Political Order and Political Decay (82 page)

Actual Chinese law, as we saw in chapter 24 above, evolved as a mixture of Legalist and Confucian doctrines. Chinese practice has always tended to favor discretion over strict rules, reflecting the weak rule of law in the Chinese tradition. But the Confucians had a point: too many strict rules oftentimes impede good decision making.

Bureaucratic autonomy lies in the precise way that principals impose mandates or rules on their agents. An organization's degree of autonomy will depend on the number and types of mandates handed down from the principal or, to put it in slightly different terms, the degree of authority granted to the agent. A completely subordinated organization will have no independent authority whatsoever and will be required to robotically carry out the principal's detailed mandates. An autonomous organization, by contrast, will be able to make decisions on its own without detailed second-guessing from the principal.

There are a wide variety of responsibilities that can be delegated by principals. One of the most important concerns staffing. As we saw in Volume 1, one of the most important developments in the establishment of the rule of law in Europe was the investiture conflict, which revolved around the Catholic church's ability to appoint its own priests and bishops. Up until the eleventh century, the church was necessarily subordinate to the political authority of the Holy Roman Emperor since he could influence personnel decisions, including the choice of popes. The church's independence as a lawmaking institution was therefore tightly bound to its control over its own cadres. The civil service reform struggles in nineteenth-century America were similarly about the bureaucracy's ability to set its own standards for hiring and promotion, rather than being subordinated to patronage politicians.

Political principals often issue overlapping and sometimes downright contradictory mandates. Indeed, there are often multiple principals—that is, political authorities with equal legitimacy issuing potentially contradictory mandates. State-owned utilities, for example, often have mandates to simultaneously do cost recovery, universal service to the poor, and efficient pricing to business clients, each promoted by a different part of the political system. These mandates obviously cannot be simultaneously achieved and generate bureaucratic dysfunction. The quasi-public railroad Amtrak could become a profitable and effective railway if it were not under congressional mandates to serve various low-volume rural communities. In China there are often duplicate functional agencies, one reporting to a chain of command that goes through national ministries, the other reporting to municipal or provincial governments; the result is inconsistent and ineffective policy.

A high degree of autonomy is what permits innovation, experimentation, and risk taking in a bureaucracy. In a well-functioning organization, the boss gives general orders to get something done, and the subordinates figure out how best to do it. High-quality military organizations understand that junior officers have to be given the “freedom to fail”: if the slightest mistake can end a career, then no one will ever take risks. This insight was embedded in the evolution of the U.S. army's field manual for combined arms operations, FM 100-5. In rethinking combined arms doctrine in light of the Vietnam War, the drafters of the manual shifted emphasis from centralized command and control to more flexible mission orders under which the commander is supposed to only set broad goals and devolve implementation to the lowest possible echelon of the command structure. In other words, junior officers were permitted a high degree of autonomy, which included toleration of failure if they sought to innovate or experiment.
8

Lack of autonomy is a major cause of poor government. People around the world hate the rule-bound, rigid, paperwork-driven nature of bureaucracy. Bureaucrats themselves derive power and authority from their ability to manipulate rules and therefore have an interest in expanding their reach. But their political masters are complicit in this process, in the number and types of mandates that they issue. The solution to this problem is to change the mandate to permit greater bureaucratic autonomy.

On the other hand, bureaucracies can have too much autonomy. I described what were perhaps the two most notorious cases of this in modern history, the German and Japanese military bureaucracies prior to the first and second world wars. In both cases a strong tradition of autonomy led to high-quality military organizations, but it also led to their usurping of the goal-setting authority of the political leaders that were nominally their principals. The German navy and General Staff in the early years of the twentieth century co-opted the emperor and set a course of foreign policy that brought the country as a whole into conflict with Britain and France. The Japanese Kwantung Army in Manchuria was even more directly involved in launching an aggression against China, and it eventually took over political authority for Japan as a whole in all but name. Even short of these extreme cases, tightly bonded, highly autonomous bureaucratic organizations can be highly resistant to political direction; they can become inbred, resistant to change, and unresponsive to societal needs.

Ironically, sometimes an excessive number of rules actually increases rather than decreases bureaucratic autonomy, but in a very unhealthy direction. Bureaucratic red tape is often so mind-numbingly complex that no one is able to actually monitor whether or not the rules are being followed. This allows the bureaucrats themselves to decide which ones to enforce since only they can navigate the system. This is frequently said about the bureaucracy in India, which is famous for being simultaneously rule bound and arbitrary.

