- Paperback: 274 pages
- Publisher: Transaction Publishers; Revised edition (August 25, 2003)
- Language: English
- ISBN-10: 0765805332
- ISBN-13: 978-0765805331
- Product Dimensions: 6 x 0.6 x 9 inches
- Shipping Weight: 12.8 ounces (View shipping rates and policies)
- Average Customer Review: 7 customer reviews
- Amazon Best Sellers Rank: #2,351,499 in Books (See Top 100 in Books)
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The New Realities Revised Edition
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About the Author
Peter F. Drucker (1909-2005) is known by many as the father of modern management. He was Clarke Professor of Social Science and Management at Claremont Graduate School in California and was a recipient of the Presidential Medal of Freedom. He is the author of over thirty-five books, including The Ecological Vision, The Concept of the Corporation, and A Functioning Society.
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This book is not about ‘things to come’. It is not about the ‘next century’. Its thesis is that the ‘next century’ is already here, indeed that we are well advanced into it. We do not know the answers. But we do know the issues.”
Now, 26 years later, I want to review some topics of this excellent book which demonstrate Drucker’s long and wide view into our century.
All quotes are original Drucker, my comments are marked MC.
Chapter 1 The Divide …
And, a year later as already said, the Austrians selected the first anti-semite to high political office as Lord Mayor of Vienna [MC: 1897-1910 – the tall Ringstrassen-Memorial is still proudly watching the traffic.] With the Dreyfus affair, totalitarianism emerged fully fledged.
Chapter 2 No More Salvation by Society …
The void created by the disappearance of the belief in salvation through faith was filled in the mid 1700s by the emergence of the belief in salvation by society, that is, by a temporal social order, embodied in an equally temporal government. This belief was first enunciated by Jean Jacques Rousseau in France. Thirty years later Jeremy Bentham in England worked it up into a political system. It was cast in its permanent form, that is into a ‘scientific’ absolutism, by the ‘father of sociology’ August Comte and by G. W. R. Hegel in Germany. Those two then ‘begat’
Marx. Lenin, Hitler, and Mao were all Marx’s children. …
The death of the belief in salvation by society, which for 200 years had been the most dynamic force in the politics of the West and increasingly in politics world-wide, creates a void. The emergence of fundamentalist Islam is an attempt to fill this void. It is the result of disenchantment alike with the welfare state of the ‘democratic’ West, and with communist utopia.
MC: on Wikipedia we find a list of Islamist terrorist attacks since the 1980s which proves that the West is under attack and Peter Drucker saw it coming in 1989.
Chapter 4 When the Russian Empire is Gone …
Within twenty-five years (if not sooner) the Russian Empire too will, however, have disappeared – or at let it will have changed from European into post-European and primarily Asian.
MC: Drucker wrote already in his book Managing in Turbulent Times published in 1980: “For that matter, only a bold man would be confident that the Russian Empire – the empire of the czars, of Lenin, of Stalin – will be around by the year 2000.”
As we all know, on December 8, 1991 the Soviet Union was declared as dissolved.
Russia, Ukraine and Belarus established the Commonwealth of Independent States (CIS) in its place. Today CIS has nine full member states – Ukraine is no member state.
Drucker continues (Pag. 33): The disintegration of the Russian Empire will create totally new realities in international politics – realities for which no one is as yet prepared, least of all the United States. … The disintegration of the Russian Empire is likely to be far more traumatic for the mother country, that is for European Russia.
MC: If you study George Friedman’s “The Next 100 Years” published in 2010 you find scenarios for Russia which are even worse for a country with 17 million km² (4 million in Europe, 13 million in Asia) and a decreasing population of 143 million people (85% in Europe, 15% in Asia). Maybe this view on Russia is could be considered as an opportunity for Europe and Russia to draw fruitful and peaceful conclusions for the 21st century instead of conflicts and war. The dramas of the 20th century should be very good teachers for policy and decision maker in the 21st century.
Drucker continues: To be sure, Russia – whether communist or post-communist – will cease to be a ‘superpower’. But so will the US. In fact, there will be no ‘superpowers’. There will be no such thing as a centre in world politics.
Chapter 5 Now that Arms are Counterproductive …
After all, arms are proving impotent militarily. The Korean War ended in a draw despite the overwhelming superiority of the US in men and arms. In all other conflicts between a major power and a small opponent the major power lost. … Indeed war can no longer be considered, in the famous words of Karl von Clausewitz, ‘the continuation of policy by other means’. It has become the defeat of policy.
Drucker continues: The time may even be approaching when all major nations can agree to forgo military aid as self-defeating and to band together to stop terrorism – as the nineteenth-century nations banded together in the Treaty of London of 1857 to stamp out piracy at sea, and as (at least tacitly) they agreed in the 1950s not to condone air piracy.
MC: Drucker’s insight should be considered to avoid a big war and fight jointly terrorism instead of an ex-post confirmation that Drucker was right again.
