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 :

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.

Limitations of Bureaucracy :
Various criticisms have been leveled against bureaucracy from time to time. 1. Under bureaucracy there is too much of emphasis on the observance of rules, regulations and procedures. This gives rise to avoidable delay and red-tapism. The human side of things is ignored. 2. It follows tradition and conservatism; consequently, a bureaucrat would hesitate to bring about any change, even when necessary. It cannot bring about innovation so vital for economic change. 3. It cannot face the challenge of uncertainty and volatile change. It is too slow to deal with such a contingency effectively. 4. Bureaucracy leads to departmentalism. It has a tendency to divide and subdivide a task. 5. Responsibility and risk are avoided by the bureaucrats, although these might be vitally essential for the success of an enterprise. 6. There is indifference towards the customers, therefore, customers get a raw deal from the bureaucrats. 7. The bureaucrats develop an obsession to follow rules and procedures. So they get almost no opportunity to exercise individual judgment. Consequently, they take very little interest in the well-being of an enterprise.

Role of Bureaucracy in the Soviet Union :

According to some in the Soviet Union there is "party state bureaucracy. Full-time party officials exercise considerable powers. "They appoint, they dismiss, they allocate and reallocate, they interfere in current affairs, they adjudicate. There is a pyramid of hierarchical or political subordination." According to Alec Nove in the Soviet Union managerial de facto powers arise from the following circumstances : 1. Output plans being in some degree aggregated, their decisions partly determine the product-mix. 2. Both output plans and inputs, though "decided" above often decided on the basis of information, arc proposals submitted by management, since it knows best the capability of a particular plant 3. A variety of innovations in product design and in methods of production can be initiated at the enterprise level. 4. Because of "centralized pluralism", sometimes orders which reach the management may be somewhat contradictory in nature. In these instances, management has some choice to decide as to what orders to obey. 5 Particularly, in matters relating to supply of inputs, there is much scope for informal initiative. 6. Management seldom meets opposition from the trade unions.

Facts
Bureaucratic organizational structures have numerous layers of management, cascading down from senior executives to regional managers to departmental managers, all the way down to shift supervisors who work alongside frontline employees. Due to the many layers of management, decision-making authority has to pass through a larger number of layers than with flatter organizations. Refund decisions, for example, may have to pass from frontline employees, through shift supervisors, to store managers for a retail outlet in a bureaucratic company.

Significance
In a bureaucratic organizational structure, authority is generally centered at the top, and information generally flows from the top down. This usually encourages a company culture focused on rules and standards, where operational processes are rigidly controlled with best-practices methodologies and close supervision.

Advantages
Top-level managers in bureaucratic organizational structures exercise a great deal of control over organizational strategy decisions, which is ideal for business owners with a command and control style. Strategic decision-making time can be shorter in a tall organizational structure, since less individuals are involved in the process. Standardization and best-practices are often

highlights in companies with tall organizational structures, ensuring that work is consistently completed efficiently and effectively.

Disadvantages
Bureaucratic structures can discourage creativity and innovation throughout the organization. No matter how ingenious a business owner is, it is virtually impossible for a single individual to generate the range of strategic ideas possible in a large, interdisciplinary group. Front-line employees may receive less satisfaction from their jobs in a rigidly bureaucratic organization, increasing employee turnover rates. Organizations bound by rigid controls can also find themselves less able to adapt to changing conditions in the marketplace, industry or legal environment.

Considerations
At first glance, bureaucratic organizational structures may seem less desirable than flatter structures, but this is not necessarily so. Some industries, such as software development, may benefit from a more autonomous structure, 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, usually in large organizations and government. As opposed to adhocracy, it is represented by standardized procedure (rule-following) that dictates the execution of most or all processes within the body, formal division of powers, hierarchy, and relationships. In practice the interpretation and execution of policy can lead to informal influence. 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. the duty of each official to do certain types of work is delimited in terms of impersonal criteria 2. the official is given the authority necessary to carry out his assigned functions 3. the means of coercion at his disposal are strictly limited and conditions of their use strictly defined 3. every official's responsibilities and authority are part of a vertical hierarchy of authority, with respective rights of supervision and appeal 4. officials do not own the resources necessary for the performance of their assigned

