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Lectures to the Chinese by Alfred De Grazia

PART ONE:  The Eight Bads

6. Setting One Above Another

A century ago, there were few large companies in America, even though the country was industrializing. The great majority of people lived and worked on farms or in small towns. Colleges were small seminaries. A few thousand men worked for the national government. Many thousands worked for state and local government. Tariffs and property taxes paid for the government. The per capita tax load was very light.

Probably no more than a fourth of the population lived on schedules imposed by others. Half of these were school children.

By 1974 few Americans were occupied in small businesses. Only five out of a hundred worked on farms. But about 80 per cent worked and lived by routines and the clock. Only the old people were really exempted. The tax load was about $1,500 for every man, woman, and child.

What brought about this change? Some say population growth. But skim off the bureaucratic top layer of India and the Indian villages have changed little. So increasing the people dose not bring bureaucracy.

"Arranging a better living for all." answer others. But relative to the technology, Americans of today are not better off than they were a century ago.

Has this breeding of bureaucracy by technology been inevitable? I say no. The ideology of bureaucracy came before the mass technology and then the two bred together to produce the mass society. Just as the automobile motor was first designed and mass-produced so as to pull the car as if it were a horse-drawn chariot, so the new industrial technology was designed to be fitted into the image of factory and army that the eighteenth and nineteenth centuries introduced. If the mass ideology had not dictated otherwise, the machines and assembly lines and chemical industry of today might never have existed, and in their place would be a technology designed for a society of smaller autonomous groups.


Probably a million people in America do nothing but file records, even though thousands of computers are used to do the work of another million file clerks. Probably $20 billion is used to process paper work in government and big business. Standardized forms that are filled out for this or that purpose by large numbers of people may reach a million in number. Americans are forever, it seems, filling out forms, under some mild or severe threat that they must do so correctly and honestly. Every day new orders and regulations are promulgated in The Federal Register, which now numbers hundreds of volumes. State and local government and the non-government large organizations issue even more orders and rules than the federal government. Many thousands of pages of rules and precedents accompany the ministrations of the Bureau of Indian Affairs even though the Americans Indians are supposed to be free nations dealing freely with the government of state and nation.

For a generation, the federal bureaucracy grew faster than the state and local systems. Then, between 1962 and 1972, the annual personnel costs of the latter grew from $30 billion to $85 billion. Government salary levels have increased faster than the non-government. The member of civilian government workers is growing twice as fast as the U.S.population. Six out of every ten new jobs being created in America are in governmental bureaucracy. Meanwhile, mark you well, the proportion of bureaucracy jobs in the non-governmental sector is rapidly increasing at the expense of the positions available in independent and smaller business. Above all of this movement sounds the echo of Parkinson's Law, "Work expands to fill the time available." Create jobs for all; don't worry that the work will be insufficient; false work can fill up an infinity of time.

These trends forbode evil. Stripped to their essence, they signal that real unemployment is increasing, that dependent, as contrasted to independent work, is on the increase, and that more and more Americans are coming directly under the coercive power of the state. The sum of these trends can be called taxesis, a word of Greek roots that connotes a plague of offices. As Hannah Arendt has written, bureaucracy is a form of autocratic rule by Nobody, a worse form than tyranny, an autocratic rule by a single Somebody. However, as I have shown, it requires this Somebody in order to build up the Nobody.

Americans live under perhaps the most universal blanket of bureaucracy of any people in the world. Yet because this bureaucracy is not flagrant, harsh, domineering, and ungenerous, Americans are still assured, though anxious, that they are free. They suffer, without fully realizing it, from taxesis, the all-encompassing social disease of subjection to rule and routine.

The principal thrust of all bureaucracy is the expansion of coercive control over human persons, possessions, and activities. When bureaucracy is governmental, its weapons are the tax and the gun, which, if not nakedly displayed, are behind every rule and order. When it is non-governmental, its weapon is the monopoly, internally exercised as a control over the availability and the price of goods. Step by step, the two types of bureaucracy grow alike. While the governmental type encroaches upon the non-governmental type, nationalizing or regulating them by tax and gun, the non government and tightening its grip over its employees and markets. A strong resemblance to the institutions of fascism and communism evolves.

