Max Weber extolled the hierarchic-bureaucratic mode of organization: "Experience" - he claimed - "tends universally to show that the purely bureaucratic type of administrative organization... is, from a purely technical point of view, capable of attaining the highest degree of efficiency" (Weber, 1947, p. 337). Since Weber's time business and government bureaucracy has flourished. Between 1900 and 1950 the ratio of administrative personnel to production workers in U.S. industry grew from 10 per cent to 20 per cent (Bendix, 1956, p. 214)1. By 1983 it reached 48 per cent (Meyer, 1985, p. 37). The proportion of government employees (most of whom are bureaucrats) in the civilian labor force rose in the post-World War II period from 10 to 16 per cent (Meyer 1985 p. 37). A similar trend is noted throughout the industrialized world. Yet, far for being admired, bureaucrats ¨C especially those working for the government- are looked upon as "permanently bungling and inefficient individuals or, alternately, [as] individuals who carry out only those decisions that serve their own interests, rather than those of their superiors" (Breton and Wintrobe, 1982 pp. 6-7) But, "however much people complain about the 'evils of bureaucracy' it would be sheer illusion to think for a moment that continuous administrative work can be carried out in any field except by means of officials working in offices. The whole pattern of everyday life is cut to fit this framework" (Weber, 1947, p.337). Out of power politicians pledge that, if elected, they will curb the bureaucracy, but, when in office they seem unwilling or incapable to carry out their promise. Our goal is to reconcile Weber's claims in favor of bureaucracy with the arguments of the critics. The discussion is organized as follows. In Section 1 we present Weber's case in favor of a bureaucratic mode of organization Section 2 gives a brief description of major inquiries into the functioning of hierarchies. In Section 3 we present a simple model of an efficient Weberian bureaucracy. The Principal ¨C Agent problem confronting profit-oriented enterprises is discussed in Section 4; section 5 discusses the additional difficulties confronting public sector Bureaus. Niskanen's hypothesis of a bureau-maximizing bureaucracy, and of bureaucracy-maximizing politicians is examined in Section 6. The seventh section is devoted to the issue of efficiency vs. loyalty of bureaucratic employees The last section contains a brief summary of the major conclusions.
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