A Functioning Society
Selections on community and society
Summary
Drucker assembled this collection late in life from essays and book chapters written between the 1940s and the 1990s, organised around the question that runs through his whole body of work: what makes a society function.
His position is stated consistently across the selections. A functioning society requires that individuals have status and function, meaning a recognised place and meaningful work, and that power is legitimate, meaning it rests on a principle the society accepts. He argues that the collapse of European societies into totalitarianism in the 1930s followed from the failure of nineteenth-century institutions to provide either, and that this was the formative problem of his career.
His answer is that the large organisation, and particularly the corporation, became the institution through which industrial society provides status and function, and that management is therefore a social function rather than a technical one. The essays develop this: the corporation as a social institution, the plant community, the responsibilities of management, the emergence of the knowledge worker whose relationship to the organisation differs from that of the industrial employee, and the growth of the non-profit sector as a source of citizenship that the corporation and the state cannot supply.
He also argues, in the later selections, that the pension fund ownership of American corporations amounted to a transfer of ownership to employees that neither party recognised, and that this created a governance question no one had addressed.
The collection assembles material written across sixty years, so there is repetition and the historical context of individual pieces varies. Drucker's method is assertion supported by observation rather than evidence, and readers wanting empirical support will not find it. Its value is the statement of why he thought management mattered, which the practical management books assume rather than argue.
Key takeaways 7
- A functioning society must give individuals status and function, meaning a recognised place and work that matters.
- Power is legitimate only when it rests on a principle the society accepts, and organisations must satisfy this as much as states.
- The corporation became the institution through which industrial society supplies status and function to most people.
- Management is a social function rather than a technical one, because it determines whether that institution works.
- Knowledge workers own their means of production and therefore have a different relationship to organisations than industrial employees did.
- Pension fund ownership transferred corporate ownership to employees without either party recognising it or addressing the governance consequences.
- The non-profit sector supplies a form of citizenship that neither the corporation nor the state can provide.
Who should read it
Executives who want the social argument underlying Drucker's management writing, rather than the practical prescriptions.
About Peter F. Drucker
Management writer and consultant; professor at Bennington, NYU and Claremont Graduate University
He invented management as a field of study, and The Practice of Management and The Effective Executive remain the primary sources every later writer builds on.
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Where it sits in the reference 3
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