Capitalism’s secret love affair with bureaucracy | Financial Times
within which the relationship between capitalism and bureaucracy can be discussed in a more concrete way. German industrialization was undoubtedly. This article addresses the relationship between bureaucracy and democracy, bureaucratic politics and democratic politics. Bureaucratic theories and politics are. Bureaucracy and Capitalism. Dragan Stanisevski. Department of Political Science and Public. Administration, Mississippi State University,. Mississippi State, MS.
You've come to an old part of SW Online. We're still moving this and other older stories into our new format. In the meanwhile, click here to go to the current home page. Mises was an advocate of free-market capitalism at a time when Keynesianism ruled the roost.
Today, Mises' ideology has won out, yet his ideas fail utterly to describe reality. In spite of the move away from public ownership and toward private ownership, governments around the world have continued to take taxpayers' money and essentially use it to subsidize private industry and to enhance the instruments of repression and war.
Amid all the talk about the declining role of the state, state expenditure as a percentage of GDP has dramatically increased over the last quarter-century. What about private industry? Has allowing the free market to rip meant less corporate bureaucracy? Through the first half of the s, the heyday of neoliberal capitalism, the corporate bureaucracy in the U.
Corporate bureaucracy is not a product of "state interference" in the free market, but of the concentration and centralization of capital, the growth of the world market, and with it, the development of monopoly control of entire industries and markets by handfuls of giant transnational corporations. The main developments in public administration in the nineteenth century lay in the direction of combating what were thought of as aristocratic hangovers — advantages of birth or connections, patronage and sinecures and the corruption associated with this.
These were now seen as inimical to democracy, to the efficient and technically competent care for the health and safety, the economic and political welfare, of citizens, and to honest government. The Northcote-Trevelyan Report completed at the end of that year and embodied in an official state document was to have delayed — revolutionary influence upon the British Civil Service and through it upon many public services throughout the world.
It recommended the abolition of patronage and drew upon Chinese practice to urge recruitment by open competitive examinations under the supervision of a central examining board.
It proposed the reorganization of the office staff of the central departments into two broad classes — one to deal with intellectual work, the other with mechanical. It recommended the filling of higher posts by promotion from inside the service on the basis of merit rather than seniority. The Report, of course, led to much controversy. The principle of open competition in recruitment was not adopted until — but after appointees had to submit themselves to a pass examination even though they were still nominated by heads of departments.
Some departments began to introduce open competition on their own account. In less traditional and non-aristocratic societies such as the United States, the war there still not wholly won was against newer but open forms of patronage and new anti-democratic advantages: The movement represented by the Northcote-Trevelyan recommendations was neatly summed up in a report prepared for President Ulysses S. Grant by Dorman B. In President Grant had secured Congress approval to make new regulations for the admission of persons into the US Civil Service and appointed an advisory committee to draw up rules for competitive examinations.
Eaton, one of the advisers, was sent to Great Britain to report on the situation there after the implementation of the Northcote-Trevelyan proposal. Some of the principles and conclusions Eaton derived from his study summarized neatly the nineteenth-century trend in public administration in English-speaking democracies from the United States to Australia: Public office creates a relation of trust and duty of a kind which requires all authority and influence pertaining to it to be exercised with the same absolute conformity to moral standards, to the spirit of the constitution and the laws, and to the common interests of the people, which may be insisted upon in the use of public money or any other common property of the people; and, therefore, whatever difficulty may attend the practical application of the rule of duty, it is identically the same whether it be applied to property or to official discretion.
There can in principle be no official discretion to disregard common interests or to grant official favors to persons or to parties. So far as any right is involved, in filling offices, it is the right of the people to have the worthiest citizen in the public service for the general welfare; and the privilege of sharing the honors and profits of holding office appertains equally to every citizen in proportion to his measure of character and capacity which qualify him for such service.
The ability, attainments, and character requisite for the fit discharge of official duties of any kind — in other words, the personal merits of the candidate — are in themselves the highest claim upon an office.
