11/24/2011
Is there any remedy available?
It's useless to blame bureaucrats' slowness and slackness; it is vain to lament over the fact that the assiduity, carefulness, and painstaking work or the average bureau clerks are below those of the average worker in private business. In the absence of an unquestionable yardstick if success and failure it is almost impossible for the vast majority of men to find that incentive to utmost exertion that the money calculation of profit-seeking business easily provides.
The psychological consequences of bureaucratization
It's evident that youth is the first victim of the trend toward bureaucratization. The young men are deprived of any opportunity to shape their own fate.They are in fact "lost generation" because they lack the most precious right of every rising generation, the right to contribute something new to the old inventory of civilization.
In the communist manifesto the instances used for the exemplification of class struggles are taken from the conflict between castes. Then Marx adds that the modern bourgeois society has established new classes. But he never said what a class is and what he had in mind in speaking of classes and class antagonisms and in coordinating classes to castes. Neither Marx nor any one of the host of Marxian writers could tell us what a social class is, much less whether such social classes really play in the social structure the role assigned to them in the doctrine.
The characteristic feature of a caste is its rigidity. The social classes, as Marx exemplified them in calling the capitalists, the entrepreneurs, and the wage earners distinct classes, are characterized by their flexibility.
Though a socialist country may be classless, but there will be other differences in social functions which we can call classes with surely no less justification than that of Marx.
The only thing that counts is the fact that under capitalism everybody is the architect of his own fortune. Work well done and services well rendered are the only means to succeed. Under socialism, the beginner must please those already settled. The rising generation is at the mercy of the aged. Mankind is doomed when the youths are deprived of the opportunity to remodel society according to their own fashion.
Plato's ideal and perfect state is to be ruled by unselfish philosopher. The characteristic mark of Plato's philosophy: it doesn't pay any attention to the evolution of social and economic conditions and to the changes in human ideas concerning ends and means. Any deviation of the actual conditions from the ideal model cannot be anything else than corruption and degradation.
In the communist manifesto the instances used for the exemplification of class struggles are taken from the conflict between castes. Then Marx adds that the modern bourgeois society has established new classes. But he never said what a class is and what he had in mind in speaking of classes and class antagonisms and in coordinating classes to castes. Neither Marx nor any one of the host of Marxian writers could tell us what a social class is, much less whether such social classes really play in the social structure the role assigned to them in the doctrine.
The characteristic feature of a caste is its rigidity. The social classes, as Marx exemplified them in calling the capitalists, the entrepreneurs, and the wage earners distinct classes, are characterized by their flexibility.
Though a socialist country may be classless, but there will be other differences in social functions which we can call classes with surely no less justification than that of Marx.
The only thing that counts is the fact that under capitalism everybody is the architect of his own fortune. Work well done and services well rendered are the only means to succeed. Under socialism, the beginner must please those already settled. The rising generation is at the mercy of the aged. Mankind is doomed when the youths are deprived of the opportunity to remodel society according to their own fashion.
Plato's ideal and perfect state is to be ruled by unselfish philosopher. The characteristic mark of Plato's philosophy: it doesn't pay any attention to the evolution of social and economic conditions and to the changes in human ideas concerning ends and means. Any deviation of the actual conditions from the ideal model cannot be anything else than corruption and degradation.
The social and political implication of bureaucratization
The essence of the philosophy bureaucratism.
The written laws are in the eyes of the officials barriers erected for the protection of scoundrels against the fair claims of society. It would be fine for the society if the government can be beyond the law and execute the people at will. Bureaucrats must break human laws lest they violate a divine law.
The main difference between a policeman and a kidnapper and between a tax collector and a robber is that the policeman and the tax collector obey and enforce the law, while the kidnapper and robber violate it.
Within the framework of social cooperation every citizen depends on the services rendered by all his fellow citizens. For, under the division of labor, the structure of society rests on the shoulder of all men and women.
It's not in the power of the government to make everybody more prosperous.
The written laws are in the eyes of the officials barriers erected for the protection of scoundrels against the fair claims of society. It would be fine for the society if the government can be beyond the law and execute the people at will. Bureaucrats must break human laws lest they violate a divine law.
The main difference between a policeman and a kidnapper and between a tax collector and a robber is that the policeman and the tax collector obey and enforce the law, while the kidnapper and robber violate it.
Within the framework of social cooperation every citizen depends on the services rendered by all his fellow citizens. For, under the division of labor, the structure of society rests on the shoulder of all men and women.
