Professional Documents
Culture Documents
2 (51) - 2009
Series V: Economic Sciences
THE EVOLUTION
OF THE CONCEPT OF BUREAUCRACY
O. IEREAN 1 G. BRTUCU1
Abstract: The first half of the paper defines the concept of bureaucracy, its
evolution over the time and the current academic debates. A short review of
the most debatable theories written by Lowi, Niskanen, Dunleavy and
Choudhury is included. The second half focuses on the three concepts of
power put forward by Russel and the non-paid goals bureaucratic offices
pursue on a daily basis. The paper also analyses the issue of monitoring the
output of bureaucratic offices.
1
PHD Candidate, Marketing, Transilvania University of Braov
246 Bulletin of the Transilvania University of Braov Vol. 2 (51) - 2009 Series V
began to take in more and more revenue, but the government and bureaucrats have
while the role of administrators increased an effect on the interest groups and the
as the functions of government multiplied. public. The entire system is codependent
Along with this expansion, came the on each other.
recognition of corruption and nepotism William Niskanen's 1971 budget-
within the managerial system. All these led maximizing model completed Lowi's
to a civil service reform on a large scale in claims: Lowi claimed that governments
many countries towards the end of the 19th failed to exercise oversight, Niskanen
century. argued that rational bureaucrats will
always and everywhere seek to increase
2. Modern Debates on Bureaucracy their budgets, thereby contributing strongly
Modern academics asked themselves to to state growth. Niskanen went on to serve
which extent elected officials do control on the U.S. Council of Economic Advisors
their bureaucratic agents. Because under President Reagan and his model
bureaucrats have more information than provided a strong underpinning for the
elected officials about what they are doing worldwide move towards the reduction of
and what they should be doing, bureaucrats public spending and the introduction of
might have the ability to implement privatization in the 1980s and 1990s.
policies or regulations that are against Two branches of theories have arisen in
public interest. These concerns led to the response to these claims. The first focuses
"Congressional abdication" hypotheses, a on bureaucratic motivations: Niskanen's
claim that the American Congress had left general approach was criticised by a range
its authority over public policy to of authors who argued that officials'
appointed bureaucrats. motivations are more public interest-
Theodore Lowi initiated this debate by orientated than Niskanen allowed. The
concluding in a 1979 book that the U.S. bureau-shaping model, made by Patrick
Congress does not exercise effective Dunleavy, also argues against Niskanens
control over bureaucratic agencies. He that rational bureaucrats should only
argues that policies are made by "iron maximize the part of their budget that they
triangles", consisting of interest groups spend on their own agency's operations or
appointed bureaucrats and Congressional give to contractors or powerful interest
subcommittees. It is thought that since groups, that are able to organize a flow-
1979, interest groups have taken a large back of benefits to senior officials. For
role and now do not only effect example, rational officials will get no
bureaucracy, but also the budgets. The idea benefit from paying out larger welfare
of "iron triangles" has evolved to "iron checks to millions of poor people, since the
hexagons" and then to a "hollow sphere." bureaucrats' own utilities are not improved.
The relationships between the It should be expected that bureaucracies
government, interest groups, bureaucrats maximize budgets in areas like police
and the general public, all have an effect forces and defence, but not in areas like
on each other. Without one of these pieces welfare state spending.
the entire structure would completely A second branch of responses has
change. This relationship is considered a focused more on Lowi's claims, asking
network so that not one single piece can whether governments can control
describe or control the entire process. bureaucrats. This research is motivated by
The public votes in the government and the following concern: if we wish to
the interest groups provide information, believe that we live in a democracy, then it
ierean, O. et al.: The Evolution of the Concept of Bureaucracy 247
the right to set the agenda by which the acting out a part and those at the top of the
institution will choose that action. bureaucracies are as full of power as those
It is the third source of influence Russell at the bottom. All power is purely
listed that is most closely related to the procedural.
general notion of political power.
Education, propaganda and persuasion are 4. The Goals of Bureaucrats
all forms of information. Information has The bureaucratic clerk pursues power.
value, or grants power, only if there is The economic entrepreneur pursues profit.
uncertainty. Uncertainty creates the In Knight's (1921) theory of profit, profit
potential to exercise power and exits because of uncertainty and is earned
information provides the capacity to do it. by those who possess the daring and
Political power means inducing someone information to allow them to make correct
to do something that he/she did not want to decisions under uncertainty. So, there is a
do, as when citizen X gets an institution to close link between the economic theory of
choose action A when all but citizen X profit and the political theory of power.
favour an alternative action B. Both profit and power exist because of
The uncertainty of all institution uncertainty and both accrue to the
members gives citizen X the power to possessors of information.
