An Unflinching Gaze: Peter Drucker's Self-Portrait Through a Fallen World

Bo Yang Ph.D.

PUBLISHED:

January 31, 2026

Peter Drucker’s memoir, Adventures of a Bystander, is a self-portrait of a most unusual kind. It reveals its subject not through direct autobiography, but through a series of incisive portraits of the people he encountered throughout a tumultuous life. Drucker positions himself as a "bystander," but this is no passive observer. Instead, he is an intellectual portraitist whose careful study of others becomes the very method by which he comes to understand himself and the fractured world he inhabited.


The book’s central drama is framed by a vivid scene from the summer of 1940. Karl Polanyi, a brilliant economic historian and refugee from the war engulfing Europe, was staying with the young Drucker and his family in Vermont. Tormented by the news of France's surrender and the bombing of London, Polanyi was consumed by an agonizing question: "Why did this European catastrophe happen?" Each morning, as soon as he heard Drucker's infant daughter stir in her crib, he would rush into her room and pour out his developing theories, testing his grand intellectual framework on the most innocent of listeners. This single image captures the profound urgency that animates the book. For both Polanyi and Drucker, understanding the collapse of European civilization was not an abstract academic exercise; it was an existential necessity.


To explain his unique perspective, Drucker employs the metaphor of the "bystander" as the "fireman in the theater." In old European theaters, two firemen were required to be present for every performance. They did not participate in the play, yet their presence was integral to it. From their unique vantage point, they saw the stage differently than the actors or the audience. Drucker clarifies that this viewpoint is not a simple reflection of reality. As he puts it, this kind of "reflection is a prism rather than a mirror; it refracts." In observing the world, the bystander sees reality broken down into its constituent parts, and in that refraction, he inevitably sees himself.


This analysis will follow Drucker’s prismatic gaze. We will first explore his diagnosis of a European elite intellectually trapped by the failed ideas of the 19th century. We will then examine the desperate search for an exit from this intellectual prison, as seen through his dialogues with other brilliant minds on the edge of the abyss. Finally, we will uncover the alternative vision Drucker discovered—not in a grand ideology, but in the pragmatic realities of American society and the nascent practice of management.


1  Trapped in the 19th Century:  The Collapse of a Worldview


To comprehend the rise of 20th-century totalitarianism, Peter Drucker believed one must first understand the intellectual and imaginative paralysis of the European elites who preceded it. His portraits of the men and women of his youth are not mere nostalgic sketches; they are forensic examinations of a worldview in collapse. The catastrophe that befell Europe, he argues, was not caused by a sudden invasion of barbarism, but by an internal failure—a vacuum created when the continent’s leading minds became prisoners of their own history, unable to see, let alone confront, the monstrous new reality taking shape before them.

Drucker uses the haunting metaphor of a "sunken city of Atlantis" to describe the Vienna—and by extension, the Europe—of his youth. He recalls a childhood story of a city whose inhabitants, punished for their pride and greed, are forced to live as the undead, re-enacting their empty rituals in a world without sunlight. For Drucker, this was the state of the European elite. They were the living dead, trapped in the illusion of a "prewar" world, going through the motions of a life that no longer existed. This clinging to the past was, in his words, a "miasmic smog... paralyzing everybody," stifling all thought and imagination.


The Paralysis of the Liberals

The first and most prominent group of prisoners were the 19th-century liberals among whom Drucker was raised. His own father, a high-ranking government official, simply could not believe that Hitler would invade Austria or that another great war was possible. The editors at the prestigious journal The Austrian Economist, men of international perspective, dismissed 18-year-old Drucker’s warnings about the rising Nazi movement as "Nonsense," convinced that electoral politics had solved the problem. Most damningly, Drucker recounts an episode at the liberal-minded Frankfurt University. After a Nazi official delivered an ominous speech to the faculty, the university’s most celebrated professor—a brilliant scientist and archetypal liberal—was expected to offer a rebuttal. Instead, he stood up and asked only one question: "Could you please clarify... will the research budget for physiology be increased?"


