Abba Lerner and the Political Economy of Bureaucracy and Organizations

This article introduces a previously unpublished paper by Abba P. Lerner that offers one of the first examples of economic ideas interacting with issues of bureaucracy and public organization. Written in 1942, the paper is titled “Design for a Streamlined War Economy,” and it argues that for the wartime US economy to achieve maximum performance, Congress should maintain a price system in lieu of bureaucratic rationing. Although “Design for a Streamlined War Economy,” as well as Lerner’s well-known 1944 book The Economics of Control, addresses the macroeconomy, only the 1942 paper explicitly extends Lerner’s thinking into the internal organization of a bureaucratic defense establishment. This is new and noteworthy. I argue that Lerner’s paper represents one of the first examples of twentieth-century economic thinking applied to bureaucracy.