Adolf A.Berle, Jr., who studied deeply the transformations of the American corporation into a managerial-controlled bureaucracy, wrote:

Corporation executives as individuals are not capitalists seeking profit. They are men seeking careers, in a structure offering rewards of power and position rather than profit or great wealth. Probably an exactly similar situation prevails within any Communist commissariat.

Nor indeed are the corporation's tools too very different from the government bureaucrat's. Unlike the Communist commissar, the corporation executive does not as a rule (there have been exceptions) have power to school or imprison the climber, dissident, or recalcitrant. But he can downgrade him, transfer him to an unprepossessing post, or, if need be, discharge him.1

Within the corporation, a few men hold centralized powers. The freedoms of employees are such as may be gained by countervailing interventions of governments, labor unions, failures of bureaucratic surveillance, and passive resistance. The representative principle goes unrecognized. For instance, in the General Electric Company structure, the hierarchical principle is paramount. One in one hundred employees may be a policy-making executive of some importance; add a labor leader for every two hundred employees; add a few important stockholding groups (portfolio specialist from pension trusts, insurance companies, banks, and a few individuals); add a few government officials who are part of "the GE family" because they do nothing but regulate some important phases of GE activity, and you have something between 1 and 2 per cent of the "family." That is, perhaps about 500,000 persons belong to GE's "jurisdiction," of which about 7,500 might be counted as GE activists. If we used customers as part of the population the ratio of 1 or 2 per cent would remain, for certainly important purchases would be included (like the agents of the French government, which buys GE nuclear reactor plants and brings to bear certain needs through its franc power).


It is generally believed that a rich consumer economy cannot go socialist, that is, centralized and bureaucratic. It is felt that the pressures of a poor class that has become aware of its own existence and plight bring socialism. This is untrue. Socialism evolves with equal facility from the middle and upper classes of the economy.

Socialist and egalitarian ideas are more popular in the middle and upper classes of America than among the poor. Survey after survey has discovered that the working class and the dependent groups are more "capitalist" and "reactionary" than persons of over $15,000 annual income. Education has something to do with this. But the basic reason is probably that the poor feel the breath of the very poor hot on their necks as they hurry along the road of survival.

This is but another contradiction. The American can make as much as $50,000 a year and, if his income is removed suddenly, collapse into the ranks of the poor. If you consider all households in America whose income is less than $25,000 a year, you will find that something like 15 per cent of their income is from real property, pensions, or securities. If you lump together the 5 per cent of the households that collect annually more than $25,000, you will find that these earn well over 50 percent of their income from real and personal property. That is, you have to conclude that about 95 percent of the American people, no matter how well off today, can sink economically tomorrow. Very few can withstand unemployment for long. In America the middle classes, no matter what and they have attained in food and shelter, want more of these and everything else. They demand a lion's share of whatever the poor get. Their political parties, corporations, unions, and associations agitate against each other and within the state structure to make more goods available to them. If this means more state intervention, so be it.

Furthermore, partly in satisfaction of such demands but partly because of the very wealth of the economy, the country moves toward socialism. Once again, the common error is to believe that societies move "rationally," that is, not really rationally, but according to economic determinism, which is thought to be rational. It is not economic needs that produce socialism. It is formed of the normal efforts of people who are spending public resources, who can command more resources, who are restless to expand their small spheres of activity, and who have no imagination as to how to expand except to do more of what they are doing. It is formed, too, of a great many people who for reasons of racism, sexism, ethnic bias, and poor economic backgrounds have lacked equal opportunities in business and go into government work where they are more welcome.

All of this adds up to more socialism, more state intervention, and more centralization and hierarchy throughout the society.

It will be objected that socialism is a much, higher ideal than blind activity, centralization, and bureaucracy. True; one may read into socialism the most beautiful texts about human cooperation. But behavior, not texts, describes reality. The fault lies with the practically universal blind acceptance of economic models of the world and the impatience with human organizational imperatives, which are much more influential in determining reality.

No matter whether you take a Marxist view, a Bastiat view, or a Keynesian view, you will follow it into the same blind alley. For they all are superimpositions of an "economic man" who does not exist upon a political reality determined by a political man.

