When Peter Drucker Speaks
Newt Gingrich on the life of Peter Drucker and his three-decade romance with Drucker's ideas
I first learned about Peter Drucker more than 30 years ago from a professor at Georgia Tech. Although I was a student at Emory, I had been sent to Georgia Tech by Gene Sanders, Georgia's Republican state senator at the time, to see Pete Jensen, a computer-science professor there. If I really wanted to understand the modern world, Senator Sanders told me, Jensen could help me learn.
One of Jensen's first observations was that I didn't need to know about computers as much as I needed to know about thinking. And there was no better way to learn about thinking than to read Peter Drucker, he said. I started with Drucker's The Concept of the Corporation when I was still an undergraduate at Emory in 1965. As a graduate student in Brussels, I came across The Effective Executive at the U.S. Information Agency library. It was an event that changed my life. To this day I recommend to virtually every group of students --in high schools, colleges, the military war colleges--as well as incoming members of Congress, that they buy a paperback copy of The Effective Executive so they can read it, underline it, and take it out once a year to reread it. It is the most powerful book I've encountered on how to be effective.
Next I read The Age of Discontinuity, a work that, along with Kenneth E. Boulding's The Meaning of the 20th Century and Alvin Toffler's Future Shock and The Third Wave, clearly outlines the scale of change we're living through. Anyone who goes back to that 30-year-old work by Drucker and looks at his analysis of change will discover that the book could have been written last year. It is a remarkable act of economic, technological, political, and cultural history.
To understand modern America, one has to understand the impact of the management revolution and the spread of routine "systematic habits of effectiveness" that enable ordinary people to accomplish extraordinary things. From small businesses to giant corporations to the world of government and the military, Drucker has had an impact on how we think about leadership, the management of people, the use of resources, and the development of plans and strategies. He is at the same time a systematizer of observations, a codifier of rules, and a popularizer of basic principles and habits. If you consider the number of people who have changed their behavior based on his principles, Drucker may well be the most influential writer of the 20th century.
Drucker has lived a fabulous life. Born in Austria in 1909, when there was still an Austro-Hungarian Empire, he survived World War I, then lived through the empire's breakup into small states. He witnessed the transition of Vienna from the cultural and intellectual center of millions of people with enormous wealth to the capital of a relatively tiny country. During the 1930s, first in Germany and later in England, he watched the rise of Adolf Hitler. He then came to America during the Great Depression and participated in America's transition from deliberate isolationism to superpower leadership.
Drucker, like Adam Smith, is essentially a philosopher of reality. He looks at what is really happening in the market in economic, historical, and political terms, and then he makes sense of it all. Drucker's work is about far more than management or the production of wealth. It is about the process by which people lead productive and useful lives and produce greater opportunities and greater resources for themselves and their fellow man. Some of his ideas are timeless and will likely be as useful 200 years from now as Adam Smith's The Wealth of Nations is today.
In his remarkably short new book, The World According to Peter Drucker (Free Press, 1998, $25) , Jack Beatty does a good job of outlining the ideas that are at the heart of Peter Drucker's thoughts. Beatty then gives the reader some understanding of what problems Drucker was trying to solve and what led him to his particular views.
Because the author places Drucker in a historical context, relating him to the Austrian economist Joseph Schumpeter, Beatty reminds me of the impact that the Austrian school of economics has had--in particular on Ronald Reagan and Margaret Thatcher--in a return to a free-enterprise, capitalist-entrepreneurial model of government.
The victory of human freedom and entrepreneurship over government bureaucracy, command control, and regulation is still precarious but increasingly real. The recent Asian financial crisis is an example of what happens when societies try on one hand to be market driven and on the other hand allow the government to allocate capital. In the end that model cannot work and inevitably causes crisis. The European efforts to sustain their welfare state in a market-driven world economy will ultimately show similar patterns of stress and decay because those countries are incapable of adjusting.
One observer said to me recently that in America every week 300,000 people are laid off but 350,000 are hired. It is that turmoil and turbulence of the marketplace, Schumpeter's "creative destruction," that allows us to continue to grow and evolve and that in recent years has given us one of the longest periods of prosperity in American history. Drucker understands that.
In a conversation I had with him recently, Drucker observed that he may be the last person alive to have attended classes taught by both Schumpeter and John Maynard Keynes, perhaps the two most important economists of the 20th century. I raise this issue to point out that the Austrian school hasn't been studied as it should. The modern press and the academic elite all value Keynes, who represented the rise of command-and-control bureaucracies coming out of the First World War--and also the notion that intellectuals could somehow direct society through their role in bureaucracies. Yet it was the Austrian school that understood that the market is vastly bigger than the individual, that the market directs resources much more intelligently than any government can, and that freedom is infringed upon anytime you turn power over to the state, even if it's a well-meaning state. Drucker recognizes that it's out of the Austrian school of thought that the prospering modern world was created, a world in which normal people can achieve extraordinary results by applying simple principles in a disciplined, purposeful way.
Too many of our business schools, academic centers, media moguls, and government leaders still rely on the Keynesian command-and-control bureaucratic model. They rely on almost nothing of Drucker and even less of the Austrian school and, as a result, routinely apply the wrong principles to structuring education, training, health care, and our role in international trade. Again and again they reject the marketplace. They reject the principles of management. They reject the essence of entrepreneurship. They reject the heart of Drucker and apply instead patterns and behaviors that simply don't work.
That is the ultimate critique of big-city schools. It's the ultimate critique of government-run health care. It is the ultimate critique of the way the federal government and state and local governments mismanage resources. It simply doesn't work.
If interested citizens were to read The Effective Executive, followed by The World According to Peter Drucker, they would begin to have a much better sense of what does work. With these books they would have a guide to effective habits that would make them far more successful and far more productive.
Newt Gingrich is the Speaker of the U.S. House of Representatives.