functions but are accountable for their use of these resources 5. official and private business and income are strictly separated 6. offices cannot be appropriated by their incumbents (inherited, sold, etc.) 7. 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, 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; 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, some offices can be omitted in the decision making process, there may be conflicts of competence; * Competences can be unclear and used contrary to the spirit of the law; sometimes a decision itself may be considered more important than its effect; * Nepotism, corruption, 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; * Officials try to avoid accountability and seek anonymity by avoiding documentation of their procedures (or creating extreme amounts of chaotic, confusing documents, see also: transparency) Even a non-degenerated bureaucracy can be affected by common problems: * Overspecialization, making individual officials not aware of larger consequences of their actions * Rigidity and inertia of procedures, making decision-making slow or even impossible when facing some unusual case, and similarly delaying change, evolution and adaptation of old procedures to new circumstances; * A phenomenon of group thinking - zealotry, loyalty and lack of critical thinking regarding the organisation which is perfect and always correct by definition, making the organisation unable to change and realise its own mistakes and limitations; * Disregard for dissenting opinions, even when such views suit the available data better than the opinion of the majority;

* A phenomenon of Catch-22 (named after a famous book by Joseph Heller) - as bureaucracy creates more and more rules and procedures, their complexity rises and coordination diminishes, facilitating creation of contradictory and recursive rules * Not allowing people to use common sense, as everything must be as is written by the law. In the most common examples bureaucracy can lead to the treatment of individual human beings as impersonal objects. This process has been criticised by many philosophers and writers (Aldous Huxley, George Orwell, Hannah Arendt) and satirized in the comic strip Dilbert,TV show The Office, Franz Kafka's novels The Trial and The CBureaucracy is the structure and set of regulations in place to control activity, usually in large organizations and government. As opposed to adhocracy, it is represented by standardized procedure (rulefollowing) that dictates the execution of most or all processes within the body, formal division of powers, hierarchy, and relationships. In practice the interpretation and execution of policy can lead to informal influence. 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. the duty of each official to do certain types of work is delimited in terms of impersonal criteria 2. the official is given the authority necessary to carry out his assigned functions 3. the means of coercion at his disposal are strictly limited and conditions of their use strictly defined 3. every official's responsibilities and authority are part of a vertical hierarchy of authority, with respective rights of supervision and appeal 4. officials do not own the resources necessary for the performance of their assigned functions but are accountable for their use of these resources 5. official and private business and income are strictly separated 6. offices cannot be appropriated by their incumbents (inherited, sold, etc.) 7. 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, 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; 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, some offices can be omitted in the decision making process, there may be conflicts of competence; * Competences can be unclear and used contrary to the spirit of the law; sometimes a decision itself may be considered more important than its effect; * Nepotism, corruption, 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; * Officials try to avoid accountability and seek anonymity by avoiding documentation of their procedures (or creating extreme amounts of chaotic, confusing documents, see also: transparency) Even a non-degenerated bureaucracy can be affected by common problems: * Overspecialization, making individual officials not aware of larger consequences of their actions * Rigidity and inertia of procedures, making decision-making slow or even impossible when facing some unusual case, and similarly delaying change, evolution and adaptation of old procedures to new circumstances; * A phenomenon of group thinking - zealotry, loyalty and lack of critical thinking regarding the organisation which is perfect and always correct by definition, making the organisation unable to change and realise its own mistakes and limitations; * Disregard for dissenting opinions, even when such views suit the available data better than the opinion of the majority; * A phenomenon of Catch-22 (named after a famous book by Joseph Heller) - as bureaucracy creates more and more rules and procedures, their complexity rises and coordination diminishes, facilitating creation of contradictory and recursive rules * Not allowing people to use common sense, as everything must be as is written by the law. In the most common examples bureaucracy can lead to the treatment of individual human beings as impersonal objects. This process has been criticised by many philosophers and

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