Thus, the heart of the Keynesian lesson to legislators is: spend funds in bad times; collect funds in good times. It never happens! Only the first of these policies is viable; the second gasps feebly and expires as soon as it is dutifully born.

What matters is not so much that a state be called socialist or capitalist as that its structure be much as to prevent bureaucracy. All socialist and capitalist systems have central political problems, a typical socialist one being the inability to organize productivity and the typical capitalist one being the inability to incorporate the poor classes. Both lead to bureaucracy and end up depriving the general population first of power and will, then of goods. For the poor are not much better off under socialism, even relatively, and the well-to-do become structurally frustrated under capitalism.


In their desperation at being bureaucratized, the lower middle and middle classes of a country that is "advanced" economically must grasp at the idea of some leader who reflects their disgust and despair and who, by mouthing chauvinistic slogans, can appease the military. Thus it happened in Fascist Italy, Nazi Germany, and Gaullist France. This action cannot reverse the pattern, for it is blind and the leader is merciless.

The adulation of a leader (dead or alive) fosters bureaucracy, incompetency, and indecisiveness down through the ranks of society. Mark you well: leader worship may appear to do the contrary because a great many people become so convinced that they can interpret what the leader says, thinks, and feels that they will go to extreme lengths to carry out their own interpretations. And the opposition and people are also fooled into obedience, for they grant authority to whoever commands the leader's voice.

The President, personally, is a midget standing on the shoulders of a giant civil and military bureaucracy. There he is easily illuminated so that his effulgent presence covers the television screens and front pages of newspapers. He comes to make the light of the land, not to live in it.

Simultaneously, he lends personality to the bureaucracy, which otherwise would be only a faceless mass. He is elected to demand actions, legislation, for whatever is tossed to him he pretends to execute, but in reality he drops it among the eager million outstretched hands below. As he remains "responsible" in law and in the minds of the population, he becomes ever more irresponsible.

We saw this so clearly in the Watergate affair, where a procession of men of the executive force repeatedly gave orders or took orders because they came "from a high source," or "the highest source." Yet, from the standpoint of a free republic, this question must be always asked, and answered.

One of the great advantages of American capitalism and federalism is that thousands of relatively invulnerable authorities who are final-in-fact are operating and they are compelled to operate more or less rationally and pragmatically, that is, in terms of the problems to be solved, without reference to divine words from above.

On the contrary side, whenever the great leader is invoked, the machinery of bureaucracy is stimulated, incompetency is rewarded, and indecision is generated. Bureaucracy is stimulated because whoever masters the divine word controls the deductions from the word and can demand a hierarchy to execute the word. Incompetency is rewarded because any criticism of an action can be regarded as criticism of the divine word. The quickest and cheapest method of forestalling and suppressing opinion addressed to the effectiveness of a concrete action is to accuse such opinions of treason to the divine word. The most comfortable substitute for making a decision is to feel, and make others feel, that the decision has been made by the act of invocation of the great man's words. Whoever requests a real decision, whether he is inside or outside the decisional authority, can be accused of delusion, illusion, and malicious troublemaking.


A subtle effect of bureaucracy is the expansion of legalism at the expense of personalism, patronage, and visible corruption. This refers not only to large new fields of law such as administrative law that grow up to deal with the burgeoning agencies and activities of government but also to the legalism that befalls efforts to get the simplest things done through a government that has become thoroughly imbued with the bureaucrat's temper.

The compounding of many rules and regulations elicits a chain of specialized personnel dealing with parts of the same subject. Personalism, patronage, and corruption become difficult because as a society grows bureaucratic the official becomes more wary of compromising himself in ways that will hurt his career. Furthermore, he has an ingrained distaste for these intrusions of arbitrariness on a fixed regime. He wants things done his way, usually referred to "in terms of the public interest."

