Monday, 7 June 2010

Bureaucrats Rule!

The young Franz Kafka, upon beholding his first Paperwork Reduction Act form - via Wikimedia Commons - public domain Of course they do. That is why their office has a -crat on the end. As a class they are exceptionally and justifiably unpopular, especially but not exclusively amongst the libertarian-minded. Very few people, except in self-deprecation, are so brave as to claim 'bureaucrat' for their trade. When we see an official with the heart and nous to face down the little tin gods and cut through the winding red tape in order to get make the system do something vaguely related to its ostensible purpose, it is hard to think of them as a bureaucrat at all.

And yet large, bureaucratic organizations dominate modern societies. Is this really just a case of every functional organization being eventually colonized by the maximum number of parasites it can bear, with a violently empowered state bureaucracy making sure that nobody gets to scrape off its brother barnacles, or operate neatly and nimbly without them? Or is it, perhaps, that bureaucracy really allows such extraordinary efficiencies in its normal unshowy mode, that it more than repays the cost of its rent-seeking abuses and Kafkaesque excrescences?

The latter possibility is so uncongenial to my prejudices and tastes, I find myself obliged to take it seriously.

Let us begin with an immediate distinction between administrators and bureaucrats. It is easy to call all paper-pushers and regulators bureaucrats, especially for somebody like me when my spleen is exploding. It is also completely unhelpful. By 'administrator', I mean anybody whose job is principally concerned with the organization's internal functioning rather than the direct accomplishment of its external purpose. There is no possible way for a large organization to exist without some such specialists, even if the specialization is only a part-time one carried in addition to other duties. Assuming effective organization to be a nontrivial problem, the need for full-time specialists is apt to increase with the scale and elaboration of the enterprise.

This administrative pool can be quite small. When my father began in the NHS, about 1960, a major teaching hospital had one chief clerk with a small number of clerical assistants. Today in 2010, certain of my clan still work in a somewhat larger teaching hospital. It cannot even ration itself to one personnel department - two separate departments exist for the hospital group, each of which must approve every person employed by a member hospital. Hospitals are, admittedly, larger concerns now than in the past. They are not as much larger as all that, nor is it clear that their mushrooming administrative establishment has served any good purpose whatsoever. What rational purpose is being followed here?

Dad's experience of hospital clerks in the old days was that they were extraordinarily useful and widely competent persons. They and their staff added, in fairly simple and transparent ways, a great deal of value to the work of the various medicos and auxiliaries who 'did the job' of actually healing and helping patients. Now when somebody takes boring and onerous chores off one's hands, and does them better and more cheaply, it is not unreasonable to want more of such assistance. This is particularly true when said assistants always seem to have their hands full. An under-administered place will then, reasonably, buy in more administrators, until the marginal value added by the last administrator no longer exceeds the cost of hiring them -

Hooey!

The economic logic works right up until we remove the implicit assumption that administrators are robots. In an organization where admin specialists are few and of only moderate status, they will indeed be valuable contributors to the direct purpose of their organization. Their self-interest will exist, but it need not particularly dominate.

However, when their numbers and/or influence increase - and the two usually go together - administration itself becomes an increasingly dominant end within the organization. Beyond a certain point, a phase change can be expected - from the administrators' tending to serve the organization's external functions, to the external functions' tending to serve administrative convenience.

I predict that where this critical point is well-defined, it can be identified by a sharp acceleration in the rate of administrative hirings and expenditures. The diminishing external returns from more administration were formerly providing net negative feedback. At the critical point, this is overwhelmed by the positive feedback from increasing internal returns for the decision-makers, until external constraints dominate again at a much higher level of administrative cost.

I further suspect that there are only two kinds of administered organizations - those which have such a critical point, and those which cannot sustain the weight of enough administration to reach it.

A post-critical organization is actually ruled by, and for, its now-dominant administrative institutions. It is utter folly to consult its ostensible purpose as a guide to its actions, and then declare them crazy. They are not crazy. They are mostly adaptive behaviour under a particular bureaucracy, which is to say ruling administration. Intelligent people who wish to prosper within a bureaucratic organization know this, and tailor their thinking accordingly.

A naïve view of the free market would suggest that this is not a problem, except by government interference. After all, when an organization reaches the point where it can no longer act rationally, it should then be outcompeted by less barnacled rivals, not so?

Not necessarily! If economies of scale are large enough, or entry barriers high enough, it is easily possible to imagine a field where the barely-tolerated functional behaviour at a bureaucratic organization's periphery can still outcompete any organization small enough to operate continually below the Bureaucratic Critical Mass. In this view, the essentially parasitic bureaucratic core is simply a necessary overhead of competitive production, and will not bring down the firm until and unless it becomes so grossly irrational as to no longer tolerate even peripheral functionality. It is an overhead defined by human nature (which will not change) and technologically and politically determined economies of scale (which may change, though not in a good way if self-interested bureaucracies have anything to say about it).

Further, the productive periphery of the organization will itself be adapted to bureaucratic rule. Simply 'cutting useless bureaucracy', if this can be imposed at all from outside, may not directly free the 'good' parts of the organization to work well. Someone who is genuinely good at expediting production by skillful bureaucrat-wrangling may not be at all a good performer in the absence of the obstacles they have - rightly! - concentrated their talents upon overcoming.

In the gloomiest view of this, bureaucratic capture and resultant decay may actually be as inexorable a limit on human institutional activity, as senescence is upon individual life. Virtuous bureaucrats and institutional cultures might stave the worst off for a while, but the Great Leveller will not forever be denied. Reformers might then do better attacking the technological basis of the economy of scale, making bureaucracy objectively less adaptive in their field, rather than zealously searching for their organizational Philosopher's Stone.

My main reason for describing this view as gloomy is not just the human waste and cost incurred when a big institution falls over, taking its members' life-niches with it. Worse is the identity of at least one class of obviously vulnerable organizations. The supply of coercion has a few economies of scale in it here and there, and governments invented bureaucracy in the first place. If I am right about rational producer adaptation to bureaucracy... then even a hypothetically libertarian government might find itself merely accelerating the functional decay it sought to arrest. We may have got ourselves into a position where most of our skill-sets are reasonably maladaptive to freedom - libertarians, for all we know, included. A grim thought, but not a wholly implausible one.

What counter-technologies might undercut the government economies of scale? What social inventions? How can total or partial government-crash be cushioned? Can bureaucrat-wrangling productive skills be co-opted as assets for non-bureaucratic organizations? Is it even possible to become familiar with, and accepting of, the process of institutional rot in general, without cynically becoming a fungus? There are more questions teeming here than even my nosy spirit can readily encompass, let alone solve.

Over to the Bureau of Debureaucratization, who are even now beginning work with a consensus summary report on their mission statement schema brainstorming protocol. They will get back to us when they have devised an appropriate presentational timeframe.

Administrators merely administrate, but bureaucrats rule!

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