Party government and the salutary activity of parties are not superseded, but they are made purer and more efficient, by the merit system of office, which brings larger capacity and higher character to their support Examinations in connection with investigations of character may be so conducted as to ascertain, with far greater certainty than by any other means, the persons who are most fit for the public service; and the worthiest thus disclosed may be selected for the public service by a just and non-partisan method, which the most enlightened public opinion will heartily approve.
Open competition presents at once the most just and practicable means of supplying fit persons for appointment. It is proved to have given the best public servants: Open competition is as fatal to all the conditions of a beaurocracy, sic as it is to patronage, nepotism and every form of favoritism, in the public service.
The merit system, by raising the character and capacity of the subordinate service, and by accustoming the people to consider personal worth and sound principles, rather than selfish interest and adroit management, as the controlling elements of success in politics, has also invigorated national patriotism, raised the standard of statesmanship, and caused political leaders to look more to the better sentiments and the higher intelligence for support.
Party political patronage was a special problem in America and in some other societies where it could extend down to the very lowest levels of the civil service. The Eaton recommendations were in fact stalemated. But in English-speaking democracies, the creation of a civil service recruited on merit and subject to parliamentary and legal checks and the scrutiny of a free press and public opinion led — at least among its supporters — to the belief that it did not deserve the unfavourable connotations of the word bureaucracy.
Walter Bagehot in The English Constitution contrasted bureaucracy not backed by wider experience and opinion with public administration in a parliamentary system with its frequent change of ministers — new men sensitive to outside opinion, able to reinvigorate the administrative process.
For Bagehot believed that a skilled bureaucracy, trained from early life to its special vocation, lacked the flexibility necessary for meeting new problems.
Permanence, hierarchy and professionalism, Laski insisted, were probably fundamental to the proper performance of a civil service. The inevitable tendency for such a service to degenerate into a caste with closed mind could be inhibited, but not infallibly prevented altogether. One should give the heads of departments a permanent place in public life, encourage direct and continuous contact with representative public associations, keep the retiring age of officials reasonably low and thus afford younger officials a chance of responsible work at a sufficiently early age.
Changing work assignments and contact with foreign officials were important, so were not penalizing those who wished to leave the service in the early years of their career and creating links between elected and appointed officials, e. Control of and protest against administrative discretion by publicity and by judicial action, e.
Max Weber, as Martin Albrow has reminded us, was also concerned with placing limitations on bureaucracy. He was not concerned with the danger of internal bureaucratic inefficiency — he believed true, ideal-type bureaucratic organization to be, above all, efficient.
Capitalism, Socialism and Bureaucracy
He worried rather about the inherent tendency of a bureaucracy to accumulate power. It had to be prevented from controlling the policy and action of the state or organization it was supposed to serve. It had become a politically stultified nation in which the vigour of the non-bureaucratic classes could not express itself.
Weber considered a number of mechanisms that might limit the scope of systems of authority in general and bureaucracy in particular. Albrow has summarized them as falling into five major categories. It thus limited bureaucracy by attacking its fundamental principle: Collegiality limiting one-person authority was an advantage, but the disadvantages in not reaching decisions quickly or attributing responsibility meant that it would tend to be overwhelmed by the monocratic principle. The separation of powers, dividing responsibility for the same function between two or more bodies, amounted to a similar limitation of monocratic principle.
It encouraged compromise between a number of interests but it could — and Weber believed it did and would — become inherently unstable, with one of the authorities gaining pre-eminence. Amateur administration by those with sufficient resources to spend their time in unremunerated activities provided less dependence on the centre and encouraged reliance on public esteem for authority.
But in modern specialized and complex societies amateurs had to be assisted by professionals and the latter tended to make the real decisions. Direct democracy sought to make officials directly guided by and answerable to an assembly through such devices as short terms of office, selection by lot and the permanent possibility of recall.
Socialism, Power Elites and Bureaucracy
As a method of administration it was feasible in small organizations or communities but even there the demand for expertise was a decisive counterweight. In the end, Weber came to see modern parliamentary democracy as providing the greatest possibility of a check on bureaucracy.
He was much less concerned with democratic values. Party leaders, for him, because they came out of the increasingly bureaucratic political parties of the modern world, were not dilettantes. Their charisma was tempered by the discipline and concern for routine demanded by the modern party machine.
