The Future of Industrial Man, Chapter 7: Section 2

There was a time, when I was working as an assistant dean in an engineering school, that I felt I needed to get an outside perspective. Things were not going well and I couldn’t explain why they were not. Eventually, I found my way to the office of a dean at a school safely distant from my own. I explained the problems and found a sympathetic ear. “Rational Positivism” she explained. “Engineers want everything to be as rational as their engineering and they don’t accept that much of human existence is not.”

Such is basically the argument of this second, though not a single engineer is mentioned. It is about the failure of rationalism as a political movement. Drucker argues that rationalists are politically paralyzed. They “can neither compromise for power nor fight for it.” He ends “ultra-bold in theory and timid in action, strong in opposition and helpless in power, right on paper but incapable in politics.”

Again, this raise many questions about his views for an industry that is based on rational logic.

The Future of Industrial Man, Chapter 7

This is a sixty year old book but it seems to be commenting on the political events of 2010. In particular, it seems to be describing the current Populist Tide. The purpose of the chapter is to argue that rationalist liberalism, the kind of liberalism that we associate with the New Deal, is an absolutist movement and hence leads to tyranny. It’s essentially the argument of Fox News, but it better written.

I must confess that I find the implications of this chapter disturbing. Let us suppose that the New Deal liberalism is indeed tyrannical because it elevates human reasons to absolute status, because it claims that such reason is the only way to find truth. Then, Drucker argues, populism, from the right or left, is a protest moment. “It cannot develop the institutions of social or political life. For event at its best it is primarily a protest against institutions.” So Drucker would project that we apparently have some years of fruitless protest ahead. Oh Good.

Looking beyond this parallel, how will Drucker’s observation help an industry that is fundamentally based on rationalism? And promotes rationalism?

“Influence of American Economic Policies”

If Drucker did not invent the Information Age, then the Information Age was invented for him. This is one of those interludes that is difficult for me to assess the validity of the argument. It is an article he wrote in 1941 when he was a new professor at Sarah Lawrence.

Superficially, the piece seems like a love letter to his new country. He is arguing against a claim (unreferenced in the piece) that the US adopted a global economic policy that destroyed Europe in the 1920s. Instead, he argues, the country did the best it could for the countries of Eastern and Southeastern Europe.

The most interesting part is at the end, the suggestion that Drucker is going to be at the center of information age. After a little digression on the changed nature of the global trade (from complementary to competitive) he asks question that points to the future. It ”seems to me that our approach to the international economic organization of tomorrow cannot start from the question of trade in goods, but must first answer two questions: How can the international movement of man power and how can the international movement of capital and ideas be organized?”

The moment of labor and goods seems to be obvious issues. When did economics become interested in the movement of ideas?

The Future of Industrial Man, Chapter 6: Last Post

Tolerance and indifference. Drucker makes much of these qualities. They are truly useful. Are you tolerant of a minority group if they do things that you approve? Probably not. You have to be willing to let them hold a divergent view.

Do you live in a free society if you are indifferent about certain aspects? This is important because Drucker talks about technical questions as being things of indifference to most of society. Do you make a free judgment when you determine the best way to organize knowledge or process data or make judgments from data, even if those actions have moral consequences? At this point in his career Drucker would say no but we will see what happens as he begins to conceive the importance of information in society.

The Future of Industrial Man, Chapter 6: Free Society and Free Government

I’ve been reading Hayeck’s book, The Road to Serfdom on my commute to work. It is background reading for this project, which is in itself background reading. As it happens, Drucker quotes Hayeck and Hayeck quotes Drucker. The references have been useful. Yet, I have been surprised how many of my peers take offense at the book. Many have been truly shocked “Are you reading that swill Hayeck?” they ask.

Not all of them do that, of course. I know more than a few University of Chicago Economists, though the Chicago School of economics is not all that thrilled with the members of the Austrian School.

