From Weber to Kafka: Political Activism and the Emergence of an Inefficient Bureaucracy

A well functioning bureaucracy can promote prosperity, as advocated by Max Weber. But when bureaucracy gets jammed, it causes stagnation, as described by Franz Kafka. We propose a dynamic theory of the interaction between the production of laws and the efficiency of bureaucracy. When bureaucracy is inefficient the effects of politicians legislative acts are hard to assess. Therefore, incompetent politicians have strong incentives to pass laws to acquire the reputation of skill-full reformers. But too many, often contradictory reforms can in turn lead to a collapse in bureaucratic efficiency. This interaction leads to the existence of both Weberian and Kafkian steady states. A temporary surge in political instability, a strong pressure for reforms by the public, and the appointment of short-lived technocratic governments can determine a permanent shift towards the Kafkian nightmare steady state. Using micro-data for Italy, we provide evidence consistent with one key prediction of the theory: the relative supply of laws by incompetent politicians increases when legislatures are expected to be short. ∗Gratton: UNSW, email: [email protected]. Guiso: EIEF and CEPR, email: [email protected]. Michelacci: EIEF and CEPR, email:[email protected]. Morelli: Bocconi University and Igier, email: [email protected]. The research reported in the paper is not the result of any forpay consulting relationship. We would like to thank Massimo Bordignon, Raquel Fernandez, Giancarlo Spagnolo, Niko Jaakkola, and Carlos Pimienta for comments. Gabriele Gratton acknowledges financial support from the Australian Research Council (ARC Discovery Project DP140102426), Claudio Michelacci from the European Research Council (ERC Advanced Grant 293692).