induce the institution to choose action B In the modern corporation, the
over C, action C over D and so on until information gatherers and processors of
action A is reached. But if all institution information are the managers. They are the
members vote action B over A, they could possessors of power. A major difference
impose action B by not voting for action C between the business corporation and the
against B. public institution is that the power of
Returning to Russell's list of sources of managers can be paid off. The business of
power, it is easy to see that it is the corporations is making profits and
uncertainty that surrounds a dictator's use managers as information gatherers are its
of physical power or a supervisor's list of main beneficiaries.
rewards and punishments that allows these Legally, corporations belong to the
people to control their subordinates. If stockholders and the custom is that they
citizen Y knows with certainty that citizen are the rightful beneficiaries of corporate
X will give him a reward if he does action profits. So, managers are unable to pay
A, then citizen Y, in carrying out action A, themselves all the profits they create. They
exercises as much power over citizen X as are forced to claim corporate profits in less
X does over Y. In a bureaucracy in which conspicuous ways than simply salaries and
no uncertainty exists, authority might exist, cash bonuses. Numerous substitute goals
but no real power will accompany have appeared: on-the-job consumption,
authority. excess staff and emoluments, security and
All employees of an institution would a range of non-paid goals.
know all of the possible events that might Many of the non-paid goals of managers
happen and all could predict the outcomes are correlated with the size or growth in
or decisions that would follow. Employee size of the corporation. Large size
procedures would be completely codified corporations can also be used as a
and both the supervisor's and the justification for higher compensation
employee's reaction to any situation would packages and thus can allow managers to
be very predictable. In a world of complete justify greater direct cash payments to
certainty, all individuals are essentially themselves.
ierean, O. et al.: The Evolution of the Concept of Bureaucracy 249
The bigger and more complex the firm be a monopsonist. A public good is by
is, the more difficult it is for stockholders definition consumed by all the people and
to monitor the activities of managers and the agent of all the people is a monopsonist
the more power managers have. Size and buyer on their behalf. It is known that the
growth in size are possible goals, along government may not engage in the supply
with profits, of corporate managers. of only pure public goods, but it remains
The pursuit of profits is not the the sole agent of whatever interest group it
legitimate goal of public institution and so, represents in dealing with public
it is even more difficult for public bureaucracies. Even if the government acts
bureaucrats to convert the power they have as the sole agent for the population, or an
into income. The non-paid goals of interest group, it does not necessarily have
management become the logical objectives to buy from a single source, even though it
of the public bureaucrat. Among these, size often does.
and risk aversion have received the most The usual reason for granting a bureau a
attention. The first systematic effort to monopoly on the provision of a given
study bureaucracies within a public choice service is to avoid wasteful duplication.
framework was made by William There is some validity in this justification,
Niskanen. but the monopoly nature of most bureaus
One of the key characteristics of a frees them from competitive pressure to be
government institution is the nonmarket efficient and denies the funding agency an
nature of its output. An institution does not alternative source of information by which
typically supply a number of units of to gauge the efficiency of the monopolist
output as such, but levels of activities from bureaus.
which output levels must be inferred. The The inefficient production of a bureau's
Ministry of Defence maintains numbers of services is also affected by the scheme of
combat personnel and weapon systems, compensation of bureaucrats. While
although it supplies various units of managers in a private corporation can
defensive and offensive capabilities. Its usually claim a share of the savings/profits
budget is defined over the activities it generated by an increase in efficiency,
maintains, even though the purchasers, the public bureaucrats' salaries are either
taxpayers and their representatives, are unrelated or indirectly related to improved
ultimately interested only in the final efficiency. So, the public bureau is
outputs of combat capabilities that these characterized by weak external control on
activities produce. The reason for this is efficiency and weak internal incentives.
obvious: it is easier to count soldiers and If the bureaucrat has no financial
airplanes than it is units of protection. This incentive to pursue greater efficiency, what
measurement problem, inherent in all of are his goals, and how are they related to
the goods and services that public bureaus efficiency? Niskanen listed the following
provide, creates a monitoring problem for possible goals of a bureaucrat: salary,
the funding and control agencies. Given perquisites of the office, public reputation,
the immeasurable nature of a bureau's power, patronage, output of the bureau,
outputs, how can the purchaser monitor the ease of making changes and ease of
efficiency of its production? managing the bureau. He then asserts that
The monitoring problem is intensified by all but the last two are positively related to
the bilateral monopoly nature of the the size of the budget.
bureau-sponsor relationship, which states
that the buyer of a bureau's output would
250 Bulletin of the Transilvania University of Braov Vol. 2 (51) - 2009 Series V