On Bureaucratic Capitalism

I am preparing the text for an invited lecture on why foreigners are still unable to understand the socialist market economy in China. The main focus will be on a number of concepts that have been applied to China, but which are mistaken. The first of these concerns ‘bureaucratic capitalism’, which has an intriguing history. The concept arises from Max Weber, who saw it specifically in terms of the peculiar developments in Western Europe. The small number who apply ‘bureaucratic capitalism’ to socialist countries, such as China, are simply unaware of Weber’s work and indeed the realities of these countries. The text is as follows:

Let us begin with ‘bureaucratic capitalism’.[1] The term derives particularly from Max Weber, who made it a central category of his analysis of the rise of capitalism and the modern European bourgeois state (Weber 1921 [2015]; 1947, 324-40; 1968, 956-1005). Bureaucracy is the key, which Weber sees as a detailed and often hierarchical division of labour in which all follow objective and explicit rules that are applied impersonally. A bureaucracy is staffed by full-time professionals, who have developed the necessary skills but who live from a salary and do not in any way own the ‘means of administration’ or make a profit. This is, of course an ‘ideal type’ favoured by Weber, an abstract category used for analysis rather than a concrete description of a real life bureaucrat.

For our purposes, two features are important in Weber’s analysis: bureaucracy as a manifestation of rationalisation; and bureaucracy as crucial for the rise of capitalism in Europe. As for rationalisation, Weber speaks of three types of legitimate authority: rational, traditional and charismatic (Weber 1947, 328-29). Charismatic authority is derived from the Christian tradition and designates a system in which followers are devoted to a gifted or heroic leader. Traditional authority also entails being subject to an individual leader, but now because of tradition itself and its assumed duties. Whoever occupies the position of chief is regarded as legitimate due to tradition. By contrast rational authority is not personal but impersonal. It relies on a distinct set of laws that have their own moral legitimacy or are socially agreed to be legitimate. Weber calls this ‘legal authority’ and it is based on the Western approach to rule of law.

This ‘rational authority’ obviously relies on reason, but what type of reason. Weber (1947, 115) identifies two types:

  • Goal-rationality (Zweckrationalität]’, with Zweck meaning end, purpose or goal. Thus, one’s behaviour is rational if it works appropriately towards achieving a specific purpose or purposes. For Weber, this includes the careful weighing up of different purposes, considerations of the best means to achieve the purpose, and the relationships between the means and ends. Thus, if one’s purpose is the pursuit of profit, then one will – where reason is the assumed framework – seek to identify the most appropriate means to achieve this end. By contrast, if the goal is to serve the good of the community (gongtongti fuwu), then the very nature of the means will shift to enable this outcome.
  • Value-rationality [Wertrationalität]’, in which behaviour is determined by ‘some ethical, aesthetic, religious, or other form of behaviour, entirely for its own sake and independently of any prospects of external success’ (1947, 115). Contrary to one’s initial impression, this too is a rational approach, but now predicated on an absolute value that determines the appropriate action. For example, if an absolute value is Western liberal ideology and its attendant capitalist system, then one will engage in a series of actions to realise this value. By contrast, if the absolute value in question is communism, then the nature of rational actions will come out very differently.

Obviously there is an overlap between the two types of rationality, and Weber is not always clear about their relationship (with rationality often coming to mean efficiency), but I have deliberately used economic examples since they lead to the second implication: for Weber, bureaucracy was crucial to the growth of capitalism in Western Europe. The reason is that a bureaucracy based on rational authority, on the impersonal observation of a code of laws, and so it is more efficient than other forms of organisation. As Weber observes:

‘The decisive reason for the advancement of bureaucratic organizations has always been the purely technical superiority over all other administrative forms … A strictly bureaucratic administration produces an optimal efficiency for precision, speed, clarity, command of case knowledge, continuity, confidentiality, uniformity, and tight subordination. This is in addition to minimization of friction and the costs associated with materials and personnel’ (Weber 1921 [2015], 96; see also Weber 1947, 337).