These responses seem to me to fall victim to Drucker’s thoughts on truth. Is it just what the majority think? I’m trying to understand the computing age and that work is taking me here. I have to understand how Drucker thinks or I will just be espousing my own opinions.

The Future of Industrial Man, Chapter 6

The first theme of this section is how freedom is constituted in the ability to make bad decisions. The second theme is the limitation of democratic rule. Tyranny of the majority. He doesn’t like anything that suggests one group is closer to truth than any other. It is very egalitarian of him. But he also hits a key issue for the information age. How can we can we define a quality in terms of a quantity? How do we claim that truth is what the majority see? That is the appeal of common sense. It is ordinary wisdom, the judgment of the majority. Yet we believe in the romantic hero, the loner who sees something that goes against the sensibility of the majority and is able to act.

The Future of Industrial Man, Chapter 6: Free Society and Free Government

There is a scene in Tony Kushner’s play Slavs, which seems to be the outtakes from Angels in America, in which two aged Bolsheviks sit in some corner of heaven and complain about what has happened since they left earth. Neither is pleased. The Soviet Union has collapsed and they don’t see that as good. However, they aren’t concerned with the actions or state of society or the prosperity of the inhabitants. “Where is the theory?” The Soviet Union was based on a wonderful theory. Where is the theory of capitalist society?

Well, part of it is in this chapter.

The elements are familiar to anyone who has been following the political debates of the last two decades. Freedom is based on the ability to choose and the ability to make the wrong choice. It is tightly connected, in Drucker’s mind to limited government. However, Drucker also connects it, quite tightly, to the Christian idea of fallen man, of humanity being sinful and not able to see perfection in this world.

If he were writing the book in 2010, would he frame the issue that way? At the very least, it resonates with fewer people than it did in 1946. Still, it is one the endearing things about Drucker. He is writing about big ideas. At this point, the scope of his world is the Western civilization of mid-20th century Europe. Yet, he doesn’t see it as one possible framework for management. He conceives it as the only one.

The Future of Industrial Man, Interlude

I’ve read ahead. Have you been able to see that? This blog represents the fruit of my efforts to read Drucker’s works in order and carefully outline them. However, I have read a number of books that come later. His novels are tough going. He does not have a novelists sense of detail. He also makes the old epithet “an Ayn Rand Love Scene” seem like a complement.

In Drucker on Asia he more or less disowns this book, claiming that these ideas have never gained popularity. They are difficult to understand and they lead to conclusions that seem peripheral. Perhaps society is broken. Perhaps the decisive power is illegitimate. Perhaps it fails to give function and status to individuals in a proper way. But it moves forward and it has ideals. What bridges the gap that separates Druckers metaphysics from the pragmatism of the society that he has been describing?

The Future of Industrial Man, Chapter 5 (pt 2)

Doubts and questions. Is Second Life a free and open society? Does it reward individuals according to their industrial skill, their ability to work with network software? It seems to do so. Capital accumulation doesn’t help you. Neither does social capital, at least to a certain extent. Yet, it does so by surpressing the world that exists outside the virtual society, by claiming that it is secondary to Second Life.

In this chapter, Drucker argues that the factory was the model for totalitarian society and that totalitarian dictators were able to build big industrial societies by surpressing the influence of wealth and social heritage. They were only able to do this through a policy of constant warfare . If we try to extend that argument to the Internet or to Second Life, we see that while it is possible to extend the values of the internet into the greater society but that such an extension does not antidote the power of money or social status. Both retain substantial power and cannot be dethroned easily. I don’t know if war would allow us to surpress the power of wealth and status. But what would physical isolation do to them? If we could no longer travel, or if we could not travel beyond our immediate neighborhood, would internet society become global society?

The Future of Industrial Man, Chapter 5: Challenge and Failure of Hilterism

Not much new here. This is largely a repeat of his last book. The basic idea is that the totalitarian societies of the second world war attempted to make industrial society the basis for general society. They did this that valued the skill of industrial workers and advanced them if they had skills and were loyal to the leaders. However, the only way that they could legitimize this process was to claim that it was needed because the country was at war. The old industrial leaders had to sacrifice financial rewards and social position because of the war.

