The Age of Discontinuity

Guidelines to Our Changing Society

Peter Drucker

• Publisher: Routledge
• Year: 2017
• eBook ISBN: 9781351486279
• Topic: Business
• Subtopic: Sociology
• Index: Business

The closing decades of the twentieth century have been characterized as a period of disruption and discontinuity in which the structure and meaning of economy, polity, and society have been radically altered. In this volume Peter Drucker focuses with great clarity and perception on the forces of change that are transforming the economic landscape and creating tomorrow's society.

Drucker discerns four major areas of discontinuity underlying contemporary social and cultural reality. These are: (1) the explosion of new technologies resulting in major new industries; (2) the change from an international to a world economy—an economy that presently lacks policy, theory, and institutions; (3) a new sociopolitical reality of pluralistic institutions that poses drastic political, philosophical, and spritual challenges; and (4) the new universe of knowledge based on mass education and its implications in work, leisure, and leadership.

Peter Drucker brings to this work an intimate knowledge and objective view of the particular and general. The Age of Discontinuity is a fascinating and important blueprint for shaping a future already very much with us.

PART
ONE

THE KNOWLEDGE TECHNOLOGIES

THE END OF CONTINUITY / 1

NO ONE knowing only the economic facts and figures of 1968 and of 1913—and ignorant both of the years in between and of anything but economic figures—would even suspect the cataclysmic events of this century such as two world wars, the Russian and Chinese revolutions, or the Hitler regime. They seem to have left no traces in the statistics. The tremendous economic expansion throughout the industrial world in the last two decades has by and large only made up for the three decades of stagnation between the two world wars. And the expansion has in the main been confined to nations that were already “advanced” industrial nations by 1913—or were at least rapidly advancing.

Our time, all of us would agree, is a time of momentous changes— in politics and in science, in world view and in mores, in the arts and in warfare. But in the one area where most people think the changes have been the greatest, the last half-century has been in reality a period of amazing and almost unparalleled continuity: in the economy.

The economic expansion of the last twenty years has been very fast. But it has been carried largely by industries that were already “big business” before World War I. It has been based on technologies that were firmly established by 1913 to exploit inventions made in the half-century before. Technologically the last fifty years have been the fulfillment of the promises bequeathed to us by our Victorian grandparents rather than the years of revolutionary change the Sunday supplements talk about.

Imagine a good economist who fell asleep in July, 1914, just before “the guns of August” shattered the world of the Victorians. He wakes up now, more than fifty years later, and, being a good economist, he immediately reaches for the latest economic reports and figures. This Rip Van Winkle would be a mighty surprised man—not because the economy has changed so much, but because it has changed so very much less during fifty years than any economist (let alone a good one) would have expected.

The figures would show that by the mid-sixties all economically advanced countries had, on the whole, reached the levels of production and income they would have attained had the economic trends of the thirty or so years before 1914 continued, basically unchanged, for another fifty years.

The one important exception to this might be Russia, where production and income today are probably well below what the pre-1914 growth rates had promised. We know the reason, of course. It is the political strait-jacket into which the Communists forced Russian agriculture just when the technological revolution got going on the farm. As a result, Russia, in 1913 one of the world’s largest food exporters, now can barely feed her own population. Yet she still keeps nearly half her people on the land— at least twice as many as would be needed had Russian farm productivity been allowed to grow at the rate at which it grew between 1900 and 1913.

All other countries that had reached by 1913 what is now called the “take-off point” in economic development—the United States, the countries of Western and Central Europe, and Japan—are today roughly where a long-range projection of the growth trends of the years between 1885 and 1913 would have put them half a century later, that is, today. This is true even of Britain; by 1913 her growth had already slowed to a crawl.

Even more amazing: our Rip Van Winkle economist would find the economic geography of the world quite unchanged in its structure. Every single area that is today a major industrial power was already well along the road to industrial leadership in 1913. No major new industrial country has joined the club since. Brazil, at least in its central region, may be on the threshold of emergence, but she is not there yet. Otherwise, only areas that are, in effect, extensions of the old industrial regions, such as Canada, Mexico, and Australia, have grown to industrial stature, and, at that, mainly as satellite economies.

