Management Dilemmas: Bureaucratic Political Economy (Contemporary Economics)

Author: Gary J. Miller (USA)
Publisher:
Publish Date: 2002-11-01
Features: The main purpose of this book is to explore the literature of political economy, serving as a theoretical bridge between these two types of literature in bureaucratic organizations. The first two-thirds of the book explain that the narrow, neoclassical view of organizational economics is not naturally established. Although the economic explanation for the existence of bureaucracy is that it can correct market failures, the inherent logic of self-interest behavior between subordinates and superiors cannot make the bureaucracy persist as a smoothly running, efficient machine. Instead, the conclusions described in social choice theory, principal-agent theory, and incentive compatibility literature show inherent logical inconsistencies. This makes it impossible to design an incentive-control system that simultaneously regulates the self-interested behavior of both superiors and subordinates. For various incentive systems with other good characteristics, there will always be some people with an "avoid responsibility" incentive—pursuing narrower interests, leading to an equilibrium result that everyone in the organization perceives as inefficient.