Wednesday, March 28, 2012


Managing America: Peter Drucker Defines the Post Capitalist Society in America 


Peter Ferdinand Drucker was born in Vienna and educated there and in Germany. He received a doctorate in international law from Frankfurt University in the early 1930s and worked as a business reporter. When the Nazi Party began taking over Germany, Drucker immigrated to the United Kingdom and then to the United States.

Drucker gained fame for his insights into the business world and his many books on industry and corporate management. He assumed that his readers were intelligent, rational, hardworking people of good will.

Drucker is the author of thirty-nine books, which have been translated into more than twenty languages. Two of his books are novels, one an autobiography. He is the co-author of a book on Japanese painting, and made four series of educational films on management topics. His first book was written in 1939, and from 1975 to 1995 he was an editorial columnist for The Wall Street Journal. 

He was a frequent contributor to the Harvard Business Review, The Atlantic Monthly, and The Economist and he continued to act as a consultant to businesses and non-profit organizations when he was in his nineties.

Drucker’s first book was The End of Economic Man (1939), which examined the evils of fascism. With his second work, The Future of Industrial Man (1942), Drucker turned his focus to large industrial organizations. After conducting a long study of the General Motors Corporation, he wrote The Concept of the Corporation (1946), which would become an influential text on business management.

Mr. Drucker: Did anyone in America know what a Post Capitalist Society was by definition?

Peter Drucker: “Only a few short decades ago, everybody knew that a post capitalist society would surely be a Marxist one. Now we all know that a Marxist society is the one thing the next society is not going to be. But most of us also know or at least sense that developed countries are moving out of anything that could be called capitalism.”

“The market will surely remain the effective integrator of economic activity. But as a society, the developed countries have also already moved into post-capitalism. It is fast becoming a society of new classes, with a new central resource at its core.”

Drucker: “Capitalist society was dominated by two social classes: the capitalists, who owned and controlled the means of production, and the workers-Karl Marx's proletarians, alienated, exploited, and dependent. The proletarians first became the affluent middle class as a result of the Productivity Revolution-the revolution that began at the very time of Marx's death in 1883, and reached its climax in every developed country shortly after World War II."

“Around 1950, the industrial worker-no longer a proletarian but still labor-seemed to dominate politics and society in every developed country.”

“But then, with the onset of the Management Revolution, the blue-collar workers in manufacturing industry rapidly began to decline both in numbers and, even more noticeably, in power and status.”

Drucker added: “The capitalist probably reached his peak even earlier-by the turn of the century, and surely no later than World War I. Since then, no one has matched in power and visibility the likes of Morgan, Rockefeller, Carnegie, or Ford in the United States; Siemens, Thyssen, Rathenau, Krupp in Germany; Mond, Cunard, Lever, Vickers, Armstrong in Great Britain; de Wendel and Schneider in France; or of the families that owned the great zaibatsu of Japan: Mitsubishi, Mitsui, and Sumitomo.”

Drucker continued: “By World War II they had all been replaced by professional managers the first result of the Management Revolution. There are still a great many rich people around, of course, and they are still prominent in newspaper society pages, they have become celebrities economically, they have almost ceased to matter.”

“Even on the business page all the attention is being paid to hired hands, that is, to managers. And such talk of money as there is about the excessive salaries and bonuses of these hired hands, who themselves own little or nothing.”

“Instead of the old-line capitalist, in developed countries pension funds increasingly control the supply and allocation of money. In the United States, these funds in 1992 owned half of the share capital of the country's large businesses and held almost as much of these companies' fixed debts. The beneficiary owners of the pension funds are, of course, the country's employees. “

“If Socialism is defined, as Marx defined it, as ownership of the means of production by the employees, then the United States has become the most socialist country around-while still remain the most capitalist one as well.”

“Pension funds are run by a new breed of capitalists: the faceless, anonymous, salaried employees, the pension funds' investment analysts and portfolio managers.”

Drucker concluded: “But equally important: the real, controlling resource and the absolutely decisive factor of production is now neither capital nor land nor labor. It is knowledge. Instead of capitalists and proletarians, the classes of the post-capitalist society are knowledge workers and service workers.”

Mr. Drucker; in a Post-Capitalist economic society, what is the role of paper money?

Peter Drucker; "Money knows no fatherland" is a very old saying. But the nation state was invented in large part to disprove it. Control over money was at the very center of what came to be called "sovereignty." But money has slipped the leash; it has gone transnational. It cannot be controlled any longer by national states, not even by their acting together.”

“No central bank any longer controls money flows. It can try to influence them by raising or lowering interest rates. But in the flow of money, political factors are increasingly as important as interest rates. The amount of money beyond the control of any one central bank, that is, the amount of money traded every day on the transnational markets, the New York foreign exchange market or the London interbank market, so greatly exceeds anything needed to finance national and international transactions that the flows escape any attempt to control or limit them, let alone manage them.”

Two questions for America;

1    What is the true worth of the American dollar in the Post Capitalist Society?

2         What is the true role of the US Federal Reserve Banking System in the Post Capitalist Society?

Mr. Martin Chekel, a noted international businessman and author of the thought provoking “Managing America” six book series and the retrospective eight book series “The Diary of American Foreign Policy 1938 – 1945” that laid the foundation for US foreign policy the past seventy-four years.

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