Now what happens when a person on the outside needs to pass through the maze of rules, or sometimes to find an exception or loophole? He hires one or more lawyers, or, if in a corporation, uses the legal staff for his purpose. These lawyers are quite ready, since they are well paid for their time, to pursue any trivia needed to appease the bureaucrats. The person goes about his normal life. The system is working for him, at a price that few can afford. In a pas a deux the lawyers and bureaucrats please each other's needs and ultimately obtain the desired goal. Often, the antics of the one side are used to increase the costs and the personnel employed on the other. This is not at all displeasing to either. In the narrow sense, the laws are upheld and "no one is compromised." A pile of papers stands as testimony of the faithfulness and correctness of the administrator.

No one, that is, except the large number of people whose only weapons might have been a gun, a bribe, or, heavens forfend, a good cause. They would perish financially, physically, and mentally if they had to work through the legal maze themselves.

Few Americans can contend with legalism and bureaucracy.

This is the result, to be sure, of the abandonment of personal discretion or purely political action, but it is not a good result, not one that makes men equal or executes the laws efficiently. It is to be stressed that both on the side of the person soliciting action and on the side of the government (or large corporation),the social cost of the activity is far greater than the social cost of the more abrupt forms of decision in their less justified instances.


The effects of a bureaucratic society on the minds of youth are not as well known, say, as the effects of a mother's love upon the infant. Or, if they are well known, they are not tied in. It has been observed how many youth try to "drop out" of the whole social system, how they have reduced their marriage, vote, and birth rates, how they search for "jobs with meaning ."

For a while the situation was under control because the economic system promised the young a more comfortable job than their parents had and more material goods in compensation. It made good on its promises. They could overlook the loss of initiative and freedom in their lives. But now the economic prospects are poor. They will receive fewer material goods and take longer to find jobs, and their tenure on the job will be more precarious.

Will new waves of protest arise, as the bind they are in is drawn tighter? Probably a third of the better-equipped youth of the decade of the sixties dropped out to protest the system in one way or another. The educational and job structures that they opposed creaked and cracked in some parts but on the whole remained the same and even grew more arbitrary and all-encompassing.

It would appear now that youth will enter the educational and economic system under conditions of invisible protest. This is less unnerving to the authorities but its effects are more deadly. Lowered work morale means lessened initiative, lower quality production, increased waste, higher costs of labor, and much more. It is better to have people throwing rocks at factory windows than to have them drilling holes in the wrong part of a piece of plastic.

The City University of New York is given the horrendous sum of $7,000 per student from the pockets of the people, but its students are "turned off"; they resist study and assignments, passively defying the authorities and yet preventing any measures to flunk them out. In fact, their grades have gone higher as their performance has deteriorated. CUNY is exceptional mostly in size, with its quarter of a million students, but not in its low quality of education imparted.

Without a real rise in wages and salaries to supply incentive, the only source of industrial and administrative improvement has to be reorganization. But if the reorganization occurs against the freedom of the person, then it will accelerate the downward trend of morale and productivity. It will simply aggravate the disease it was called in to cure. Reorganization, to be effective, has to pay people more in a real sense. If they cannot be paid by consumption goods, they must be paid in increased shares of power and respect offered through the workshop-industrial democracy, that is. Educational, governmental, and economic institutions should operate internally, as well as externally, as representative governments.

However, this claim, no matter how agreeable and logical, cannot be met easily. The system is still operating in a vicious circle. Since the external power of bureaucracies and monopolies is increasing the effects of demoralization do not punish the institutional authorities. They can continue policies leading to decline, secure in the knowledge that their employees have nowhere to go. Since a person does not derive his subsistence as a matter of right from the system, he has to beseech government to guarantee him a job. Thus everyone is forced to do his bit against productivity and for bureaucracy. One cannot join the competitors or the opposition, because of the simple fact that there are none. The authorities similarly control the information and intelligence available to the workers; the true causes and effects of the problem are hidden behind a smoke screen of false statistics and artificial enemies. Internal disciplinary measures are adequate to repress opposition, if not to obtain the value of critical workers. Obviously, outside attack must be the only way to break the vicious circle.

Is not this the reason why labor unions exist? In part, yes, although it must be remembered that only one fourth of the employees of America are unionized. The cannot the leaders of this one fourth set an example wherever they operate and bring about the unionization of the whole? One hundred years ago, unions were thought to be instruments for bringing about industrial democracy. Today they are used in America to bring about a maintenance of and slight incremental betterment of real income and security devices to make a job as close to a piece of property as it can become and to provide as easy a retirement as possible. They are regarded largely in this light. Their influences in general politics is sporadic and hardly inflammatory.

