Peter Drucker on Social Ecology, Balancing Change and Continuity, and Building a Functioning Society

Byron Ramirez, Ph.D.

PUBLISHED:

December 7, 2020

Towards the latter part of the 20th century and beginning of the 21st century, Peter F. Drucker became known as the guru of management and as ‘the man who invented management’ (BusinessWeek, 2005). Ever since his “The Concept of the Corporation” (1945), where he examined General Motors, Drucker focused his writings on the structure and internal dynamics of organizations. He spent decades studying the way people work, and the ways managers manage. Drucker also examined how people work under different contexts and environments. For several years, his works primarily focused on private sector organizations, their management practices, programs, and performance.



Over time, however, Drucker seems to have transformed from a management author and consultant into a social ecologist. In his “Management: Tasks, Responsibilities, Practices” (1973), we can see Drucker’s emphasis on managerial tasks, managerial work, managerial tools, managerial responsibilities, and the role of top management, across all organizations, including nonprofits. Some years later Drucker would write “Managing in Turbulent Times” (1980), where he reveals his concern for the future of business, the economy, and society.


Drucker’s works became increasingly permeated with examples of matters surrounding society at large. Drucker would later write “Innovation and Entrepreneurship” (1985), where he advised all organizations, including public-service institutions, to become entrepreneurial in order to survive and prosper in a market economy. Years later, Drucker explained: “My interest in, and concern for, community, society, and polity, goes back a very long time, all the way back to 1927 and 1928.” (Drucker, 2003).


Perhaps one of Drucker’s greatest strengths was his ability to observe the environment that surrounded him. He possessed an uncanny ability to see things that others had not recognized, and to focus on details that many overlooked. Joseph Maciariello, Emeritus Professor of Social Science and Management at the Drucker School of Management, and who collaborated with Drucker on many publications, writes: “One of the most important duties of the social ecologist for Drucker is to identify major trends that have already emerged in the nub but have not yet made their impact felt on the institutions of society.” (Maciariello, 2005).


Drucker believed that freedom and dignity were imperative to building effective organizations in modern society. And he expressed his recognition of these principles. Drucker’s “The Frontiers of Management” (1986) and “The New Realities” (1989) highlighted that changes in society are inevitable, and thus, we must realize that change represents opportunity. Rather than perceiving change as an inconvenience, we should treat it as an opportunity to grow and develop. Moreover, Drucker advises all of us to focus on what to do today in reflection of tomorrow. A few years later, Drucker reveals the focal points of his work. Drucker writes: “Finally there is one continuing theme, from my earliest to my latest book: the freedom, the dignity, the status of the person in modern society, the role and function of organization as instrument of human achievement, human growth and human fulfillment, and the need of the individual for both, society and community.” (Drucker, 1992)


Drucker focused many of his writings on improving society as a whole, and fostering the common good. Drucker writes: “But what I learned from Toennies — and never forgot — is the need for both, a community in which the individual has status, and a society in which the individual has function.” (Drucker, 2003) This particular excerpt embodies the roots of Drucker’s philosophy of management as a liberal art (MLA).


One can observe Drucker’s own transformation by examining his initial works which focus on for-profit organizations to later writings which converged on topics surrounding communities and society. Drucker writes: “I consider myself a social ecologist concerned with man’s man-made environment the way the natural ecologist studies the biological environment.” (Drucker, 1992) In some of his writings, Drucker explains that he perceives himself as a social ecologist who recognizes change and continuity. Drucker states: “Social ecology is a practice. Its aim is to maintain the balance between continuity and conservation on the one hand, and change and innovation on the other.” (Drucker, 1992) Drucker adds: “Fundamental to the discipline of social ecology…is the belief in responsibility, in authority grounded incompetence, and in compassion.” (Drucker, 1992) Drucker emphasizes these points because he argues that in order for society to improve as a whole, we must look at our existences (lives) as being inter-related, inter-connected. Drucker posits that if organizations and individuals strive toward maintaining the balance between continuity and change, society will benefit.