In the half-century before 1913, the economic map of the world had been changing as fast and as drastically as the physical map of the world had changed during the age of discovery in the fifteenth and sixteenth centuries. Between i860 and 1870, both the United States and Germany had surfaced as new, big industrial powers and had rapidly forged ahead of the old champion, Great Britain. Twenty years later, Russia, Japan, the present Czechoslovakia, and the present Austria had soared aloft, with Northern Italy following closely behind. The fact that economic development, which seemed so easy and effortless then, even for a non-Western country like Japan, has since World War I become so difficult as to be apparently unattainable is not only a fundamental economic contrast between our era and that of the Victorians and Edwardians. It is also the greatest political threat today—comparable only to the threat of class war inside industrial society before 1913.

If our Rip Van Winkle economist should turn to industrial structure and technology, he would find himself equally (and equally unexpectedly) on familiar ground. Of course, there are hundreds of products around that would be unfamiliar to him: electric appliances, TV sets, jet planes, antibiotics, the computer. But in terms of economic structure and growth, the load is still being carried by the same industries and largely by the same technologies that carried it in 1913.

The main engine of economic growth in the developed countries during the last twenty years has been agriculture. In all these countries (excepting only Russia and her European satellites), productivity on the farm has been increasing faster than in the manufacturing industries. Yet the technological revolution in agriculture had begun well before 1913. Most of the “new” agricultural technology—tractors, fertilizer, improved seeds and breeds—had been around for many years. The “good” farmer of today has just about reached the productivity and output of the “model farm” of 1913.

Second only to fanning as a moving force behind our recent economic expansion is steel.

World steel capacity has grown fivefold since 1946, with Russia and Japan in the lead. But steel production had become synonymous with economic muscle well before World War I. Almost all the steel mills built since World War II use processes that date back to the 1860’s and were already considered obsolescent fifty years ago. The automobile industry—probably number three in the growth parade today—was also well advanced when World War I started. Henry Ford turned out a quarter-million Model Ts in 1913—more than the Soviet Union has yet produced in any one year. And there is not one major feature on any car anywhere today that could not have been found on some commercially available make in 1913.

The electrical apparatus, the telephone, and the organic-chemical industries were already giants fifty years ago. General Electric, Westing-house, Siemens, the Bell Telephone System, and the German chemical companies were by then well-established blue chips. Rockefeller’s Standard Oil Company and British Shell were hardly struggling infants; they were the “octopuses” of 1913 with tentacles into every country in the world. And though electronics was just beginning its growth then, it was already large enough to spawn, in the British “Marconi Affair” of 1912, a scandal so big and juicy that it threatened the political life of the first of the new breed of “democratic” leaders, Lloyd George.

Of course, all around us there are new industries and new technologies. But as the economist defines “importance"—that is, by contribution to gross national product, personal income, and employment —these new industries are still almost negligible, at least to the civilian economy.

The airplane began to make an economic impact only with the coming of jets in the 1960’s. Air freight is only now growing at a phenomenal rate. When the big “jumbo jets” begin to fly around 1970, the freight plane may well, within a few years, make obsolete the oceangoing cargo ship just as the truck has broken the railroad monopoly on land in the last thirty years. So far, however, air freight is still a lesser factor in world transportation than bullock or burro.

Only now, when IBM is turning them out at a rate of a thousand a month, are computers starting to have substantial economic impact.

The pharmaceutical industry has all but made over the practice of medicine in the last thirty years. Thanks to new drugs, health care has become the “best buy” on the market and a universal demand; as a result health services and their financing are everywhere becoming a governmental concern, just as schooling went public 150 years ago when literacy first became a profitable investment for the individual. Yet economically—that is, in terms of employment or of direct contribution to national product—the pharmaceutical industry is still hardly visible to the naked eye and is a pygmy next to such traditional industries as food processing, railroading, or textiles.

Of all the new industries only one has, so far, attained major economic importance (as the economist measures importance). It is plastics.

