Peter Starbuck
"Reclaiming Drucker" - Page 2

The formative years

Drucker left Vienna in 1927, at the age of 18, to begin work as an apprentice clerk in a Hamburg export business. He also enrolled in the law faculty of Hamburg University. During this time, three more influences on Drucker.s later thought can be identified. The first was the Italian composer Giuseppe Verdi, who impressed Drucker with his commitment to work. Verdi.s most difficult composition, Falstaff, was not completed until the composer was 80 years old, and Drucker pledged to follow this example by continuing to work and improve his ideas throughout his life.

The second influence from the Hamburg period was Drucker.s encounter with the work of the Danish theologian, Soren Kierkegaard. Drucker later wrote that it was through Kierkegaard that he discovered God. More specifically, it was Kierkegaard.s somewhat severe Protestant message that later became the foundation for Drucker.s imperative messages of integrity and the need for a functioning free market economy to provide its members with freedom, status and function.
Finally, while on a visit home to Vienna for Christmas in 1927, Drucker met the Austrian philosopher and economist Karl Polanyi. Drucker later recalled that from Polanyi he learned the ability to admire people for the quality of their thought processes, even while disagreeing with their conclusions.

After 18 months in Hamburg, Drucker moved to Frankfurt, where he enrolled at the university and joined the editorial staff of Frankfurt.s largest daily newspaper, the Frankfurter General Anzeiger. During his first year with the newspaper, in 1928 Drucker met two people who would go on to become major influences, one negative and the other positive. The negative influence was the leader of the Nazi Party, Adolf Hitler, then in opposition but already a formidable political force. Drucker did not believe that Hitler was entirely irrational, and he did note that Hitler.s later nationalisation of the German banks had saved them from collapse. But he perceived the threat of Nazi totalitarianism at an early date, and his writings against Hitler would have consequences for himself.

The other influential figure in Drucker.s life from 1928 was the Austrian economist Joseph Schumpeter, a family friend and former colleague of Drucker.s father, the economist Adolph Drucker. Such was Schumpeter.s impact upon Drucker.s ideas that the latter has sometimes been described as Schumpeter.s successor. Drucker has never objected to this description, and he continues to acknowledge and praise Schumpeter. However, when asked why he himself never became an economist, Drucker.s reply was that his interest was in people.

What appealed to Drucker was Schumpeter.s concept of a free market economy driven by entrepreneurs, with government intervening only to protect people from extreme events over which they had no control. Schumpeter believed that the economy could never be in equilibrium but would instead always strive to attain this elusive balance. This, in turn, led to economic cycles. When the economy was at a low point in the cycle, entrepreneurs would see opportunities and their activity would increase. When the cycle reached its peak, however, entrepreneurs would cease looking for new opportunities because their markets were saturated. It was at this point of overheating that the classical economists were persuaded that governments should intervene.

Schumpeter.s theory was that this was precisely the wrong action, for three reasons. First, intervention would precipitate a depression. Second, Schumpeter never did develop a method of predicting the peaks and troughs of an economic cycle, despite labouring for decades. This meant it was impossible to know exactly when to intervene. As Drucker later commented, "even the mighty Schumpeter could not find the answer". Finally, Schumpeter argued that if governments stood aside when the cycle had reached its peak, then the economy would be self-cooling and the peak would move naturally towards the trough, at which point entrepreneurs would see opportunities and move into the market once again.

From Schumpeter.s basic ideas, Drucker developed his own key ideas on innovation, the role of the entrepreneur and the dominance of the customer as buyer or rejecter of goods or services. Following Schumpeter, Drucker argued that as money was pumped into the economy, those that could save money did so, while those who had nothing still had nothing.

Other economists whom Drucker admired included Adam Smith and the French economist, Jean-Baptiste Say. Drucker acknowledged Smith.s essential contribution but, again following Schumpeter, argued that in the modern world balanced supply and demand would not drive markets. Here he turned to Say, who, following the earlier work of Richard Cantillon, had identified the role played by the entrepreneur in supporting economic growth and activity.

"Drucker did not believe that Hitler was entirely
Irrational. But he perceived the threat of Nazi
totalitarianism at an early date, and his writings
against Hitler would have consequences"