Drucker explains to us that his work as a social ecologist also evolved over time and that he realized that environmental conditions were changing. Drucker states: “In working on this book I began to realize that totally new — indeed unprecedented — social institutions were rapidly evolving…” (Drucker, 2003) A couple of years later, Drucker tells us: “Our society has become, within an incredibly short fifty years, a society of institutions…” (Maciariello, 2005) These reflections seem to reveal that Drucker acknowledges that he was examining society as if he were an ecologist examining an ecosystem. Drucker writes: “And it soon became obvious to me that work is a central factor in shaping and molding society, social order, and community.” (Drucker, 1992)


Drucker changed as the world that he observed around him was changing. In an attempt to better discern and explain the changes affecting society, Drucker asked poignant questions such as: “But this conclusion then led me to ask: what will, what can take the place of the ‘organic’ community of Toennies’ rural society? What can again integrate individual, community and society in an Industrial Age?” (Drucker, 2003) Drucker’s ability to ask questions and observe patterns allowed him to discern changes in organizations and society.


One of Drucker’s integral concepts is that of a Functioning Society. Central to this visionary concept is the notion that freedom, dignity, and equal opportunity can provide conditions for individuals to find meaning and purpose in their lives, and in turn, individuals will be able to contribute towards the betterment of communities and society. Drucker explains: “Corporations and other businesses are the wealth-producing institutions of society. Without these private sector institutions, our public sector and social sector institutions would not have the resources to function. It is the private sector that provides the resources to fund social and public sector institutions.” (Maciariello, 2005) However, Drucker also realized the importance of other institutions’ role in society. He writes: “The work of society is carried out through different kinds of organizations, each with its own tasks. Three diverse kinds of organizations make up the society of organizations. First there are public sector organizations…then there are private sector organizations…and finally there are social sector organizations.” (Maciariello, 2005)


Drucker was undoubtedly a social ecologist as he was not only examining organisms in the ecosystem (society), but also tracking the relationship amongst organisms (public sector, social sector, and private sector) within the ecosystem (society). Drucker offers this observation: “Each institution is an organ of society. And no organ can survive the body it serves.” (Maciariello, 2005) Drucker shares his understanding and perception of society as a body, and society’s institutions as organs that help sustain the body (society).


The work of a social ecologist involves observing relationships between organisms, explaining what those relationships are, and conceiving ways to improve those relationships. Drucker attempts to improve our understanding of society and the relationships between its organizations by offering some insight. Drucker writes: “Government commands; it tries to obtain compliance. Business supplies; it tries to get paid. The nonprofit institutions however are human-change agents.” (Drucker, 1992) Drucker not only understood the relationship between organisms (government, business, and nonprofit), but also tried to explain to us what their roles in society ought to be. Drucker believed that nonprofit organizations would provide human beings with those items that were not produced by either the public or private sector. Consequently, Drucker suggested that in order to meet the needs of individuals in the future, a nonprofit organization must adopt and embrace change, as it is the way to predict the future. Drucker states: “The most effective way to manage change successfully is to create it. The enterprise has to become a change agent.” (Drucker, 2001)


Drucker also believed that organizations (organisms) within society (ecosystem) must focus on what they do best. Maciariello writes: “Drucker believes that for a society to function well, its organizations should be single-purpose institutions….as a result, each organization, whether for-profit or nonprofit, should focus on a single task.” (Maciariello, 2005) It would appear that as Drucker observed society as if it were an ecosystem, he realized that every organism has a role and function to serve within such an ecosystem. Thus, Drucker suggested that each organism seek to do what it is best at doing. Hence, Drucker firmly believed that companies and individuals must build and focus on their strengths.


