The New Bureaucracy: Waste and Folly in the Private Sector
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The story behind the book
Except for individual study purposes, no print-outs or copies are to be made without the express written permission of the author.
It was the second half of the 1980s. I had the idea of doing a book about outrageous executive compensation and other waste and indulgence in the private sector, which I had tentatively entitled The New Bureaucracy.

To add to my sense of purpose, I now had an IBM XT clone, which I had bought from a mail-order house in Ottawa in a moment of technological bravado. I used a barebones shareware program called PC Write, produced by a programmer in Seattle, which occupied little space in the computer's memory. It turned out that PC Write was tailor-made for writers and, as I subsequently learned, had a niche reputation among computer cognoscenti. My clunky reconditioned IBM Model C typewriter, which was outdated when I originally bought it and now used only for labels, sat on a second desk in my office like a museum artifact. Jane Oglesby, my newly hired one-day-a-week researcher, didn't want to learn how to use the XT - computers were still considered alien technological wonders beyond the ability of ordinary mortals - but I insisted.

I took out a subscription to the Financial Post to give myself a direct window on the New Bureaucracy. We made expeditions to the UBC Library, where I gave Jane a short tutorial on how to dig up what I was after. When I had advertised for an assistant, I hadn't required a research background; it was better to train someone myself and I could do it quickly. The UBC Library became her main worksite.

I allocated two years to the book. It took me much longer for, unsuspected by me at the beginning, I was off on a great adventure. I was exploring the exotic American corporate world and I ended up chronicling it with rapt wonder, much like Darwin on the Galapagos Islands. It changed my life - the interior life of my understanding. I knew a little bit about the excesses and folly in that world - glimpses of them had led me to the subject - but I had no idea just how byzantine and extravagant that world could be, and how self-serving.

It began innocently enough, with a newspaper report detailing the high compensation that corporate executives were pocketing. Their extraordinary pay and perks were bad enough, but what really hit me was that nobody said "Boo" about it, as if it were the most natural thing in the world. At the same time, the media and politicians, lockstep with the right-wing ideological drift, were pummelling the public sector for the least hint of extravagance, real or imagined.

They also, indulging their ideological fix, took it for granted that the public sector was wasteful and, by implication, inhabited by a second-class, inferior species of human being. Strong-arm man Erik Nielsen, in Brian Mulroney's cabinet, had formed the "Nielsen Task Force" to plumb inefficiencies and bring government up to the mark. The task force had a ballyhooed “Private Sector Advisory Committee” made up largely of private-sector poobahs. (I discovered later that this was typical of self-righteous investigations into the entrails of the public service, both in Canada and the U.S.: Corporate executives would be recruited to lead such inquests and bring their presumptive superior wisdom to bear.) It bothered me that they and others, like ideological thugs loose on the streets, were so casually beating up on the public sector, and nobody had the wit or the guts to disarm them.

I couldn't help also noticing the irony: stiff-backed suits with hugely inflated compensation and luxurious perks were moralizing about how the public sector was costing us too much money. I began thinking of other waste in the private sector. I knew a lot about the history of stock markets and how wasteful and unproductive their churning of paper could be, and that came to mind. I thought of commodity trading - speculation in futures - too. I didn't know much about it, but I remembered the battle that early prairie farmers had fought against the predatory Winnipeg Grain Exchange. Corporate takeover activity had become all the rage in the business news: "paper entrepreneurship," some critics were describing it. That was all the more wasted time and motion, and money. One of those scornful critics of paper entrepreneurship was the well-known business guru Peter Drucker, which made an impression on me. Other economically non-productive corporate games, like tax avoidance, also came into the picture. Then there was advertising, particularly brand-name advertising: huge waste, as I had already documented in my work on television advertising.

In the twisted political climate in North America and Britain, where any defence of the public sector, practical and logical as it might be, was simply overrun by the ascendancy of right-wing anti-government dogma, here was the one way to defend the public sector: attack the glaring waste in the private sector. The best defence is a good offence, I argued.