He finds this new form of bureaucracy dominating across many fields, whether army, state, church, political parties, clubs, private associations, and – crucially – economic enterprises. It is nothing less than the ‘most crucial phenomenon of the modern Western state’ (Weber 1947, 337). In other words, for Weber, bureaucracy plays the foundational role in the development of the bourgeois state, bourgeois civil society and capitalism. It may be compared to Adam Smith’s focus on division of labour and Marx’s surplus value, although it also raises a number of questions.

First, Western analyses of Weber tend to focus on his influential work, The Protestant Ethic and the Spirit of Capitalism (1904-1905 [1992]), in which the vanishing mediator of capitalism was Reformed Protestantism. This focus is rather imbalanced, since for Weber the religious dimension was a means for achieving a rational bureaucratic organisation. Second, I have emphasised that Weber saw modern rational bureaucracy as the most efficient form developed thus far. He also balances this appreciation with the other side, in which rational bureaucracy dominates to the exclusion of all other, higher concerns (Adler 2012). However, critics too often stress the negative dimension and miss the balance of Weber’s analysis. Third, a more fundamental problem concerns the cause of the rise of rational bureaucracy. By now it is clear why one can speak of bureaucratic capitalism in light of Weber’s work, but it begs the crucial question: from where does such a system arise? Weber is willing to admit that ‘capitalism is the most rational economic basis for bureaucratic administration and enables it to develop in the most rational form’ (Weber 1947, 338; Stanisevski 2004). But Weber does not provide the type of systemic analysis of capitalism that we find in Marx.

Weber’s focus was strictly on Western Europe, particularly when he was analysing rationality, bureaucracy and capitalism. Thus, when he speaks of bureaucratic capitalism (to use a shorthand), he speaks of the Western European context for capitalism. And despite his misgivings over rationality and bureaucracy, he saw it as the highest form of political, social and economic organisation. As for socialism, it ‘would, in fact, require a still higher degree of formal bureaucratization than capitalism’ (Weber 1947, 339; see also Weber 1968, 224).

This final point brings us to a question I will ask on each occasion: has ‘bureaucratic capitalism’ been applied to socialist countries, including China? It has, but – crucially – without awareness of Weber’s balanced insights. One example is Cornelius Castoriadis, who follows a Trotskyite line (Trotsky 1937 [1972]) in hypothesising that the Soviet Union during Stalin’s time became a form of ‘bureaucratic capitalism’ (Castoriadis 1956 [1988]). Here ‘bureaucracy’ has only a negative sense (unlike Weber) and the use of ‘capitalism’ indicates a sneering dismissal of the Soviet project to the construct the world’s first socialist system.

We find similar, if not more extreme and unrealistic, proposals from a small group who inhabit the ‘grey zone’ of the internet. Self-described ‘activists’, they feel they are changing the world one blog post at a time. Their core approach is not merely to hypothesise that China turned towards capitalism with the Reform and Opening Up (itself a profound misinterpretation), but to deny that China has ever been socialist at all (La Botz 2012; Yu 2009; Yu et al. 2012; Lin 2017, 2019). This entails an all-out denial that the Communist Party of China is communist, a denial that the Liberation was in any sense communist, a denial that Mao Zedong was a Marxist, and a denial that China at any stage has attempted to construct socialism. How is this fanciful narrative constructed? It is based on the assumption that CPC is an evil and secretive organisation, terribly afraid of its own people and seeking world domination. ‘Bureaucracy’ thus means for them absolute control by the CPC – a position that is empirically wrong as well as being profoundly voluntarist and thus at odds with the Marxist dialectic. With this assumption – much like believing in ghosts – they can construct a narrative of bureaucratic control over the many phases of the New China of the last 70 years that is based on speculation, twisting of information and simple falsehoods.

