Frank Albert Fetter, Review of Bureaucracy, by Ludwig von Mises (1945)

Frank Albert Fetter’s review presents Mises’s Bureaucracy as a concise defense of free enterprise against the governmental centralization of economic decisions. Its structure moves from the intellectual opposition between Austrian and German historical economics to Mises’s diagnosis of bureaucracy, then closes with qualified praise. Fetter’s central claim is that the growth of bureaucracy reflects a deeper transfer of authority over prices and production from consumers and private enterprise to the state.

The opening gives this argument a polemical genealogy. For Fetter, the disagreement between Menger and Schmoller concerned political order as well as economic method. He portrays the historical school as favoring state direction while covertly relying on cost-of-production price theory. Austrian subjective valuation, by contrast, locates ultimate authority in consumers:

The Austrian school, on the contrary, traced the ultimate sovereignty over price to individual subjective valuations of consumers, thus giving new emphasis to the democratic character of free enterprise, and new meaning to the price system.

Fetter thereby makes price theory the foundation of a contrast between totalitarianism and liberalism. He places Mises alongside Hayek as an heir to the Austrian tradition whose experience of continental political developments lends urgency to warnings addressed to Western democracies. A brief excursus on Keynes reinforces this alignment: Fetter associates Keynes’s turn toward national planning with abandoning classical doctrine and making the state the arbiter of prices.

The review’s conceptual center distinguishes bureaucracy as an administrative instrument from the political system that enlarges its powers. Fetter explains Mises’s target directly:

The main argument is directed against the transfer to the government of the economic functions of price determination and direction of production.

On this account, bureaucratic expansion follows the centralization of economic functions; it is a symptom and measure of approaching totalitarianism, rather than the original cause. Fetter nevertheless observes that Mises does not always keep this systemic critique clearly separate from an indictment of bureaucracy itself.

His final assessment combines strong agreement with a substantive reservation:

At times even a reader in sympathy with the author's main thesis may question whether capitalism is not exalted too much by crediting it so fully with all the fruits of science, invention, and cultural progress.

This caution limits the historical claims made for capitalism without weakening Fetter’s endorsement of the book’s case against socialism. He also emphasizes that Mises recognizes broad police powers for protecting public health, morals, and security, so the defense of enterprise does not entail unrestricted laissez-faire. The review’s relevance lies in its explicit connection between economic coordination and political freedom: Fetter praises Mises’s general theoretical vision while cautioning both against overcrediting capitalism and against Western confidence in immunity from totalitarian developments.