The two faces of capitalism For much of the nineteenth century, the new capitalist order was seen as incorporating the reality of the demand for parliamentary democracy, legal equality for citizens, the guarantee of individual human rights, primarily against the state, and a defeasible i. Basically, however, capitalism was an economic concept.
It was the society of free enterprise, of industrial production for a market on the basis of private ownership, freedom of contract and freedom from unnecessary state controls or gratuitous government planning. Its supporters held, as an article of faith, that individual effort and commercial enterprise were the mainsprings of progress, the source of vigour and inventiveness, the creators of wealth.
Governments and their servants were essentially parasitic.
Socialism And Bureaucracy
Where eighteenth- and even early nineteenth-century attacks on bureaucracy emphasized its nature as a caste, its pseudo-aristocratic arrogance, its readiness to dominate, the attack shifts — as the century progresses — to the view that the power of the state is or will be at the expense of the development of citizens, of communal institutions and of individual enterprise. Bureaucrats are expert; they operate by well-tried and well-considered maxims and are staffed by trained people.
They perish by the immutability of their maxims; and, still more, by the universal law that whatever becomes a routine loses its vital principle Expanding functions of government and the greater efficiency of government would end in monopolizing the talent of the nation — the bureaucracy would do everything and nothing could be done outside it or against its wishes. For Bagehot, the skills of a bureaucracy had only the appearance of science; they were in truth inconsistent with the proper principles of the art of business.
Herbert Spencer, inexplicably but nevertheless most effectively the general and political mentor of a generation, attacked the Liberals in for espousing state intervention: The multiplicity of careers opened by a developing bureaucracy tempts members of society to acquiesce in or favour such further growth.
Montague, in The Limits of Individual Libertydeveloped the same theme, distinguishing the regulated servitude in which the citizens of continental bureaucracies lived from the identification between administration and the community assured in England by Parliament, the law courts and municipal liberties.
The French Revolution and the development of commercial society in Europe, we have argued, later appeared to many as either inaugurating or consummating the shift from the community of Gemeinschaft to the atomistic individualism of the Gesellschaft.
Where the Gemeinschaft elevates status, common ideology and tradition, the life of the community and human relationships, the Gesellschaft elevates the individual, his or her satisfactions, his or her rights. As both socialism and state interference and public administration grew in response to unbridled laissez-faire capitalism, the exponents of free enterprise, individual liberty and self-determination saw a new danger, no longer tied to aristocratic pretensions or the open elevation of social status and dependence.
That danger was the development of bureaucratic-administrative attitudes, ideologies and structures. These elevate neither human relationships nor individuals and their demands.
They emphasize rather social interests, socio-technical norms to which individuals are subordinate, the requirements of a total social province, concern or activity.
Here individuals are functionaries carrying on the activity or passive recipients benefiting from it, objects and not subjects. The paradox of capitalism lay in its principled opposition to bureaucratic management being accompanied by a process of economic development and rationalization which sought state support where it was advantageous and which led both to the bureaucratization of capitalist enterprises as they grew in size and scope and to the extension of the ideology of rational planning and calculation in social life.
For Weber, bureaucrats were becoming as inescapable in business as in government. The Victorians themselves, though much given to self-analysis, grossly misread many of the trends of the time and failed to allow for reversals, contradiction and complexity.
It was born of the first half of the nineteenth century in industrializing Europe. It constituted a critique of that new industrial society and its base in private ownership — a critique made in the light of the ideals and hopes of the French Revolution. It called for liberty, equality and fraternity, for human self-realization and self-determination at the concrete social and economic and not only at the formal constitutional and political level. It rejected, at least initially, all forms of external domination: But it found the key to the evils of the new capitalist society in private property, especially in the means of production.
But socialism proceeded to distinguish itself from populism and anarchism by accepting and indeed proclaiming the liberating potential of the new science and the new technology. It believed in progress and in the overwhelming significance, in human history? The age required new moralities, new forms of social organization.