Even plastics were looked upon until a very few years ago as “substitutes"—ersatz—rather than a major new industry and technology in their own right. And even the plastics industry today is only a faint premonition of what the “materials” industry of tomorrow is likely to be, both economically and technologically.

The new industries with their new technologies loom much larger in our eyes than the old familiar steel mills and automobile assembly plants. They capture our imagination and furnish the glamour stocks in our investment portfolios. But if all of them (except plastics), with all their output and all their jobs, were taken out of the figures for the civilian economy, the difference would hardly show in national income or total employment, that is, in the figures by which the economist measures economic strength and growth.

An economist of 1913 could, therefore, have forecast the industry structure of the 1960’s with reasonable accuracy. Only no sane economist of that time would have dreamed of forecasting continuity. The relative stability in technologies and industries during the last fifty years is in the sharpest imaginable contrast to the turbulence of the half-century before. The fifty years that came to an end with World War I produced most of the inventions that underlie our modern industrial civilization. Synthetic dyes (and with them the organic-chemical industry), the Bessemer steel process and the Siemens electrical generator came in the late 1850’s and 1860’s. The electric light bulb and the phonograph were invented (both by Edison) in the 1870’s. In the same decade appeared the typewriter and the telephone, which together took respectable women out of the home and into the office and thus led, in another half-century, to female emancipation and suffrage. In the 1880’s came the automobile. In the same decade came aluminum—together with the slightly older vulcanized rubber, the first truly new material since the Chinese first made paper around the time of Christ Marconi’s wireless and aspirin (the first effective synthetic drug and the beginning of the pharmaceutical industry) were developed in the 1890’s, the Wright brothers' airplane in 1003, the electronic tube (de Forrest and Armstrong) in 1912.

Most industrial technology today is an extension and modification of the inventions and technologies of that remarkable half-century before World War I.

This continuity, in turn, has made for stable industry structure. Every one of the great nineteenth-century inventions gave birth, almost overnight, to a new major industry and to new big businesses. These are still the major industries and big businesses of today.

The best example is the rebuilding of industrial Germany after World War II. The same companies dominate the German economy today and are the blue chips of the Frankfurt Stock Exchange that dominated German economy and stock exchanges in 1913. Their names are unchanged; their product scopes, their markets, their technologies are largely unchanged—they are only much, much bigger.

To be sure, this faithful, almost antiquarian, restoration of pre-World War I German industry overdid it. The Krupp concern was rebuilt by the last bearer of the name to look as much as possible like the empire his grandfather had left behind around 1900—an empire of coal mines, steel mills, and shipyards—and had to be taken over by the banks under a government guarantee in 1967. But the reason for failure was the old and familiar nemesis of industrial empire builders: financial overextension, rather than the ancestor worship of the last Krupp.

Indeed, even the technoeconomic “catastrophes” that we are so widely threatened with are still in the future rather than the present. The “population explosion” has not, so far, caused large-scale famine and pestilence. We would actually still worry a good deal about “unsalable surpluses” of farm crops if Russia had continued to increase farm productivity at the pre-World War I rate (let alone if Russian farm productivity had shown anything like the explosive growth of American agriculture). And while we have the technological means to control population, not even the pill has so far had a major impact in the poor countries of rapid population growth.

The world of the New Left and of the hippies, of Op Art and of Mao Tse-tung’s Cultural Revolution, of H-bombs and moon rockets, seems further removed from the certainties and perceptions of the Victorians and Edwardians than they were from the Age of the Migration at the end of antiquity. But in the economy, in industrial geography, industrial structure, and industrial technology, we are still very much the heirs of the Victorians.

Measured by the yardsticks of the economist, the last half-century has been an Age of Continuity—the period of least change in three hundred years or so, that is, since world commerce and systematic agriculture first became dominant economic factors in the closing decades of the seventeenth century.

The growth during this period of continuity has been great, especially in the countries that were already well advanced before 1913. But the growth has been largely along lines that had been laid down well and truly in those distant days of our grandparents and great-grandparents.

