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  • Re-reading Drucker: Concept of the Corporation

    Posted by David Foster on January 17th, 2016 (All posts by )

    Concept of the Corporation, by Peter Drucker

    It’s been a long time since I read this 1946 book by Peter Drucker.  I recently pulled it down from the shelf and thought it worth a reread.  I’ll be excerpting some passages I think are particularly interesting, not necessarily in sequential order.  For starters, under the heading the corporation as a social institution:

    Americans rarely realize how completely their view of society differs from that accepted in Europe, where social philosophy for the last three hundred years has fluctuated between regarding society as God and regarding it as merely an expression of brute force.  The difference between the American view of the nature and meaning of social organization and the views of modern Europe goes back to the sixteenth and seventeenth centuries.  During that period which culminated in the Thirty Years’ War (1618-1648) the Continent (and to a lesser degree England) broke with the traditional concept of society as a means to an ethical end–the concept that underlay the great medieval synthesis—and substituted for it either the deification or the degradation of politics.  Ever since, the only choice in Europe has been between Hegel and Machiavelli.  This country (and that part of English tradition which began with Hooker and led through Locke to Burke) refused to break with the basically Christian view of society as it was developed from the fifth to the nineteenth century and built its society on the reapplication of the old principle to new social facts and new social needs.  

    To this social philosophy the United States owes that character of being at the same time both the most materialistic and the most idealistic society, which has baffled so many observers…The American who regards social institutions and material goods as ethically valuable because they are the means to an ethical goal is neither an idealist nor a naturalist, he is a dualist.

     

    To this philosophy of society this country owes its great political insight.  The Federalist is a classic of politics precisely because it manages to be profoundly pragmatic and deeply moral at the same time. But to this philosophy America also owes its worst political blind spot: a refusal to see the existence or an irrational, emotional, or naturalistic basis of allegiance…It was almost impossible for an American to comprehend that, for instance, a German soldier would fight well even though bitterly opposed to Naziism. The proposition–elementary to every European whether German, French, or Russian–that you owe allegiance to your country and nation as the permanent facts of human life rather than as to the creed adopted by them for the time being, sounds like blasphemy to American ears. ..

    Refusal to accept the inevitable shortcomings of any society is responsible for a good deal of what is best in political life.  The demand that society be made to live up fully to its promises and beliefs underlies the activity of the reformer and accounts for many social and political advances and improvements…At the same time refusal to understand that society and social institution cannot be perfect, and that by the very nature of human activity their efficiency is low (although no lower than that of any other man-made things such as, for instance, a steam engine) accounts for some of the worst mistakes in political analysis and political action…To paraphrase words of Edmund Burke, it is not enough to prove a society to be less than perfect to justify its overthrow; one must also prove that a new society or new institution is likely to do better.

     

     

    10 Responses to “Re-reading Drucker: Concept of the Corporation

    1. Mike K Says:

      I read everything that Drucker wrote, including his autobiography, which was excellent. Unfortunately, I can’t recall the title and don’t seem to have it anymore.

      I once tried to get him to come and talk to our medical society when managed care was coming. Unfortunately his fee was $10,000 for a day or a weekend.

    2. David Foster Says:

      The autobiography is called “Adventure of a Bystander.”

      http://www.amazon.com/Adventures-Bystander-Foundation-Nonprofit-Management/dp/0471247391/ref=sr_1_1?ie=UTF8&qid=1453066998&sr=8-1&keywords=drucker+adventures

    3. Michael Hiteshew Says:

      To paraphrase words of Edmund Burke, it is not enough to prove a society to be less than perfect to justify its overthrow; one must also prove that a new society or new institution is likely to do better.

      That should be chiseled into stone in every government building.

    4. Michael Hiteshew Says:

      BTW, it’s interesting that the left has to come to view the very concept of a corporation as the very embodiment of evil. It’s yet another insight into their ‘government as church’ religious belief.

    5. David Foster Says:

      Michael H….of course, “nonprofits” are corporations too, as are private educational institutions. Those who are so angry about ‘corporate personhood’ never seem to notice this.

    6. Mike K Says:

      Some of Drucker’s best writing was about non-profits and how they should be run. His comments about the “Girl Scouts” are now outdated but he used them as an example of how a non-profit can adjust to changes in circumstances. His example was the change from mothers at home all day using the Scouts for an activity to break up the day. He then described how the organization dealt with the change to working mothers and showed how they changed the emphasis to “quality time” with daughters. He thought this an excellent example of a nimble organization dealing with mission change.

      At the time, I was figuring out how medical associations could deal with the changes in medicine. Many traditional medical societies, including the Los Angeles County Medical Association, have disappeared.

    7. Mike K Says:

      “The autobiography is called “Adventure of a Bystander.”

      Thanks. I don’t know what happened to my copy. I can remember exactly where it was in my library before I sold my house.

      Read the reviews to see others’ opinion of it.

    8. Grurray Says:

      His point on overthrowing institutions is also similar to Chesterton’s Fence

      In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, “I don’t see the use of this; let us clear it away.” To which the more intelligent type of reformer will do well to answer: “If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it.

    9. Grurray Says:

      Philosopher Roger Scruton in ‘How to be a Conservative’ posits that

      Conservatism starts from a sentiment that all that all mature people can readily share: the sentiment that good things are easily destroyed, but not easily created. This is especially true of the good things that come to us as collective assets: peace, freedom, law, civility, public spirit, the security of property and family life, in all of which we depend on the cooperation of others while having no means singlehandedly to obtain it. In respect of such things, the work of destruction is quick, easy and exhilarating; the work of creation slow, laborious and dull. That is one of the lessons of the twentieth century. It is also one reason why conservatives suffer such a disadvantage when it comes to public opinion. Their position is true but boring, that of their opponents exciting but false.”

    10. David Foster Says:

      Grurray…very good!