The Frontiers of Management. Peter F. Drucker

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СКАЧАТЬ to go into production sharing, that is, to use their labor advantage to become subcontractors to developed-country manufacturers for highly labor-intensive work that cannot be automated—some assembly operation, for instance, or parts and components needed in relatively small quantities only. Developed countries simply do not have the labor anymore to do such work. Yet even with the most thorough automation it will still account for 15 or 20 percent of manufacturing work.

      Such production sharing is, of course, how the noncommunist Chinese of Southeast Asia—Singapore, Hong Kong, Taiwan—bootstrapped their development. Yet in Latin America production sharing is still politically quite unacceptable and, indeed, anathema. Mexico, for instance, has been deeply committed—since its beginnings as a modern nation in the early years of this century—to making her economy less dependent on, and less integrated with, that of its big neighbor to the north. That this policy has been a total failure for eighty years has only strengthened its emotional and political appeal.

      But even if production sharing is used to the fullest, it would not by itself provide enough income to fuel development, especially of countries so much larger than Chinese city-states. We thus need a new model and new policies. Can we, for instance, learn something from India? Everyone knows, of course, of India's problems—and they are legion. Few people seem to know, however, that India, since independence, has done a better development job than almost any other Third World country: the fastest increase in farm production and farm yields; a growth rate in manufacturing production equal to that of Brazil, and perhaps even of South Korea (India now has a bigger industrial economy than any but a handful of developed countries!); the emergence of a large and highly entrepreneurial middle class; and, arguably the greatest achievement, progress in providing both schooling and health care in the villages. Yet the Indians followed none of the established models. They did not, like Stalin, Mao, and so many of the Africans, despoil the peasants to produce capital for industrial development. They did not export raw materials. And they did not export the products of cheap labor. But ever since Nehru's death in 1964 India has encouraged and rewarded farm productivity and sponsored consumer-goods production and local entrepreneurs. India and her achievement are bound to get far more attention from now on than they have received.

      The developed countries, too, need to think through their policies in respect to the Third World—and especially in respect to the hopes of the Third World, the rapidly industrializing countries. There are some beginnings: the new U.S. proposals for the debts of the primary-products countries that U.S. Treasury Secretary Baker recently put forth, or the new lending criteria which the World Bank recently announced and under which loans to Third World countries from now on will be made conditional on a country's overall development policies rather than based mainly on the soundness of individual projects. But these proposals are so far aimed more at correcting past mistakes than at developing new policies.

      The other major agenda item is, inevitably, going to be the international monetary system. Since the Bretton Woods Conference at the end of World War II, it has been based on the U.S. dollar as the “reserve currency.” This clearly does not work anymore. The reserve currency's country must be willing to subordinate its domestic policies to the needs of the international economy, for instance, risk domestic unemployment to keep currency rates stable. And when it came to the crunch, the United States refused to do so, as Keynes, by the way, predicted forty years ago.

      The stability the reserve currency was supposed to supply could be established today only if the major trading countries—at a minimum the United States, West Germany, and Japan—agreed to coordinate their economic, fiscal, and monetary policies, if not to subordinate them to joint, and that would mean supernational, decision making. Is such a development even conceivable, except perhaps in the event of worldwide financial collapse? The European experience with the far more modest European Currency Unit (ECU) is not encouraging; so far, no European government has been willing to yield an inch for the sake of the ECU. But what else could be done? Or have we come to the end of the 300-year-old attempt to regulate and stabilize money on which, in the last analysis, both the modern national state and the international system are largely based?

      Finally, there is one conclusion: Economic dynamics have decisively shifted to the world economy.

      Prevailing economic theory—whether Keynesian, monetarist, or supply-side—considers the national economy, especially that of the large developed countries, to be autonomous and the unit of both economic analysis and economic policy. The international economy may be a restraint and a limitation, but it is not central, let alone determining. This “macroeconomic axiom” of the modern economist has become increasingly shaky. The two major developed countries that fully subscribe to it in their economic policies, Great Britain and the United States, have done least well economically in the last thirty years and have also had the most economic instability. West Germany and Japan never accepted the macroeconomic axiom. Their universities teach it, of course. But their policymakers, both in government and in business, reject it. Instead, both have all along based their economic policies on the world economy, have systematically tried to anticipate its trends, and to exploit its changes as opportunities. Above all, both make the country's competitive position in the world economy the first priority in their policies—economic, fiscal, monetary, and largely even social—to which domestic considerations are normally subordinated. And these two countries have, of course, done far better, both economically and socially, than Great Britain and the United States these last thirty years. In fact, their focus on the world economy and the priority they give it may be the real “secret” of their success.

      Similarly the secret of successful businesses in the developed world—the Japanese, the German carmakers like Mercedes and BMW, ASEA and Ericsson in Sweden, IBM and Citibank in the United States, but equally of a host of medium-size specialists in manufacturing and in all kinds of services—has been that they base their plans and their policies on exploiting the world economy's changes as opportunities.

      From now on any country—but also any business, especially a large one—that wants to do well economically will have to accept that it is the world economy that leads and that domestic economic policies will succeed only if they strengthen, or at least not impair, the country's international competitive position.

      This may be the most important—it surely is the most striking—feature of the changed world economy.

       (1986)

*And when its price dropped in early 1986 below $15 per barrel, oil too sold for no more than it did in 1933 in relation to the prices of manufactured goods and services.

*On this, see two quite different discussions, one by Dennis Avery, senior agricultural analyst, of the U.S. Department of State, “U.S. Farm Dilemma; the Global Bad News Is Wrong,” Science 230, 24 (October 1985); and Barbara Insel, International Affairs Fellow at the Council on Foreign Relations in New York, “A World Awash in Grain,” Foreign Affairs (Fall 1985).

*Real Primary Commodity Prices by David Sapsford, IMF Internal Memorandum, May 17, 1985.

*On this, see my book Innovation and Entrepreneurship (New York: Harper & Row, 1985).

*This is cogently argued by Stephen Marris, for almost thirty years economic adviser to the Organization for Economic Cooperation and Development (OECD), in his Deficits and the Dollar: The World Economy at Risk (Washington, D.C.: Institute of International Economics, December 1985).

      CHAPTER TWO

      America's Entrepreneurial Job Machine

      “WHERE HAVE ALL THE JOBS GONE?” has been the constant question in all industrial СКАЧАТЬ