An accidental friend, a Texas multimillionaire from Dallas
taken refuge in British Columbia, was going on about the
"sociopaths" and "criminals" who had perpetrated the
subprime mortgage fiasco. He then said a few colourful
words about Bernard Madoff, only to move on quickly to
denounce the extraordinary compensation that corporate
executives were siphoning from their companies.....stopping
only to catch his breath before discoursing on the trillions
and trillions of dollars of dubious commercial paper out
there in the financial ether.
"Nobody has any idea of
how much of it there actually is," he went on to lecture
me. "And nobody knows what anything is worth any longer.
How can a bank lend money in a situation like that?"
He was quite heated about it while I, the democratic
socialist whom one might expect to be indignant, was amused
I picked up on his comments, however, about executive
compensation. I mentioned that I had explained it all a
long time ago, in a book covering the private corporate
sector. I ended up giving him a copy, more in jest than
anything else, to see what he would say.
The book was The New Bureaucracy: Waste and Folly in the
Private Sector, which came out in 1991.
A couple of days later he responded.
"You were a prophet," he said enthusiastically. "You
got it right long before anyone else."
This was from someone who spends much of his time
managing his assets and who tracks financial and commodity
markets assiduously. He also keeps in regular touch with
sources of market information in the U.S. In other words,
he's somebody you would normally think of us a pure laine
right-wing capitalist, and right-wing reviewers of the book,
when it was published, went ballistic over it. I knew,
though, he was a bit of a maverick, so his remark wasn't
His assigning a prophetic quality to the book, however,
did catch my attention. It got me thinking about where the
book's prophetic edge came from.
The New Bureaucracy, for those not familiar with it,
covered the gamut of the private corporate sector, based on
what was happening in the 1980s. It detailed corporate
executive suites run amuck with inflated compensation and
indulgences; stock market analysts gone zany with fanciful
elaborations; investment bankers generating M&A activity to
keep their outsized fees rolling in; traders devising
synthetic financial concoctions on a seemingly never-ending
binge, and all kinds of other weird and wonderful things.
There were also chapters on the New Bureaucracy's
advertising and marketing branch, with its brand-name
propaganda a classic propaganda system - and another
chapter on the dogma and media branch, with its cadres of
dogma workers, viz. economists, "think tanks," and related
The book introduced two general ideas. First, the
private corporate sector for the most part wasn't a case of
adventurous capitalists astride the world like colossi, but
of a self-inflating bureaucracy. Second, this bureaucracy,
and its indulgences and power, were protected by an
ideological screen just as surely, indeed more surely, than
communist ideology protected the entrenchment of the old
Soviet bureaucracy with its commissars and apparatchiks.
In the case of the New Bureaucracy, the ideological
screen was free enterprise. It was an ideology that was
supposed to be anti-bureaucratic, which, as I wrote, made it
"the finest bureaucratic protection of all."
I had originally begun work on the book with Canada in
mind, with the intention of touching on the United States
and other countries only peripherally. Quite early in my
research, however, I became engrossed in the American scene
it was so much more outlandish and bizarre - and the book
ended up being largely about the U.S. This only made
sense. Free enterprise ideology the ideological screen -
was altogether unchallenged in the U.S., unlike Europe with
socialism in its history or Japan with its quasi-feudal
cultural ethos. The ideological protection for the New
Bureaucracy in the U.S. consequently was so pervasive and
untempered that the bureaucratic entrenchment and folly
could self-inflate with impunity, in ways that if they had
happened in the old bureaucracy public administration
would have generated massive dark headlines and screams of
For me, it was like discovering a zoo. I was so
fascinated by what I found that I ended up writing twice as
much as my contract with McClelland & Stewart allowed, and
it took not one but two editors in series, which I had to
pay for myself, to get the manuscript down to size. The
first editor fell in love with my colourful material just as
I had, and gave up her cutting with 35,000 words to go.
As I completed the book, I knew I was on to something.