Also important to Drucker was the notion that social ecology is an important and necessary discipline that must be employed to better understand and improve society. Drucker writes: “But also social ecology as a discipline deals with action.” (Drucker, 1992) Drucker argues that one must take action and regard social ecology as a practice. Maciariello, who collaborated with Drucker, adds: “A principal goal of a social ecologist is to help promote continuity in the conserving institutions of society, while advancing change in the inherently destabilizing institutions of a free society.” (Maciariello, 2005) Furthermore, Maciariello explains: “Knowledge workers must become accustomed to the process of creative destruction. They must become change leaders, active in the pursuit of change.” (Maciariello, 2005) Drucker argued that we must understand our environment and observe what is changing or has changed, as change is a constant in the knowledge society.


Ecology is defined as the scientific study of relationships of organisms to one another and to their environment. Furthermore, a biotic community is one where all populations of living organisms, in a given area, interact and interconnect. Drucker studied society as if it were an ecosystem where biotic communities (biomes) are interconnected by physical, biological, and chemical processes. As such, one could argue that society sustains itself through processes similar to photosynthesis, energy flow through food chains, and recycling of nutrients. Just like a biological ecosystem, society contains organisms (organizations) that are capable of carrying on photosynthesis, and thus is able to convert light into organic material. Similarly, organizations are able to produce energy that helps sustain the ecosystem (society).


One can also draw a parallel between society and the human body. A human being is composed of a complex, highly integrated system of cells. Cells specialize and serve a specific purpose. Thus, when an aggregate of similarly differentiated cells merge, they form a tissue. Living tissue is made up of molecules which would never be able to assume the proper structure if energy were not supplied to maintain this level of organization. It is important to understand how cells (humans) obtain their energy and are able to maintain their configuration and sustain life. This is a crucial point as it may help explain and define our role and influence on society.


A cell is comprised of structural parts: cell membrane, nucleus, and cytoplasm. Similarly, human beings are also made up of structural parts: emotional, physical, intellectual, and spiritual. It is important to think of the complexity of humans (cells) when studying society (human body). For instance, a human being may be able to perform effectively if she or he carries a high level of protoplasm (knowledge), which allows her or him to continually carry on dynamic biochemical processes. There are individuals whose “mitochondria” may not contain the same ability to break down glycogen and glucose into water and carbon dioxide, and thus form energy. All individuals are different, just as cells are different. The important point is that when cells (humans) are aggregated, they form a human body (society). Comparatively, when organisms (organizations) are aggregated, they form an ecosystem.


Throughout his body of work Drucker reminds us to identify major trends that have already emerged, but have not yet made an impact on the institutions of society. One can look around and realize that the world continues to change rapidly. While there are continuous emerging technologies aimed at addressing social challenges, we must evaluate what needs to change, and what we ought to maintain. Innovation and technology alone cannot remedy many of the social issues we currently face.


Humans must work together to improve their interactions and relationships while helping to build a society that functions more effectively. It is in the best interest of society that we do so. We should collectively look to build common good and to do so by improving our organizations. We must learn to manage people effectively while giving them an opportunity to develop their full potential. We must nurture freedom and dignity. Thirty years from now, our ecosystem (society) will have changed, and we will need each other as much as we do today. As Drucker once wrote: “No organ can survive the body it serves”.


References

  • Denning, S. (2013). The Founder of 21st Century Management: Peter Drucker. Forbes.
  • Drucker, P. F. (Ed.). (2003). A Functioning Society: Selections from Sixty-five Years of Writing on Community, Society, and Polity. Transaction Publishers.
  • Drucker, P. F. (1973). Management: Tasks, Responsibilities, Practices. Harper Collins, New York, New York
  • Drucker, P. F. (1980). Managing in Turbulent Times. Harper Business. New York, New York
  • Drucker, P. F. (1992). Reflections of a Social Ecologist. Society, 29(4), 57–64.
  • Drucker, P. F. (1986). The Frontiers of Management. EP Dutton. New York, New York
  • Drucker, P. F. (1989). The New Realities: In Government and Politics, In Economics and Business. Society and World View. Boston, Massachusetts.
  • Drucker, P. F. (2001). The Next Society. The Economist.
  • Editor, (2005). The Man Who Invented Management. Business Week, 28, 102.
  • Maciariello, J. A. (2005). Peter F. Drucker on a Functioning Society. Leader to Leader, 37, 26–34.