For Drucker, the liberals' catastrophic failure was therefore not moral but imaginative—a cognitive paralysis rooted in their unwavering faith in a 19th-century framework that was utterly unequipped to recognize, let alone combat, a radically new form of political evil. They saw the Nazis as crude and vulgar, a temporary aberration that could be managed with the old tools, never imagining a world where their own cherished principles were no longer relevant.


The Disillusionment of the Socialists

If the liberals failed because they could not imagine a world beyond the 19th century, the socialists failed because their imagination was entirely a reaction against it, leaving them equally blind to the political realities of the 20th. They correctly diagnosed the deep flaws of the old order but were tragically naive in their proposed solutions.


Drucker tells the story of Count Traun-Trauneck, a brilliant young aristocrat who placed his faith in an international workers' movement, believing the solidarity of the proletariat could transcend national borders and prevent the coming war. His hopes were brutally shattered when that very movement was consumed by a tidal wave of nationalism, as the "workers of the world" eagerly marched off to kill one another. The Count, his faith destroyed, retreated into obscurity, a broken man.


Even more cautionary is the tale of Noel Brailsford, a British dissenter who journeyed from liberalism to socialism out of a deep compassion for the oppressed. Horrified by Nazism, Brailsford adopted the desperate logic of "the enemy of my enemy is my friend," which led him to become an apologist for Stalin's Soviet Union. He knew of the atrocities, yet out of a desire to preserve a united front against fascism, he publicly defended the indefensible. Drucker saw in Brailsford a terrible paradox: a good man whose conscience led him to "condone evil." It was a lesson in how well-intentioned idealism, when detached from political reality, can become both morally compromised and politically naive.


The Cul-de-Sac of Rationalism

Drucker identified a deeper intellectual prison that held both liberals and socialists captive: "Rationalism." He was careful to distinguish this from reason itself. For Drucker, Rationalism is the arrogant impulse to force the mysterious, non-rational dimensions of human life into a single, quasi-scientific, all-encompassing explanatory system, mistaking the map for the territory.


His prime example of this mindset is Sigmund Freud. In a masterful chapter, Drucker deconstructs three central "myths" about Freud: that he was impoverished, held back by anti-Semitism, and professionally neglected. In reality, Drucker argues, Freud was a quintessential "child of the Enlightenment." His great project was to take the dark, mysterious depths of the human psyche—the subconscious—and force them into a neat, rationalist framework. He promised a single key, sexual repression, that could unlock every human mystery. This quest for a perfect, totalizing explanation, Drucker argues, was the true intellectual disease of the 19th century.


This rationalist obsession with a single, perfect system was the poison that contaminated the wells of European thought. It created an intellectual environment where even the most brilliant minds, in their search for an escape, would propose new, equally totalizing solutions—be it the perfect statesman, the perfect social design, or the perfect technology.


2. The Search for a Way Out: Dialogues on the Edge of an Abyss


Drucker did not diagnose Europe's crisis from a detached, academic distance. His search for an answer was a lived experience, forged in intense dialogue with other thinkers who were also desperately seeking a path beyond the failed ideologies of the 19th century. In the portraits of his intellectual interlocutors—Fritz Kraemer, Karl Polanyi, Buckminster Fuller, and Marshall McLuhan—Drucker reveals a landscape of brilliant but ultimately flawed attempts to find an exit.


The 'Third German' and Legitimate Power

Fritz Kraemer was an eccentric political philosopher who provocatively advocated for monarchy, not out of nostalgia, but from a deeply held conviction that to resist the illegitimate, mob-driven power of Nazism, Germany needed a true conservatism grounded in legitimate authority and political virtue. He called for a "third German"—an "ideal Prussian"—to stand against both the corrupt "ugly German" of the establishment and the weak, ineffective "good German" of the liberal class. Drucker shared Kraemer's belief that the legitimacy of power was the central question of modern politics. Yet he ultimately diverged from Kraemer's solution, seeing it as too narrowly focused on the power of the state and overly reliant on the emergence of a "great man" to solve society's problems.