If, as is the growing practice in European republics, the unions participate as unions in the management and ownership of industry, the individual employee has certainly a new channel to expressing one's will in larger affairs. To the degree that the unions themselves are de-bureaucratized, this new freedom might bring impressive results. Nevertheless, the bifurcation of industrial and agency government into two parties that range management and most shareholders against union leaders and employees will not bring the beneficial results of a single representative structure collecting within itself all the voices that have a direct interest in the enterprise. There are more flexible and productive ways of organizing the human relations of an industry for the sharing of power, respect, and material goods than by the dual structure of management and unions.

If a country were small and governed loosely by a central monarch, if it contained several hundred barons, each ruling a part of its industries and communities, then it would be called a feudal regime. Since their fiefdoms would be small, the system would be more personal and less bureaucratic. America has several hundred families, each with a small group of retained lawyers and assistants, who own a quarter of the assets of the country and in one way or another are involved in most of the decisions of politics and economics. Call them the "super-rich." A New York Times article reads:

It is no coincidence, as V.I. Lenin used to say, that Chase Manhattan has opened the first American banking office in Moscow in 50 years. David Rockefeller says,"To some extent the Soviets have believed their own propaganda to the effect that a small group of families, including our own, really run this country, while the Government is just sort of a front. Therefore, if they're going to have a relationship with the U.S., they probably wanted to deal with the people who they thought really had the power. They felt it would be a rather dramatic demonstration to the world of business that relationships had changed in an important way."2

You should not exaggerate the power of the industrial military complex in America. The super-rich of America are modest and imbued with the democratic mythology. They are moreover too hard-working on the whole (that is, immersed in everyday routines) to threaten directly the over-all power system. Furthermore they are not formally organized as a feudal aristocracy.

But the super-rich deny the fundamental desire of the American people for equality of opportunity. They govern great banks and industries in a bureaucratic fashion and have to resist efforts to disengage one business from another, or a business from a bank. For instance, should you be in New York City, you would see two new ugly buildings reaching up over one hundred stories, created largely at the instigation of and with resources commanded by David Rockefeller, an economist who should know better but is first and foremost one of the super-rich. As these buildings were erected, a great many old handsome buildings nearby were neglected, torn down, or defaced. (Sometimes persons of small means moved into them and repaired them.)

The super-rich must resist all efforts to protect and foster independent men and women in the society and therefore they must act against the only kind of manpower and womanpower that can preserve a republican form of government. If the rich have a sense of responsibility for the republic, as they often do, they try to help the poor to develop and succeed. But logically they cannot tell others to lift themselves up by hard work and merit, since they have inherited their wealth and opportunities. They become contradictions, cases of pseudosis.

So far as concerns the organization of public decision in America, the same super-rich are like loose cargo sliding and crashing in the hold of a ship in storming seas. They enter now here, now there, to demand and effect a decision. Then they leave the situation to bureaucrats and assistants who hold only formal loyalty and mercenary fealty. For Americans generally do not love to serve the rich. Thus, the super-rich cannot govern but they can prevent America from being properly aimed and organized for good government.

Charismosis, governmental and non-governmental, the unions, and the super-rich: none of these formulas hold promise for the future of the country. Working all together, what do they provide? Not the worst-governed system, indeed, fortunately, one of the better-governed systems of the world. But this is a far cry from what Americans long for. Who wishes to suffer the diseases of mechanism and impersonalism, only to contract the worse diseases of economic decline and hyperimperialism?

The Americans speak like famous Mencius (Meng-tse), psychologist and adviser of the great:

When speaking to men of consequence it is necessary to look on them with contempt and not be impressed by their lofty position. Their hall is tens of feet high; the capitals are several feet broad. Were I to meet with success, I would not indulge in such things.

Though Mencius could find rulers to pay him well, he could not find rulers to accept his advice, which, to him, was worth more than gold. He finally secluded himself to write. The Americans must carry on at their work. Few of them can live as writers.


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