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 :

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Bureaucracy as a rule by officials. 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 : 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.

Facts Bureaucratic organizational structures have numerous layers of management. they take very little interest in the well-being of an enterprise. 5 Particularly. since it knows best the capability of a particular plant 3." According to Alec Nove in the Soviet Union managerial de facto powers arise from the following circumstances : 1. This gives rise to avoidable delay and red-tapism. through shift supervisors. decision-making authority has to pass through a larger number of layers than with flatter organizations. Standardization and best-practices are often . where operational processes are rigidly controlled with best-practices methodologies and close supervision. 4. may have to pass from frontline employees. cascading down from senior executives to regional managers to departmental managers. There is a pyramid of hierarchical or political subordination. Because of "centralized pluralism". which is ideal for business owners with a command and control style. It cannot bring about innovation so vital for economic change. since less individuals are involved in the process. Output plans being in some degree aggregated. There is indifference towards the customers. 6. It is too slow to deal with such a contingency effectively. their decisions partly determine the product-mix. a bureaucrat would hesitate to bring about any change. therefore. regulations and procedures. It has a tendency to divide and subdivide a task. 7. 6. 2. Responsibility and risk are avoided by the bureaucrats. all the way down to shift supervisors who work alongside frontline employees. It follows tradition and conservatism. The bureaucrats develop an obsession to follow rules and procedures. 1. 4. 3. although these might be vitally essential for the success of an enterprise. Consequently. they adjudicate. Management seldom meets opposition from the trade unions. Refund decisions. Bureaucracy leads to departmentalism. Under bureaucracy there is too much of emphasis on the observance of rules. even when necessary. "They appoint. Significance In a bureaucratic organizational structure. Due to the many layers of management. 5. This usually encourages a company culture focused on rules and standards. to store managers for a retail outlet in a bureaucratic company. The human side of things is ignored.” Full-time party officials exercise considerable powers. 2. So they get almost no opportunity to exercise individual judgment. and information generally flows from the top down. It cannot face the challenge of uncertainty and volatile change. Role of Bureaucracy in the Soviet Union : According to some in the Soviet Union there is "party state bureaucracy. Strategic decision-making time can be shorter in a tall organizational structure. though "decided" above often decided on the basis of information. they dismiss. they interfere in current affairs. consequently. they allocate and reallocate. management has some choice to decide as to what orders to obey. Both output plans and inputs. customers get a raw deal from the bureaucrats. arc proposals submitted by management. authority is generally centered at the top. for example.Limitations of Bureaucracy : Various criticisms have been leveled against bureaucracy from time to time. in matters relating to supply of inputs. In these instances. there is much scope for informal initiative. A variety of innovations in product design and in methods of production can be initiated at the enterprise level. Advantages Top-level managers in bureaucratic organizational structures exercise a great deal of control over organizational strategy decisions. sometimes orders which reach the management may be somewhat contradictory in nature.

but others such as fast food benefit from tight controls and tall hierarchies Bureaucracy is the structure and set of regulations in place to control activity. formal division of powers. it is virtually impossible for a single individual to generate the range of strategic ideas possible in a large. industry or legal environment. every official's responsibilities and authority are part of a vertical hierarchy of authority. hierarchy. the official is given the authority necessary to carry out his assigned functions 3. interdisciplinary group. Considerations At first glance. with respective rights of supervision and appeal 4. but this is not necessarily so. official business is conducted on a continuous basis 2. bureaucracy concerns: * the historical and administrative reasons for the process of bureaucratization (especially in the Western civilisation) * the impact of the rule of law upon the functioning of bureaucratic organisations * the typical personal orientation and occupational position of a bureaucratic officials as a status group * the most important attributes and consequences of bureaucracy in the modern world A bureaucratic organization is governed by the following seven principles: 1. bureaucratic organizational structures may seem less desirable than flatter structures. Front-line employees may receive less satisfaction from their jobs in a rigidly bureaucratic organization. increasing employee turnover rates. it is represented by standardized procedure (rule-following) that dictates the execution of most or all processes within the body. Some industries. officials do not own the resources necessary for the performance of their assigned . official business is conducted with strict accordance to the following rules: 1. ensuring that work is consistently completed efficiently and effectively. the duty of each official to do certain types of work is delimited in terms of impersonal criteria 2. Organizations bound by rigid controls can also find themselves less able to adapt to changing conditions in the marketplace. and relationships. usually in large organizations and government. such as software development. Disadvantages Bureaucratic structures can discourage creativity and innovation throughout the organization. No matter how ingenious a business owner is.highlights in companies with tall organizational structures. the means of coercion at his disposal are strictly limited and conditions of their use strictly defined 3. In practice the interpretation and execution of policy can lead to informal influence. As opposed to adhocracy. may benefit from a more autonomous structure.