On Decisions and their “Agents”

By Richard Johnson Ph.D. • December 17, 2025
This essay was inspired by an article recently published by Karen Linkletter and Pooya Tabesh (2025). They were in search of the meaning of “decision” in the works of Peter Drucker. To this end, they used Python to identify and locate all the times the word, “decision”, came up in Peter Drucker’s oeuvre . They then characterized the contexts (“themes”) in which the word came up. The result was a nuanced but very clear characterization of the evolution of his thinking on the topic. Here, we will focus on a key theme for Drucker: the case where your decisions involve other people’s decisions and actions . For present purposes, we can start with their statement: One of Drucker’s valuable contributions to the literature on decision-making is his adamance that implementation be built into the decision-making process.” (Linkletter and Tabesh 2025 8) To be clear, “…it is not a surprise that his integration of implementation of and commitment to decisions is part of his process of decision-making. He argues that a decision “has not been made until it has been realized in action.” (2025 8) The question, therefore, is how to make this happen, how to turn an organization from an aggregate of individuals whose decisions may or may not be aligned, into an agent—an entity that makes decisions, implements them, and then ascertains that what was done was, in fact, what was decided, as we try to do when making purely individual decisions. Let’s look at the matter more closely… A few years ago, I read a story about a road crew that was painting a double-yellow line on a highway. In their path was a dead raccoon that had been hit by a car or truck. It was lying right in the middle of the road. The crew didn’t stop. Someone later took a picture of the dead raccoon with a double-yellow line freshly painted right over it. The picture is below. It went viral on the Internet.

