Volume 13, Number 2 (Summer 2010)
Bureaucracy may denote either a means of management, or a particular kind of organization. Characteristics of such organizations include the existence of a discretionary budget, a tendency to expand their resources continuously and progressively, the absence of profit-seeking behavior, and competition for political position inside the organization. This paper argues that if we are to understand the functioning of bureaus and determine their consequences for the allocation of resources, two main characteristics of bureaucratic organizations will require more attention than they have received. These are the impossibility of economic calculation and the absence of clearly defined property rights to public assets and resources. This paper points out that management of public resources is most accurately characterized as stewardship, not ownership, and develops new perspectives on the economic theory of bureaucracy.
