This briefing document summarizes the main themes and critical arguments presented in the provided excerpts from Peter F. Drucker’s “The End of Economic Man.” Written initially in 1939 and with a 1969 preface, the book offers a socio-political analysis of the rise of totalitarianism (specifically Nazism and Fascism) in Europe, arguing that it stems from the failure of the prevailing “economic man” concept and the collapse of faith in both capitalist democracy and Marxist socialism. Drucker contends that fascism is not rooted in national character or simply a defense of capitalism, but rather a response to the disintegration of the rational social order and the masses’ desperate search for a new, non-economic basis for society. He analyzes the unique characteristics of fascism, its economic policies, its reliance on the creation of enemies, and ultimately predicts a potential, and perhaps inevitable, alliance between Nazi Germany and Soviet Russia.
Main Themes and Important Ideas:
1. The Inadequacy of Purely Economic or Historical Analysis:
- Drucker argues that understanding social phenomena, particularly the rise of totalitarianism, requires a sociological lens that examines societal strains, stresses, trends, and upheavals.
- He critiques purely economic or historical explanations as insufficient on their own, stating, “No matter how valid either approach, they are not adequate by themselves. The stool needs a third leg. Social phenomena need social analysis…”
- He sees sociology, as envisioned by figures like Weber, Pareto, and Schumpeter (with his concept of the “innovator” as a social, not purely economic, force), as crucial for this understanding.
2. Defining “Society” for Operational Purposes:
- Acknowledging the vagueness of the term “society,” Drucker argues that it is still a useful concept for analysis, much like other abstract terms such as history, economics, and philosophy.
- He posits that “The End of Economic Man treats society as the environment of that very peculiar critter, the human being. History treats what happens on the surface, so to speak. ‘Isms’—that is philosophical systems—may be called the atmosphere. But society is the ‘ecology.'”
- The book aims not to define society definitively but to understand it, specifically in the context of the rise of totalitarianism as a major social phenomenon of the first half of the 20th century.
3. Fascism as a Pervasive Sickness of the European Body Politic:
- Drucker rejects explanations of Nazism and Fascism based on inherent national character or as simply the “dying gasp of capitalism.”
- He argues that national character explains how things are done, not what things are done. “This book rather diagnosed Nazism—and Fascism—as a pervasive sickness of the European body politic.”
- Crucially, he asserts that the failure of Marxism and the collapse of faith in its promise of secular salvation were major reasons for the masses’ turn to totalitarianism.
4. The Lack of a Positive Creed in Fascism:
- A key characteristic of fascism, according to Drucker, is the absence of a positive, coherent ideology and an overemphasis on the negation of the past.
- He highlights Mussolini’s slogan “men make history!” not as a statement of agency, but as an attempt to claim that “the deed is before the thought, and that revolution logically precedes the development of a new creed or of a new economic order.” Drucker counters this historically, arguing that revolutions are typically preceded by intellectual and social developments.
5. Belief Against Belief: The Psychology of Fascist Attraction:
- Drucker observes a peculiar phenomenon: the masses often believed in fascism despite not believing its specific promises or statements.
- He uses the analogy of a child caught stealing jam who hopes against hope for a miracle to escape punishment, and the British government hoping against hope for a miracle to avoid war with dictators.
- “Both make themselves believe in a miracle against all reason and knowledge because the alternative is too terrible to face. Both turn to the miracle because they are in despair. And so are the masses when they turn to fascism.” This despair stemmed from the collapse of the rational order and the failure of existing systems to provide meaning and security.
6. The End of “Economic Man” as the Basis of Society:
- Drucker argues that the concept of “Economic Man” – the idea that human behavior is primarily driven by economic self-interest and optimization – had become the foundation of European society, evidenced by the rise of economics as a dominant science.
- However, this foundation had crumbled, leaving a void that totalitarianism sought to fill with a non-economic basis for social order. “The outward sign of the emergence of the concept of Economic Man as the basis of society was the emergence of economics as a science.”