Paul Polman: Management, Sustainability, and Stewardship as a Liberal Art

By Robert Kirkland Ph.D. • December 17, 2025
When Paul Polman became CEO of Unilever in 2009, he did not inherit a troubled company. He stepped into a large global enterprise with familiar consumer brands that sat on shelves in cities from Amsterdam to Manila. Even with that scale and reach, the business rested on foundations that were beginning to crack. Public faith in multinational firms was fading, climate change was moving from a distant worry to a financial reality, and investors were increasingly locked into the rhythm of quarterly results that encouraged short term decisions and discouraged real strategy. Polman’s answer was surprisingly philosophical for a leader of such a company. Rather than defend profitability as the central corporate purpose, he attempted to redefine what the company was for. His response may suggest a contemporary expression of Peter Drucker’s idea of Management as a Liberal Art. Drucker described management as a moral undertaking that must be anchored in judgment, responsibility, and service, not only in efficiency or cost control. Redefining Corporate Purpose Soon after taking the role, Polman stunned many investors by ending quarterly earnings guidance. He went further and encouraged investors who focused only on short term returns to place their money elsewhere (Polman and Winston, 2021). The gesture appears to have been meant to reset the company’s relationship with financial markets. Drucker consistently argued that true leadership cannot be tied to the emotional fluctuations of short term financial reporting. By refusing to follow the ninety day cycle, Polman gave Unilever enough breathing space to think about long term issues. He also sent a powerful message inside the company. Unilever would no longer place shareholder extraction above every other consideration. Drucker might say that Polman was returning management to a place where purpose and meaning had priority. Drucker had long argued that institutions must be run for durability and social legitimacy, not just for quarterly outcomes (Drucker, 1946). The Unilever Sustainable Living Plan In 2010, Polman introduced the Unilever Sustainable Living Plan, which attempted to grow the company while reducing its environmental footprint (Unilever, 2010). The plan contained measurable goals for carbon emissions, water use, waste, sustainable sourcing, health, hygiene, nutrition, and economic livelihoods in the supply chain (Unilever, 2018). This was not presented as charity. It was presented as the business model itself. This approach fits well with Drucker’s view that a company must justify its existence through contributions to the common good (Drucker, 1946). Polman noted that a company serving billions of consumers could not thrive in a world marked by climate disruption, fragile supply chains, and social instability (Polman and Winston, 2021). He reframed sustainability as a competitive requirement. There are many examples of how this mindset influenced operations, such as targeted efforts to stabilize incomes for small farming communities or reduce water dependency in detergent production. Drucker would likely describe this approach as a return to institutional citizenship, which is the idea that power involves obligation (Drucker, 1989 and 1993). Human Dignity in Management Drucker believed that effective management is inseparable from human dignity. He argued that organizations must offer people both identity and contribution (Drucker, 1946). Polman appeared to take this to heart. Under his leadership, Unilever pushed for higher wages, safer working conditions, and expanded training programs across its vast networks of suppliers and small scale producers (Unilever, 2018). He also shifted language in a revealing way. Polman preferred speaking about farmers and families rather than vendors and suppliers (Polman and Winston, 2021). This change hinted at a deeper moral view of business. It positioned Unilever as a partner invested in the stability of the people who provided its raw materials. That reading fits closely with the idea of management as a liberal art, which sees leadership as an act of stewardship for the growth of people, not just the supervision of tasks (Drucker, 1989). Climate Leadership and Ethical Risk Management Drucker warned that management cannot be reduced to engineering efficiency. Managing also requires wrestling with consequences (Drucker, 1990). Polman pressed Unilever to treat climate risk as a direct business issue. He connected environmental damage to cost volatility, to consumer trust, and to the company’s long term future. Under his leadership, Unilever accelerated its use of renewable energy, sustainable materials, lighter packaging, and lower water use in many products (Unilever, 2010 and 2018). Polman’s climate agenda blended science, logistics, ethics, psychology, and an understanding of global politics. Drucker described this type of synthesis as central to Management as a Liberal Art. Responsible executives, he argued, must integrate many forms of knowledge into decisions (Drucker, 1989 and 1993). Polman framed sustainability as fiduciary responsibility rather than philanthropy. His influence is still visible in the way many global firms now treat environmental commitments as strategy rather than charity. This framing closely reflects Drucker’s view that corporate social responsibility must be rooted in a firm’s core mission, capabilities, and day-to-day operations rather than treated as a separate act of goodwill. By embedding sustainability into Unilever’s strategy and value chain, Polman