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Alarming as they are, the political and social consequences of bureaucratic management cannot be compared to its psychological effects in terms of the extent of its destructiveness. Not to appear spreading hostility and fear against this dominant system of our time, I want to have a little twist in this article.

Compared to the previous two articles, in which I simply presented the ideas of Ludwig von Mises taken from Bureaucracy with minimal reflection, this time I intend to introduce the subject and relate it to what’s going on in financial technology, particularly in cryptocurrency. Though my understanding of cryptocurrency is still very basic, I don’t want this limitation to prevent me from connecting the relevance of the psychological consequences of bureaucratic management to what I currently understand about this breakthrough technology.

With this goal in mind, I intend to utilize the two questions below both as a guide in your reading and at the same time as a tool for further engagement:

• How did Ludwig von Mises explain the idea of the misdirection of the youth as a psychological outcome of bureaucratization? In your own opinion, is his analysis accurate?

• How about his description of the crisis of progress and civilization? Is his argument sound? Does it have a solid historical and economic bases? What’s your thought about this?

Cryptocurrency as an Alternative

At the outset, I want you to see that the dark picture painted by Mises in the 6th chapter is not as dark as it is today simply because we now have the tools to reverse such a trend with the aid of blockchain technology and cryptocurrency, most especially in a blockchain that is truly outside of the control of national governments and central banking. And I think a decentralized blockchain like Hive in this context will play a very powerful role in such a transition.

In chapter 6, Ludwig von Mises identified five disturbing psychological consequences of bureaucratism. I suspect that in the economist’s mind if something is not done to reverse the trend, all that we can expect in the future of humanity is nothing but increasing tyranny, social unrest, and economic hardship. The good thing is with the technological innovation that we are witnessing in blockchain and cryptocurrency, both the present and the next generation do have now an alternative to choose the path of freedom away from bureaucratic control.

A Word of Apology

A word of apology is proper at this point. I think it is common for writers to experience that as he starts writing a piece, suddenly, it seems that the words and ideas are taking a life of their own, and does not want to be controlled in terms of limiting their length. Due to this kind of situation, I decided to further subdivide the current material into two. A rigid and tight argument matched with unexpected length tends to be boring, and this is exactly what I want to avoid.

To make this post as concise as possible, I refrain from covering all the five psychological consequences. Instead, I just want to focus on the first two results explaining how they have been formed. After doing this, I intend to do a further reflection based on the insights mentioned by our economist as they relate to blockchain and cryptocurrency.

For now, let us start with the first two psychological outcomes of bureaucratic management:

The Psychological Consequences of Bureaucratism

1. Misdirected Youth

Mises identified that the first psychological outcome of bureaucratism in the misdirection of the youth. To grasp the strength of this argument, we need to identify the situation before the growing influence of bureaucratization. And this is best summarized in "Horatio Alger's philosophy" (p. 93) about a capitalist society. For our economist, this philosophy emphasized the most distinguishable feature of capitalist society:

Capitalism is a system under which everybody has the chance of acquiring wealth; it gives everybody an unlimited opportunity. Not everybody, of course, is favored by good luck. Very few become millionaires. But everybody knows that strenuous effort and nothing less than strenuous effort pays. All roads are open to the smart youngster. He is optimistic in the awareness of his strength. He has self-confidence and is full of hope. And as he grows older and realizes that many of his plans have been frustrated, he has no cause for despair. His children will start the race again and he does not see any reason why they should not succeed where he failed. Life is worth living because it is full of promise (ibid.).

Mises picked up the stories of famous and successful entrepreneurs in America to illustrate the truthfulness of the above philosophy. He mentioned the experiences of Thomas Alva Edison and Henry Ford. He added that many young men and women of the same generation confirmed this through their less-known stories. These people were characterized by vision, energy, and personal responsibility. Mises described them as follows:

. . . the rising generation is driven by the spirit of a pioneer. They are born into a progressing society, and they realize that it is their task to contribute something to the improvement of human affairs. They will change the world, and shape it according to their ideas. They have no time to waste, tomorrow is theirs and they must prepare for the great things that are waiting for them. They do not talk about their being young and about the rights of youth; they act like young people must act. They do not boast about their own 'dynamism'; they are dynamic and there is no need for them to emphasize this quality. They do not challenge the older generation with arrogant talk. They want to beat it by their deeds (p. 94).

However, such mindset and attitude changed with the increasing influence of bureaucratization. Young men and women lost their vision and initiative. Their only dream was to secure a job in government bureaus. Referring to a typical young man at that time, notice how Mises described this shift:

The routine of a bureaucratic technique will cripple his mind and tie his hands. He will enjoy security. But this security will be rather of the kind that the convict enjoys within the prison walls. He will never be free to make decisions and shape his fate. He will forever be a man taken care of by other people. He will never be a real man relying on his strength. He shudders at the sight of the huge office buildings in which he will bury himself (ibid.).

This trend was especially true in the most bureaucratized country, Germany. Before World War 1, a "youth movement" emerged who was hostile to anything connected to the past. They were proud of their " revolutionary radicalism". However, they never criticized government bureaucracy. Mises gave us a clear picture of the ugly features of this movement:

Turbulent gangs of untidy boys and girls roamed the country, making much noise and shirking their school lessons. In bombastic words, they announced the gospel of a golden age. All preceding generations, they emphasized, were simply idiotic; their incapacity has converted the earth into a hell. . . the brilliant youths will rule. They will destroy everything old and useless, they will reject all that was dear to their parents, they will substitute new real and substantial values and ideologies for the antiquated and false ones of capitalist and bourgeois civilization, and they will build a new society of giants and supermen (pp. 94-95).

