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Peter Drucker, "Concept of the Corporation (Transaction Publishers Reprint)"

"This book presents Peter Drucker' s vision of how the free enterprise system should function in an industrial society. He wrote this book in 1946 after he completed a one-and-a-half year study of General Motors (GM) carried out at the request of its CEO Alfred Sloan. To the great surprise and dismay of GM half the book is devoted to the responsibility of a large company for contributing to fulfil the expectations of all members of society at large, the citizens.

Peter Drucker considers that there must be a harmony between the objectives of a company, of the economic system, of the government and of the objectives of the citizens. If there are fundamental conflicts between these objectives the free enterprise cannot survive.

People want to have a job, be respected, and not experience discrimination or insecurity. Drucker refers to these four factors as: "function", "status", "equal opportunity" and "full-employment". The reality is that many people are unemployed, do not feel respected, experience discrimination and live with the fear of becoming unemployed. That was the case in 1946 and is still the case in 2006.

Peter Drucker identifies as one of the main causes of the harmony problem the "laissez faire" concept of economists that suggests that this harmony is automatic if the market can function without any interference of government. He writes: "the laissez-faire economists made the fatal mistake of considering harmony as established automatically instead of as the final and finest fruit of statesmanship". This fallacy is nowadays referred to as the simplified "Washington consensus". This "laissez faire" fallacy, after Marxism as a doctrine has probably caused the most unnecessary suffering in the world.

Drucker writes that the system should be organised such that the corporation "fulfils automatically its social obligations in the very act of seeking its own self-interest". "An industrial society based on the corporation can only function if the corporation contributes to social stability and to the achievement of its social aims independent of the good will or social consciousness of individual corporate managements".

Peter Drucker brilliantly presents how harmony can be achieved. He proves that the free enterprise system is the only system that can fulfil the expectations of all people, if they want to make material progress. However the problems are still with us. No government has produced the "finest fruit of statesmanship". It has not been possible to design a system that transforms self-interest into harmony. Self-interest has to be combined with a concern for the well being of others. Readers wanting to explore this idea further should read "Ethics for the New Millennium" by the Dalai Lama about "Universal Responsibility", and "The essential David Bohm" by Lee Nichol about overcoming self interest through dialogue.

Peter Drucker recognised the problem in his epilogue written in 1983: "In practice governments have collapsed into impotence" and more constructively: "there are social needs which the government cannot take care of". Even if harmony is the responsibility of government the problems can only be solved together with business.

If GM instead of neglecting the views of Peter Drucker had embraced them GM would not be in the trouble GM is to day." - reader's review

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