It would thus make possible previously undreamt-of affluence and the elimination of the power of some men over others. That came in the s and s, when socialism proper was born, primarily in England and in France. It took to itself the labour theory of value developed in England by David Ricardo and the socialist Ricardians, the concept of exploitation and a savage critique of the social dislocation introduced by unchecked greed and private interests in the new industrial cities and barracks. This was a critique foreshadowed by Rousseau, who saw the modern city as a desert populated by wild animals.
Much of this new socialist ideology though certainly not all of it was derived from or inspired by the thought of Saint-Simonwhose disciples edited the Saint-Simonian newspaper Le Globe.
Society, the Saint-Simonians thought, needs to be planned and administered as a giant workshop.
Feudal society, feudal institutions and feudal mores required and were therefore dominated by men of the sword organizing the society for war. They ruled by authoritarian command backed by force. Industrial society, in contrast, is concerned with production and the harmony, cooperation and peace that are necessary for production. In modern conditions, such men scientists, engineers, doctors, pharmacists, seamen, clockmakers, farmers and bankers, for instance — are the most essential and useful to the nation, while the traditional great offices of the crown-marshals, cardinals, archbishops and bishops, prefects and sub-prefects, government employees, judges and rich non-working proprietors — make no significant contribution to the good of the state or of society and can easily be spared.
That, at least, was the theme of his famous Parabole, published, by coincidence, just before the assassination of the Duc de Berry in and therefore almost landing Saint-Simon in prison as having incited the assassination. For Saint-Simon and many of his followers, the administration of an industrial society would be a rational activity and would be seen as such by those affected. It would not be based on coercion or domination, but on the acceptance of common technological means and production goals by both the industrialist and his workers.
Saint-Simon himself, full of plans for canals, had placed bankers as entrepreneurs and financial administrators at the apex of his social pyramid, but his actual banker friends in Restoration Paris soon became alarmed at his subversive views on property and other matters.
His concept of rational administration did appeal to some of the graduates of the new Ecole Polytechnique and spread to rationally-minded reformers in Germany.
Saint-Simon, especially in his earlier works, thought that government in an industrial society would have only minimal policing functions.
It would protect workers from the unproductive activities of idlers and speculators, and it would maintain order, security and freedom in production — matters that could in time become the collective responsibility of all citizens.
All else is not government but management. Proper administration was the recognition of the objective requirements of industry and production. The Saint-Simonian Bazard, in the lectures later assembled in the Exposition of Saint-Simonian doctrine, called for public ownership of the means of production and recognized that this involved the creation of a substantial and pervasive directing authority for society: If, as we proclaim, mankind is moving toward a state in which all individuals will be classed according to their capacities and remunerated according to their work, it is evident that the right of property, as it exists, must be abolished, because, by giving to a certain class of men the chance to live on the labor of others and in complete idleness, it preserves the exploitation of one part of the population, the most useful one, that which works and produces, in favor of those who only destroy The social institution of the future will direct all industries in the interest of the whole society, and especially of the peaceful laborers.
We call this institution provisionally the general banking system, while entering all reservations against the too narrow interpretation which one might give to this term. The system will include in the first instance a central bank which constitutes the government in the material sphere; this bank will become the depository of all wealth, of the entire productive fund, of all instruments of production, in short of everything that today makes up the mass of private property.
There all decisions would be collective. The subsequently disgraced Soviet jurist E. Pashukanis put it most clearly in his General Theory of Law and Marxism when he distinguished law as the necessarily contradictory attempt to reconcile and regulate the demands of separate and conflicting juridical subjects, representing the abstract individualism of buyers and sellers competing in and for a market, from scientific administration as the application of socio-technical norms.
Society under communism would be administered like a hospital, where the administrator is guided by the rules of health and the function and purpose of a hospital. Socialists in the nineteenth century, before they attained government, had no time for bureaucracy and bureaucrats or, rather, for what they were more likely to call the state and its officials.
Saint-Simon complained that officials saw government posts as theirs by right and not as sources of duties. These officials served their own interests and not the interests of those governed. They wanted high pay for themselves and extracted high taxes from the people. Hegel, Marx claimed, separated the state and bureaucracy from civil society without giving the concept of bureaucracy any concrete content apart from that of formality and formalism.