As I mulled this over, I realized that the layers and layers of people feeding on this waste weren't just random opportunists. They constituted a highly paid and entrenched "bureaucracy."  Their waste was "structural" rather than operational.  They might do what they did efficiently, say, speculating in the currency market or producing a Coca Cola commercial, but what they did was wasteful in itself.

I recalled a book I had read in my student days, The Managerial Revolution, about bureaucratic managers taking over from owners, written by American philosopher and critic James Burnham. It was amazing, I thought, that I could still remember his name. Also in my mind was the title of another book, The New Class, by Milovan Djilas, about the state bureaucracy in Communist Yugoslavia, which had established itself above the hoi-polloi. My private-sector, commercial bureaucracy was a new class, too. With Djilas' title playing on my mind, I coined a phrase for it: The New Bureaucracy. These were the practitioners of non-productive tasks in the private sector who, simply because they were in the private sector, could expand wealth and power, and economic waste, with impunity.  The New Bureaucracy!  It was just right for them - exactly what I wanted to say.  I was going to write a work of Galbraithean scope, I said to myself, which, because of its central critical idea, was going to change the world.  The phrase "The New Bureaucracy" would be my benchmark.  I imagined it becoming part of common parlance, used by journalists and commentators.

I still, though, had to write the book. As I sat down on my first day of work on the project, I was overcome by a wave of anguish. I realized that what I knew about the private corporate sector, albeit significant, was hardly anything at all when placed against the large canvas I had drawn up. I just didn't know the field and, for those few initial minutes, I had the sinking feeling that the work involved in finding out would kill me. Simply thinking about it paralyzed me. I would have to go into ideologically enemy territory, too, and what would I discover when I did? Maybe it would contradict my hypothesis. On the other hand, I also knew that, like it or not, I couldn't avoid the task and had to get started.

I began with a symbolic subscription to the Financial Post, in addition to Maclean's, Saturday Night, and the business pages of the Vancouver Sun, which I was already receiving and which I began systematically to clip. Jane and I did our real work, however, in the UBC Library. We started with back issues of the Financial Post, and then The Economist and Business Week. It was clear almost from the beginning that the Financial Post wouldn't take me very far. Aside from its silly dogmatism and its doctrinaire off-the-wall columnists, it didn't give me the graphic, concrete sense of the scene that I was after.

I soon added Forbes and Fortune magazines to our list. I decided we would go back 10 years. I laid out the different parts of The New Bureaucracy we would look at. Ultimately, in the book, I called them "branches," as in branches of the bureaucracy, and allocated a chapter to each one. There was the Corporate Branch, the Paper Entrepreneurialism Branch (mergers and acquisitions), the Stock Market Branch, and so on, through to the Dogma Branch (economists, think tanks, mass media). Articles falling into any of those areas were either catalogued or copied. The Corporate Branch covered compensation, perks, board patronage, luxury, management consultants, management fads, lobbying, public relations, political financing and corporate propaganda.

As our investigation moved through the bureaucratic structure, we discovered new information sources lower down, like the Institutional Investor (for the Money-Manager Branch) or Advertising Age (for the Advertising and Marketing Branch). I was also reading books; we had done a bibliographical search. The books and magazines generated yet more sources in an ever-widening, intricate and dense circle, including highly specialized, esoteric journals which we also canvassed for the prior 10-year period, academic articles, specific magazine and newspaper references, public relations packages and news releases (which we would have asked to receive), newsletters, publications and studies from consulting and marketing companies, and the journalists, analysts, consultants and authors themselves, whom I might call on the phone.