For Ludwig von Mises, the young people of this movement did not possess any concrete plans. Their boldness "was only a poor disguise for their lack of any ideas and any definite program" (p. 95). "They espoused entirely the program of their parents. They did not oppose the trend toward government omnipotence and bureaucratization. Their revolutionary radicalism was nothing but the impudence of the years between boyhood and manhood; it was a phenomenon of protracted puberty. It was void of any ideological content" (ibid.).

As to the leaders of this movement, Mises portrayed them as "mentally unbalanced neurotics," "profligate" and "none of them excelled in any field of activity or contributed anything to human progress" (ibid.). About the followers, many of them, their only aim was to be a bureaucrat. A similar goal could be seen among new converts as the movement spread outside Germany.

Mises concluded his observation of this outcome by confidently saying that from its birth, the movement was bound to fail because it was not able to detach itself from the dominance of government control. Instead, whatever its dissatisfaction was with the system could only be appeased if the members of the movement could secure a government job. That's why Mises called this movement a "counterfeit rebellion" (p. 96) and considered dead during his time in countries, which were highly bureaucratized for the followers of the movement were already "integrated into the all-embracing apparatus of state control" (ibid.).

2. Crisis of Progress and Civilization

As we have seen so far, the youth was the most affected sector of society due to bureaucratization. They felt uneasy, dissatisfied with what was going on, and wanted change, but they did not know how to achieve such a change. The reason for this was due to the success of the bureaucratization of the mind using education. The youth either due to absence or distorted understanding of the economy, all their cries for reform were vain efforts to beat the air. The youth movement failed for they did not possess the quality of mind to see the evil of socialization brought about by bureaucratization.

Ludwig von Mises saw bureaucratization as a revival of the caste system that characterized the age of feudalism. Under that age, the youth "are deprived of any opportunity to shape their fate" (p. 97). He further described the similarity of the adverse condition of the youth both under the caste system and the bureaucratic system. For the youth, "there is no chance left. They are in fact 'lost generations' for they lack the most precious right of every rising generation, the right to contribute something new to the old inventory of civilization" (ibid.). This is the reason why Mises stated that the kind of crisis brought about by bureaucratization was not only confined to the youth. He claimed, "This is more than a crisis of the youth. It is a crisis of progress and civilization" (pp. 100-101).

Socialism is the ideology that caused this crisis by way of Marxism. The bondage broken by classical liberalism was subtly restored through Marxism's contrary interpretation of the achievements of classical liberalism. In Marxism, "the irreconcilable conflict of economic classes" (p. 98) is regarded as the central dogma. For Marxists, in capitalism, an offspring of classical liberalism, the interests of the two economic classes were hostile to each other. To remove this hostility, the goal is to establish a socialist classless society. And achieving this goal is exactly where bureaucratization serves as the most useful tool.

How Can Cryptocurrency Help Reverse the Identified Psychological Trends?

In this section, I will be reviewing some of the insights mentioned by Mises related to the first two psychological results of bureaucratic management.

The first thing I want to mention is the way our economist described the generation before the prevailing influence of bureaucratism. He described them as “characterized by vision, energy, and personal responsibility.” They see themselves as involved in the task of changing the world. They consider it their duty “to contribute something to the improvement of human affairs.”

If my observation is accurate with what is going on in the crypto space, I see similar characteristics possessed by strong advocates of blockchain technology and cryptocurrency. This observation is applicable both to the old and the youth of our time. Though this is relevant to the former, I think it is the latter that will benefit the most.

Nevertheless, it seems to me that this technological innovation has restored somehow such vision, passion, and energy as well as this sense of being in charge of one’s life. This is because the quest for freedom, both financial and time, are powerful motivators that liberate the human spirit to strive for more, which cannot be found in a highly bureaucratic society.

Furthermore, we also see a strong sentiment among crypto enthusiasts about an increasing desire to disconnect oneself from the monopolistic control of the civil government. Our current generation therefore especially those who are already in the crypto space is the exact opposite of the generation that Ludwig von Mises described.

Another interesting observation we can add is that the crisis of progress and civilization identified by Mises might possibly be no longer true for our time, especially for those people who are informed about the power of blockchain and cryptocurrency for they are showing an inclination to contribute something new to the old inventory of civilization.

Finally, as to the ideological fire in the minds of men that causes such crisis in progress and civilization, if such central dogma of Marxism about the irreconcilable conflict of interests of economic classes has been proven a lost case through a sociological and economic analysis in the real world as demonstrated by Mises, how much more in the digital world? If in the theory of economics based on scarcity, this dogma has been proven fallacious, how can anyone continue upholding such an idea in an economic system based on abundance as what we see in the digital world? This is the reason why I consider it anomalous for a few crypto supporters to continue maintaining such hostility and envy against those who focus their attention and energy on increasing their capital.

Grace and peace!

Reference:
Mises, Ludwig von. (1944). Bureaucracy. New Haven: Yale University Press.