Chapter 11 Economics at the Crossroads
The existing economic theory explains the main economic events of the fifteen years between 1975 and 1989. Nor could it have predicted them. Reality has outgrown existing theories. …
To give us a functioning economic theory, we thus need a new synthesis that simplifies. But so far there is no sign of it. And if no such synthesis emerges, we may be at the end of economic theory. …
Economic policy requires that lay people such as politicians understand the key concepts of economic theory. But economic reality is much too complex for that. It is already difficult, if not impossible, to give answers understandable to a lay person to the simplest economic question. But if there is not again a simple economic theory – or at least one capable of simplification – there could be only ‘economic’ policies’ aimed at a specific problem, such as an inadequate saving rate. There would be only what might be called ‘economic hygiene’ or ‘preventive economics’. … And yet entrepreneurship, invention, and innovation can change the economy in a remarkable short time. They, rather than the macro-economy, are the master.
MC: Drucker’s experiences and view is in line with my conviction that we should not follow the proposals in Picketty’s Capital in the 21st Century: implementing a progressive tax on capital in addition to existing progressive income taxes and progressive real estate taxes.
Picketty describes his formula for such a progressive tax on capital not in his chapter fifteen – A Global Tax on Capital – where he mentions this tax on page 532 with a footnote nr. 33 which leads the reader to the formula in the section Notes on page 644:
“The optimal rate of the capital tax will of course depend on the gap between the return on capital, r, and the growth rate, g, with an eye to limiting the effect of r>g. For example, under certain hypotheses, the optimal inheritance tax rate is given by the formula t=1-G/R, where G is the generational growth rate and R the generational return on capital (so that the tax approaches 100 percent when growth is extremely small relative to return on capital, and approaches 0 percent when the growth rate is close to the return on capital. (Pg. 644)”
MC to Picketty confirming Drucker’s warning:
How G and R would be calculated and on which level - Eurozone, EU, Europe, globally - is missing!
Such progressive tax concepts with the effect of “multiple taxation” - to tax what has already been taxed – would create a climate totally unfriendly to entrepreneurs, employers, the whole private industry sectors and the building of wealth far below the level Picketty is focusing on (top decile, top centile). It would finally contribute to growing unemployment when the opposite is of utmost importance.
Applying such toxic formulae would empower politicians to expropriate slowly but surely private property and thus undermine the fundamentals of pluralistic democracies based on private wealth and ownership.
Chapter 15 Management as Social Function and Liberal Art
To be sure, the fundamental task of management remains the same: to make people capable of joint performance through common goals, common values, the right structure, and the training and development they need to perform and to respond to change. …But management also deals with people, their values, their growth and development – and this makes it humanity. … management is deeply involved in spiritual concerns – the nature of man, good and evil.
MC: in “Peers INC” published in 2015 Robin Chase explains the effects of the “Collaborative Economy”: companies appear or become information-technology driven platforms transforming employees into self-employed peers without a management and its fundamental task as described by Drucker. This should be avoided when “capitalism is reinvented” to use Robin Chase’s subtitle: “How People and Platforms are Inventing the Collaborative Economy and Reinventing Capitalism.”
1) Political Realities
2) Government and Political Process
3) Economy, Ecology, and Economics
4) The New Knowledge Society
Now that I'm thinking about it - it would be interesting to compare/contrast this book with Friedman's The World Is Flat, Barber's Jihad Versus McWorld and Fukuyama's The End of History and Time....
1) Politicians in developed countries are increasingly becoming centrist, and function-oriented. Most political debate is focused on the means, not the goal. Chrisma is not needed.
2) The concept of government as the savior of society is dead. Instead, it will offer specific remedies for specific ills. The government cannot run the economy, but just help create the right climate for business, trade, and activity.
3) Society is segmenting into knowledge workers and non-knowledge workers (laborers). This concept runs through all his books.
4) Russia will segment and collapse. This will create imbalance as the majority of Russians are actually Asian and Muslim.
5) The military will continue to be a drag on the economy. Weapons will become increasingly counterproductive as the enemy unknown and elusive. Terrorism will rise, and the military will suffer an identity crisis.
6) The third sector (after the knowledge workers and manual laborers) will be non-profit. This serves a large function in society and provides many of the services once expected from the government. Volunteer hours totalling $150 billion (in imaginary wages).
7) Interest groups will continue to gain political influence. Drucker calls it the "tyranny of the small majority". These single cause minorities will be very vocal and usually against (rather than for) something.
8) In the transnational economy, cheap direct labor will no longer the way to competitiveness (since the portion of direct labor for goods is declining)
9) George Stigler, University of Chicago economist and Nobel prize winner, showed that NOT ONE of the regulations through which the US government tried to control, direct, or regulate the economy has worked. (pg 166)
10) Information based organizations should most resemble an orchestra. Each participant is a specialist and an individual contributor. They have separate responsibility and are expected to handle that work without direct supervision. Things get done, but only if the common objectives (the score) is clear and simple.