I had intended to write about the Canadian scene, with a little American, British and other foreign material thrown in for comparison. Ineluctably, though, irresistibly, spellbound, like a prospector who had come across an incredibly rich lode and kept tracing it feverishly each day as long as there was daylight, I ended up headlong in the American scene. It was by far the most colourful, outrageous, extraordinary and absurd. I quickly understood why. The waste, folly, luxury and indulgence - the bureaucratic inflation in short - just like the bureaucratic entrenchment of commissars and apparatchiks in the Soviet Union, took place behind an ideological screen, in this case, the ideology of "free enterprise." This ideological screen protected it. Wholesale waste, propaganda, luxury and abuse that we would never tolerate in government passed in the private sector without hardly a whisper of reproach because it was thus ideologically safeguarded, and most of all, by the same token, was most safeguarded in the United States where the ideology had no challengers or even political critics. Europe had socialist political parties to act as a check on the ideology and, hence, on the bureaucracy and waste. Japan had a semi-feudal nationalist culture where reciprocal obligations were important, which did the same thing. The quite outlandish and extravagant compensation of CEOs of major corporations in the United States, for example, had no counterpart at the time in continental Europe or Japan; their respective cultures wouldn't tolerate it. In the United States, on the other hand, there was no such check to get in the way. The ideological screen protecting the waste and entrenchment of bureaucratic power was impregnable, unquestioned.

The even greater irony in all this was that the New Bureaucracy was so advanced in the United States in this way because it could draw on the seemingly anti-bureaucratic mythology of the American way of life - the unquestioned, dogmatic Americanism that Louis Hartz described so brilliantly in The Liberal Tradition in America. So much bureaucracy hiding behind a myth of anti-bureaucracy! Of course, too, it had destroyed real American liberalism. The irony was spectacular.

I had an articulate guide into this exotic and ornate bureaucracy: American business journalism. There was nothing like it anywhere for both archeological and anthropological detail, although the business writers and editors who produced the copy wouldn't have seen it that way. I did hardly any digging of my own. Most of the investigation was done for me by these rapporteurs of the day-to-day scene, passing on stories of the most screwball excesses and the most blatant abuses of corporate bureaucratic power as straight journalism, because they were part of the scene. Reading Business Week, I couldn't help thinking how two-bit, dogmatic, and constipated was the reporting in the Financial Post and the Globe and Mail Report on Business.

The most compelling reading, however, was Advertising Age, which had an almost obsessive appetite for reporting everything in its bailiwick. Given the cynicism of the bureaucracy's advertising and marketing branch, that "everything" was a telltale wonderland.  There was no mistaking the genuinely bureaucratic and self-inflating character of the New Bureaucracy generally, unto the absolutely gross and absolutely whacky.  Its advertising and marketing branch, however, was of special interest to me. The advertising bureaucracy wasn't just a story of bureaucratic waste and power. It had a sinister quality to it. It manipulated people's minds. It framed people's culture and, with it, their values and hence their political sensibility. It had special bureaucratic leverage: It compromised most of the mass media which were dependent on it for revenue. Even I, who had written about its waste and its brainwashing before, was astonished at how far it had gone: half delighted at my discoveries, as I read Advertising Age and other sources, and half appalled. I began thinking of brand-name advertising and sponsorship as a closed propaganda system akin in its pervasiveness and control to the old Soviet propaganda system, except more manipulative and insidious. Then I ran across the work of an American sociologist, Michael Schudson, who had made just that analysis. It occurred to me that this was also the weak link to right-wing, American-driven politics and the way we were governed: that even with a modicum of countervailing access to the mass media, say for counter-commercials or for journalism about this propaganda, the whole order built on this propaganda system would fall apart just like the parallel one in the Soviet Union.

I finally finished the book. I spent the early morning of the last three months on the phone, fact-checking and tracking down a long list of leads that I had left until the end. These were still the days when there was a discount overnight long-distance rate, to 8 a.m. in the morning. (The one advantage British Columbians had in Confederation, I used to joke, was being able to call East during their business hours at this cheap rate.) I would painfully pry myself out of bed and be at my desk at 6:30, and go to work, saving particularly complicated calls for 7:59, when I could continue on the discount rate until the conversation was ended. I did this day after day and week after week. The list of loose ends I needed to tie up seemed to be endless. I would call Chicago, New York, Washington, Boston, Cincinnati, Miami, and points in between, then move on to California during the day. I had done some of the same kind of calling over the prior duration of the project.

