Peter Drucker: The Post-Capitalist Society

Peter Drucker’s book, “Post-Capitalist Society”, published in 1993, is included in this section on the history of ideas for one reason — its title.

If you search the term “post-capitalist,” Drucker’s book is bound to come up. This may lead to some confusion. Is this website associated with the book? It is not. Drucker’s book has the words “post-capitalist” and “society” in its title. That’s where the similarities end.

Unfortunately, there is nothing post-capitalist about Drucker’s thesis. If you want to save yourself some time you can stop reading this post now, because that’s really about all there is to say. However, if you’re wondering why I would say such a thing I’ll try to explain.

Let me start by mentioning that Drucker’s resume was impressive. (He died in 2005). He was a highly regarded management consultant and winner of the 2002 Presidential Medal of Freedom. He has been described as the “founder of modern management.” The accolades go on but we won’t take the time to do him full justice here. Suffice it to say he was well respected in his field of expertise.

I approached this book with high expectations and his opening paragraph did not let me down:

Every few hundred years in Western history there occurs a sharp transformation…Within a few short decades, society rearranges itself — its worldview; its basic values; its social and political structure; its arts; its key institutions…. We are currently living through just such a transformation. It is creating the post-capitalist society, which is the subject of this book.

Alright, I’m in. What have you got for me? Sadly, not much.

The problem arises in large part from Drucker’s lack of clear definitions, or perhaps we should say his unique twist on them.  Witness, for example his take on the definition of “tax loophole,” constructed apparently to tickle the ears of his business audience:

The term “tax loophole,” however, implies that everything belongs to the government unless it has been specifically designated to be retained by the taxpayer. And whatever taxpayers retain, they retain only because government in its wisdom and generosity is willing to allow them to do so.

 

No, actually the term “tax loophole,” is commonly understood as a means of avoiding paying a tax that the framers of the tax code intended you to pay; just the opposite of Drucker’s definition.

His idiosyncratic lexical semantics give rise to idiosyncratic conceptual semantics as he performs similar malpractice on the terms “capitalism” and “post-capitalism”. For example, he uses the terms “knowledge society,” and “post-capitalist society” interchangeably often ending sentences with the construction “the post-capitalist society, the knowledge society.”

Had he stuck with the idea of a “knowledge society” he might have made some sense, but Drucker’s “knowledge society” bears a striking resemblance to Daniel Bell’s “information society”, (as do other themes found throughout the book), and the society he is describing is more accurately known as the “post-industrial society”.

Basically, Drucker’s thesis is that new applications of knowledge will transform the way we live. This echoes Daniel Bell’s analysis in his classic work, “The Coming of Post-Industrial Society”, published exactly 20 years earlier. But whereas Bell’s contribution is a work of great insight and value, Drucker’s is a muddled mess, again because of his insistence on referring to the social changes as post-capitalist instead of what they really are, post-industrial.

In laying out his thesis Drucker writes that the two antagonistic classes of capitalism — the capitalist and the proletariat — will be replaced by the two new classes of the knowledge worker and the service worker. This change comes about by “applying knowledge to work” and by “applying knowledge to knowledge.” He sums it up by saying, “That knowledge has become the resource, rather than a resource, is what makes our society ‘post-capitalist’.” [Emphasis in the original]

No, not really. Again, I think post-industrial is the term you’re looking for here.

He explains further that society is post-capitalist because the knowledge workers now own the means of production; they “carry the means of production — their knowledge — with them.” Drucker acknowledges that someone else still owns the “tools of production” (in this case a meaningless distinction between means and tools) and that the knowledge worker needs these owners of the tools of production for a job, but it’s all post-capitalist because… well…

The difference, he goes on to say, is that under capitalism the worker was totally dependent on the machine. In the “employee society, the employee and the tools of production are interdependent. One cannot function without the other.” (Yet, exactly two sentences later, he writes, “The machine is dependent on the employee, not the other way around.”) The “employee society” is another way of expressing a post-capital society with the emphasis apparently meant to be on the newly transformed relations of production. However nothing has fundamentally changed about these relations. They are still firmly capitalistic.

Consider this. I am a tool-maker. I can design and manufacture any manner of tool, fixture, or machine. I can use the full resources of a tool room machine shop to produce what I have designed. I can use the machines as my needs require; the machines never use me. I can take my skill-set to another employer if I choose. I am exactly the type of “knowledge worker” Drucker is describing. And I can tell you from personal experience there is not one damn thing post-capitalist about this relationship. This is still classic textbook capitalistic relations of production. Referring to my skill-sets as “the means of production” is to wrest all accepted meaning from the term. I do not own the means of production; I only own, and must sell, my labor power.

 

Now what about Drucker’s other class, the service workers? Drucker writes:

But in the knowledge society, even the low-skilled service workers are not “proletarians.” Collectively, the employees own the means of production. Individually, few of them are wealthy. Even fewer of them are rich (though a good many are financially independent — what we now call “affluent”). Collectively, however, whether through their pension funds, through mutual funds, through their retirement accounts, and so on, they own the means of production….  [P]ension fund managers are the only true “capitalists” in the United States. The “capitalists” have thus themselves become employees in the post-capitalist knowledge society… One implication is that capital now serves the employee, where under Capitalism the employee served capital.

You can read and re-read that paragraph, but its not going to help. It’s a confused mess. Having a small stake in the stock market through investment accounts does not transform low-skilled service workers into capitalists. They do not “own the means of production” in any meaningful sense. And what’s all this about a good many of the low-skilled service workers being financially independent? Financially independent, really? I guess there’s no need to tip my waitress anymore. It reminds me of the old high school term paper maxim: If you can’t dazzle ’em with brilliance; baffle ’em with bullshit.

We know, of course, what he’s referring to. Today, even a common laborer may have a stake in the capitalist system through investment accounts. This was not true of workers in the Dickensian past. But to present this a evidence of post-capitalism; to say that because of this the capitalists have become the employees and the employees the capitalists is a conceit. In truth, Capital serves the employee as a token gesture whereas the employee must still sell his productive years to Capital. Any employee who owns stock in the company they work for can easily put Drucker’s assertion to the test. Simply go to your employer, introduce yourself as one of the “owners,” and demand that certain changes be made in the way the company is operated. See how far this gets you.

We could go on and on but what’s the point. There is nothing post-capitalist about Drucker’s post-capitalist society. He misrepresents the meanings of the two terms, (as well as many others which we won’t bother with), and ends up overstating what by 1993 was already a commonplace: Modern economies have moved from an industrial to a service-based economy.

But, of course, one cannot earn the title of “guru” by merely repeating commonplaces.