It's not in the power of the government to make everybody more prosperous.
Bureaucratic management of private enterprises
The general tendency of our times is to let the government interfere with private business, and this interference in many instances forces upon the private enterprise bureaucratic management.
No progress and reform can be expected in a state of affairs where the first step is to obtain the consent of the old men.
To say to the entrepreneur of an enterprise with limited profit chance, "Behave as the conscientious bureaucrats do" is tantamount to telling him to shun any reform. Progress is precisely that which the rules and regulations did not foresee; it is necessarily outside the field of bureaucratic activities.
Both industrial inefficiency and corruption are the consequences of methods of government interference with business as applied in Southern and Eastern European countries.
No progress and reform can be expected in a state of affairs where the first step is to obtain the consent of the old men.
To say to the entrepreneur of an enterprise with limited profit chance, "Behave as the conscientious bureaucrats do" is tantamount to telling him to shun any reform. Progress is precisely that which the rules and regulations did not foresee; it is necessarily outside the field of bureaucratic activities.
Both industrial inefficiency and corruption are the consequences of methods of government interference with business as applied in Southern and Eastern European countries.
Bureaucratic management of publicity owned enterprises
Socialism, that is, full government control of all economic activities, is impracticable because a socialist community would lack the indispensable intellectual instrument of economic planning and designing: economic calculation.
As soon as an undertaking is no longer operated under the profit motive, other principles must be adopted fro the conduct of its affairs. It's naive of the champions of nationalized and municipalized enterprise to say say that the public enterprise's duty is to render useful services to the community. Because every undertaking's sole task is to render useful services.
The question should be: How do we find out whether the scarce resources are used in their most appropriate way?
With private profit-seeking enterprise this problem is solved by the attitude of the public.
As the account of profit and loss is not to be considered the criterion of the management's success or failure, the only means to make the manager responsible to the boss, the treasury, is to limit his discretion by rules and regulations.
As soon as an undertaking is no longer operated under the profit motive, other principles must be adopted fro the conduct of its affairs. It's naive of the champions of nationalized and municipalized enterprise to say say that the public enterprise's duty is to render useful services to the community. Because every undertaking's sole task is to render useful services.
The question should be: How do we find out whether the scarce resources are used in their most appropriate way?
With private profit-seeking enterprise this problem is solved by the attitude of the public.
As the account of profit and loss is not to be considered the criterion of the management's success or failure, the only means to make the manager responsible to the boss, the treasury, is to limit his discretion by rules and regulations.
bureaucratic management
In order to avoid the outcome that the deputy becomes an arbitrary in the province, the king tries to limit the deputy's powers by issuing directives and instructions. So the deputy's free discretion is now limited; their first duty is now to comply with the regulation. The deputy is no longer eager to deal with each case to the best of their abilities. The first virtue of an administrator is to abide by the codes and decrees. He becomes an bureaucrat. (Bureaucracy under despotic management)
It's a fallacy that bureaucratic management is incompatible with democratic government and institutions. The two pillars of democratic government are the primacy of the law and the budget. The definition of democratic government: A system of government under which those ruled are in a position to determine, directly by plebiscite or indirectly bu election, the exercise of the legislative and execute power and the selection of the supreme executives.
Primacy of the law means that no judge or officeholder has the right to interfere with any individual's affairs or conditions unless a valid law requires or empowers him to do so. Democratic control is budgetary control.
Bureaucracy itself is neither bad nor good. What we blame is the expansion of the sphere in which the government interferes with business and with many other items of the citizenry's affairs, and this results in a substitution of bureaucratic management for profit management.
The main function of the law is to limit the power of the authorities and the courts to inflict evils upon the individual citizen and to restrict his freedom. The law protects the people against the arbitrariness of those in office.
Bureaucracy management is management bound to comply with detailed rules and regulations fixed by the authority of a superior body. The task of the bureaucrat is to perform what these rules and regulations order him to do. The objective of business management is to make a profit.
The definition of bureaucratic management: Bureaucratic management is the method applied in the conduct of administrative affairs the result of which has no cash value on the market. We do not say that a successful handling of public affairs has no value, but that it has no price on market, that its value cannot be realized in a market transaction and consequently cannot be expressed in terms of money.
It is a mistake to judge the efficiency of a government department by comparing it with the working of an enterprise subject to the interplay of market factors.