I had no idea, however, that almost 20 years later stock
markets would be knocked for a loop, investment advisors
would hide their heads in shame, and business-media gurus
would be altogether discredited. Nor did I predict the subprime mortgage scandal. I wasn't Nostradamus.
The prophetic element in the book lay elsewhere in its
prediction of One Big Bureaucracy, what is euphemistically
known today as globalization but was really creeping and
then accelerating bureaucratic expansion private-sector
I can remember the very moment of making the
prediction. I had charted in the last chapter how the New
Bureaucracy in the U.S. had been replicating itself in other
countries by sheer bureaucratic weight. Outrageous
executive compensation, the drowning of television with
commercials, puffing up of stock markets, the M&A capers,
flogging of synthetic financial instruments, the
proliferation of lobbyists you name it, they were making
their way into countries where they had never been, led by
American apparatchiks and examples.
I asked myself if this new bureaucracy could possibly
continue to inflate into the future. The prospect of its
doing so seemed incredible to me, because the inflation I
had documented was already so astonishing. I hesitated.
You have to remember, though, that The New Bureaucracy:
Waste and Folly in the Private Sector wasn't an offhand
commentary or speculative essay. It was an intensively
researched, intricate look at how this bureaucracy had
developed in the U.S. and, to a lesser extent, in Canada and
was jam-packed with illustrations and syndromes drawn almost
entirely from the American business press itself and
follow-up inquiry. These syndromes were structural, not
incidental. In my experience, structural forces counted in
So, reflecting on how to wind up my manuscript, I
decided to follow reason rather than feeling, and reason
told me that such forces would metastize further. "Stop by
the Paris Bourse," I wrote, "walk down a street in Taipei,
watch an American television channel. It touches
everything, watches over everybody One Big Bureaucracy."
I proved to be right. The New Bureaucracy grew in
territory, reach and excesses, following the pattern.
It's true this expansion was more graphic than even I
could imagine back in those days long gone, the 1980s,
spectacular as they were. It was an expansion of degree,
though, rather than of kind. When my Texas friend called
the perpetrators of the current mess "sociopaths" and
"criminals," he meant it literally, not figuratively. For
me, on the other hand, they were simply parts of a larger
bureaucracy doing what that New Bureaucracy has been doing
for decades. That Bernard Madoff broke the law and
defrauded people of billions is interesting, but less
interesting than the wider culture in which he did it, which
already had a history.
Remember, too, that most of those behind the current
meltdown didn't break the law. Those AIG executives,
collecting extravagant bonuses simply to stay around after
leading their company into massive bankruptcy, and those
failed, exiting CEOs given huge golden handshakes, were just
following established convention. In the New Bureaucracy,
such compensation contracts, bonuses and pay-offs are
perfectly in keeping.
What I had done in the book was to look behind the
ideological curtain to see the private corporate sector in
all its bureaucratic nakedness, just as it is. In those
terms, what has been happening recently or, more
important, what has been seen to happen because it could not
be glossed over fits naturally.
Where does that leave us today?
Notwithstanding all of the brouhaha, I don't expect much
of a check on future waste and folly, because the
ideological screen behind which this bureaucracy
self-inflates is still intact. Its syndromes, consequently,
are largely intact as well. This is particularly so in the
United States, regardless of the shake-up in banking that's
occurring. There are still vastly overpaid CEOs, fatuous
stock analysts, overweening M&A cadres, ubiquitous
lobbyists, incessant and pervasive marketing cadres and all
the rest of those many branches of the wasteful and often
silly New Bureaucracy I documented.
When the book came out, in 1991, I speculated what would
happen if the phrase, "the new bureaucracy," became common
intellectual parlance. If it ever did, I thought, the
private-sector bureaucratic entrenchment I described, and
the waste and folly that went with it, would finally lose
its ideological cover. Needless to say today, it didn't
happen. The phrase never made headway.
Maybe it was too far ahead of its time. Maybe it's
still too far ahead of its time. Or maybe my speculation
was just author's fantasy.
Too bad, though. As long as the waste and folly can hide
behind ideology, nothing much will change.