The Education of Peter Drucker
Jack Beatty, the biographer of renowned management expert Peter Drucker (who died last month at 95), pays tribute to him as one of the twentieth century's greatest influences for the good
Hailed as "the father of management theory," Peter F. Drucker was also (as he once labeled himself) a "social ecologist"—a student of the success and failure, the rise and fall of societies. In one of his last public interviews, on the National Public Radio program On Point, he saw a "very difficult transition" coming for Americans as they adjust to a world in which their country is no longer "the big boss"—a world of stronger economies, more creative societies, and plural value systems. Certainly, he said, the new century is beginning badly for the United States. Even though President George W. Bush had awarded him the nation's highest civilian honor, the Presidential Medal of Freedom, in 2002, Drucker told On Point in December 2004 of his despair over the "tragedy of Iraq—a total disaster." Being the big boss for so long had given Americans a false sense of their power—and of their country's rightness. The humbling of U.S. power in Iraq and the rejection of U.S. pretensions to virtue around the world, he feared, was a harbinger of humblings to come.
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Peter Drucker was born into a country that precipitately came down in the world. In 1914 the Austro-Hungarian Empire ruled more than 50 million Europeans from the Alps to the borders of Russia. But by 1918 Austria had been reduced to an alpine republic of 6.5 million, and Drucker's native Vienna had been rendered a mere capital of nostalgia. The Great War had splintered the "Dual Monarchy" of the Emperor Franz Josef into the national and religious shards that are still contending in the Balkans today. "How does it feel to be ending your days under the rule of another Austrian?" (California Governor Arnold Schwarzenegger) Drucker was recently asked. "I'm not impressed with Austrians," he sardonically replied. "I've known too many of them."
Like Conrad's "Mr. Kurtz," all Europe went into the making of Peter Drucker. His father, Adolph, was a lawyer/ economist with a high government job; his mother, Caroline, had studied medicine. They shared their professional interests with Peter and his younger brother Gerhart, and gave them an unrivaled education by including them in their Vienna "evenings." "My father had a dinner party every Monday" Peter recalled. "There were often economists, ranking civil servants, even a major international lawyer." Later in the week Caroline would hold a medical dinner. At one, Peter heard leading physicians debate the theories of Vienna's most famous psychiatrist, Sigmund Freud. There were also musical evenings: Peter's grandmother was a soloist with the Vienna Philharmonic under the baton of Gustav Mahler. And there were literary evenings, even mathematical and statistical evenings. Peter's formal schooling could not add much to this intellectual saturation. Still, he "worshipped" Miss Elsa and Miss Sophy, the sister-teachers at the private school where his parents sent him after the public school failed to teach him to write legibly. It was a progressive school: Miss Elsa and Miss Sophy taught the boys to cook and sew and the girls to hammer and saw. Miss Elsa offered terse encouragement ("Better than last week"), while Miss Sophy's approval came in the form of a warm smile—"pure bliss to the beholder." "When fifty years later, the Women's Libbers announced that the Lord is really a woman," Peter recalled, "I was not a bit surprised."
Postwar Vienna was fixated on "prewar," when everything had been better. "All they talked about was life before 1914," he said. " I was surrounded by extinct volcanoes." Future-facing Peter could not stand it. After finishing high school, instead of going on to Vienna's medical school, as his father desired, Peter left to take a clerk's job in Hamburg. He was seventeen. "I had sat in school long enough."
Days, he worked. Evenings, he took classes in the law faculty of Hamburg University. German universities were notoriously slack, and decades later Peter wanted it understood that he was a part-time student: "Full-time students did not spend four years working hard and studying law. They spent four years in an agreeable haze compounded of two parts beer and one part sex."
He found time to publish a paper in the September 1929 issue of a prestigious economic journal. It predicted—just one month before the Great Crash—that the bull market of the 1920s would stay bullish. That cured Peter of soothsaying. Post-crash, the newspaper The Frankfurter General-Anzeiger hired him as a financial writer and soon named him senior editor. He was twenty. The war had killed off the generation of German and Austrian thirty-five-year-olds who should have filled such jobs.
Since his day at the paper began at 6 A.M. and ended at 2, Peter set about completing his law degree at the University of Frankfurt in the rigorous German manner. He never attended a class—it was enough to take an examination at the end of the year—except for the one he taught in international law for an indisposed professor. There he met a young woman from Mainz, Doris Schmitz—his future wife of seventy-one years.
Germany had entered the nightmare years. Millions had lost jobs in the Great Depression. Black-shirted Nazi thugs paraded in the streets. Unreason ruled. Peter witnessed a "wildly cheering rally" at which a Nazi logician displayed the "abracadabra of fascism" with this burst of irrationality: "We don't want lower bread prices, we don't want higher bread prices, we don't want unchanged bread prices—we want National Socialist bread prices!"
Partly as an act of protest—to hold up a German of an earlier generation as an exemplar of tolerance—Peter published a pamphlet on Friedrich Julius Stahl (1802-1861), a legal philosopher, a liberal parliamentarian, and a Jew. The Nazis burned it. Drucker recalls that after sitting through a foul-mouthed harangue against the Jewish faculty delivered by the Nazi goon now in charge of the university, "I knew I would leave Germany in forty-eight hours."
He set out for England, and within days of landing there, took a job as a securities analyst for a London firm; luckily his stock-market prognostication of September 1929 had been written in German. While going up the escalator at the Piccadilly Circus tube station, Peter passed Doris Schmitz coming down. When he reached the street, he quickly took the escalator back down, only to pass her coming up. Eventually they connected.
