Consequences of Statism
If my reading of Bureaucracy is accurate, that the proponents of government omnipotence are using the bureaucratic system to advance the power of the state, then Mises’ interpretation of bureaucracy can also be applied to statism. In fact, terms like "mercantilism," "statism," "totalitarianism," and "interventionism" in our time, though different in name, share similar characteristics.
Political and Social Consequences
In the fifth chapter of the book, Ludwig von Mises enumerated five social and political implications of bureaucratization. They include contempt for human laws, complacency, an increase in government spending, the bureaucratization of the mind (or more appropriately described as the emergence of university graduates as champions of statist ideals), and the supremacy of the tyrant's will.
- Contempt for Human Laws
At the outset, this implication seems to be farfetched and puzzling, for bureaucratic management is characterized by strict compliance with regulations. And besides, the office of a civil servant is established through a legislative act (p. 76). And so, it is unthinkable for bureaucrats to entertain this kind of attitude as if they were operating on a different level of legislation. The only justification I observe for doing this is the bureaucrat's loyalty to the interests of the state.
For the advocates of state interference, a bureaucrat plays a very unique role. Mises elaborated on this in his concept of "the essence of the philosophy of bureaucratism" (p. 75). In this concept, a bureaucrat is perceived as the faithful servant of the State who wishes nothing but to implement the will of his master, and whoever dares to challenge that will is considered a social menace or the enemy of the State. This is the exact opposite of an individualist who is motivated by personal interests.
A bureaucrat is idealized. He is considered sincere and thinks of nothing else but his solemn task, to demolish the selfishness of the people. Moreover, a bureaucrat is "the champion of the eternal divine law. He does not feel morally bound by the human laws. . ." (ibid.). So, with this kind of intellectual atmosphere, a bureaucrat appears to be exempted from legal penalties, provided that the purposes he serves are those of the state. It is as if a bureaucrat operates on a higher plane beyond human laws. This kind of mindset was common before the rise of totalitarian states in the past.
- Bureaucratic Complacency
To see the significance of this second implication, we need to understand that though bureaucrats are paid to implement the law, the body of laws is not always perfect. It is a fact that unwise laws exist. And since the primary duty of a bureaucrat is to implement the laws of the land, it is not his fault if there are laws detrimental to the public good.
The same can be said about the merits of his actions. Though the services of civil servants are necessary to maintain order in society, this also holds in the case of other menial jobs such as scavengers and dishwashers. This is because under the division of labor everyone depends on the services offered by others. This social arrangement is important for those who specialize in their chosen fields. Considering this, bureaucrats, therefore, do not possess special claims "to the epithet pillar of society" (p. 77).
At this point, Ludwig von Mises recognized the proper place of altruism in the development of civilization. However, contrary to ideas propagated by German statist philosophers, he argued that people search for careers in public service not because of altruistic goals, but because of higher monetary incentives, ease of work, and job security. For Mises, maintaining altruistic goals is nonsense. He further explained the real motivation for why people seek a career in civil service:
In all countries, most people joined the staff of government offices because the salary and the pension offered were higher than what they could expect to earn in other occupations. They did not renounce anything in serving the government. Civil service was for them the most profitable job they could find (p. 79).
Furthermore, Mises described that these personal motivations under a bureaucratic system finally resulted in complacency as far as the civil service in Europe was concerned:
The incentive offered . . . consisted not only in the level of the salary and the pension; many applicants, and not the best ones, were attracted by the ease of the work and by the security. As a rule, government jobs were less exigent than those in business. Besides, the appointments were for life. An employee could be dismissed only when a kind of judicial trial had found him guilty of heinous neglect of his duties. In Germany, Russia, and France, every year many thousands of boys whose life plan was completely fixed entered the lowest grade of the system of secondary education. They would take their degrees, they would get a job in one of the many departments, they would serve thirty or forty years, and then retire with a pension. Life had no surprises and no sensations for them, everything was plain and known beforehand (ibid.).