demonstrated Drucker’s argument that responsible management integrates social obligations into how the business competes and performs, allowing ethical action and profitability to reinforce rather than undermine one another. Reviving Stakeholder Capitalism Polman helped restore credibility to the idea of stakeholder capitalism. He insisted that corporations must serve employees, consumers, suppliers, communities, and the environment rather than focus only on investor returns (Polman and Winston, 2021). He also pushed Unilever to evaluate brand performance partly through its social or health impact (Unilever, 2018). Under this model, brand equity included moral equity. This aligns with Drucker’s view that corporate legitimacy must be earned and never assumed (Drucker, 1989). For Polman, consumer trust was a survival requirement. When customers believe that a firm contributes to a worsening world, the company risks losing not just reputation but also the permission to operate (Drucker, 1990). Moral Leadership and Institutional Courage Polman spoke in moral terms more openly than most executives. He frequently challenged governments that fell short on climate commitments and he encouraged other business leaders to adopt fair labor standards and responsible tax behavior (Polman and Winston, 2021). Drucker argued that real authority is moral before it is positional. Polman’s conduct fits that idea well (Drucker, 1989 and 1990).  Inside the company, Polman asked employees to see themselves as contributors to social improvement and not merely as managers of brands or operations (Unilever, 2010). This practice reflects MLA. Drucker believed that people should find meaning and contribution through their work, not only wages (Drucker, 1989). Performance, Profit, and Purpose Some critics argue that purpose oriented leadership reduces profitability. Polman countered this by pointing to performance. During his tenure, Unilever posted steady growth, especially in emerging markets, improved margins, and delivered strong long term returns (Unilever, 2018). He argued that long term value and social value reinforce one another (Polman and Winston, 2021). Drucker had long dismissed the idea that ethical leadership conflicts with economic effectiveness (Drucker, 1999). Even with strong performance, tension remained. Certain investors disliked the refusal to play the quarterly guidance game. Some environmental advocates believed Unilever could have moved faster on issues such as plastics. Drucker never said that Management as a Liberal Art would eliminate conflict. He said that it would give leaders a moral compass for navigating conflict in a transparent way (Drucker, 1989). Polman seemed to follow that guidance by making tradeoffs visible and by emphasizing choices that protected dignity, stability, and ecological viability (Drucker, 1990). Building a Network of Responsible Institutions After leaving Unilever, Polman co founded Imagine, an organization that works with senior executives to accelerate progress toward the United Nations Sustainable Development Goals (Polman and Winston, 2021). This next step reinforces the idea that sustainability for Polman is a theory of governance rather than a branding strategy. Drucker believed that modern society relies on networks of responsible institutions. These include corporations, governments, and nonprofit organizations that understand their interdependence and act accordingly (Drucker, 1946 and 1993). Polman’s post CEO work attempts to strengthen that network. He is essentially trying to rebuild the trust and cooperation among institutions that Drucker warned could erode in a fragmented society (Drucker, 1999). The Legacy of a Modern Druckerian Paul Polman’s leadership at Unilever provides one of the clearest contemporary examples of Drucker’s idea of Management as a Liberal Art. He treated the corporation as a civic institution rather than a simple profit generator. He wove climate stability, labor dignity, and social inclusion into the core of strategic planning. He asked brands to earn moral legitimacy. He emphasized supply chains as human communities. He took personal risks by arguing that corporations hold responsibility for the future of the planet on which their operations depend (Polman and Winston, 2021). In Drucker’s language, Polman practiced stewardship. He demonstrated that management concerns human beings, the communities they inhabit, and the ecological systems that support them (Drucker, 1989 and 1990). In an era shaped by climate upheaval, inequality, and declining institutional trust, Polman shifted the central question. Instead of asking whether companies can afford to care, he asked whether they can survive if they refuse to care at all. References Drucker, P. F. (1946). The concept of the corporation. New York: The John Day Company. Drucker, P. F. (1989). The new realities: In government and politics, in economics and business, in society and world view. New York: Harper & Row. Drucker, P. F. (1990). Managing the non-profit organization: Practices and principles. New York: HarperBusiness. Drucker, P. F. (1993). Post-capitalist society. New York: HarperBusiness. Drucker, P. F. (1999). Management challenges for the 21st century. New York: HarperBusiness. Polman, P., & Winston, A. (2021). Net Positive: How courageous companies thrive by giving more than they take. Harvard Business Review Press. Unilever. (2010). Unilever Sustainable Living Plan. Unilever PLC. Unilever. (2018). Sustainable sourcing and livelihoods progress report. Unilever PLC. World Business Council for Sustainable Development. (2019). Business leadership for a net-zero economy.