- The failure of economists to predict or understand major economic and political shifts further undermined the credibility of this concept. “This can only mean that the teachings of economic science have ceased to correspond to social reality.”
7. The Disintegration of the Rational Character of Society:
- Drucker identifies the breakdown of a rational relationship between the individual and society as a revolutionary trait of the times.
- Europe had uniquely attempted to rationalize the entire cosmos, offering individuals a defined place within a rational order (whether religious or secular).
- The rise of totalitarianism signifies a return to irrationality, where “demonic forces” that had been banished by European rationalism re-emerge. Even Marxist critiques of capitalism, according to Drucker, had to create “devils” (the capitalists).
8. The Illusion of Freedom Under Fascism:
- While refuting the past, European society failed to create a new sphere of human activities that could be accepted as supreme and autonomous, with a new concept of man and real, non-economic freedom.
- Freedom outside the economic sphere tended to be interpreted in economic terms. Attempts to curtail economic freedom risked the suppression of all freedom, as freedom itself was no longer seen as autonomous and supreme.
- The “new freedom” preached by fascism was the “right of the majority against the individual,” exemplified by the Munich Agreement. This, Drucker argues, is not freedom but license. “Fascism, on the other hand, announces that it has succeeded in discovering the secret of true freedom, which lies in abolishing all possible substance of freedom.”
9. Fascism as a World-Revolutionary Force, Not Limited to National Character:
- Drucker refutes the idea that fascism was solely a product of specific national traits in Germany and Italy.
- The fact that fascism was becoming a world-revolutionary force indicated similar underlying causes elsewhere.
- Despite similarities in form, Italy and Germany differed significantly in character and history.
10. The Primacy of National Unification in Italy and Germany:
- In contrast to countries like England and France where the struggle for democracy was a primary historical experience, in Italy and Germany, the great emotional attachment of the masses in the 19th century was to national unification.
- The bourgeois order was largely accepted as a means to achieve national unity, lacking independent emotional appeal. When its substance became invalid, its tenets lost all power.
11. Totalitarianism as Neither Capitalist Nor Socialist:
- Having found both capitalism and socialism invalid, fascism sought a society beyond economic considerations, focused on maintaining industrial production for social ends.
- The apparent hostility to both capitalist profit supremacy and socialism was a consistent expression of fascism’s genuine intentions: a social revolution maintaining the industrial system but not capitalist.
12. The Military Model as the Basis of Totalitarian Society:
- Totalitarian regimes, particularly Nazism, attempted to make all social relationships conform to the model of the military, with an emphasis on command, obedience, and non-economic rewards (like military honor).
- Organizations like the Storm Troops and Hitler Youth served primarily social purposes, giving the underprivileged a sphere of command while the economically privileged obeyed, aiming to transcend class distinctions.
- “Totalitarian Wehrwirtschaft—the organization of the entire economic and social life upon military lines—serves therefore the vital social purpose of supplying a noneconomic basis of society while leaving unchanged the fagade of industrial society.”
13. The Subordination of Economics to Military and Social Ends:
- In the totalitarian state, private profits were no longer a constitutive element of society but a lubricant, subordinate to the requirements of a militarily conceived national interest and full employment.
- Government control over the economy was extensive, with compulsory investments and the effective abolition of significant private corporate profit without altering the abstract principle of private profits.
- Consumption was drastically cut to free up capital for investment, largely in armaments, mirroring Soviet Russia’s methods but driven by a different underlying social goal (military autarchy, not economic progress).
14. The Economic Unsustainability and the Social Purpose of Armaments:
- While economically inferior to free capitalism, the totalitarian economic system was driven by the social need to provide a non-economic basis for society and to banish unemployment.
- Drucker challenges the simplistic view that armaments are purely wasteful economically, arguing that if financed by cutting non-essential consumption, the economic position isn’t necessarily worsened and could even be a gain if it employs more labor.
