In any modern economic system, the institution of ‘formal organization’ is very much important. Government departments, business firms labour unions, etc., are instances of formal organizations. For the appreciation of an economic system, an understanding of the way organizations function and the problems they face is essential. In a formal organization the mechanism that gets things done is usually referred to as “bureaucracy.” The role of bureaucracy is different in different economic systems, although none can eliminate the institution completely.
Meaning of Bureaucracy :
Different writers have defined the term bureaucracy in different ways. The early analysis of bureaucracy is found in the writings of Marx Weber, Michels and F.M. Marx etc. They wanted to demonstrate the ways in which the public sector bureaucracies adversely affected democratic values, and how this might be remedied. In modern times, several meanings are attached to this term :
Bureaucracy as a.Bureaucracy as a rational organisation.Bureaucracy as organizational inefficiency.
Definitions and Characteristics :
In the words of Jackson, “a bureaucracy is a particular form of organisation composed of a set of bureaux or agencies, such that the overall bureaucracy is a system of consciously coordinated activities which has been explicitly created to achieve specific ends.”
According to Peter M. Blau, “Bureaucracy is a form of social organisation consisting of institutionalized methods for the achievement of administrative objectives by the concerted efforts of many officials.”
In the words of Gladden, it is a systematic organisation of tasks and individuals, into a pattern which can most effectively achieve the ends of collective efforts; it is a regulated administrative system organized as a series of interrelated offices’.
But any study of bureaucracy is closely associated with the name of Marx Weber, a German sociologist. Weber’s views have been criticized by M. Albrow and R.K. Merton etc. yet his analysis of bureaucracy still holds ground. According to him, bureaucracy is a form of organisation, which has the following characteristics :
1. It has a hierarchical structure.
2. There is strict adherence to rules.
3. Officials are selected on the basis of merit.
4. Each official is subjected to discipline and control in the conduct of his official work.
5. The officials are remunerated by fixed salaries in money.
6. The activities are divided on the basis of a systematic division of labour.
7. The office is treated as the primary occupation of the official, if not the sole one,
8. The official works are entirely separated from ownership of the means of administration.
Advantages of Bureaucracy :
Theoretically speaking, a bureaucracy may be regarded as a very efficient means for performing tasks in any large scale, complex organisation, either private or public. An ideal bureaucracy has the following advantages :
1. Bureaucratic administration is based on rules and regulations.
2. Recruitment is based on impartial objective methods and not on patronage.
3. It develops efficiency.
4. It aims at consistency of treatment of the customers.
Therefore, a bureaucratic organisation is speedy, regular, efficient, unambiguous, continuous and rational. Bureaucracy thus is considered to be indispensable in the field of political as well as economic administration.
Limitations of Bureaucracy :
Various criticisms have been leveled against bureaucracy from time to time.
1. Under bureaucracy there is too much of emphasis on the observance of rules, regulations and procedures. This gives rise to avoidable delay and red-tapism. The human side of things is ignored.
2. It follows tradition and conservatism; consequently, a bureaucrat would hesitate to bring about any change, even when necessary. It cannot bring about innovation so vital for economic change.
3. It cannot face the challenge of uncertainty and volatile change. It is too slow to deal with such a contingency effectively.
4. Bureaucracy leads to departmentalism. It has a tendency to divide and subdivide a task.
5. Responsibility and risk are avoided by the bureaucrats, although these might be vitally essential for the success of an enterprise.
6. There is indifference towards the customers, therefore, customers get a raw deal from the bureaucrats.
7. The bureaucrats develop an obsession to follow rules and procedures. So they get almost no opportunity to exercise individual judgment. Consequently, they take very little interest in the well-being of an enterprise.
Role of Bureaucracy in the Soviet Union :
According to some in the Soviet Union there is “party state bureaucracy.” Full-time party officials exercise considerable powers. “They appoint, they dismiss, they allocate and reallocate, they interfere in current affairs, they adjudicate. There is a pyramid of hierarchical or political subordination.”
According to Alec Nove in the Soviet Union managerial de facto powers arise from the following circumstances :
1. Output plans being in some degree aggregated, their decisions partly determine the product-mix.
2. Both output plans and inputs, though “decided” above often decided on the basis of information, arc proposals submitted by management, since it knows best the capability of a particular plant
3. A variety of innovations in product design and in methods of production can be initiated at the enterprise level.
4. Because of “centralized pluralism”, sometimes orders which reach the management may be somewhat contradictory in nature. In these instances, management has some choice to decide as to what orders to obey.
5 Particularly, in matters relating to supply of inputs, there is much scope for informal initiative.
6. Management seldom meets opposition from the trade unions.