From a Functional to a Free Society-- The End of Economic Man: Drucker's Diagnosis of Totalitarianism

By Bo Yang Ph.D. • December 10, 2025
Peter Drucker suggested that readers view his first three books as a unified body of work: The End of Economic Man(1939), The Future of Industrial Man (1942), and Concept of the Corporation (1946). These works share a common theme: politics. Drucker did not think about politics like scholars who strictly follow modern social science norms. Instead, he viewed politics as part of social ecology and understood political events through the dynamic changes in social ecology. Despite having "corporation" in its title and using General Motors as a case study, Concept of the Corporation is indeed a book about politics. In this work, Drucker attempts to address the main issues that industrial society must resolve: the legitimacy of managerial authority, the status and function of managers and workers, and the power structure of society and organizations. In Drucker's own words, this is a book exploring the specific principles of industrial society. Corresponding to these specific social principles, Drucker had earlier attempted to develop a general social theory, which was the aim of The End of Economic Man and The Future of Industrial Man. The subtitle of The End of Economic Man is "The Origins of Totalitarianism." The book focuses on how society disintegrates in industrial societies and how totalitarianism rises. For Drucker, the real challenge of this topic isn't explaining how Hitler and Mussolini came to power, nor the actions of Germany and Italy in government, military, and economic spheres. Rather, it's understanding why some Europeans accepted clearly absurd totalitarian ideologies, and why others seemed potentially receptive to them. Drucker's writing style is argumentative. He clearly knew that to effectively advance his arguments, he needed to engage with popular theories of his time. Back then, there were two main explanatory approaches to Nazism and Fascism, which Drucker termed "illusions." Some viewed totalitarianism as ordinary political turmoil similar to previous historical revolutions. In their view, totalitarianism was characterized merely by cruelty, disruption of order, propaganda, and manipulation. Others considered totalitarianism a phenomenon unique to Germany and Italy, related to their specific national characters. Drucker thoroughly refuted explanations based on "national character." He believed that any historical approach appealing to "national character" was pseudo-history. Such theories always emphasize that certain events were inevitable in certain places. But all claims of "inevitability" negate human free will and thus deny politics: without human choice, there is no politics. If the rise of totalitarianism were inevitable, there would be no need or possibility to oppose it. Viewing totalitarianism as an ordinary revolution is equally dangerous. This thinking merely emphasizes how bad Nazis and Fascists were. But the real issue is that Europeans were not merely submitting out of fear—they were actually attracted to totalitarianism. And those attracted weren't just the ignorant masses but also well-educated intellectual elites, especially the younger generation. The world cannot defeat totalitarianism through contempt alone, especially if that contempt stems from ignorance. Understanding the enemy is a prerequisite to defeating it. Drucker identified three main characteristics of Nazism and Fascism (totalitarianism is a social type, with Nazism and Fascism being its representatives in industrialized Europe): 1. The complete rejection of freedom and equality, which are the core beliefs of European civilization, without offering any positive alternative beliefs. 2. The complete rejection of the promise of legitimate power. Power must have legitimacy—this is a long-standing tradition in European politics. For power to have legitimacy means that it makes a commitment to the fundamental beliefs of civilization. Totalitarianism denied all European beliefs, thereby liberating power from the burden of responsibility. 3. The discovery and exploitation of mass psychology: in times of absolute despair, the more absurd something is, the more people are willing to believe it. The End of Economic Man develops a diagnosis of totalitarianism around these three characteristics. Drucker offers a deeper insight: totalitarianism is actually a solution to many chronic problems in industrial society. At a time when European industrial society was on the verge of collapse, totalitarians at least identified the problems and offered some solutions. This is why they possessed such magical appeal. Why did totalitarianism completely reject the basic beliefs of European civilization? Drucker's answer: neither traditional capitalism nor Marxist socialism could fulfill their promises of freedom and equality. "Economic Man" in Drucker's book has a different meaning than in Adam Smith's work. "Economic Man" refers to people living in capitalist or socialist societies who believe that through economic progress, a free and equal world would "automatically" emerge. The reality was that capitalism's economic freedom exacerbated social inequality, while socialism not only failed to eliminate inequality but created an even more rigid privileged class. Since neither capitalism nor socialism could "automatically" realize freedom and equality, Europeans lost faith in both systems. Simultaneously, they lost faith in freedom and equality themselves. Throughout European history, people sought freedom and equality in different