The appropriate degree of autonomy needed to produce high-quality government would thus look like the curve shown in
Figure 25
. At one extreme, that of complete subordination, the bureaucracy has no room for discretion or independent judgment and is completely bound by detailed rules set by the political principal. At the other end of the horizontal axis, that of complete autonomy, governance outcomes would also be very bad, because the bureaucracy has escaped all political control and sets not just internal procedures but its goals as well. The inflection point of the curve is shifted to the right, however, due to a general recognition that the dangers of excessive micromanagement are often greater than those posed by excessive autonomy.

FIGURE 25.
Bureaucratic Autonomy and the Quality of Government

Capacity and autonomy interact with one another. One can control the behavior of an agent through either explicit formal rules and incentives or informal norms and habits. Of the two, the latter involves substantially lower transaction costs. Many highly skilled professionals are basically self-regulating, due to the fact that it is hard for people outside their profession to judge the quality of their work. The higher the capacity of a bureaucracy, then, the more autonomy one would want to grant it. In judging the quality of government, therefore, we want to know about both the capacity and the autonomy of the bureaucrats.

The effort to grant workers greater autonomy based on rising levels of capacity has already occurred in many private-sector workplaces. The classic automobile factory of the early twentieth century, like Henry Ford's Highland Park facility, was staffed with an extremely low-skilled blue-collar workforce. In 1915, most auto workers in Detroit were recent immigrants; half could not speak English, and the average level of education was not much beyond elementary school. It was under these conditions that “Taylorism” developed. Scientific management segregated the organization's intelligence at the top of a hierarchy, where white-collar managers directed a blue-collar workforce by issuing detailed rules about where to stand, how to operate the machines, and how many bathroom breaks a worker could take. This kind of low-trust workplace did not permit the lower levels of the organization to exercise any autonomous judgment whatsoever.

This type of work environment has been replaced with a much flatter form of organization. The lean manufacturing plant, pioneered by Toyota, delegates substantially higher degrees of discretion to assembly-line workers, who are encouraged to discuss among themselves how better to organize their joint production. Autonomy is even higher in firms that rely on highly educated professionals. Law firms, architectural firms, research labs, software companies, universities, and similar organizations cannot possibly be organized along Taylorite lines. In such organizations, the managers who exercise nominal authority over their highly educated “workers” actually know less about the work being done than do those at the bottom of the hierarchy. In such flat organizations, authority does not flow only from principals to agents; the agents themselves are often involved in goal setting and use their expertise to control the principals. These organizations, needless to say, require substantially higher levels of trust than the old Taylorite ones.

The optimal level of autonomy thus depends on the organization's capacity.
Figure 26
illustrates the optimal autonomy curves for four hypothetical organizations of differing levels of capacity. For each, the curve slopes downward at the extremes, since every bureaucracy can have too much or too little autonomy. But in the lower-capacity organizations, the inflection points shift to the left, while in higher-capacity organizations, they shift to the right. The early twentieth-century Ford factory would be at level 1, while a high-tech company like Google would be at level 4.

What applies to private-sector organizations is also valid for the public-sector organizations that make up a state. As societies become wealthier and develop governments with higher capacity, they can afford to grant them much greater autonomy. The assertion embedded in Figure 25 that the optimal amount of autonomy is shifted to the right is true only in high-capacity countries. In very low-capacity countries, the opposite is the case: one would want to circumscribe the behavior of government officials with more rather than fewer rules because one could not trust them to exercise good judgment or refrain from corrupt behavior. On the other hand, if the same developing country agency were full of professionals with graduate degrees from internationally recognized schools rather than political cronies, one would not only feel safer granting them considerable autonomy, but would actually want to reduce rule-boundedness in hopes of encouraging the exercise of judgment and innovative behavior.

FIGURE 26.
Optimal Levels of Autonomy for Differing Levels of Capacity

If we locate countries on a matrix that arrays state capacity against bureaucratic autonomy (see
Figure 27
), we can compare the overall quality of state institutions. Each country is actually a collection of different government institutions of varying capacities and degrees of autonomy, which is why each is portrayed as an oval rather than a single point. The diagonal line is derived from Figure 26 and consists of the inflection points representing the optimal degree of autonomy for a given degree of capacity. All organizations should want to increase capacity (move up the vertical axis), but this involves costly long-term investments. In the short run, their strategy should be to move as close to the line as possible.

As is evident from
Figure 28
, there is not one single formula for making all governments work better. The route to better performance depends on where a country is on the matrix. Indeed, paths may differ within the same country, since the many bureaucracies that make up a government will have different capacities and degrees of autonomy.