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Excerpt from Peter Drucker’s “Landmarks of Tomorrow”

Peter Drucker

Peter F. Drucker (1909 – 2005) was born in Vienna to a lawyer and civil servant father and a medically trained mother. Their family was an intellectual one, and their visitors included Joseph Schumpeter, Friedrich Hayek and Ludwig von Mises. After secondary school in 1927 he went to Hamburg and soon became a journalist. He attained a law degree from Frankfurt’s Goethe University in 1931.

In 1933 Drucker relocated to London, and a year later to the US. He became a Naturalized citizen in 1943, teaching at Bennington College for seven years, then 22 years at New York University as a Professor of Management. From 1971 until his death he was Clarke professor of Social Science and Management at Claremont Graduate University in California.

He was also a leader in the development of management education, and invented the concept known as management by objectives and self-control And he has been described as “the founder of modern management”.

“Drucker’s books and articles, both scholarly and popular, explored how humans are organized across the business, government, and nonprofit sectors of society. He is one of the best-known and most widely influential thinkers and writers on the subject of management theory and practice. His writings have predicted many of the major developments of the late twentieth century, including privatization and decentralization; the rise of Japan to economic world power; the decisive importance of marketing; and the emergence of the information society with its necessity of lifelong learning.” (Wikipedia)

The following selection is from his Landmarks of Tomorrow (New York: Harper Brothers, 1957). (pp. 212-216)

Today the power charge of our society has been built up as it has never been before. Instead of the Kansas prairie, the citizen has the Himalayas around him. Here are the towering institutional peaks of big business, there the rugged and almost sheer cliffs of organized labor closing off access to trades, crafts and jobs to all but the dues-paying members. The farmers are dominated by national farm organizations, medicine by the American Medical Association, and so on. Even religious life, almost without power charge in the America of fifty years ago, is today increasingly organized in strong national institutions which speak for the individual denominations, lobby before Congress and conduct their own campaigns.

Within the government itself the administrative bureaucracy and the armed forces have largely become organized—though not yet autonomous—institutional power centers.

 Of course, the federal government too has grown and expanded in size as well as power. It is clearly the Everest amongst the Himalayan peaks. But in relation to the total power charge of society as expressed by the other new institutions, the federal government may well have become less, rather than more, powerful. Certainly its power monopoly has been broken.

The development of the new power centers within society may have gone furthest and fastest in this country. But the growth itself is not specifically American; it is the result of the emergence of modern industry. Even in Soviet Russia, Stalin, while absolute despot, could only maintain his personal power by playing against each other the major power centers of Communist party bureaucracy. Army, Secret Police and industrial management. Since his death there has been an increasing power play between them, making and breaking governments. Even behind the facade of “monolithic” Communism, the new institutional powers have therefore become the actual political reality. Even there, the exclusive monopoly of organized institutional power, which had been one of the foundations of modern government, has been undermined. 

The emergent industrial society has had another major impact on the foundations of government: it erodes local government. It creates a new social community: the metropolis. And we do not know how to govern it.

Local affairs must be handled locally. Otherwise, they will not get done. If they do not get done locally they drift “up stairs'” to central government. This may be called the ‘law of political gravity”—and it is as inevitable as the physical law of gravity. But local matters cannot be disposed of centraIly, or they clog the wheels of central government to the point where they cannot turn at all, and where the major tasks of government—the formulation of national policy, national welfare, justice,  defense or international  policy—go by the board. Centralized planning, as we have seen, soon degenerates into no plan at all.

One reason why local affairs must be done locally is their mass of detail, of paperwork, of regulations, of bureaucracy— especially as the burden of these things seems to increase with the square of the distance from the local scene Where the need exists and where the action eventually has to be taken.’ Another, more insidious reason is that any issue, if removed “upstairs,” acquires political connotations which might be quite lacking at the local scene. The simplest technical matter, if referred to the top level, turns into a major philosophical issue and threatens thereby to become insoluble.

We have known all this since the earliest days of organized government. During the last twenty-five years, we have learned the lesson all over again, in the organization of the big business enterprise. What we today call “decentralization” in business is nothing but the creation of local government within the business enterprise, so as to have the proper organ to handle and to decide operational problems at the scene of action. The major purpose of decentralization is not to make local, operating  management stronger—though that too is necessary. It is to make possible effective top management. Without decentralization top management simply cannot do its own job, but gets mired in a mass of details and torn to pieces in a welter of emotional and personal squabbles.

In preindustrial society, local government tasks are few and simple, and their performance tends to be governed by well-established custom. In an industrial society, however, local government tasks rapidly multiply. They become highly complex, requiring technical knowledge and professional competence in their planning and execution. They also have greater impact; industrial society falls to pieces without a transportation system, without adequate sewage or power, let alone without a functioning school system.

Industrial society, therefore, more than any other society, needs strong and functioning institutions of local government. Yet in every society that has undergone the process of industrialization, local government has fallen to pieces; and inevitably the tasks that local government defaulted on fell into the lap of central government.

This often looked as if it were a deliberate reach for new powers on the part of central government. This illusion has been strengthened by the traditional Leftist (or rather, French Revolution) distrust of local government and preference for central government, as the more uniform, more elegant and more “rational.” Of all the many follies of the Leftist tradition, none is greater than this preference for centralization. Of all its many illusions, none has been blinder than the belief that the extension of central control over local affairs represents the success of a deliberate policy, rather than unintended failure, if not bankruptcy, of government altogether.

To be sure, the central government in an industrial society has to be strong. It has to do a great many things which earlier governments never dreamed of, or perhaps never heard of. But precisely because it has to be strong, central government in an industrial society has to free itself from the jobs that require local knowledge, local decisions and local action—for the same reason that the top management of a big business, in order to be strong, frees itself from operating decisions through decentralization to local managers in charge of operating units. No central government today has assumed more of the local government functions than that of France; indeed local government in France hardly exists any more. Yet no central government has been more obviously paralyzed, more impotent, than that of France. To a large extent this results from the domination which local concerns, issues and prejudices exercise on all levels of the national government, and from the political and emotional heat which they generate.

 

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