social domains. In the 19th century, people projected their pursuit of freedom and equality onto the economic sphere. The industrial realities of the 20th century, along with the Great Depression and war, shattered these hopes. People didn't know where else to look for freedom and equality. The emerging totalitarianism offered a subversive answer: freedom and equality aren't worth pursuing; race and the leader are the true beliefs. Why did totalitarianism reject the promise of power legitimacy? One reason was that political power abandoned its responsibility to European core beliefs. Another reason came from the new realities of industrial society. Drucker held a lifelong view: the key distinction between industrial society and 19th-century commercial society was the separation of ownership and management. The role of capitalists was no longer important. Those who truly dominated the social industrial sphere were corporate managers and executives. These people effectively held decisive power but had not gained political and social status matching their power. When a class's power and political status don't match, it doesn't know how to properly use its power. Drucker believed this was a problem all industrial societies must solve. Totalitarianism keenly perceived this issue. The Nazis maintained property rights for business owners but brought the management of factories and companies under government control. This way, social power and political power became unified. This unified power was no longer restricted or regulated—it became the rule itself. Why could totalitarianism make the masses believe absurd things? Because Europeans had nothing left to believe in. Each individual can only understand society and their own life when they have status and function. Those thrown out of normal life by the Great Depression and war lost their status and function. For them, society was a desperate dark jungle. Even those who temporarily kept their jobs didn't know the meaning of their current life. The Nazi system could provide a sense of meaning in this vacuum of meaning—though false, it was timely. Using the wartime economic system, the Nazis created stable employment in a short time. In the Nazi industrial system, both business owners and workers were exploited. But outside the industrial production system, Nazis created various revolutionary organizations and movements. In those organizations and movements, poor workers became leaders, while business owners and professors became servants. In the hysterical revolutionary fervor, people regained status and function. Economic interests were no longer important, freedom and equality were no longer important; being involved in the revolution (status) and dying for it (function) became life's meaning. The Nazis replaced the calm and shrewd "Economic Man" with the hysterical "Heroic Man." Though absurd, this new concept of humanity had appeal. What people needed was not rationality but a sense of meaning that could temporarily fill the void. Those theorists who despised totalitarianism only emphasized its evil. Drucker, however, emphasized its appeal. He viewed totalitarianism as one solution to the crisis of industrial society. From 19th-century commercial society to 20th-century industrial society, the reality of society changed dramatically. 19th-century ideas, institutions, and habits could not solve 20th-century problems. Capitalism could not fulfill its promises about freedom and equality, and neither could Marxism. It was at this point that totalitarianism emerged. Nazism and Fascism attempted to build a new society in a way completely different from European civilization. Drucker said the real danger was not that they couldn't succeed, but that they almost did. They addressed the relationship between political power and social power, proposed alternative beliefs to freedom and equality (though only negative ones), and on this basis provided social members with new status and function. The war against totalitarianism cannot be waged merely through contempt. Defeating totalitarianism is not just a battlefield matter. Those who hate totalitarianism and love freedom must find better solutions than totalitarianism to build a normally functioning and free industrial society. Totalitarianism gave wrong and evil answers. But they at least asked the right questions. Industrial society must address several issues: the legitimacy of power (government power and social power), individual status and function, and society's basic beliefs. These issues became the fundamental threads in Drucker's exploration of industrial society reconstruction in The Future of Industrial Man. The Future of Industrial Man: From Totalitarian Diagnosis to General Social Theory Both The End of Economic Man and The Future of Industrial Man feature the prose style of 19th-century historians. Even today, readers can appreciate the author's profound historical knowledge and wise historical commentary. For today's readers, the real challenge of these two books lies in Drucker's theoretical interests. He doesn't simply narrate history but organizes and explains historical facts using his unique beliefs and methods. In The End of Economic Man, Drucker developed his diagnosis of totalitarianism around three issues: power legitimacy, individual status-function, and society's basic beliefs. In The Future of Industrial Man, he also constructs a general social theory around these three issues. In "What Is A Functioning Society," Drucker explains three sets of tensions that exist in social ecology: 
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