political infighting and other degenerations can counter the rule of impersonality and can create a recruitment and promotion system not based on meritocracy but rather on oligarchy. * Disregard for dissenting opinions. official business is conducted on the basis of written documents A bureaucratic official: * is personally free and appointed to his position on the basis of conduct * exercises the authority delegated to him in accordance with impersonal rules. even when such views suit the available data better than the opinion of the majority. . see also: transparency) Even a non-degenerated bureaucracy can be affected by common problems: * Overspecialization. offices cannot be appropriated by their incumbents (inherited. making individual officials not aware of larger consequences of their actions * Rigidity and inertia of procedures. etc. and similarly delaying change. sold. some offices can be omitted in the decision making process. evolution and adaptation of old procedures to new circumstances. making the organisation unable to change and realise its own mistakes and limitations. official and private business and income are strictly separated 6. loyalty and lack of critical thinking regarding the organisation which is perfect and always correct by definition. there may be conflicts of competence. ultimately he/she is responsible only for the impartial execution of assigned tasks and must sacrifice his or her personal judgment if it runs counter to his or her official duties. Criticism * Vertical hierarchy of authority can become chaotic. making decision-making slow or even impossible when facing some unusual case.functions but are accountable for their use of these resources 5. corruption. sometimes a decision itself may be considered more important than its effect. * A phenomenon of group thinking . * Competences can be unclear and used contrary to the spirit of the law. confusing documents. * Officials try to avoid accountability and seek anonymity by avoiding documentation of their procedures (or creating extreme amounts of chaotic. * Nepotism.zealotry. and his or her loyalty is enlisted on behalf of the faithful execution of his official duties * appointment and job placement are dependent upon his or her technical qualifications * administrative work is a full-time occupation * work is rewarded by a regular salary and prospects of advancement in a lifetime career An official must exercise his or her judgment and his or her skills. but his or her duty is to place these at the service of a higher authority.) 7.

every official's responsibilities and authority are part of a vertical hierarchy of authority. official and private business and income are strictly separated 6. In the most common examples bureaucracy can lead to the treatment of individual human beings as impersonal objects. the official is given the authority necessary to carry out his assigned functions 3. and relationships. hierarchy. as everything must be as is written by the law. offices cannot be appropriated by their incumbents (inherited. facilitating creation of contradictory and recursive rules * Not allowing people to use common sense.TV show The Office. with respective rights of supervision and appeal 4. the means of coercion at his disposal are strictly limited and conditions of their use strictly defined 3. bureaucracy concerns: * the historical and administrative reasons for the process of bureaucratization (especially in the Western civilisation) * the impact of the rule of law upon the functioning of bureaucratic organisations * the typical personal orientation and occupational position of a bureaucratic officials as a status group * the most important attributes and consequences of bureaucracy in the modern world A bureaucratic organization is governed by the following seven principles: 1. official business is conducted on a continuous basis 2. official business is conducted with strict accordance to the following rules: 1. etc. Franz Kafka's novels The Trial and The CBureaucracy is the structure and set of regulations in place to control activity.* A phenomenon of Catch-22 (named after a famous book by Joseph Heller) . usually in large organizations and government. George Orwell. sold.as bureaucracy creates more and more rules and procedures.) 7. In practice the interpretation and execution of policy can lead to informal influence. officials do not own the resources necessary for the performance of their assigned functions but are accountable for their use of these resources 5. As opposed to adhocracy. the duty of each official to do certain types of work is delimited in terms of impersonal criteria 2. their complexity rises and coordination diminishes. This process has been criticised by many philosophers and writers (Aldous Huxley. formal division of powers. Hannah Arendt) and satirized in the comic strip Dilbert. official business is conducted on the basis of written documents A bureaucratic official: * is personally free and appointed to his position on the basis of conduct . it is represented by standardized procedure (rulefollowing) that dictates the execution of most or all processes within the body.

* Disregard for dissenting opinions.zealotry. political infighting and other degenerations can counter the rule of impersonality and can create a recruitment and promotion system not based on meritocracy but rather on oligarchy. * Nepotism. even when such views suit the available data better than the opinion of the majority. see also: transparency) Even a non-degenerated bureaucracy can be affected by common problems: * Overspecialization. there may be conflicts of competence. facilitating creation of contradictory and recursive rules * Not allowing people to use common sense. * Competences can be unclear and used contrary to the spirit of the law. In the most common examples bureaucracy can lead to the treatment of individual human beings as impersonal objects. making decision-making slow or even impossible when facing some unusual case.* exercises the authority delegated to him in accordance with impersonal rules. but his or her duty is to place these at the service of a higher authority. corruption. making individual officials not aware of larger consequences of their actions * Rigidity and inertia of procedures.as bureaucracy creates more and more rules and procedures. confusing documents. evolution and adaptation of old procedures to new circumstances. * Officials try to avoid accountability and seek anonymity by avoiding documentation of their procedures (or creating extreme amounts of chaotic. and similarly delaying change. their complexity rises and coordination diminishes. as everything must be as is written by the law. * A phenomenon of group thinking . Criticism * Vertical hierarchy of authority can become chaotic. This process has been criticised by many philosophers and . loyalty and lack of critical thinking regarding the organisation which is perfect and always correct by definition. ultimately he/she is responsible only for the impartial execution of assigned tasks and must sacrifice his or her personal judgment if it runs counter to his or her official duties. sometimes a decision itself may be considered more important than its effect. * A phenomenon of Catch-22 (named after a famous book by Joseph Heller) . and his or her loyalty is enlisted on behalf of the faithful execution of his official duties * appointment and job placement are dependent upon his or her technical qualifications * administrative work is a full-time occupation * work is rewarded by a regular salary and prospects of advancement in a lifetime career An official must exercise his or her judgment and his or her skills. some offices can be omitted in the decision making process. making the organisation unable to change and realise its own mistakes and limitations.

TV show The Office. Franz Kafka's novels The Trial and The C . George Orwell. Hannah Arendt) and satirized in the comic strip Dilbert.writers (Aldous Huxley.