with private organizations of similar size. On the other hand, the postal service has always been subject to unusual political pressures that have directed its operations. It has been required to deliver mail to remote places without passing the additional costs on to the communities being served, to carry certain types of mail at greatly reduced rates, to have its rates set through the political process, to provide many services to Congress.

Obviously, then, we cannot remedy the shortcomings of bureaucratic management by appointing business executives to government posts. Such a businessman is no longer an entrepreneur, but a bureaucrat bound by rules and regulations that are beyond his reach.

Since bureaucratic methods are necessary in handling government activities, there is really only one way to limit bureaucracy, and that is by limiting government itself to certain activities that are clearly governmental in nature. Bureaucracy would be hardly noticed at all if it were encountered only in such organizations as police departments, military services, public records departments, and similar units of government. But it is proving to be intolerable now that it is being progressively extended to every phase of commercial, educational, and, increasingly, private life.

Nor is the mixed economy a safeguard against bureaucracy. It is true that private, profit-seeking firms, even when heavily regulated, sometimes retain a measure of freedom and efficiency in comparison with governmental enterprises. But it is a rare firm that can retain its vitality in the long run when regulation becomes pervasive and oppressive. Just as the individual entrepreneur becomes a bureaucrat when he joins government service, so does the individual firm tend to take on the characteristics of a bureaucracy when it comes under permanent government control. The most obvious examples of this in the American experience were the railroads, which had all the traits of government enterprises long before they collapsed and were taken over altogether.

Under the circumstances, it is not hard to see why government organizations—and bureaucracy—are beginning to seem immortal. If a majority of the people continue to favor the continuous expansion of government, believing that there are no constructive alternatives to such intervention, that is the consequence. Mr. Kaufman, though presenting a good analysis of the growth phenomenon, does not sound overly distressed by the prospect of bigger and bigger government. Mises, on the other hand, thought that eternal life for the bureaucracies will mean death for democracy.

Mises believed that a free market and personal freedom are inseparable. So far, the interventionists have only proved him right. They pay lip service to personal freedom, but under total bureaucracy real freedom just isn't in the rules!

Melvin Barger is director of corporate communications for Libbey-Owens-Ford Company. He is a graduate of the University of Toledo and has worked for the Wall Street Journal. He has received the George Washington Honor Medal from the Freedoms Foundation.