During his four-year stay in England, Drucker sat in on John Maynard Keynes's economics seminar at Cambridge University and made an important discovery: He "suddenly realized that Keynes and all the brilliant economics students in the room were interested in the behavior of commodities while I was interested in the behavior of people." His interest in people would lead him to the study of management and a career as a management consultant to institutions (the Pentagon), corporations (from General Electric down to small furniture makers), and charitable organizations (ranging from the Girl Scouts to Protestant megachurches). "This is a person business," he said of consulting. "We are not greengrocers selling commodities." As for economics: "There is only one point on which the economists and are in agreement: I am not an economist."
London soon paled for Drucker: The talk was all of "pre-war" even as a new war loomed. He had begun writing for U.S. periodicals and increasingly saw his future in America. In 1937 he talked the London Financial Times into sending him here—though not, he later emphasized, as a conventional correspondent: "I came instead as a writer."
"Since I was twenty," Drucker wrote at eighty-two, "writing has been the foundation of everything I have been doing." From the first he showed a mastery of modern English prose. He has that rarest quality in a writer of non-fiction—a voice, a characteristic way of saying. He describes Los Angeles as a "sun-drenched limbo—frowsy palms and peeling stucco." In retirement J.P. Morgan drifts into "well-heeled oblivion." He likens sociology to acne: "Civilization does not die from the disease but it itches." He can be satiric: "The only profit center is a customer whose check has not bounced." And flat-out funny: "If only for aesthetic reasons, I am not over-fond of the term 'Bottom-Up Management.'" Young writers could go to school on his first sentences. He begins one of his two novels, The Last of All Possible Worlds (1982), "This is the first of my nineteen books that admits to being fiction."
Germany furnished him with the material for his first book, The End of Economic Man: The Origins of Totalitarianism (1939). Winston Churchill not only wrote a laudatory review; after he became Britain's wartime Prime Minister he ordered that it be included in the "book kit" given to every graduate of Officer Candidate School. "It was, appropriately enough, packaged together with Lewis Carroll's Alice in Wonderland by somebody in the War Department with a sense of humor."
The End of Economic Man is, I believe, Drucker's foundational book. His vision of politics, society, management, business, and even of the social necessity of faith—all mine what he saw in a Germany fatally incubating fascism. Economic Man limns a crisis of belief in capitalism (and socialism), the causes of which have yet to be ameliorated. Ignoring its specifically European causes, Drucker focuses on the civilizational causes of fascism. We live in that same civilization.
Writing at a time of economic collapse, Drucker asserted in the book that Economic Man's promise—that a society built around the market (the major social institution of the nineteenth century) could achieve "freedom and justice through economic development"—had failed, and that this had "destroyed the belief in capitalism as a social system." The Great War and the Depression made this crisis of belief a reality for millions. "These catastrophes broke through the everyday routine which makes men accept existing forms, institutions and tenets as unalterable laws. They suddenly exposed the vacuum behind the façade of society." Fascism filled that void with magic. Robbed of their belief in the justice and rationality of society, he wrote, the masses,
...must turn their hopes toward a miracle. In the depths of their despair reason cannot be believed, truth must be false and lies must be truth. 'Higher bread prices,' 'lower bread prices,' 'unchanged bread prices' have all failed. The only hope lies in a kind of bread price which is none of these, which nobody has seen before, and which believes the evidence of one's reason.
In place of a market society, fascism sought to offer a "non-economic society," with non-economic incentives and satisfactions. For example, as a distraction from from the collapse of German agriculture and a shrinking diet, the Nazis provided the lower classes with "some of the non-economic paraphernalia of economic privilege"— theatre tickets, winter cruises, stays at health spas, and the like. In place of atomistic individualism these offered the feeling of belonging to a powerful group. Economic Man pursued self-interest. Fascist Man identified with a cause greater than himself.
Capitalism's critics from the right have recurrently deplored its failure to provide non-economic satisfactions—its narrow rationality, its rejection of the heroic ethos, its exaltation of selfishness. The fascist persuasion feeds off these discontents. In the mounting reaction against globalization, in the calls for tariffs in the U.S. to protect "our" jobs from "them," in the European rejection of immigrants as the "enemy within," in the recrudescence of low-grade nationalism ("France for the French"), in the fierce in-group passions of fundamentalism, a whiff of fascism hangs in the twenty-first-century air. Anyone wishing to understand this countercurrent to the economic, technological, and financial flow toward international integration should start with The End of Economic Man. From that book forward Drucker has stressed the need for a strong non-economic society to make "inequality appear far less intolerable" and to shore people up against the bottom-line nihilism of the market. His work as a consultant to nonprofit organizations has been in furtherance of that goal. An anti-Utopian, he believed that "the bearable society" is the best we can achieve. Churches and secular voluntary organizations help men and women cope with the meaninglessness of much modern work. Whether in the course of making inequality bearable they also make it tolerable remains an open question.
Peter Drucker's thirty-five books have sold in the millions. Probably no writer of the second half of the twentieth century has had more influence for the good. After the publication of his last major book, Post-Capitalist Society (1993) an interviewer asked Drucker if he thought his books had been understood and what effects he thought they had had. In reply he voiced his credo:
I would hope that American managers—indeed, managers worldwide—continue to appreciate what I have been saying almost from day one: that management is so much more than exercising rank and privilege, that it is about so much more than "making deals." Management affects people and their lives.
His life was a gift to humanity. Mixed with the grief that so many feel over his passing is gratitude for what he left behind.