Socialist Production: The Concept of the Corporation Chapter 2

Here is the question. Are there forms of production that are capitalist and other forms that are socialist? The answer is probably yes, if you look at the national economic scale.

Does the answer to that question change if you look within a company? In particular, can certain products be only manufactured only by a process that must be considered socialist? Must automobiles be a capitalist product? How about computers? How about software?

Here is the real issue. If decentralization represents modern free enterprise, are there some products that require such a tightly managed, step by step production process that they cannot be produced by a decentralized organization? Is our commitment to free enterprise measured by the amount of parallelism in our production processes?

This probably a moot point but it does suggest one of the boundaries between engineering and political economy, between Taylor and Drucker. “The importance of the question whether decentralization is absolutely more efficient than centralization does not lie, primarily, in its application to business management,” Drucker concludes. “It is actually the question whether a socialist economy can be as efficient economically as a free-enterprise economy.” (p122)

Memorial Day: The Concept of the Corporation Chapter 2

It’s Memorial Day in the United States so there is no Drucker today. I have visiting relatives and spent the day shepherding them through the city. A memorial service with lots of important people and lots and lots of spectators in the morning. A concert in a city park at night.

We saw the management in the morning. Guards and guides and people looking at checklists. We were able walk out of the facility and back to the subway on our own. That may have been a mistake. Most people were being shuttled back and forth under careful watch.

The evening concert was a little more subtle. The evidence was careful stashed behind the stage. We saw a show between the trees and under lights and never thought who was guiding it or who made the plan to set up the equipment or clean up the trash. We enjoyed the night and that was all we considered.




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Decentral Operations: The Concept of the Corporation Chapter 2

Drucker makes an interesting literary decision. He introduces the benefits that he sees in decentralization in the context of one of his interviews. It moves the discussion away from his opinions and gives it the appearance of being more objective, more analytic. If you look carefully, the benefits tend to be the benefits to central management or the corporation than to individuals. They don’t quite deal with the three categories that Drucker identifies at the start of the book, though I suspect that he will return to those points and try to make the connection between the inner and outer world of the corporation.

The five benefits of having a central manager, articulated by an unidentified central executive, are:

1. The central management gets broad goals for the divisions;
2. Unifies the divisions into a whole and limits their authority;
3. Tracks progress and problems;
4. Relieves divisional directors of certain task (Financial, legal, public relations etc);
5. Offers best advice from central legal, accounting, etc staff.

All of these things can be good things but they can also seem like impositions on division leaders who are anxious to acquire more authority. The complaints can be major or they can be petty – too much red tape, interference by bean counters, and so on.