The Perfect Society and the Embedded Market

Drucker’s relationship with Karl Polanyi was one of the most formative of his life. Polanyi’s quest for an exit from the 19th-century trap was part of a larger family drama; each of his four siblings also pursued a radical alternative, from fascism and engineering a new society in Brazil to rural sociology and philosophical personalism, illustrating the sheer desperation of the search. Karl’s path was economic history. In his masterwork, The Great Transformation, he argued that the worship of a utopian "free market" was the root of social decay and proposed a "third way" in which the market would be "embedded" within social principles.


Drucker, however, saw in Polanyi’s quest another form of the 19th-century impulse for "salvation by society." Polanyi’s own historical research became a source of disillusionment; he discovered that the pre-market societies he idealized were often built on slavery and coercion. Their fundamental difference was captured in Polanyi’s friendly dismissal of Drucker’s emerging philosophy as a "tepid compromise." Polanyi was searching for the perfect society; Drucker was beginning to formulate a vision for a tolerable one.


The American Prophets and the Gospel of Technology

After moving to America, Drucker encountered two thinkers who offered a completely different exit: technology. He called Buckminster Fuller and Marshall McLuhan true "prophets" because they understood that technology was not merely a set of tools but a new, formative reality. Fuller preached a technological "pantheism," seeing it as divine harmony, while McLuhan famously viewed it as an "extension of man," altering human perception itself. Drucker recognized their genius but warned against idolizing technology as a new "Golden Calf."


To understand their difference from Drucker, one might imagine technology as a lamp. Fuller was concerned with whether the lamp's light aligned with the cosmic order of the stars. McLuhan was fascinated by how the lamp's light fundamentally altered our eyesight and perception of the world. Drucker, however, insisted on asking: Who is holding the lamp? What is the human 'work' of carrying it? And what social responsibilities does that act entail?


For Drucker, these brilliant searches—for the perfect statesman, the perfect society, or the perfect technology—all pointed to a deeper modern pathology. The quest for "salvation by society," he concluded, had turned society itself into an idol. "Society" had become the "Great Baal and Moloch of modern man," a false god to which people were willing to sacrifice themselves and others in the pursuit of a worldly paradise. This deification of the social, he believed, was the ultimate source of totalitarian temptation. His own path, therefore, would require not a new system, but a new humility.


3. The American Alternative: Society, Politics, and Management


Drucker’s escape from the European intellectual labyrinth was not just theoretical; it was geographical and experiential. In the United States, he discovered a society that, while deeply flawed, offered a living, breathing alternative to the rigid and failed ideologies of Europe. It was not a perfect society, but a functioning one, and in its functioning, he found the raw materials for a new political and social vision.


An Imperfect but Resilient Society

Drucker was struck by the profound difference in how Americans and Europeans responded to the Great Depression. In Europe, the economic collapse bred "suspicion, surliness, fear, and envy," tearing the social fabric apart. In America, he observed, the Depression was largely viewed as a "natural disaster." This perception fostered solidarity; the community "closed ranks" rather than dissolving into class warfare.


He identified a key source of this resilience in what he termed American "Tribalism." Contrary to Marxist predictions, the crisis did not produce a unified "proletariat." Instead, Americans fell back on their diverse religious and ethnic communities. Drucker acknowledged the dark side of this phenomenon, distinguishing between "discrimination against" others and "discrimination for" one's own group. Yet he argued that this flawed mechanism provided a powerful source of social cohesion that prevented total social collapse. This mosaic of particular communities was held together by an overarching "American Creed"—a set of abstract principles to which anyone could swear allegiance.


A Politics of Pragmatism, Not Perfection

This unique social structure was mirrored in what Drucker called "America's political genius": a rejection of the European obsession with ideological perfection. The core of this tradition was a concept he called "dualism": a refusal to separate the material from the ideal. For Americans, politics was neither a dirty game of power (Machiavelli) nor the deification of the state (Hegel). Instead, it was a moral and creative act of making "matter serve spirit"—using imperfect institutions to strive for ethical ends.


This pragmatic approach, Drucker saw, reflected a kind of "pre-modern," community-based wisdom that Europe, in its obsession with grand "isms," had lost. The fierce debate between individualism and collectivism, for example, was resolved through a vibrant tradition of "voluntary group action," where citizens organized from the bottom up to solve problems. This focus on concrete, community-based action over abstract theory was the political equivalent of the practical wisdom he admired in the "pre-modern" figures of his youth.