Different kinds of expertise might be anywhere in the United States including, in the case of specialized trade-research companies, even small towns.  I was struck by how geographically decentralized the post-industrial American economy had already become. There were also intangibles one picked up in these conversations - new slants, shadings, qualifications, background, intonations, realism, frankness, surprising details - that one would never pick up from the printed page. On top of all my other work, these systematic, painstaking calls gave me the feeling that I had a grasp of the American corporate economy that was almost sensuous in its completeness and immediacy.

Denise Bukowski, now with her agency in Toronto, acted for me and we put the book out for auction. McLelland & Stewart won the contract with a $10,000 advance - not much compared to the much-heralded publishers' advances for best-selling authors, but what the hell, we did run an auction and there was an advance. The book, however, was twice the contractual length, even without a chapter on the medical and pharmaceutical branch that I had intended to write and that Denise vetoed. I had been up to my old habits again, falling in love with the details - but what details they were, bizarre and extraordinary, and rich in bureaucratic display! Denise retained a freelance editor in Toronto to cut back the manuscript for me. I would have to pay for her, but I was only too glad to do so. She came up 35,000 words short, that is, the manuscript was still 35,000 words too long. She said she couldn't cut it back any more and there I was, stuck with it, with McClelland & Stewart baying at my door. I tried to find a good freelance editor in Vancouver for the last slice but none were available on short notice. I was now on my third researcher, Barbara Maclellan. I desperately turned to her, and luckily she had the acumen for it. At the end we were still 2,000 words overlength - the last, bitter, impossible, miserable 2,000-word slice. Painfully, culling a sentence here and a couple of sentences there, we finally reduced the manuscript to size.

Doug Gibson, the publishing head at McLelland & Stewart, was excited by the book's prospects. The New Bureaucracy was, after all, a revolutionary book. A media tour was arranged - at least for Toronto, Ottawa, Edmonton and Vancouver, which wasn't bad. At lunch with M&S's marketing rep in Toronto, I joked about the three books on political economy that changed the world: Adam Smith's The Wealth of Nations, Karl Marx's Das Kapital and Herschel Hardin's The New Bureaucracy. I was only half joking. Like Doug Gibson, I had great hopes for the book and imagined that it would even make me some money. After all, I was introducing two general ideas to the world. The first was the idea of The New Bureaucracy itself - that the private sector was overall a bureaucracy, contrary to the mythology, and a grossly wasteful, self-inflating, indulgent and deeply entrenched bureaucracy at that. The second was that it hid behind, and was protected by, an ideological screen. Cherchez l'idéologie.

M&S's publicity machine turned over. The book tour took place, with its skein of interviews. We received good coverage in the Globe and Mail, and Peter Gzowski gave me 45 minutes on Morningside because there was so much to talk about. Reviews and news articles appeared. In Vancouver, a right-wing commentator, Gary Bannerman, was taken by the book; the waste and folly described were too outrageous and colourful not to be savoured. This led to half an hour on Rafe Mair's right-wing morning show on radio station CKNW. Facts, the magazine of the Canadian Union of Public Employees, excerpted the introductory chapter and described The New Bureaucracy as "one of the most important books of our time," which I had no doubt it was.

Both Maclean's and its columnists like Peter Newman, however, wouldn't touch it. The reviews in the Globe and Mail (by the editor of Report on Business magazine), Alberta Report (by Fraser-Institute ideologue Walter Block), and the Financial Post were bitterly negative. The reviewers made things up either about me or about my argument, and ranted away. "This monstrous book," Block called it, and went on in extraordinary dogmatic dudgeon....and I had only described, in the book, what actually takes place, using for the most part business reporting itself. The other two reviews were similarly hot and bothered. I had touched them.

