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Book Review: The New Realities

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The New Realities: In Government and Politics/In Economics and Business/In Society and World View
by Peter F. Drucker (New York.- Harper & Row, Publishers, 1989); 276 pp.; $19.95.

Crystal balls are an extremely scarce commodity. And many of those who claim to have one really are only projecting their own desires on to a screen they call “the shape of things to come.” But sometimes creative understanding and interpretation of the present and the past can offer insightful suggestions about possible developments in the future.

Peter Drucker has established an international reputation as both a perceptive analyst of the present and an astute seer of the future. Whether in management and decision-making theory, economic policy, or political events, he often sees avenues and trends that others have missed. In his first book, The End of Economic Man, published in early 1939, he demonstrated why an alliance between Hitler and Stalin to carve up Europe was extremely likely, at a time when almost every one viewed Nazism and Communism as irreconcilable enemies. And in his 1969 book, The Age of Discontinuity, he analyzed the failure of government programs and said a new trend would soon be on the horizon – “privatization.”

Professor Drucker’s new book, The New Realities, offers some glimpses of what the next decade and the 21st century may hold in store. The core of his view of the future is that the two major forces in the 20th century, “salvation by society” and “economic estates of the realm,” have lost their influence. By the first he means the belief that all of society’s problems can be solved by remaking the social order according to a collectivist blueprint. The second refers to New Deal special-interest coalition politics.

Both, Drucker argues, are in decline. Collectivist social engineering has died from failure in all the socialist countries. Indeed, he suggests that the 21st century may see the end of the Soviet Union as desires for freedom and national independence continue to replace Marxism as the ideals of the various peoples in the U.S.S.R. And special-interest politics is being replaced by a “new pluralism.” By the latter Drucker means private, non-political alternatives to government management and control in business, cultural, social problem areas and economic development. Indeed, he sees on the horizon the decline of the nation-state, as the world moves to a “transnational economy,” in which organizations, corporations, and voluntary associations of all sorts become increasingly globalized.

But if Drucker is right it will not automatically be a free market world. As the European Common Market moves towards economic integration in 1992, he sees the danger that nations will form “trading blocks,” threatening each other with tariff wars; and that many countries in the third world, while disowning old-fashioned socialism, win still try to industrialize through protectionism that artificially stimulates economic development down paths different than the ones the market would have pointed towards.

However, it will be a world, if Drucker is correct that will offer increased opportunities and challenges for individual freedom, mobility, and choice. Why? Because, he emphasizes, it is slowly but surely coming to be recognized that a modem economy is just too complex to plan. Either markets coordinate or harness the dynamic energy of free, decentralized entrepreneurial decision making, or an economy stagnates under state control. Furthermore, the moral mystique surrounding government is being peeled away; the public question is no longer whether government is morally bound to perform certain functions; rather, it is being asked, might not the market do it bettersIt should be pointed out that Drucker, while very pro-market, is neither an advocate of laissez faire nor a libertarian. And this is reflected in much of his analysis and interpretation of both policy options and desirable courses of action. But through most of the book he allows clear thinking to take first place over his personal preferences. It should also be pointed out that it is not too surprising that Drucker tends to analyze the world the way he does. As a young man, be studied in Vienna and one can still see much of the influence of the Austrian School of Economics in the way he approaches social and economic problems.

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    Richard M. Ebeling is a professor of economics at Northwood University. He was formerly president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).