Is This ‘Austrian’ Management Guru the Savior of Free-Market Capitalism?
Special Announcement: I’m happy to announce some new big-name speakers at this year’s FreedomFest. See below.
“Peter Drucker contributed as much to the triumph of a free society as any other individual.” — Jim Collins, author, “From Good to Great.”
When I teach business at Chapman University, I always ask my students if they know who Peter Drucker was. Though he passed away in 2005, he was prolific and highly influential during his 96-year life, and even today is a household name among MBAs, corporate executives and business students.
In the 20th century, he was the world’s #1 management guru. In an introduction to Drucker’s classic text, “Management,” Jim Collins, author of the bestseller, “From Good to Great,” states, “For a free society to function we must have high-performing, self-government institutions in every sector, not just in business, but equally in the social sectors. Strong institutions depend directly on excellent management, and no individual has had greater impact on the practice of management than Peter Drucker.”
Interestingly, Drucker was born in Austria, and has much in common with the great Austrian economists Ludwig von Mises, Friedrich Hayek and Joseph Schumpeter.
Indeed, Drucker’s ideas have a certain “Austrian” streak to them. In the early 1990s, I interviewed Drucker for a cover story in Forbes magazine, and I couldn’t help but notice his emphasis on entrepreneurship, innovation and investment capital as well as his denunciations of big government, excessive taxation and Keynesian economics, all themes in harmony with the ideas of the Austrian school of economics.
Interview with Peter Drucker in Clermont, California, 1991
Drucker’s style of management is Austrian through and through. Time, expectations, new information and potential change in production processes — all Austrian focal points — are constantly emphasized in his writings and consultations. The manager must be an entrepreneur, not just an administrator. Innovation is essential.
I wrote a summary of his contributions in this article.
For more information on his work, see www.druckerinstitute.com.
There was, however, a big difference between him and the Austrian economists. Most Austrian economists are gloomy pessimists, but Drucker was an incurable optimist about America, the global economy and free-market capitalism.
What is the Ideal Social Institution? Business!
After World War II, Drucker made a breakthrough discovery. He asked the question, “What institution can best fulfill our societal needs for stability, rising living standards and social justice?”
Would it be government, the church, or non-profit organizations?
No, the answer was business! An expanding business provides job security, training and educational opportunities, and benefits in a “free, nonrevolutionary” way. Large corporations, in particular, could provide a superior alternative to socialism and big government.
In Drucker’s mind, business is the new social order.
After the collapse of the Soviet socialist model, Drucker urged governments everywhere to sell off their assets, privatize their nationalized industries and put business back to work. In fact, Drucker invented the world “privatization” in 1969.
As MIT managerial economist Shlomo Maital states, “The health and wealth of a large number of individual businesses — small, medium, and large — determine the economic health and wealth of a nation. When they succeed, managers create wealth, income and jobs for large numbers of people. When they fail, working people and their families suffer. It is businesses that create wealth, not countries or governments. It is individual businesses that are either competitive in world markets, or are unable to sell in them. It is businesses that decide how well or how poorly we are.”
Drucker is Highlighted in My Two Books
I quote Professor Maital and highlight the contributions of Peter Drucker in my two bestselling books, “Economic Logic” and “The Making of Modern Economics.”
Students love my introduction to “Economic Logic,” now in its fifth edition. I start with the profit-and-loss statement before I introduce supply and demand. Business students in particular love this new approach.
Drucker is quoted numerous times in “Economic Logic.” I highlight him in chapter 12, “The Role of the Entrepreneur.”
I also emphasize the positive role of business as the “representative social institution” in solving our problems in the new 4th edition of my other book, “The Making of Modern Economics.” To see Drucker’s contribution, see pp. 434-437 of chapter 17, “The Creative Destruction of Socialism.”
I believe I’m the only economics textbook writer who includes the contributions of Peter Drucker, Shlomo Maital, Edward Deming and other business leaders.
‘Single Best Book in Economics’
Over the years, I’ve received numerous testimonials for “The Making of Modern Economics.” Here’s the latest by columnist Richard Rahn in the Washington Times:
“Mark Skousen has produced the single best book on virtually all of those who have had a significant impact in economics — for good or bad — regardless of their political leanings. Despite being an economist with a definite political viewpoint, he treats the many figures he covers with considerable fairness — even the bad actors. It’s a delight to read cover-to-cover.”
Get 50% Off by Ordering it from the Author
Both “Economic Logic” and “The Making of Modern Economics” can be purchased at a substantial discount from the publishers’ price. Rather than pay $50 or more, you pay only $35 for each book. Each copy is autographed, dated and mailed for no extra charge if mailed inside the United States.
To buy your copy, go to www.skousenbooks.com.
Big-Name Speakers at FreedomFest
Good news! I’m happy to announce that Glenn Beck, Senator Mike Lee and Betsy Devos (former Secretary of Education) will join us at this year’s FreedomFest, July 13-16, 2022, at the Mirage Hotel & Casino. Our program is now jammed with over 250 leaders and thinkers who will speak on our theme, “Turning the Tide.” Other experts include John Cleese, Fox News’ Lisa Kennedy (our emcee), Senator Rand Paul, Steve Forbes, John Mackey, Ben Stein, Art Laffer, Alex Green, Glenn Greenwald, Jim Rogers, Steve Moore, John Fund and Eric Metaxas.
We are filling up fast — our hotel room block is almost sold out. To register and get $50 off, use code EAGLE and go to www.freedomfest.com. If you have any questions, email Hayley at hayley@freeedomfest.com, and she will call you. See you in Vegas in July!
Important Announcement: At 2 p.m. EST on Tuesday, May 31, I will be holding a teleconference entitled “How to Make Fast Money in a Bear Market.” It is free for all my subscribers, but you must register here to be able to attend. Don’t miss out!
You Blew It!
Will More Gun Control Laws Eliminate Gun Violence?
In the wake of the horrific murder of 19 innocent kids and two adults at an elementary school in Texas, everyone is asking the question: What can be done to stop the violence?
The 18-year-old gunman approached the school building with a semi-automatic rifle and “encountered” an armed, uniformed school district security guard near the backdoor, according to the Wall Street Journal. The security person failed to keep the deranged man from entering the school and wreaking havoc.
One solution that is not working is when schools and churches proudly announce to everyone that they are “gun-free zones,” which encourages crazy 18-year-olds to enter the building and shoot dozens of innocent people.
Once again, many Democrats and the establishment media are demanding tougher gun control laws, even including outlawing guns owned by law-abiding citizens. Is that the answer?
One wonders. New York recently passed three gun-control laws, and it still didn’t stop the killing of 10 people in Buffalo, New York, last week.
One solution is to beef up security and the ability of innocent people to defend themselves. I see that the shooter posted violent images on social media before the shooting.
Why didn’t the social media censors pick on this? They are quick to censor, remove posts and cancel accounts on others, but why can’t they see threats of violence sooner?
On a deeper cultural level, we need to examine why we live in such violent times these days. Texas Governor Greg Abbott told reporters that 18-year-olds have been able to buy rifles in Texas for more than 60 years.
“Why is it that the majority of those 60 years we did not have school shootings and we do now? The reality is I do not know the answer to that question,” Governor Abbott said. “What I do know is, we as a state and society, need to do a better job with mental health.”
One solution is to return to teaching young people the Judeo-Christian traditional values of integrity, hard work, the Golden Rule and the Ten Commandments, especially number six: “Thou Shalt Not Kill.”