- Increase in Government Spending
Regarding the seemingly unstoppable nature of government spending, for Ludwig von Mises this is due to the fact of dual membership of a bureaucrat. He is both an employee and an employer. By employee, we simply understand "a government employee". By employer, we see that "under a democratic constitution," he is "a voter and as such a part of the sovereign, his employer" (p. 80). Due to this double membership, a conflict of interest emerged, and it is always the bureaucrat's interest as an employee that prevails over his interest as an employer. Practically, this means that "he gets much more from the public funds than he contributes to them" (ibid.). Mises explained further the relationship between this dual membership and concern for a higher salary:
This double relationship becomes more important as the people on the government's payroll increase. The bureaucrat as the voter is more eager to get a raise than to keep the budget balanced. His main concern is to swell the payroll (ibid.).
Mises narrates that it is this unfortunate deterioration that contributed to the downfall of democratic institutions both in Germany and France. He explains that a considerable number of the electorate looks to the state as the source of income (ibid.). This was true in the case of "hosts of public employees," those employed in nationalized corporations, "the receivers of the unemployment dole and social security benefits, as well as the farmers and some other groups which the government directly or indirectly subsidized. Their main concern was to get more out of the public funds" (ibid.).
Mises compared this lamentable decline to the situation in the 19th century. During that period, government expenditures were restricted as much as possible. Mises' description remains true wherein today thrift is regarded as detestable, and "boundless spending was considered a wise policy" (p. 81).
With this kind of trend, Mises claims that representative democracy will not last long. Its destruction depends on the extent of the number of bureaucrats depending on a government payroll. Once this parasitic trend spreads all over the system that leads to the destruction of the productive sector of the economy, we know that the collapse is at hand. Mises saw this as "the antinomies inherent in present-day constitutional issues" and has led many to despair about the future of democracy (ibid.).
- University Graduates as Champions of Statist Ideals
Our economist identified that the bureaucratization of the mind of university students is one of the social and political implications of bureaucratic management. I think this is next to the worst simply because man's freedom to think has been suppressed in educational institutions. This was made possible through the expulsion of economic education from the universities. As a result, statist ideas became widespread.
Mises' analysis is surprising and appears unfounded for universities throughout the world still teaching economics. However, in the mind of Mises, the kind of economics being taught in the academe from his time onward is not real economics, but "wirtschaftliche Staatswissenschaften (economic aspects of political science)" (p. 83). Notice how Mises described the absence of economics in mainstream education and the factors that contributed to such condition:
The modern trend toward government omnipotence and totalitarianism would have been nipped in the bud if its advocates had not succeeded in indoctrinating youth with their tenets and in preventing them from becoming acquainted with the teachings of economics (p. 81).
The outstanding fact of the intellectual history of the last hundred years is the struggle against economics. The advocates of government omnipotence did not enter into a discussion of the problems involved. They called the economists names, cast suspicion upon their motives, ridiculed them, and called down curses upon them (p. 82).
In most countries of the European continent, the universities are owned and operated by the government. They are subject to the control of the Ministry of Education . . . The teachers are civil servants like patrolmen and customs officers. Nineteenth-century liberalism tried to limit the right of the Ministry of Education to interfere with the freedom of university professors to teach what they considered true and correct. But as the government appointed the professors, it appointed only trustworthy and reliable men, that is, men who shared the government's viewpoint and were ready to disparage economics. and to teach the doctrine of government omnipotence (ibid.).
Mises made one interesting observation about the statement delivered by Emil du Bois-Reymond in 1870. The latter said:
We, the University of Berlin, quartered opposite the King's palace, are, by the deed of our foundation, the intellectual bodyguard of the House of Hohenzoller (ibid.).
For Mises, this statement "characterizes the spirit of German universities" in the 19th century. This statement is important because Bois-Reymond said this "in his double capacity as Rector of the University of Berlin and as President of the Prussian Academy of Science" (ibid.).
