Introduction

Both public bureaucracies and corporate (private) bureaucracies are engaged in the production of goods and services. However, if we are to understand bureaucratic production, at the level of decision making it is necessary to distinguish between two types of production decisions: (i) policy decisions, which embody expedient courses of action to be pursued by the bureau or bureaus, and (ii) technical decisions, which relate to the choice of techniques and the combination of factors of production required to implement policy decisions. Because the first type of decision - the policy decision - is by far the more important, we focus on it in this chapter and in the book. Indeed, we assume that governmental bureaucracies produce public policies, whereas corporate bureaucracies produce private policies. To put it differently, we assume that in governmental and corporate enterprises, what is properly bureaucratic pertains to decisions about what will be produced; the question of how it will be produced, although important, is secondary.

There is a long and respected tradition in the public finance literature that identifies the output of governments with public, collective, or social goods, sometimes defined as goods (and services) that are equally available to all and sometimes, rather vacuously, as goods supplied by governments. There can be no useful quarrels about definitions. definitions.