Comments on: Mises’s Bureaucracy http://organizationsandmarkets.com/2006/09/12/misess-bureaucracy/ Economics of organizations, strategy, entrepreneurship, innovation, and more Thu, 24 Jul 2008 03:31:50 +0000 http://wordpress.org/?v=MU By: Kurt http://organizationsandmarkets.com/2006/09/12/misess-bureaucracy/#comment-2536 Kurt Thu, 14 Sep 2006 19:48:09 +0000 http://organizationsandmarkets.wordpress.com/2006/09/12/misess-bureaucracy/#comment-2536 "A businessman can always tell how well a section of his enterprise is doing by looking at the profit-and-loss accounts." That is, until the company becomes so "large," that internal calculation is not possible anymore... “A businessman can always tell how well a section of his enterprise is doing by looking at the profit-and-loss accounts.”
That is, until the company becomes so “large,” that internal calculation is not possible anymore…

]]> By: Peter Klein http://organizationsandmarkets.com/2006/09/12/misess-bureaucracy/#comment-2428 Peter Klein Tue, 12 Sep 2006 22:06:13 +0000 http://organizationsandmarkets.wordpress.com/2006/09/12/misess-bureaucracy/#comment-2428 I take Mises's point to be not that bureaucrats have no feedback mechanisms, but that the feedback mechanisms available to organizations that do not sell their products or services in markets are qualitatively different than those available to market organizations (i.e., profit and loss measured in monetary terms). Government agencies, nonprofits, and other organizations that do not have a "bottom line" are essentially reduced to using what Mises (in his work on socialism) describes as calculation in kind, which cannot substitute for calculation in monetary units. I take Mises’s point to be not that bureaucrats have no feedback mechanisms, but that the feedback mechanisms available to organizations that do not sell their products or services in markets are qualitatively different than those available to market organizations (i.e., profit and loss measured in monetary terms). Government agencies, nonprofits, and other organizations that do not have a “bottom line” are essentially reduced to using what Mises (in his work on socialism) describes as calculation in kind, which cannot substitute for calculation in monetary units.

]]> By: brayden http://organizationsandmarkets.com/2006/09/12/misess-bureaucracy/#comment-2426 brayden Tue, 12 Sep 2006 21:41:24 +0000 http://organizationsandmarkets.wordpress.com/2006/09/12/misess-bureaucracy/#comment-2426 I don't see how the same wouldn't apply to government bureaucrats who must make sure that their books balance. You can't continue a practice that regularly drains your account. Oversimplifying it in those terms makes it seem as if bureaucrats have no feedback mechanism. I don’t see how the same wouldn’t apply to government bureaucrats who must make sure that their books balance. You can’t continue a practice that regularly drains your account. Oversimplifying it in those terms makes it seem as if bureaucrats have no feedback mechanism.

]]> By: david551 http://organizationsandmarkets.com/2006/09/12/misess-bureaucracy/#comment-2421 david551 Tue, 12 Sep 2006 19:44:41 +0000 http://organizationsandmarkets.wordpress.com/2006/09/12/misess-bureaucracy/#comment-2421 Government bureaucrats may compete for resources, but Mises stresses that they do not aim to maximize profits. This he regards as the crucial difference between business and bureaucratic mangement. On business managers who follow rule-like conventions, I think that Mises's point still applies. The business managers can tell, through their profit-and-loss accounts, whether following these rules works. David Gordon Government bureaucrats may compete for resources, but Mises stresses that they do not aim to maximize profits. This he regards as the crucial difference between business and bureaucratic mangement. On business managers who follow rule-like conventions, I think that Mises’s point still applies. The business managers can tell, through their profit-and-loss accounts, whether following these rules works.

David Gordon

]]> By: brayden http://organizationsandmarkets.com/2006/09/12/misess-bureaucracy/#comment-2420 brayden Tue, 12 Sep 2006 19:19:52 +0000 http://organizationsandmarkets.wordpress.com/2006/09/12/misess-bureaucracy/#comment-2420 Funny, I was teaching Weber's notion of bureaucracy in class the other day. It occurred to me that there is a great deal of fuzziness in the way that managers (in either form of organization) make decisions. Government bureaucrats probably do not strictly abide by decision-making rules and, as some have argued, must compete for resources just as for-profit businesses do. Business, likewise, have lots of bureaucratic rules that make them inertial and sticky. Even in setting prices, managers in for-profit businesses often follow rule-like conventions (see Mark Zbaracki's papers on pricing). Funny, I was teaching Weber’s notion of bureaucracy in class the other day. It occurred to me that there is a great deal of fuzziness in the way that managers (in either form of organization) make decisions. Government bureaucrats probably do not strictly abide by decision-making rules and, as some have argued, must compete for resources just as for-profit businesses do. Business, likewise, have lots of bureaucratic rules that make them inertial and sticky. Even in setting prices, managers in for-profit businesses often follow rule-like conventions (see Mark Zbaracki’s papers on pricing).

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