The reason why economics was outlawed from European universities was due to the hostility of statist advocates against the concept of economic laws. They considered such a concept "a kind of rebellion" and "heresy" (p. 83). For if the economists were correct that economic laws exist, "then governments cannot be regarded as omnipotent. . ." (ibid.).
And so, in order for the bureaucratization of the mind to be successful, economics professors were screened and books that teach economics perspectives contrary to the view of the state could no longer "be found in the libraries of the university seminars" (p. 86). The only qualities required for professors of "social sciences were disparagement of the operation of the market system and enthusiastic support of government control" (ibid.). Mises described the result of the bureaucratization of the mind:
All that the students of the social sciences learned from their teachers was that economics is a spurious science and that the so-called economists are, as Marx said, sycophantic apologists of the unfair class interests of bourgeois exploiters, ready to sell the people to big business and finance capital. The graduates left the universities convinced advocates of totalitarianism either of the Nazi variety or of the Marxian brand (p. 86).
And so, Emil du Bois-Reymond was right. Universities are the intellectual bodyguards of the State and they were successful in fulfilling their duties. This explains the widespread influence of European totalitarianism. "The universities paved the way for the dictators" (p. 87).
- The Supremacy of the Tyrant's Will
This is the final and the worst social and political implication of bureaucratization. The other way to describe this implication is the gradual erosion of liberty. Again, to clearly see the seriousness of this implication, better contrast the society under the market and the society under government omnipotence.
Under a market society, the public is regarded as supreme. It is the will of the masses that determine the activities of the specialists. The consumers are the decision-makers on whether an enterprise will succeed or not. Again, Mises briefly explains how this supremacy operates:
He who is eager to earn, acquire, and hold wealth is under the necessity of serving the consumers. The profit motive is the means of making the public supreme. The better a man succeeds in supplying the consumers, the greater become his earnings (p. 88).
Profit is the reward for the best fulfillment of some voluntarily assumed duties. It is the instrument that makes the masses supreme. The common man is the customer for whom the captains of industry and all their aides are working (ibid.).
However, due to government interference in private enterprises through bureaucratic operation, the sovereign will of the people is subtly suppressed in the name of protecting their interests. Such interference as has already been elaborated elsewhere will naturally lead to low-quality products and higher prices. In its final stage, the logical result of such intervention is the submission of the people's will to the tyrant's will. And so, in contradistinction to a market society, under government omnipotence the tyrant's will is supreme. For Mises, the critical question to ask is:
Who should be the master? Should a man be free to choose his own road toward what he thinks will make him happy? Or should a dictator use his fellowmen as pawns in his endeavors to make himself, the dictator, happier? (p. 91).
Again, Mises asked: "Who should run the country? The voters or the bureaucrats?" (ibid.).
But of course, the will of the tyrant is done through the help of an expert who assumes to know better what's good for the people. This expert is fully aware that he cannot implement his plan within a competitive system, and so he is hostile to it, and that's why he seeks bureaucratic protection. Mises saw this kind of attempt as nothing but socialism and central planning, which at the bottom of it is the "consciousness of one's own inferiority and inefficiency" (p. 92). Mises ends the chapter: "He who is unfit to serve his fellow citizens wants to rule them" (ibid.).
Psychological Consequences
Alarming as they are, the political and social consequences of the expanding power of the state cannot be compared to its psychological effects in terms of the extent of its destructiveness. In chapter 6, Ludwig von Mises identified five disturbing psychological consequences of such a trend. Since I already mentioned the fourth psychological result under the discussion on the paternal character of the state, I will just touch four of them here. Reading this part of the book, I suspect that in the economist’s mind if something is not done to reverse the trend, all that we can expect in the future of humanity is nothing but increasing tyranny, social unrest, and economic hardship.