On the contrary, the actual bureaucratic mentality and its central organizing principle of hierarchy made the bureaucracy a powerful source of abuse, encouraging internal dependence, secrecy and the creation of barriers against outsiders. Bureaucracy was not, as Hegel claimed, the universal estate or corporation concretizing and embodying reason and concern for the common good.
It was a particular closed society within the state; it served its own and not the general interest. It treated society as material to be shaped; it imposed its own will or that of the state upon it.
It represented at best an illusory general interest, for the existence and the power of bureaucracy were made possible only by the insoluble contradictions of civil society, by the irreconcilability of particular interests. It did not replace these by a general interest; it simply added another particular interest.
Both state and bureaucracy were a product of alienation, of the separation of community interest from the community itself. As a result, that interest falls into other, sectional hands, becomes a private interest. Bureaucracies, for Marx, can become powerful and almost autonomous — but only politically, never economically — when there is a stalemate in the class war and the bourgeoisie needs the state for survival.
According to Marx, this happened in France in because the bourgeoisie had already lost and the working class had not yet acquired the capacity to rule the nation. Marx had planned a special volume on the state for his initial project of a six-volume work on political economy, of which Das Kapital is only part.
In his letter to Kugelmann of 12 AprilMarx made the degree of bureaucratization of a society determine the degree of violence the proletariat would need to overthrow its ruling class. In England, the United States and perhaps the Netherlands, he wrote, there were better chances for a peaceful transition to proletarian control; in the bureaucratic societies in other parts of the continent there would have to be violent revolution aimed at the bureaucratic structure itself.
Certainly, in the same year Marx was saying, in his Civil War in France and especially in the drafts of that essay on the Paris Commune, that earlier revolutions had only perfected the state machinery instead of throwing off that dreaded incubus. The working class, he now believed, could not simply lay hold of the ready-made state machinery and wield it for its own purpose — it would have to smash it.
Marx did not at any stage think that administrative functions would simply wither away. Functionaries would also survive, at least in the transition to socialism; but they would be paid less, their tenure would be less secure and the general cost of administration not directly appertaining to production would be significantly diminished from the outset.
In factories themselves, the present barracks-like discipline, with its overseers, its supervising officers and sergeants, would be replaced by cooperation and coordination. There would be authority but it would be the rational voluntarily accepted authority required in all forms of cooperation.
It would not be imposed by capitalists standing outside the process of production and not participating in it.
This would be even more so since the unwilling and alienated detail worker, prevented from seeing the process of production as a whole, would be. An association of producers would take the place of coercive direction by political and economic bosses. Socialism from the beginning held together disparate and conflicting hopes and beliefs. The conflict between them was evinced from time to time in bitter struggles between the elevation of the general social interest and that of the working class, between centralization and spontaneity, evolutionary socialism and revolutionary communism, between Marxists and anarchists, between state socialism and syndicalism.
Behind all this lay the fundamental tension between the socialist elevation of the informal community, of the status-less, unauthoritarian Gemeinschafton the one hand, and of centralized planning and control, of the bureaucratic-administrative planned society, on the other.
In western Europe, by the late nineteenth century, the majority labour movement that was to form the Second International was coming to see democratic elections and the capture of state power through the ballot-box as the proper, irresistible course for socialism in the West.
The state would not wither away but would be used democratically by the working masses to protect their interests and those of society as a whole, to nationalize at least the commanding heights of industry and commerce — banks, railways, heavy industry and much else. It reconciled the initial tension between socialism as the elevation of the public interest and socialism especially early communism as elevating the proletariat against other classes by treating the working masses as the vast majority of mankind.
Democracy and socialist policies, the opening of careers to all talented individuals and an egalitarianism that would reject unearned authority — the authority of origin or wealth — would be sufficient, many believed, to convert the bureaucracies of the past into genuine bodies of public servants and the state into what indeed finally became, in some countries, the welfare state.
On the Left, the criticism of this elevation of the democratic state and its public service as capable of serving, relatively selflessly, the public interest came primarily from the anarchists and from the communists when speaking of states not run by them, states in which private owners had not been expropriated.
They were able to do so because, in the new conditions of modern society, education was a form of property and they sought to keep education to themselves.