In seeing this for a second time, I’ve wondered if the internet does indeed provide the opportunity for a new, industrial social organization, one that provides purpose and function based on industrial skills. In ordinary working settings, we find that industrial skills can only provide a limited form of advancement. Unless you are able to manage people and manage capital, you cannot advance far in industrial society. It provides advanced functions and advanced purposes to business people more easily than it does to technocrats.

If you don’t probe the internet back to its financial basis, which is a fairly substantial conditional, you find societies that reward skills with software and communications skills. At first glance, those societies would seem to provide function and purpose independent of capital. But I am bothered by the idea that the internet hides its financial roots. It offers artificial societies that don’t’ quite correspond to life without this technology.

The Future of Industrial Man, Chapter 4: Industrial Reality of the 20th Century (pt 6)

Last for this chapter. Drucker critiques a number of attempts to create functioning societies within the industrial world. He has one kind thing to say about agrarianism – looking back to agriculture as the foundation of society. Basically, he says that it looks backward rather than forward. It is nostalgic in the way that Bob Dylan songs are nostalgic for a society that can’t exist.

He is much harder on unions as he claims that they are primarily a negative force that is no more legitimate than modern management. Finally, he dismisses those who think that management can be the basis for a functioning society. (notably James Burnham.) Again, the legitimacy of management is his key issue.

I’ve been thinking about how I would place modern, Internet based production into Drucker’s framework. Clearly, the Internet has been a good place to sell labor and services. My friend Doug the Rocket Scientist is working with a Pakistani programmer to develop an application for his energy system. He found the guy on an internet site that is a market for skilled labor. I see how this site bring income to individuals and how it allows them to work as independent entrepreneurs. I’m not sure that it assembles them into a functioning society. This website seems to be nothing more than a day-laborer market. And it does nothing more for the programmers who sell their services, than the kinds of markets that one can find in key suburban parking lots, where low skill workers pedal their labor for a days wage and nothing more.

The Future of Industrial Man, Chapter 4: Industrial Reality of the 20th Century (pt 5)

I grew up in a union town and I served as the union administrator for my unit. Nothing Drucker says about them can surprise me.

Drucker argues that they are no more legitimate than modern management, as union leaders are elected through a process that does not really engage most union members. His central claim is that they are a negative force that serve to counterbalance the corporate management. They can’t serve the individual because they are charged with providing uniform circumstances across different plants and different companies.

My memories of Detroit unions are distant and colored by what I have read rather than by what I experienced. When law enforcement agencies recently discovered that Teamster President Jimmy Hoffa may have been buried near the condo that my parents owned, it brought a host of stories back to mind. However, as I thought about most of them, I concluded that the bulk of them were generated by secondary sources, as I could never have been in a position to see that news first-hand.

My union experience at school paralleled Drucker’s comments. Most of the teachers had no connection with the union and saw it only as an organization that took a monthly fee from their paychecks. In theory, they received more money from us because of the contract but my school actually paid more before the contract. Again, the group didn’t do much for the individual as it tried to enforce a uniform policy across 6 or 7 very different schools.

The Future of Industrial Man, Chapter 4: Industrial Reality of the 20th Century (marching away)

This is a long and difficult chapter. I will be grateful when this is over, though I am a bit concerned that the next one is about Nazis. I have read plenty of Drucker on Nazism.
Here’s his basic point. Modern industrial society is not legitimate because it does not provide status or function to industrial workers. Workers – and by this he means unskilled workers – are just an automatic element in a big production machine. In this role they gain nothing that integrates them with society.

First, according to Drucker, they do not understand the process of production and hence do not know their place in it.

Second, without an understanding of the process, they cannot take initiative.

Finally, they can add nothing personal to the work.

Based on these three things, Drucker argues that industrial work does not give unskilled workers a place or a true function in society.