- Misdirected Youth
Mises identified that the first psychological outcome of the expanding power of the state in the misdirection of the youth. To grasp the strength of this argument, we need to identify the situation before the growing influence of bureaucratization. And this is best summarized in "Horatio Alger's philosophy" (p. 93) about a capitalist society. For our economist, this philosophy emphasized the most distinguishable feature of capitalist society:
Capitalism is a system under which everybody has the chance of acquiring wealth; it gives everybody unlimited opportunities. Not everybody, of course, is favored by good luck. Very few become millionaires. But everybody knows that strenuous effort and nothing less than strenuous effort pays. All roads are open to the smart youngster. He is optimistic in the awareness of his strength. He has self-confidence and is full of hope. And as he grows older and realizes that many of his plans have been frustrated, he has no cause for despair. His children will start the race again and he does not see any reason why they should not succeed where he failed. Life is worth living because it is full of promise (ibid.).
Mises picked up the stories of famous and successful entrepreneurs in America to illustrate the truthfulness of the above philosophy. He mentioned the experiences of Thomas Alva Edison and Henry Ford. He added that many young men and women of the same generation confirmed this through their less-known stories. These people were characterized by vision, energy, and personal responsibility. Mises described them as follows:
. . . the rising generation is driven by the spirit of a pioneer. They are born into a progressing society, and they realize that it is their task to contribute something to the improvement of human affairs. They will change the world, and shape it according to their ideas. They have no time to waste, tomorrow is theirs and they must prepare for the great things that are waiting for them. They do not talk about their being young and about the rights of youth; they act like young people must act. They do not boast about their own 'dynamism'; they are dynamic and there is no need for them to emphasize this quality. They do not challenge the older generation with arrogant talk. They want to beat it by their deeds (p. 94).
However, such mindset and attitude changed with the increasing influence of the state. Young men and women lost their vision and initiative. Their only dream was to secure a job in government bureaus. Referring to a typical young man at that time, notice how Mises described this shift:
The routine of a bureaucratic technique will cripple his mind and tie his hands. He will enjoy security. But this security will be rather of the kind that the convict enjoys within the prison walls. He will never be free to make decisions and shape his fate. He will forever be a man taken care of by other people. He will never be a real man relying on his strength. He shudders at the sight of the huge office buildings in which he will bury himself (ibid.).
This trend was especially true in the most bureaucratized country, Germany. Before World War 1, a "youth movement" emerged who was hostile to anything connected to the past. They were proud of their " revolutionary radicalism". However, they never criticized government bureaucracy. Mises gave us a clear picture of the ugly features of this movement:
Turbulent gangs of untidy boys and girls roamed the country, making much noise and shirking their school lessons. In bombastic words, they announced the gospel of a golden age. All preceding generations, they emphasized, were simply idiotic; their incapacity has converted the earth into a hell. . . the brilliant youths will rule. They will destroy everything old and useless, they will reject all that was dear to their parents, they will substitute new real and substantial values and ideologies for the antiquated and false ones of capitalist and bourgeois civilization, and they will build a new society of giants and supermen (pp. 94-95).
For Ludwig von Mises, the young people of this movement did not possess any concrete plans. Their boldness "was only a poor disguise for their lack of any ideas and any definite program" (p. 95).
They espoused entirely the program of their parents. They did not oppose the trend toward government omnipotence and bureaucratization. Their revolutionary radicalism was nothing but the impudence of the years between boyhood and manhood; it was a phenomenon of protracted puberty. It was void of any ideological content (ibid.).
As to the leaders of this movement, Mises portrayed them as "mentally unbalanced neurotics," "profligate" and "none of them excelled in any field of activity or contributed anything to human progress" (ibid.). About the followers, many of them, their only aim was to be a bureaucrat. A similar goal could be seen among new converts as the movement spread outside Germany.
Mises concluded his observation of this outcome by confidently saying that from its birth, the movement was bound to fail because it was not able to detach itself from the dominance of government control. Instead, whatever its dissatisfaction was with the system could only be appeased if the members of the movement could secure a government job. That's why Mises called this movement a "counterfeit rebellion" (p. 96) and considered dead during his time in countries, which were highly bureaucratized for the followers of the movement were already "integrated into the all-embracing apparatus of state control" (ibid.).