It's a fallacy that bureaucratic management is incompatible with democratic government and institutions. The two pillars of democratic government are the primacy of the law and the budget. The definition of democratic government: A system of government under which those ruled are in a position to determine, directly by plebiscite or indirectly bu election, the exercise of the legislative and execute power and the selection of the supreme executives.
Primacy of the law means that no judge or officeholder has the right to interfere with any individual's affairs or conditions unless a valid law requires or empowers him to do so. Democratic control is budgetary control.
Bureaucracy itself is neither bad nor good. What we blame is the expansion of the sphere in which the government interferes with business and with many other items of the citizenry's affairs, and this results in a substitution of bureaucratic management for profit management.
The main function of the law is to limit the power of the authorities and the courts to inflict evils upon the individual citizen and to restrict his freedom. The law protects the people against the arbitrariness of those in office.
Bureaucracy management is management bound to comply with detailed rules and regulations fixed by the authority of a superior body. The task of the bureaucrat is to perform what these rules and regulations order him to do. The objective of business management is to make a profit.
The definition of bureaucratic management: Bureaucratic management is the method applied in the conduct of administrative affairs the result of which has no cash value on the market. We do not say that a successful handling of public affairs has no value, but that it has no price on market, that its value cannot be realized in a market transaction and consequently cannot be expressed in terms of money.
It is a mistake to judge the efficiency of a government department by comparing it with the working of an enterprise subject to the interplay of market factors.
11/23/2011
11/23/2011 Class 35
How markets use knowledge
The quality of substitutes for consumers and the cost of substitutes determine the shape of demand curve as I move away from the equilibrium point. The cost of production determines the shape of supply curve.
Titanium market: the equilibrium point is 10 billion pounds at 20 dollars each pound.
Now new demander seeks 6 billion pounds of Titanium at $20. So now the demand for titanium is 16 billion pounds at 20 bucks each pound.
Scenario #1
The supply curve and demand curve are both unit elastic.
When the equilibrium price rises to 25 dollars
Initial pounds Final pounds Change(absolute)
Old consumers 10 8 2
Suppliers 10 12 2
New consumers 6 4 2
The market rations the extra demand of titanium
Scenario #2
The demand curve is more elastic
When the equilibrium price is 25 bucks
Initial pounds Final pounds Change(absolute)
Old customers 10 6 4
Suppliers 10 11 1
New customers 6 5 1
Old customers behave strongly because they are very sensitive to the change of price, and they "contribute" more to the new buyers. Supplier don't change significantly because the price doesn't change so much.
Scenario #3
The supply curve is more elastic
When the equilibrium price is 25 dollars
Initial pounds Final pounds Change(Absolute)
Old customers 10 9 1
Suppliers 10 14 4
New customers 6 5 1
Supplier change behavior strongly because they are sensitive to the change of price. Customers are not because the change of price doesn't change a lot.
If a central planner wants to ration goods, he must be omnipotent and omniscient, knowing every single detail in the market, which is simply impossible.
With the self interest, not every one working in the public interest is actually thinking about public interest.
The quality of substitutes for consumers and the cost of substitutes determine the shape of demand curve as I move away from the equilibrium point. The cost of production determines the shape of supply curve.
Titanium market: the equilibrium point is 10 billion pounds at 20 dollars each pound.
Now new demander seeks 6 billion pounds of Titanium at $20. So now the demand for titanium is 16 billion pounds at 20 bucks each pound.
Scenario #1
The supply curve and demand curve are both unit elastic.
When the equilibrium price rises to 25 dollars
Initial pounds Final pounds Change(absolute)
Old consumers 10 8 2
Suppliers 10 12 2
New consumers 6 4 2
The market rations the extra demand of titanium
Scenario #2
The demand curve is more elastic
When the equilibrium price is 25 bucks
Initial pounds Final pounds Change(absolute)
Old customers 10 6 4
Suppliers 10 11 1
New customers 6 5 1
Old customers behave strongly because they are very sensitive to the change of price, and they "contribute" more to the new buyers. Supplier don't change significantly because the price doesn't change so much.
Scenario #3
The supply curve is more elastic
When the equilibrium price is 25 dollars
Initial pounds Final pounds Change(Absolute)
Old customers 10 9 1
Suppliers 10 14 4
New customers 6 5 1
Supplier change behavior strongly because they are sensitive to the change of price. Customers are not because the change of price doesn't change a lot.
If a central planner wants to ration goods, he must be omnipotent and omniscient, knowing every single detail in the market, which is simply impossible.
With the self interest, not every one working in the public interest is actually thinking about public interest.
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