Bureaucracy
30 August 2007
SUGGESTED
Monetary Policy
A non-technical guide to the economics of boom and bust
1 October 2004
Economic Theory
Government and Institutions
Bureaucracy' is Ludwig von Mises' classic examination of the nature of economic management by the state
‘Bureaucracy is the clearest and most concise version of the calculation critique of socialism. There are many subtleties to this book, but the main points are straightforward. Mises contrasts profit management with bureaucratic management. To Mises, bureaucratic management is necessary as far as a few basic public services are concerned.
However, the adoption of socialism would mean the extension of bureaucratic management to all areas of the economy. The problem with this is that bureaucracies are inflexible. Changing economic conditions require the adaptation of production. Entrepreneurs implement changes in production because they seek profit. Mises explains why bureaucrats would act irresponsibly – they are not checked by profit and loss accounting. Since public services lack a cash value as generated by markets the costs of increasing public services are unknown. Bureaucratic managers would thus over expand their operations without realizing it.
Such bureaucratic excesses must be limited by restrictive rules. Hence bureaucracies lack the flexibility of entrepreneurial capitalism. Bureaucracy is the shortest and surest path to understanding the merits of free markets and the dangers of socialism.’ Dr Doug Mackenzie
1996, 1969, 1944, Published by Libertarian Press Inc, ISBN 0-910 88434 X, 138pp
However, the adoption of socialism would mean the extension of bureaucratic management to all areas of the economy. The problem with this is that bureaucracies are inflexible. Changing economic conditions require the adaptation of production. Entrepreneurs implement changes in production because they seek profit. Mises explains why bureaucrats would act irresponsibly – they are not checked by profit and loss accounting. Since public services lack a cash value as generated by markets the costs of increasing public services are unknown. Bureaucratic managers would thus over expand their operations without realizing it.
Such bureaucratic excesses must be limited by restrictive rules. Hence bureaucracies lack the flexibility of entrepreneurial capitalism. Bureaucracy is the shortest and surest path to understanding the merits of free markets and the dangers of socialism.’ Dr Doug Mackenzie
1996, 1969, 1944, Published by Libertarian Press Inc, ISBN 0-910 88434 X, 138pp
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