Private Enterprise, Inc.
Big Business. By Peter F. Drucker. (Heinemann. lOs. 6d.)
No pigeon-hole is the right shape and size for Mr. Drucker ; like Mirabeau, he makes short work of formulae. His End of Economic Man, setting the rise of Nazism in perspective as an aspect of the dilemma of Western civilisation, was one of the half-dozen most illuminating books on social topics published between the wars ; and in nothing was it more remarkable than in the constant interplay and cross-fertilisation of ideas between the spheres of economics, political thought and public psychology. Big Business, a study of the economic and social role of the large American corporations, has not behind it the same emotional drive. But it shares, though on a smaller scale, these qualities of its predecessor.
Mr. Drucker is a realist. He considers private enterprise superior to collectivism ; but his premise is not this theoretical superiority but the fact of practical politics that private enterprise is part of the American creed, unlikely to be- changed except by total depression or total war. Big business is the dynamic, pace-making element of American society ; it is on big business, then, that attention should be focused. He chooses for detailed study the great indus- trial empire of General Motors, analysing it from the point of view of its own structure and purpose and its harmony with the structure and purpose of - American society ; an analysis equally fascinating as a piece of applied economics, a social study and an adaptation of political theory. He gives General Motors extremely high, though not maximum, marks on all counts, without extending his com- mendations to big business in general ; and most of his analysis of the problems which it has successfully or less successfully solved— of combining initiative at the extremities with overall control at the centre, of ensuring a steady succession of leaders, of testing the efficiency of every part of the organisation, of so organising relations with labour, with suppliers, with retailers and the general public that justice shall be apparent to all—applies most emphatically to, let us say, the National Coal Board. He is, however, careful to qualify his advocacy of General Motors' methods (which can be summed up in the word " decentralisation ") by the common-sense conclusion that a system which has grown up with its roots in a firm's history, and is thus aided at every point by the mental habits and personal relationships of the men working it, cannot be immediately translated into a paper constitution applicable to businesses with a totally different, e.g., an autocratic, tradition behind them (a lesson Which, applied to national constitution-building in the past, would have saved much disappointment). When he turns from the problems of the individual firm to those of capitalist society as a whole he is more open to criticism. He dismisses the danger of monopolist exploitation as something which, being opposed to the best interests even of the monopolist, must be
transitory, and the econcinic argument supporting this contention, viz., that supply is now universally more elastic than demand, is the weakest thing in the book. The problem of depression he admits to be serious--oai' less serious than the problem of peace— but he sees no need for the Keynesian solution of an aggressive policy of cheap money and income-equalisation. The business cycle is a fact, he says, arising ftom the average life-span of industrial equip- ment, and the way to damp it down and to prevent its slump phase from becoming chronic is a very simple fiscal reform, the alteration of the tax period fromtthe calendar year to the decade. This is altogether too light-hearted. It does not, however, vitiate anything in his earlier analysis ; if the depression problem can only be solved by a measure of collectivism, then a higher profit margin or " risk premium" will be needed to make up for the loss of efficiency entailed by the impairment of the competitive yardstick ; that is all. Altogether, Big Business is highly and hopefully recommended to business men, to Civil Servants, to students of social affairs and, most emphatically, to politicians. One may also add that it contains nothing to scare off, and much to attract, that shy bird the general
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