"This is a bureaucracy," I in effect was saying, "a competing bureaucracy, and we should look at it as such instead of as a divine utopia." These particular reviewers, however, were so taken aback - their dogmatic adoration of the private sector was so wishful and hence so fragile - that they saw Armageddon in my insight. Instead of exploring what I had written, they attacked the public sector, which I had not written about at all, except for a few apt comparisons in passing. They also violently attacked me. They desperately didn't want the book to be read.

This hysteria, when I thought about it, told me I was on the right track more surely than if the reviews had been nothing but praise. I also noticed that what criticism there was in those reviews, as different from denunciation, was weak and off the mark. This, too, confirmed my insight, although for me it didn't really need confirming, since what I had written was in effect a documentary, a kind of journalisme vérité. Right-wing columnists and business writers lived in their protected little world too long, indulged by their right-wing newspaper and magazine proprietors without any countervailing left-wing media power to rattle their arrogance, and fed by anal-retentive market-dogma think tanks.  They freely dismissed left-wingers as business know-nothings. No wonder that when I evoked their world in intimate detail, except from a different point of view - like a free-spirited daughter betraying all the lurid secrets behind her family's respectability - they went ballistic.

As I mulled over my own reaction to them, it struck me how I had been able to pick up on those particular reviews' weaknesses, undistracted by their bellicosity. Then, again, I was used to vicious, silly reviews by this time. I realized how much of an old hand I had become. I really did have a thick skin.

A few years earlier, as a reviewer myself, I had read Behind Closed Doors, Linda McQuaig's exposé of how the tax system favoured the rich at the expense of everyone else, and how they and their lawyer and accountant friends managed to keep it so. I was impressed. I arranged, through her publisher's representative in Vancouver, to take her out for a drink when she came here on her author's tour. We met in the bar at the Hyatt Regency. She was deeply upset by a column on her book which had just appeared in the Financial Post. It was so malicious, vindictive, personal, obtuse and wrong-headed - so unexpected and unfair, after her careful work - that she didn't know what to make of it. Behind Closed Doors was her first book. I told her it was par for the course, that she could take pride in being so attacked, and regaled her with stories of some of the weird reviews I had been subjected to, going back to my theatre days.

Something altogether different, however, did get under my skin. I had made a mistake in a single word and I was mortified. I had referred to Max Weber, the early 20th century German sociologist, as Karl Weber, and a couple of reviewers had made a point of letting me know. If that weren't enough, the erroneous "Karl" was the first word in the second chapter - given that the introductory chapter was prefatory, the name was really the first word in the whole book - and I had got it wrong! I had the same queasy, sinking feeling that one gets after causing a car crash or making a devastating social faux pas. I had spent so much time fact-checking every last detail and had simply passed over Weber's name as a routine entry! Worse, far from being slapdash, I had kept Weber's book, The Theory of Social and Economic Organization, beside me at my desk when I wrote the applicable passage, to make sure I paraphrased him accurately. The gods were punishing me.

I was so upset with myself, I asked if we could insert an erratum into copies of the book, but my editor at M&S maintained this would be too clumsy for a single word and would only draw attention to the mistake. I refused to surrender. I remembered the Letraset that I had used to produce headlines for an electrostencil Gestetner newsletter I had done, on broadcasting politics, in another life 15 years earlier. If I could press letters off a sheet for that, couldn't one press off letters to make "Max" instead of "Karl"? Starting with a visit to my former Letraset supplier, I tracked down a freelance graphic artist who, with a computer, could make a transparency with multiple reiterations of "Max" on the sheet. I also found a reproduction specialist - a chromatecker, he called himself - who could take that transparency and make up a Letraset-style sheet to match. The chromatecker operated out of a messy shop in his basement in West Vancouver, not too far from my home. All-Out Graphics was the shop name. He had to create the decal sheets in two stages, first with the words "Max" repeated in columns and then with a little rectangular white backing in behind them to cover the old word "Karl" when each "Max" was imposed.

