Edited by William F. Shughart II and Laura Razzolini
Chapter 11: Bureaucracy
William A. Niskanen 1 Introduction Most government services are supplied by bureaus, so any comprehensive theory of government must include a theory about the behavior of bureaus in the broader political environment. This chapter summarizes the development of the economic theory of bureaucracy. As I made a major early contribution to this theory (Niskanen 1971), my review of this literature reﬂects a continuing interest but, possibly, some personal bias. This review also borrows broadly from my two prior reassessments of this literature (Niskanen 1991, 1994), since my perspective on this topic has changed little in recent years. For other recent reviews of this literature, see the ﬁne articles by Ronald Wintrobe (1997) and Terry Moe (1997).1 2 Building blocks 2.1 Contributions from other traditions The study of bureaucracy, like the broader study of politics, was the almost exclusive domain of sociology and political science until several decades ago; as of 1968, for example, the article on ‘Bureaucracy’ in the International Encyclopedia of the Social Sciences did not cite one study of bureaucracy by an economist. At that time, the modern scholarly literature on bureaucracy was dominated by the writings of Max Weber, a German sociologist. Weber recognized bureaucracy as the characteristic form of public administration for a state with extended territorial sovereignty, using the term bureaucracy largely as a synonym for a system of relations based on rational–legal authority. The modern literature on public administration was also strongly inﬂuenced by Weber’s writings, with occasional infusions of...
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