- The focus on armaments was driven by the loss of faith in economic progress and the need for a non-economic goal to justify sacrifices in consumption.
15. The Import Problem and its Consequences:
- The drive for military autarchy created a significant import problem, especially for raw materials needed for armaments in resource-poor Germany and Italy.
- Attempts to solve this through substitute industries and trade manipulation had limited success and often led to increased burdens on domestic and foreign populations.
- The import situation had significant political and social consequences, influencing foreign policy towards the political subjugation of raw material producers and potentially undermining the non-economic totalitarian society itself by forcing industrialization of agriculture.
16. The Necessity of Inventing Enemies:
- Faced with internal contradictions and the inability to create a positive, rational social order, totalitarian regimes had to invent external enemies to blame for their failures and to justify their actions, particularly rearmament.
- “Though they arm chiefly for internal social reasons, the totalitarian countries continuously have to invent enemies against whose aggressive designs they have to be prepared.”
- This reliance on negative “holy wars” against fabricated threats, such as Jewish conspiracies, became a central mechanism for maintaining the regime’s legitimacy.
17. The Social Function of Anti-Semitism:
- Drucker argues that Nazi anti-Semitism was not rooted in any inherent opposition of German Jews to Nazism (except for its anti-Semitism) or any real threat they posed.
- Instead, it served as a crucial internal mechanism, a means to denounce the bourgeois order (fought under the name of the Jew) without resorting to class war, which would have been contradictory to the non-economic ideology.
- The “Jewish question” could never be finally solved by Nazism because the Jew served as a necessary personified demon for the regime’s self-justification.
18. The Inherent Inefficiencies of Over-Organization:
- The extreme centralization and planning characteristic of totalitarian regimes led to over-organization and a loss of individual initiative, making the system brittle and prone to breakdown even from minor disruptions.
19. The Underlying Desire for a Rational Society:
- Despite the grip of totalitarianism, Drucker believes that the vast majority of people in Germany and Italy yearned for a new order that could provide a rational society and a rational place for the individual.
- The failure of attempts to create such an alternative, like Dr. Schuschnigg’s in Austria, only reinforced the totalitarian belief due to the despair of the masses.
20. The Predicted Alliance Between Germany and Russia:
- Drucker argues that the real enemy of totalitarian Nazism is not Soviet communism, as both regimes had been forced down a similar path toward a totalitarian, non-economic society due to the collapse of faith in their initial ideologies (freedom and equality through Marxism).
- He predicts a potential, and perhaps inevitable, alliance between Germany and Russia based on both ideological convergence (the rejection of the Western ideal of freedom and its economic basis) and mutual strategic and economic benefits (overcoming import dependence for Germany and avoiding a two-front war for Russia).
- He identifies potential obstacles in the personal convictions of Hitler but suggests that the growing power of more pragmatic, “confirmed totalitarian” elements within the Nazi regime, who historically favored closer ties with Russia, could pave the way for such an alliance.
21. The Danger of Simulating Totalitarian Armament in Democracies:
- Drucker cautions against the idea that the best way to resist totalitarianism is to simply mirror its total armament.
- He argues that totalitarian armament is driven primarily by social, not military, considerations, and that democracies should focus on creating a new, positive societal vision to counter the appeal of totalitarianism, rather than solely on physical rearmament.
Conclusion:
Drucker’s “The End of Economic Man,” as evidenced by these excerpts, offers a profound and unconventional analysis of the rise of totalitarianism in Europe. He moves beyond simplistic economic or nationalistic explanations, emphasizing the social and psychological factors driving the masses towards these regimes in a period of profound disillusionment and the collapse of established ideologies. His insights into the nature of fascism, its reliance on negative creeds and manufactured enemies, and his prediction of a Russo-German alliance remain historically significant and offer valuable lessons for understanding the dynamics of societal upheaval and the enduring human need for a rational and meaningful social order.
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