Excerpt from 
“An Essay on Yugoslav Society”
(IASP New York, 1969)  

By Branko Horvat




 In analyzing the functioning of private capitalism and the ideology it generates, Marx laid great emphasis on what he called “commodity fetishism,” i.e., a tendency to treat relations between men as relations between commodities. A closely corresponding phenomenon in state capitalism may be called “office fetishism.” It means hiding actual human relations behind impersonal bureaucratic rules, a mystification of the activities of office-holders. The judgments of the market are infallible, as are the judgments of an official with respect to his subordinates. The holding of office confers upon the incumbent the quality of being cleverer, more honest, more reliable (politically or otherwise) — in short, superior to all individuals placed lower in the hierarchy of office. The parallelism goes even further. Both the free market and the bureaucratic structure have their separate lives that cannot be brought under conscious control. In the case of the free market, the contention seems fairly obvious. In the case of bureaucracy, it may appear somewhat puzzling and therefore requires a more detailed inquiry.


Weber’s Theory of Bureaucracy


Bureaucracy, as a social institution, has three fundamental characteristics:

1) When administrative tasks are simple and undifferentiated, no specialized apparatus is necessary for their execution… quantitative expansion and complexity of administrative tasks provide “technical” precondition for the development of the bureaucracy. …

(2).  Like money, the institution of bureaucracy has been known in all social systems, … However, the institution (again, like money ) reached its fully developed form only in the capitalist system. …. As Max Weber, … pointed out, money is a normal presupposition of bureaucracy; it makes regular pecuniary compensation possible and desirable. … Money, in the sense of capital accounting, became an institutional basis for both rationalization and depersonalization of human relations. Bureaucratic structures fitted perfectly into this social framework.

(3). The third characteristic of bureaucracy is that it is a product of a particular type of  authority. Following Weber in his classification…, we can distinguish three fundamental types of authority. Traditional When economic development is slow, as it was before the advent of capitalism, changes in social institutions are very small and all of social life, including the institution of authority, is likely to be strongly traditionalized. … Since there is little possibility of solving these contradictions within the traditional framework, a social explosion usually demolishes the traditional authority and replaces it, for the time being, by the charismatic authority of the leader of the revolutionary movement. … The essence of a charismatic movement is emancipation from the routine, and therefore the corresponding type of authority is bound to be short-lived and transitional in character. Charismatic movements either fail and perish, or succeed and through the “routinization of charisma” build new, traditionalized systems.


With the advent of capitalism the mechanism just described ceases to operate … The impersonal market and expropriation of the means of production and administration destroy personal loyalties to the incumbents of offices. Rapid economic development requires flexible adaptations of the social framework…A new type of authority develops, the type Weber calls rational legal authority. Legal authority rests on belief in the “legality” of the patterns of normative rules and in the right of those elevated to authority under such rules to issue commands . The rules are universal, cover all possible cases of conduct within the jurisdiction of those in authority, and define the limits of that jurisdiction. Obedience is owed to the legally established impersonal order, which thus becomes the fundamental source of authority. As T. Parsons comments on Weber  the authority extends to individuals only insofar as they occupy a specifically legitimized status under the rules, an office, and their powers are limited to a “sphere of competence” as defined in regulations. Outside this sphere they are private individuals with no more authority than anyone else. Thus a possibility arises for a new and more subtle “fetishism of office” to be added to the traditional “commodity fetishism”; an aspect of exploitative relations hidden behind the market is supplemented or replaced by the other, hidden behind the office. The individuals with split personality, as it were, masters in the office and clients at home, owning nothing and deciding on everything, public servants by title and public masters by position, are bureaucrats. The administrative staff, whose constituent members they are, takes the form of a bureaucratic structure.


… technical features of bureaucracy make it an extremely efficient tool for handling mass administration. Administrative functions can be specialized according to purely objective considerations, and then discharged by functionaries who have adequate specialized training. Business is conducted objectively, according to calculable rules and without regard to persons. From the point of view of those who hold the supreme authority, the bureaucratic machine works with unrivaled precision, stability, and reliability. Stringency of discipline makes possible a high degree of calculability of results. Finally, the scope of operations of the bureaucratic type of administrative organization appears practically unlimited, and this organization is formally capable of application to all kinds of administrative tasks …. All this leads Weber to conclude: “Experience tends universally to show that the bureaucratic type of administrative organization . . . is, from a purely technical point of view, capable of attaining the highest degree of efficiency and is in this sense formally the most rational known means of carrying out imperative control over human beings” …


But there is a snag in this ideal-type analysis of a social institution. Bureaucracy is perfectly suited for an imperative —i.e., coercive — control, hut it does not insure that the interests of the controller and the controlled are identical. Moreover, there is a strong tendency for these interests to be polarized. A typical bureaucratic structure looks like a pyramid with a tiny top and a large base; with a flow of communication in only one direction, from the top downward; with these communications having an imperative character; with both ends loose — at the top, where hierarchical relations disappear in the sense that there are no more superiors, and at the bottom, where they disappear in the opposite sense, namely, there are no more inferiors, and with no direct communication between the top and the bottom of the social pyramid. The “purely bureaucratic type of administrative organization” begins to assume the ominous aspect of potential social conflicts. Clearly, Weber’s ideal-type analysis appears to be dangerously simplified and misleading. If we are to evaluate the efficiency of the system when developed to its ultimate consequences, we must take into account the human relations the system is likely to generate. In addition, we must consider the dysfunctional effects of the system that are determined by its technical characteristics.


