Tuesday, June 8, 2010

ReConversion : The Concept of the Corporation Chapter 2

Drucker clearly loves the story of how GW converted to war production and then reconverted to civilian production. An example of decentralization at work. No unified plan for the company, Drucker claims, but a series of principles that the company attempted to use to shape its approach to the war. This section largely deals with the relation between central and divisional management, which is Drucker’s chief concern, and it largely presents the story as successful. The company did what it did and started reconversion to a peace time economy in the spring of 1943.

It is hard to read this without thinking of the stories of war fraud. The Truman Commission. All My Sons. Still, the most interesting point to me is one that is unexamined. In the section about reconversion, the central management decides on a major expansion program even though they anticipate that the domestic demand for automobiles will be of short duration. What did they foresee for the post-war years? Did they know that most of the productive capacity of the world would have been bombed to pieces? Did they anticipate the GI bill, or the Cold War? This seems unlikely. Why did they make such plans? General Motors faced its greatest crisis of the first half century in the 1922 post war recession. Drucker is writing as if that event never existed.

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