- Crisis of Progress and Civilization
As we have seen so far, the youth was the most affected sector of society due to the increasing power of the state. They felt uneasy, dissatisfied with what was going on, and wanted change, but they did not know how to achieve such a change. The reason for this was due to the success of the bureaucratization of the mind using education. The youth either due to absence or distorted understanding of the economy, all their cries for reform were vain efforts to beat the air. The youth movement failed for they did not possess the quality of mind to see the evil of socialization brought about by bureaucratization.
Ludwig von Mises saw bureaucratization as a revival of the caste system that characterized the age of feudalism. Under that age, the youth "are deprived of any opportunity to shape their fate" (p. 97). He further described the similarity of the adverse condition of the youth both under the caste system and the bureaucratic system. For the youth, "there is no chance left. They are in fact 'lost generations' for they lack the most precious right of every rising generation, the right to contribute something new to the old inventory of civilization" (ibid.). This is the reason why Mises stated that the kind of crisis brought about by bureaucratization was not only confined to the youth. He claimed, "This is more than a crisis of the youth. It is a crisis of progress and civilization" (pp. 100-101).
- Disappearance of the Critical Sense
This outcome is also surprising. In an age that boasted about revolutionary and critical ideas, there is no way that Mises could be right in his analysis. However, by the disappearance of the critical sense, Mises was referring to the absence of "common sense and self-criticism" (p. 105) as demonstrated in the elimination of competition, the adulation of the masses, and the considered superiority of bureaucratic management.
For our economist, the idea that competition can be completely eliminated is the first concrete example of the absence of critical sense. For Mises, "competition can never be eliminated" (ibid.). Under an alternative system, the kind of competition that we currently have will just be replaced with another kind of competition. He elaborated more on the distinction between these two kinds of competition:
The capitalist variety of competition is to outdo other people on the market by offering better and cheaper goods. The bureaucratic variety consists in intrigues at the 'courts' of those in power (ibid.).
The adulation of the masses is another controversial but insightful observation coming from our forgotten economist. He compared this new kind of “dictatorship” to the old type of dictatorship. Though this interpretation of Mises is considered antiquated, swallowing it in our time is still difficult, particularly in democratic countries. Unlike in the past, despite the fear of dictators, there were still few who raised their voices of disagreement. But the time that Mises described is different. None dared to contradict the popular opinion for the new sovereign now is the common man. Everyone competes in praising this new sovereign, and no one has the courage to advocate ideas contrary to public opinion. With this kind of trend, it becomes very convenient to be the champion of the masses. This is the essence of good politics in our time.
A generation that considers the bureaucratic system superior to the free market system is a clear indication of the lack of critical sense. Such superiority is seen in the growth of bureaucracy and government operation of industries in Europe, the emphasis on the importance of identification papers, the popularity of government services, and the concept that personal freedom can be preserved under full-grown bureaucracy.
- Increasing Violence Leading to Endless Civil War
Our economist explained how this kind of revolutionary idea came about. For those who advocate political salvation through an elite class of men, there is no doubt in their minds that a society must be governed in an authoritarian fashion. However, the problem with dictatorship is that many are potential competitors. "If the decision between various candidates is not left to majority vote, no principle of selection remains other than civil war" (pp. 103-104). Mises backed up this assertion with a historical example: The German "Fuhrer principle" is as old as the Roman Empire. The Emperor embodied "the ablest and eminent man" (p. 104). However, the Empire started to collapse through "continuous civil war, anarchy, and rapid decay" (ibid.) when no one was qualified to replace the most perfect among men. "The rule of the worst was substituted for the rule of the best" (ibid.). "Treachery, rebellion, and murder became the selective principle" (ibid.). For Mises, "a system that can be wrecked by the fault of only one man is a bad system. . ." (ibid.). It is in this way that "a Fuhrer system must necessarily result in permanent civil war. . ." (ibid.). Here Mises seems to equate the Fuhrer system with the bureaucratic system in which violence is the ultimate basis.