The Organization as the Locus of Freedom

Drucker's political philosophy found its ultimate practical application in an unlikely place: the modern business corporation. A two-year study of General Motors in the 1940s crystallized his thinking. He found himself in a debate with GM's legendary chairman, Alfred Sloan, who held that a corporation's only responsibility was economic performance. Drucker argued for a broader vision: in a world where traditional communities were dissolving, the large corporation had become the central social institution. As such, it had to provide workers with the social status and function that the old order no longer could.


He found an unexpected ally in GM's president, Charles E. Wilson, a self-proclaimed "socialist." Wilson championed two groundbreaking ideas: the employee pension fund, which Drucker predicted would make workers the owners of American industry, and the "self-governing plant community," a direct response to Drucker's call for granting workers more autonomy. From these observations, Drucker forged his most groundbreaking insight. Tyranny thrives in a vacuum of social status and function. The well-managed organization, therefore, is not just an economic entity; it is the primary non-governmental institution capable of providing individuals with the status, function, and community that prevent the alienation on which totalitarianism feeds. Management, understood correctly, was the concrete "alternative to tyranny."


4. The Enduring Mystery of the Person


After a lifetime spent analyzing the grand ideologies that defined the 20th century, Peter Drucker’s ultimate answer to its crises lay not in a new system, but in a return to the irreducible and mysterious nature of the human person. The ideologies had failed because they were abstractions; they forgot the messy, contradictory reality of individual human beings. The way out was to recover a form of wisdom that looked unflinchingly at people as they are.


The "Pre-Modern" Wisdom

Drucker found this wisdom embodied not in great theorists, but in "pre-modern" figures. His grandmother dismissed complex economic theories with a simple analogy: a ruler cannot change its length and then claim people have grown taller. Confronted by a Nazi, she didn't argue ideology; she poked him with her umbrella and told him his swastika was as impolite as a pimple on his face—and he sheepishly removed it.


Similarly, the dynamic salon hostess Genia Schwarzwald had a profound disdain for all "isms." Her passion was for solving concrete problems. As Drucker notes, her famous salon was not just a hub of intellectual life, but a compassionate "counter-world" she created as a refuge for the "old-time liberals" and other elites who felt trapped in the "sunken city" of a collapsing Europe. When a massive strike loomed, she forcefully intervened, knocking heads together. When accused of forcing both sides to betray their principles, she delivered a line that summarized her entire philosophy: "I have no use for principles which demand human sacrifice."


Lessons from the "Men of Action"

Drucker found further proof of this principle in the practical wisdom of the bankers and businessmen he met. The banker Ernest Freedberg insisted that any system must be "'foolproof,' because work is ultimately done by fools." The retail magnate Henry Bernheim taught him that "There are no irrational customers, only lazy merchants." Their insights were a constant reminder that effective action comes from observing people's actual behavior, not from imposing abstract models upon them.


Drucker's Ultimate Insight

Drucker’s entire intellectual journey was a movement toward this fundamental truth. As a young man, he had a startling religious insight: "The opposite of Sin... is not Virtue; it is Faith." Years later, while sitting in John Maynard Keynes's legendary economics seminar, he had a professional epiphany, realizing that everyone else in the room, including Keynes himself, was interested "in the behavior of commodities," whereas he was interested "in the behavior of people."


This focus on the human person in all their complexity led him to his most profound conclusions. He came to see the problem of slavery in America not as a mere political mistake, but as a "sin"—a deep moral and spiritual wound that could only be healed by repentance and redemption. He was shaken to his core when a Black theologian argued that true freedom for Black Americans required confronting not only the sin of white oppression but also the "guilt and mystery" of their own African ancestors' role in the slave trade.


For Peter Drucker, the bystander who had witnessed the collapse of a world, the most profound social and political problems were, at their root, moral and spiritual problems of the human heart. To escape the prisons of ideology, one must have the courage to set aside the quest for perfect systems and turn instead to the difficult, humbling, and ultimately liberating task of looking unflinchingly at the full, mysterious, and often contradictory nature of the person.

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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