A week or so ago, I went to the staff appreciation ceremony at school. The staff are far from being unskilled workers, so the parallels with Drucker’s observations may not be that good.

The event impressed me two ways. First, it was a large activity with people from every part of the school. Not a one there could have understood how their contributions fit into the entire organization. Still, most had a local context that allowed them to understand how their job fit into some well-defined activity.

Next, it surprised me with the reliance on video presentations. The first was understandable. It came from the President who was out raising money. The remainder came from leaders who were there. They relied on the vocabulary of modern television advertising and had the production values that one normally associates with commercials for local automobile dealers.

I didn’t doubt the sincerity of the videos but they left me feeling distant from the event rather than closer. They didn’t seem to do any thing that a lunch with the immediate supervisor and a few friends couldn’t have done better. But perhaps that is the point. The division lunch looks more like an artifact from pre-industrial society and this big event is more closely linked to mass production.

The Future of Industrial Man, Chapter 4: Industrial Reality of the 20th Century (pt 3)

A reader has reminded me that Coconuts is also a great Kaufman comedy. I concede that this is true.

In this project, I have to keep returning to the time in which the book was published. He is writing in 1943 and is dealing with a simpler social idea. Small towns. Independent bankers. Responsible shareholders. John Steinbeck. George Bailey. All the rest. Kaufman, too, I suppose, as he has a nostalgic eye even though he writes about urban life.

It is an age before mutual funds and corporate investors. These institutions will ultimately form a countervailing power to corporate management. Manage has a real check on its power when they face someone who owns a substantial fraction of the company.

At the same time, Druckers divides the economy into two parts. The first is the economy of production. The second is the economy of rights and finance. He calls the first real and the second symbolic. The first conveys power but not wealth. The second has wealth but no power. The growth of mutual funds is part of the symbolic economy and it is some attempt to get power but it still lives in the world of symbol.

The Future of Industrial Man, Chapter 4: Industrial Reality of the 20th Century (pt 2)

This chapter actually connects nicely to Drucker’s last, which was on totalitarianism. It is a chapter on political philosophy that dissects the nature of the modern corporation. It argues that the corporation is a political entity based on the social contract. It derives its power not from a government but from the property brought to it. He makes many references to Locke and his second treatise government.

Drucker is trying to make the point that while the corporation has a legitimate role, the management of the corporation has become an illegitimate power because it no longer based on the power of the stockholders. Management can make decisions without worrying about any reaction from the shareholders.

His reasons starts with the famous book by Berle and Means, The Corporation and Private Property, which made the first serious argument about the division between shareholders and management. Drucker has noted that capitalism has continued to work when shareholder control has been completely eliminated from the corporation, as in the Soviet Union or has been completely eviscerated, such as in Nazi Germany.

The Future of Industrial Man, Chapter 4 and the Solid Gold Cadillac

A local theatre recently produced the play Solid Gold Cadillac but George Kauffman and some other writer – a Barnard professor I believe. (I should know this fact as I sat next to his daughter at the opening.) It was not a great play. It is nothing compared to You Can’t Take it With You or even The Man Who Came to Dinner, the two great Kauffman comedies. At the same time, it got close to the key issue of this chapter of Drucker: that corporate management has no legitimate basis for its power.

The play tells the story of a company that is vaguely General Motors. It is run by a group of executives who have little interest in anything beyond wealth and womanizing. They hold control by getting proxies from their shareholders who know nothing about company and gladly give the proxies to management. The scheme falls apart when a woman (an actress who is playing an actress) is given the job of shareholder relations, gets all the proxies and takes over the company.

As a work of art it is both silly and lacking any truly interesting character. However, it does represent the times well. It was writing slightly after The Future of Industrial Man and it recognizes, as the business literature of the time was starting to comprehend, that management had become divorced from the shareholders.