 Dysfunctional Effects of Bureaucracy
and Inefficiency of the Bureaucratic
Mode of Operation


… In executing its administrative functions, the nationwide bureaucracy does not behave capriciously. In fact, there are marked regularities, which may be classified under three main headings,

(1) Ideally, the bureaucratic apparatus is expected to carry out the commands of the authorities without questioning their validity. …. In practice, however, bureaucracy does not operate in a social vacuum… the premise that official policy will be faithfully carried out by subordinates. But why should it? True, there is stringent discipline backed by the threat of punishment. But this safeguard … breaks down when the interests of the bureaucracy as a social group,…. come into conflict with the policy to be executed. Various consequences follow.


 if reliability and calculability are to be achieved, the interests of the bureaucracy and the ruling class must coincide. It is therefore natural that in a class society the upper strata of the bureaucratic hierarchy will consist of members of the ruling class or of those aspiring to enter its ranks.

a bureaucratic organization, in order to be viable in a class society, must be a class-oriented organization. …. Being class-oriented, bureaucracy generates social conflict and thus prevents the achievement of maximum efficiency….

It becomes clear that bureaucracy hinders social progress by its very nature. This fact is extremely relevant in the case of socialist revolution. The conclusion reached by Marx that socialist revolution, in order to be successful, must demolish and replace the old state apparatus, proves to be confirmed by historical events. There is, however, a practical question: replaced by what? Suppose the ruling classes are dispossessed and the bureaucratic hierarchy is filled up with persons entirely unrelated to and even hostile to the old ruling classes. Is the new “classless” bureaucracy likely to behave differently from the old one? …


(2). In order to insure precision, impersonality, and calculability, bureaucracy in action must be governed by rules that are, ideally, supposed to cover all possible cases. … Since this is impossible and the number of rules is much smaller, an important element of imprecision and unpredictability creeps into the organization. …

The fundamental principle of hierarchy is conformity to rules and to authority of superiors. Functionaries are trained to conform, for this makes the bureaucratic organization work. Conformity is clearly a means to the end that the organization sets out to achieve. But for the members of the hierarchy, conformity is an essential precondition for their own existence. The result is displacement of goals by means, a typical bureaucratic endeavor to satisfy rules and superiors, and not to assist clients. …

The dysfunctional effects of bureaucratic organization are magnified as the organization increases in size. In nationwide bureaucracies, the process comes to a logical end: the apparatus designed to facilitate control becomes uncontrollable itself, …


(3). The process of administration is not timeless nor is it independent of the size of the organization. In a large bureaucratic organization, with many intermediary links, there will be a considerable lag between the moment in time when the command is issued at the top and the moment in time when the command is carried out by functionaries at the other end. … On their long journeys, information and instructions also get distorted for psychological reasons, and for all the other reasons we examined under (1) and (2). While the information and instructions are traveling up and down, circumstances change and the solution applied may prove grossly inadequate. Both cases reflect another inherent contradiction of bureaucratic organizations - namely, the contradiction of centralization and decentralization, If the aim is maximum efficiency, decentralized bureaucratic organization is a logical and psychological impossibility: logical, because it destroys coordination; psychological, because it is impossible to train a man to conform and to assume initiative at the same time. ….

…. as a rule, the more backward the country, the less efficiently bureaucracy works.


Bureaucratic Polarization of Society


….. Let us suppose, therefore, that the social life of a country is organized and controlled by a huge bureaucratic apparatus. What sort of social relations are likely to emerge? We need only draw the conclusions of the above analysis.

The fundamental principle of bureaucratic organization is obedience. The behavioral consequence is obsequiousness toward (i.e., receiving orders from) superiors, compensated for by arrogance toward (i.e., giving orders to) subordinates. …. Interests are polarized because what represents maximum freedom of choice for the top represents at the same time minimum freedom of choice for the bottom. ….. Hence there is a possibility for a sharp social differentiation to appear, the fundamental historical differentiation between the ruling and the exploited classes.

This potential conflict then materializes in overt signs of social stratification. In order to have a stable and efficient system, the rulers need a loyal bureaucracy. This loyalty upward is bought by economic privileges and reinforced by status differentiation. Thus there will be a wealthy and powerful minority and a poor and powerless majority. …

We may now answer the question posed previously. Even if the socialist revolution radically destroys the old state apparatus and in administrative  jobs replaces the members of the old ruling class by members of the hitherto exploited class, the new society will not necessarily be a classless, socialist society. If the fundamental principle of bureaucratic organization the principle of hierarchy — is left to operate, in the course of  time two social classes with conflicting interests will again emerge. …






OK Economics was designed and it is maintained by Oldrich Kyn.
To send me a message, please use one of the following addresses:

okyn@bu.edu --- okyn@verizon.net

This website contains the following sections:

General  Economics:


Economic Systems:  


Money and Banking:


Past students:


Czech Republic


Kyn’s Publications


 American education


free hit counters
Nutrisystem Diet Coupons