What is amazing is perhaps not that it took a half-century for the work and thought of those earlier generations to bring full fruit. It is that the generation of 1900, which we tend today to look down on as stodgy stick-in-the-muds, laid down economic foundations of such strength and excellence that they have prevailed over all the wickedness, criminal insanity, and suicidal violence of the last fifty years. The towering economic achievements of today, the affluent, mass-consumption economies of the advanced countries, their productivity and their technological powers, are built four-square on Victorian and Edwardian foundations and out of building blocks quarried then. They are, above all, a fulfillment of the economic and technological promises of the Victorian and Edwardian eras and a testimony to their economic vision.

Now, however, we face an Age of Discontinuity in world economy and technology. We might succeed in making it an age of great economic growth as well. But the one thing that is certain so far is that it will be a period of change—in technology and in economic policy, in industry structures and in economic theory, in the knowledge needed to govern and to manage, and in economic issues.

While we have been busy finishing the great nineteenth-century economic edifice, the foundations have shifted under our feet.

THE NEW INDUSTRIES AND THEIR DYNAMICS / 2

FORECASTING “technological marvels” is high fashion these days. Hardly a month goes by without the well-publicized appearance of a new list of future “miracle” products and processes. But no matter how persuasive these forecasts* may be, they rarely mention the most important qualitative and structural features of the technology ahead for the last third of the twentieth century—even though these are infinitely more important than any invention, product, or process.

First, major expansion of the economies of the industrially developed countries, both those of the West and those of the Communist world, cannot be carried any further by the industries and technologies that have provided the dynamics of growth for the last one hundred years. In the developed countries, these industries have become “mature” industries—the economist’s euphemism for incipient senility. Only in underdeveloped or developing nations can these industries still provide the technological foundation for rapid and extensive economic growth.

Between 1850 and 1870 the center of economic gravity shifted from the industries of the Industrial Revolution—coal and steam, textiles, and machine tools—to new and different industries: steel and electricity, organic chemicals, and the internal-combustion engine. Now, a hundred years later, we are in the early stages of a similar and equally drastic shift to industries based not only on new and different technologies but also on different science, different logic, and different perception. They are also different in their work force, for they demand knowledge workers rather than manual workers.

These industries are capable of providing rapid economic growth in jobs, opportunities, income, standards of living, and aspirations for many decades, if not for another century. And they are very unlikely to emerge except in countries that have a solid industrial and educational foundation—that is, in the developed countries.

THE AGING “MODERN” INDUSTRIES

Technologically, the established “modern” industries may still enjoy a long period of growth and advance. Financially—that is, as investment channels—they may be highly attractive and offer rich returns. They may even grow at a good clip in the years ahead. But in their ability to provide the thrust for further substantial growth of the developed economies, they are mature, if not stagnant. No matter how much they themselves grow and prosper, they will lose increasingly the capacity to contribute to rising national incomes, to increased employment and career opportunities. They will increasingly be unable to provide economic dynamics for the developed countries.

To clarify, and also to illustrate, this conclusion, I shall take a brief look at the three industries that, together, have powered the tremendous growth of the developed economies of the West (and of Japan) in the last twenty years: agriculture, steel, and automobiles.

1. Agriculture has been the most spectacular performer in the growth parade. In the United States, ten out of every twenty members of the labor force were still working on the land in 1900. At the end of World War II, in 1945, the United States still had almost one-third of the population on the farm. Now fewer than one-tenth of the labor force work as farmers. They produce, however, many fames more food and farm crops than the much larger number produced sixty years ago. The indirect contribution of agriculture to the national product, to incomes, and to the standard of living may be greater still. The people who are no longer needed to work on the land have provided the labor force for an expanding manufacturing industry, for the services, and for the rapidly growing information and knowledge employments. The transfer of marginal farmers and farm workers to urban employment has by itself probably been the largest single factor in the rise of national productivity. A good many of these farm workers moving from the land to the city d...

Table of contents

• Cover Page
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Introduction to the Transaction Edition
• Preface to the 1983 Edition
• Preface to the Original Edition
• Part One: The Knowledge Technologies
• Part Two: From International to World Economy
• Part Three: A Society of Organizations
• Part Four: The Knowledge Society
• Conclusion
• Index