The Future of Industrial Man, 3: Mercantile Society of the 19th Century (pt 4)

I’m dwelling on this chapter because it seems central to Drucker’s argument but I want to talk about Adams for a bit. Adams wrote about visitors to a World’s Fair worshipping a dynamo. It is hard to understand what that meant to people at the end of the 19th century. The dynamo freed them from the natural world. They could have light any time they needed it – day or night – they could have heat and the power to run tools. To exploit this technology, they would have to develop a relationship to it. This relationship would be different than the relationship with land and the production from land. It could provide wealth and social status and purpose, but such provision would not be permanent. Furthermore, it put individuals in a new relationship with those who owned the dynamo and those who operated it. Those who owned the dynamo might get status and function might get status and function from the market in traditional ways. Those who operated the dynamo got their positions from knowledge, knowledge that might have a market value but was substance very different from that of land or other assets.

The Future of Industrial Man, 3: Mercantile Society of the 19th Century (pt 3)

I am trying to understand this chapter in terms of the technological industry. It seems that the Vernon cycle is highly relevant to the ideas that Drucker is promoting. Vernon argues that the manufacture of high tech goods follows a certain pattern. It starts in an expensive labor market near to the source of the ideas that created the product. (Think Cambridge, Massachusetts). From that start, the process is standardized so that it can go to other expensive labor markets that are far from the source. In both these cases, the product is mostly sold locally.

Following these two steps, the production process is further standardized so that be manufactured in a low wage labor market. When production goes to such a market, the product is then exported back to the original area in which the product was created.
In this world, market participation is competitive. The ability of individuals to participate in that market depends on their relationship to the production process, not to the good itself. Once that process changes, they can easily lose their ability to acquire status and function.

If a programmer’s job depends on the proximity to their client, they have a certain ability to participate in the market and claim status. If the job can move to anywhere in the globe and depends upon knowing the latest programming techniques, then the programmer has precarious position indeed.

The Future of Industrial Man, 3: Mercantile Society of the 19th Century (pt 2)

Drucker argues that we believe that we still live in a mercantile society but that we do not. Production has changed and is no longer tied to a specific location or a special climate. It is no longer the monopoly of a single country but can move to follow economic efficiencies. Because of this, trade is no longer complementary, in which one country trades the products of its land for products of another region, but competitive. Participation in the market becomes a competition to see who can use resources most efficiently.

I am still trying to grasp the changes that Drucker sees. He has a way of defining an idea in a single word or a phrase and then repeating those words without further elucidation. In Drucker’s new world, we apparently organize our lives around methods of production: how we generate electricity, how we make wine, how we create nails, to identity three examples that have appeared in the historical economics literature. Our connections to the good is through our participation in the process, not because we own a certain piece of land or live in a certain climate. If the process changes, then our relationship changes in an instant. Once we may have controlled the good or service. In a moment, that control is gone. The property represented by that good or service may still trade on the market but our relationship to it is now quite different. We cannot gain social status or function from it.

The Future of Industrial Man, 3: Mercantile Society of the 19th Century

This chapter contains the foundation of the book. Drucker argues that by the start of the early modern era, social status and function were determined by two things: property and the market. One gained social status and function through the possession of property and exercises that status and function through the market. In this world, the socialially decisive power is that which controls the market.

The argument centers on England, though he does give examples from other European countries: The Junkers of Germany and the French bourgeois proprietor. Like the landed gentry of England, these classes apparently had enormous control of the society of their time. Drucker arges that the English gentry retained leadership status well into the 19th Century and that their influence still remains on Western society. We value land ownership. We view country estates as a buffer from political rule. We view industrial work as second-class or as somehow demeaning.

In this chapter, Jane Austen becomes a central figure, England’s “greatest social analyst” in Drucker’s words. She clearly saw the role of the market in her society. She was the daughter of a clergyman but she never endowed any of that class with social power in her novels. Mr. Collins in Pride and Prejudice is a simpering fool. Mr. Elton in Emma is a selfish egotist. Neither commands anything in the market nor has any profit by which they may participate in the market.