I now was enjoying correcting my mistake. With all my reading about business, I had become an aficionado of manufacturing or, more precisely, of the inventiveness behind new kinds of manufacturing. Previously I had regarded manufacturers as narrow-minded, culturally stunted, politically reactionary stiffnecks, as most of them probably were. At least, however, manufacturing was productive, as different from the wasteful bureaucratic games that I had documented. The engineering and design sides could be genuinely creative. I related to the passion and excitement that often went into them. I had also become aware of how much of the creativity of modern economies lay in talented people working by themselves or in small shops, in unexpected places. As a creative artisan myself, albeit a literary artisan, I also liked the idea of having discovered the skills for dealing with my unusual problem in my own backyard. (A near-neighbour, who was an inventor, had manufactured one of his creations, a hydraulic pump, in a workshop in his old three-story frame building just around the corner. The building was zoned commercial because it had once housed the neighbourhood grocery store. I delighted in pointing out to visitors the existence of this "manufacturing facility" in deepest residential West Vancouver.)

The chromatecker had the touch for his craft. Since the paper in The New Bureaucracy was just slightly off-white, he tinted the little white rectangles behind the word "Max" accordingly. It worked. It was my own little manufacturing miracle. M&S and I were able to press "Max" over "Karl" at the beginning of Chapter 2 and in the index, and if readers weren't looking for the minutely raised edge of the covering white rectangles, they probably wouldn't have even noticed.

The buzz that Gibson, Bukowski and I had anticipated for The New Bureaucracy, however, didn't happen. I didn't make my fortune from a raging best-seller. Readers from whom I heard were excited by the book and how revealing it was, but nothing followed. Gibson was particularly disappointed that it didn't do well in Ottawa, in the civil service community, which had been so badly bashed about by the New Bureaucracy's pretensions for itself. The succès de scandale that we had hoped for, given all the disclosures in the book, hadn't developed, either. After a decent interval, M&S remaindered the book. I bought 500 copies so that it would still be available later on, from my office. My royalties didn't even pay back M&S's advance. "It disappeared down a black hole," I told people, when they asked me about sales.

My nonchalance about what had happened startled them. After all my work - and a few years taken out of my life - I should have been depressed. I was just as happy with the book at this point, though, as I was when Denise and I had put the manuscript out for auction. I had, after all, discovered something important.

It had also been enough for me to have written the book for the particulars I had learned in the process. The book was in me, and I was still alive. I was one of the rare democratic socialists in the country, maybe the only one for all I knew, who had a sure and detailed knowledge of the private corporate world. "I know so much," I kept thinking, because in doing the work I had covered so much territory. I felt powerful, like someone who had being doing muscle-building.

And yet, and yet... I would catch something on the radio, or a sound bite on the television news, or read some pretentious and predictable piece by one of the Vancouver Sun's stable of apparatchik, deadweight columnists, or come across a commentary by a critical American writer - an interesting commentary, perhaps, but one that was still missing something - and the happening would trigger a tinge of regret in me, an unrelievable ache, that the New Bureaucracy had not made its way further afield and that its leading ideas had been lost; that the phrase, "The New Bureaucracy," had not become part of common political language. The capturing of reality in that single phrase was so illuminating.

When anyone commiserated with me, I mentioned George Orwell, whose books hardly sold at all until he wrote Animal Farm in 1945. Maybe, for a best-seller, I just had to wait until the next one. On the other hand, the success of Animal Farm depended on sales in the U.S. generated by right-wing American anti-communism. Anything I might write, by contrast, would run against the American grain. It would be like Orwell living and writing in one of the Soviet Union's satellites, Bulgaria for example. "I'm doomed," I joked.

Copyright © Herschel Hardin 2005
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