[Odyssey] “The End of Economic Man”: Liberalism’s Struggle and Democratic Fascist Power

When people hear the name Peter Drucker (1909–2005), many think first of his books on management. It is therefore easy to assume that Drucker was a scholar deeply versed in things like marketing theory or financial accounting. But Drucker’s management theory did not emerge because he set out to create a discipline of management.

Just as Leibniz and Newton each built the mathematical field of calculus because they could not otherwise find a way to explain their own natural philosophy and physics, Drucker began his work as a political economist and sociologist and, through his interest in human behavior, eventually founded the field of management. It may also be compared to Adam Smith, who studied moral philosophy and, in that extension, laid the foundations of modern economics.

Peter Drucker, who lived a long life across three generations, had a deep interest in human behavior. The catalyst for this lay in his experience of Nazism and the persecution of Jews in Germany. There is an interesting episode related to this. In his first book, The End of Economic Man: The Origins of Totalitarianism, the young Drucker says he heard a Nazi officer give the following speech on the street:

“We do not want the price of bread to rise. We do not want the price of bread to fall. Nor do we want the price of bread to stay where it is. The price of bread we want is the price set by the Nazis.”

Drucker testified that many people cheered these words of the Nazi officer. But the young Drucker, unable to make sense of it, asked the friend beside him, “Do you think this makes any sense?” His friend replied, “You really are naive. That is simply how it is.” Drucker later said that at that moment he grasped the essence of totalitarianism. In other words, both socialism and capitalism concern economic rationality, but when that economic rationality disappears among the people, what arrives is none other than totalitarianism. Drucker called this totalitarian phenomenon “the end of economic man.”

Stahl’s Conservatism as Presented by Drucker

Peter Drucker says that liberals failed to resist Nazi fascism. The rationalism of liberals had no persuasive power against the Nazis’ detached-from-reality and irrational agitation. In response, Drucker invokes the conservative philosophy of the 19th-century legal philosopher Friedrich Julius Stahl, whom he regarded as a mentor.

Stahl, who saw the state as “an entity that realizes the Kingdom of God,” established the foundations of a Christian conservative philosophy holding that both the state and law must follow the will of God. Stahl became professor of legal philosophy at the University of Berlin in 1840, and was both a leading conservative thinker who systematized the divine right of kings in legal philosophy in the first half of the 19th century and a politician actively engaged in real politics. He later became chairman of Prussia’s First Conservative Party and was also a key figure in laying the foundations of Germany’s Christian Democratic Party.

As we know, the divine right of kings is not confined to the idea that “the king is sacred.” It means that the monarch, transcending secular order, must govern benevolently on the basis of mercy, good deeds, and absolute good in accordance with the will of God, the sovereign of history. By doing so, Stahl argued, the secular state can draw closer to the Kingdom of God.

An interesting fact is that Stahl, who advocated the divine right of kings, accurately predicted both the collapse of socialism and the emergence of the madness called Nazism. Stahl believed that excessively constructivist ideologies born of imperfect reason would ultimately summon a monster like the biblical Leviathan, and that through the imperfection of that arrogant reason they would inevitably destroy themselves.

Stahl argued that individual freedom and responsibility, granted by God to human beings within a spiritual order transcending reason, should serve as the organizing principle of society. Stahl’s thought had an enormous influence at the time, together with Humboldt, across Europe and in Prussia, and for a very long time became a foundational current of conservative thought in Europe. His ideas were also carried forward into Peter Drucker, and Drucker interpreted the capitalist corporation as a means of embodying God’s order and saw the CEO as a realizer of such transcendent morality. Modern management theory was born in that way through Drucker.

The reason Drucker says in The End of Economic Man that the transcendent conservatism of Julius Stahl was the only thought capable of fighting Nazi fascism is that political struggle is, in its essence, a struggle between good and evil, and rational liberalism, grounded in value relativism, had no power of resistance in such a struggle. In fact, during the Nazi rise to power, the White Rose, a German liberal group, even distributed pamphlets containing Laozi’s Tao Te Ching. Against irrational fascism transcending left and right, rationalist liberalism had lost its popular persuasive force.

Similarities Between South Korea and the Weimar Republic

The situation in Germany in the 1930s, when the Nazis came to power, has many similarities with the historical path South Korea has followed. Just as backward Germany succeeded in industrialization with war reparations after winning the Franco-Prussian War, leading to the emergence of a middle class, South Korea too saw the rise of a middle class through industrialization after overcoming the ruins of the Korean War. In both Germany and Korea, “nationalism” played a major integrative role.

Just as the Reich of Kaiser Wilhelm in Germany was transformed into a constitutional republic through democratic revolution, South Korea too ended its authoritarian era and underwent democratization. Socialism collapsed in Germany; in Korea, faith in capitalism became firm with the collapse of the former Soviet Union and East Germany, and with South Korea’s victory in inter-Korean system competition.

The problem came afterward. In the early 20th century Germany experienced a severe depression, while Korea, 70 years later at the end of the 20th century, suffered the trauma of the IMF crisis. Both Germany and Korea came to share the experience of thinking that capitalism, too, was ultimately not an alternative. Added to this, Germany 70 years ago faced threats from neighboring countries, and Korea too came to face Japanese remilitarization, China’s overt interference in domestic affairs, and the North Korean nuclear crisis.

With no visible exit, as the old order collapsed and a new order failed to emerge 70 years ago, Germany launched a witch hunt against the Jews, while Korea put large corporations and conservatives forward as targets of “clearing out deep-rooted evils.” One may say it is excessive to judge that Hitler’s anti-liberal, anti-capitalist fascism 70 years ago and South Korea today are running on the same track.

In The End of Economic Man, Peter Drucker said that both capitalism and socialism, whether right or wrong, are ideologies that seek “economic rationality,” whereas fascism is based on non-economic logic and therefore begins with “the end of economic man.” Claims such as “we cannot make a living because of the rich and the chaebol,” “the chaebol are piling up internal reserves and not investing,” “the economic concentration of chaebol firms is dangerously high,” or “chaebol firms slash subcontract prices and make life difficult for small and medium-sized enterprises” are not true. Such claims, in essence, run on the same track as the Nazis’ “demonization of the Jews,” mobilized for their rise to power.

If Germans, famed above all for being rational and prudent, could be swept up in the madness of fascism, there is no guarantee that Koreans today, similarly trapped without an exit, will not in the near future fall into collective madness. When collective hysteria is at work, the abnormal naturally comes to appear normal. That is because we are imperfect human beings who see what we want to see. The ideology capable of standing against such madness requires, beyond rational and reasonable liberalism, a transcendent faith able to decide the value struggle between good and evil.

That, perhaps, is the very weapon liberals must take up against the monster called fascism, encountered in the odyssey of liberalism.

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Original title: [오디세이] ‘경제인의 종말’: 자유주의의 투쟁과 민주적 파쇼 권력

Author: Jeong-seok Han

Date: 2021-01-27

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=5&idx=23449