To sum up, for Max Weber bureaucratic capitalism described the highly efficient yet ambivalent nature of capitalism in Western Europe and its attendant bourgeois state and society. He certainly did not apply the idea to other contexts, except to point out that socialism would require a whole new level of rational organisation. By contrast, a small number of ‘grey zone’ internet ‘activists’ apply the term in a purely negative way to speak of China – albeit without any sense of Weber’s work and without seeking truth from facts.

Bibliography

Adler, Paul. 2012. ‘The Sociological Ambivalence of Bureaucracy: From Weber via Gouldner to Marx’. Organization Science 23 (1):244-66.

Castoriadis, Cornelius. 1956 [1988]. ‘The Proletarian Revolution Against the Bureaucracy’. In Political and Social Writings, Vol. 2, 57-89. Minneapolis: University of Minnesota Press.

La Botz, Dan. 2012. ‘China: From Bureaucratic Communism to Bureaucratic Capitalism’. New Politics 2012 (20 November). https://newpol.org/china-bureaucratic-communism-bureaucratic-capitalism.

Lin, Kevin. 2017. ‘Remoulding the State Sector: Back to the 1990s?’. In Made in China Yearbook 2016: Disturbances in Heaven, edited by Ivan Franceschini, Kevin Lin and Nicholas Loubere, 20-23. Canberra: ANU Press.

———. 2019. ‘How Should the U.S. Think About China?’. New Politics 2019 (5 September). https://newpol.org/how-should-the-u-s-left-think-about-china.

Stanisevski, Dragan. 2004. ‘Economy and Bureaucracy: Handmaidens of Modern Capitalism’. Administrative Theory & Praxis 26 (1):119-27.

Trotsky, Leon. 1937 [1972]. The Revolution Betrayed: What Is the Soviet Union and Where is it Going? Translated by Max Eastman. New York: Pathfinder.

Weber, Max. 1904-1905 [1992]. The Protestant Ethic and the Spirit of Capitalism. Translated by Talcott Parsons. London: Routledge.

———. 1921 [2015]. ‘Bureaucracy’. In Weber’s Rationalism and Modern Society: New Translations on Politics, Bureaucracy, and Social Stratification, edited by Tony Waters and Dagmar Waters, 73-128. New York: Palgrave Macmillan.

———. 1947. The Theory of Social and Economic Organization. Translated by A.M. Henderson and Talcott Parsons. New York: Oxford University Press.

———. 1968. Economy and Society: An Outline of Interpretive Sociology. Edited by Guenther Roth and Claus Wittich. New York: Bedminster.

Yu, Ao Loong. 2009. ‘China: End of a Model … or Birth of a New One?’. New Politics 12 (3):31-56.

Yu, Ao Loong, Ruixue Bai, Bruno Jetin, and Pierre Rousset. 2012. China’s Rise: Strength and Fragility. London: Merlin.

[1] We should remember the different senses of the term ‘bureaucracy’ in English and Chinese. The English term ‘bureaucracy’ has two parts, ‘bureau’ (desk) and ‘cracy ‘from the classical Greek kratia, rule). Thus, ‘bureaucracy’ is rule conducted from a desk or office, that is, by the writing and sending or receiving of written documents – now their electronic equivalent.

Lenin on Max Weber

In a scintillating lecture on the 1905 revolution, Lenin offers his usually genteel assessment of none other than Max Weber:

The bourgeoisie likes to describe the Moscow uprising as something artificial, and to treat it with ridicule. For instance, in German so-called “scientific” literature, Herr Professor Max Weber, in his lengthy survey of Russia’s political development, refers to the Moscow uprising as a “putsch”. “The Lenin group,” says this “highly learned” Herr Professor, “and a section of the Socialist Revolutionaries had long prepared for this senseless uprising.”

To properly assess this piece of professorial wisdom of the cowardly bourgeoisie, one need only recall the strike statistics …

Collected Works, vol 23, pp. 250-51.