Indeed, Austen’s most famous novel begins with a frequently quoted reference to the market “It is a truth universally acknowledged,” she notes, “that a single man in possession of a large fortune must be in want of a wife.” This begins a novel of young women and young men participating in the marriage market, bringing to that market the property, great or small, that they possess: land, cash, family connections, physical appearance and prospects for the future.

The Future of Industrial Man, 2: What is a Functioning Society? (pt 3)

Drucker calls them beliefs. I would identify them as values, as the qualities that we value in a society. Freedom of speech. Freedom of action. Personal ownership of property. Perhaps he identifies them as beliefs because he sees them as outside of his metaphysical system. Things that cannot be deduced within his logic and yet concepts that fundamentally shape the institutions and rules of society.

In the world of technology, the beliefs of rational positivism play a major role. We belief that we can control nature. That we can gain this control by isolating key elements and actions. That control is expressed in fundamental concepts and rules. That this control can tend to a positive good.

Such is the technological world. We are haunted in this work, by the line from Pope’s Essay to Burlington “And Laughing Ceres re-assumes the land.” There are things we cannot control. Nature fights back. Weeds fill the garden and moss destroys the bricks. Yet, such is not a value that we use to organize technological society.

The Future of Industrial Man, 2: What is a Functioning Society? (pt 2)

Drucker’s cricitics, when considering his political economics, often complain that he is too metaphysical. Apparently, I must live in a more metaphysical universe than they for his arguments tend to make more sense than theirs. When Drucker claims that an illegitimate force can only maintain power through tyranny, I find his arguments credible. I am clearly less of an empiricist than I should be.

In addition to the issue of legitimate power, this book rests upon the idea that a functioning society must rest upon the foundation of providing purpose and status to all of its members. This point fairly obvious at this point and he doesn’t dwell upon it long. At the same time, it has made be ponder the anti-social programmer and all the hours that they spent – and of course I spent – hunched over a keyboard. If they are employed, then the job provides the status, purpose and reward. But what if they are not employed? And what about the gamers who can spend hours in a world of their own creation?

You can look at it several ways, I suppose. One can consider it a form of self-investment or education. In an anthropological sense, it could be a way of building signs and symbols of mastery. It this work is completely disassociated from an outside society, programming for the sake of programming, it then becomes a religious rite, a means of improving one own mental discipline in the midst of a material world.

I doubt that we can really point to examples of programming work that are completely disconnected from society. Certainly one gains a skill that has market value in the long run. Yet, it does seem to be an aspect of technological life that can be at least a little distance from the beliefs of the larger society.

The Future of Industrial Man, 2: What is a Functioning Society?

Let’s try to start with the basic concepts of this chapter and see if we can anticipate where he is going. He introduces two basic ideas. First, societies need to provide status and function to each individual. Second, the decisive power of any society needs to be based on the fundamental beliefs of a society in order to be legitimate. “There are always a great many ‘unfree’ institutions in a free society, a great many inequalities in an equal society, and a great many sinners among the saints,” he writes. “But as long as that decisive social power which we call rulership is based upon the claim of freedom, equality, or saintliness and is exercises through institutions which are designed toward the fulfillment of these ideal purposes, society can function as a free, equal, or saintly society. For its institutional structure is one of legitimate power.”

Drucker notes that the thing that he calls the decisive power is not the same thing as the primary political power. He notes that the class of English landed gentry held decisive power in Victorian England even though they were not in a majority and held less wealth than the merchants and manufacturers.

Since I am looking at the world of technology, I should note that decisive power is clearly not held by the engineers and the programmers. They are clearly not able to command society nor are their institutions the ones that shape our community. At the same time, we should acknowledge that we cede a certain amount of decisive power within the technological world to adolescents because they often embody many of the values that we would like to see in technology: mastery of complexity, ability to devote attention to difficult problems, opportunities to capitalize on their knowledge.

Adolescents are the completely decisive power. The power of finance hides behind their activities. Still, we do cede them a certain power when their values are more closely aligned to that of the technology and, of course, when their skills are as well.