Classical Budgeting Term Paper

Pages: 4 (1212 words)  ·  Bibliography Sources: ≈ 6  ·  File: .docx  ·  Level: College Senior  ·  Topic: Economics


Prior to the classical budgeting era that emerged in mid-19th century and continued till mid-20th century, we had another model of budgeting which was grounded in the concept of decentralization. But this model was found ineffective and when it came apart, its demerits were all too obvious. United States is heavily indebted to Britain and other western countries for shaping of its various institutions including the public budgeting system. The disruption of decentralization budgeting system paved way for classical budgeting model in early 19th century. The earliest records of the emergence of this system are found in the statements of Baron Louis who was the French minister of finance in the period right after the Napoleonic Wars. He was probably among the pioneers of classical budgeting when he announced in 1815 that previous financial structure would no longer be followed and thus laid the foundation of classical budgeting:

We are going to present the most exact evaluation of our needs possible, the sums necessary to operate the ministerial departments. Then we shall offer a proposal of the ways and means of meeting them. Each ministry is guaranteed the regular employment of the funds put at its disposal. These funds are in the most rigorous proportion possible to its needs for the services performed. If clarifications are necessary, each minister has to place before you all the elements necessary for you to form your opinion (Caiden, N. 1982).Get full Download Microsoft Word File access
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Term Paper on Classical Budgeting Assignment

Classical budgeting was based on four important concepts namely annuality, unity, appropriation and audit. The first characteristic i.e. Annuality meant that all budgets would be developed on yearly basis. Each year the country would determine the needs of various sectors and then allocate resources. Unity referred to a centralized body from which all resources would be allocated. As opposed to decentralized model that was previously in vogue, classical model favored central control. Appropriation was another interesting aspect of this type of budgeting. Classical budgeting endorsed legislative participation in disbursement of resources and taxation. It was believed that this would allow the system to be more transparent. The model advocated public scrutiny and hence accountability was stressed. Audit referred to the activity whereby all expenditures could be monitored, scrutinized and checked on regular basis.

This simple mechanism was highly effective for a long time since it was based on the sensible concept of "incrementalism." This system paved way for accountability and transparency in government departments. It was now possible for the public to hold the government responsible for excessive expenditures or for crossing the budget-determined line. Classical budgeting was based on the concept of incrementalism that was first identified by Aaron Wildavsky. Incrementalism is defined in many ways but the main characteristic is stability which was a vital part of classical budgeting. The allocation made to a particular sector in one year determined the budget for the next year as well with few adjustments. Wildavsky (1984) defined incrementalism as a procedure "where changes are small, alternatives resemble those of the past, and patterns of relationships among participants remain stable." (p. xii) Wildavsky's book, The Politics of the Budgetary Process, published in 1964 is now considered a classic on the subject of public budgeting in the United States. Classical budgeting had some positive as well as normative effects. Summarizing the positive ones, the theorist explained: "The largest determining factor of this year's budget is last year's. Most of each budget is a product of previous decisions . . . many items are standard, simply reenacted every year" (1988, p. 78). And that "... At any one time, after past commitments are paid for, a rather small percentage -seldom larger than… [END OF PREVIEW] . . . READ MORE

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How to Cite "Classical Budgeting" Term Paper in a Bibliography:

APA Style

Classical Budgeting.  (2005, October 20).  Retrieved October 25, 2020, from

MLA Format

"Classical Budgeting."  20 October 2005.  Web.  25 October 2020. <>.

Chicago Style

"Classical Budgeting."  October 20, 2005.  Accessed October 25, 2020.