Journal of

Management Drucker on effective public

History
6,1
management
James A. Gazell
48 San Diego State University, San Diego, California, USA

Keywords: Management, Business, Effectiveness, Federal government, Public sector,

Nonprofit organizations
Management historians have devoted attention to writer Peter F. Drucker’s thoughts about
directing businesses successfully but may have overlooked (or been unaware of) his appreciation of
the inherent difficulties in managing public sector organizations effectively. He nevertheless wrote
extensively about two highly important components of this sector: nonprofit organizations and the
federal government. He was among the earliest observers to recognize the growing significance of
nonprofits and the variety of obstacles to their more effective management. He also perceived
categories of management problems unique to the ability of the federal government to be run well
– a set of external and internal limits. His observations reveal an underlying respect for the role of
government and his desire to strengthen it by focussing its missions and priorities on what it must
do and what it does best and identifying what it does poorly and should thus delegate to nonprofits
and business.

Introduction
The first reaction in a situation of disarray is always to do what Vice President
(Albert) Gore and his associates are now doing – patching. It always fails. The
next step is to rush into downsizing. Management picks up a meat-axe and lays
about itself indiscriminately … In many, if not most cases, downsizing has
turned out to be something that surgeons for centuries have warned against:
“amputation before diagnosis”. The result is always a casualty (Drucker, 1995,
February, p. 54, col. 1). Management philosopher, Peter F. Drucker, made this
comment in analyzing the efforts of the National Performance Review (the Gore
Commission) to revamp the structure and administration of the federal
government. His observation is significant because it exemplifies a strong
currrent in his thoughts that management historians may have neglected (or
may not have been conscious of). That current is his appreciation of the
difficulties unique to (or inherent in) managing the public sector (that is,
government and nonprofits) effectively. This aspect of his writings may have
escaped attention because such scholars have concentrated on his discussion
and analysis of the broad nature of management – an emphasis that reflects his
own orientation.
To Drucker, management was a body of knowledge ultimately enabling
people to control nature and their lives and to achieve economic improvement
and social justice through “the systematic organization of economic resources”

Journal of Management History,

Vol. 6 No. 1, 2000, pp. 48-62. This article is part of a special issue of papers entitled “Special issue – Symposium on the
© MCB University Press, 1355-252X contributions of Peter Drucker to management – part one”, edited by James A. Gazell.
(Drucker, 1954, p. 4). “Management is work”, he noted, “and as such it has its Drucker on
own skills, its own tools, its own techniques” for completing “tasks” (Drucker, effective public
1973, p. x). Furthermore, management to him was a bulwark against management
totalitarianism, which he feared would result if organizations in democratic
countries did not function effectively over the long run. Organizations could not
operate incompetently for an indefinite time and still survive. They had to
perform within a tolerable range. Otherwise, the public would grow so 49
disillusioned that it would eventually exchange its considerable freedom for the
lure of a regimented society.
To Drucker, great governmental strength certainly posed a threat of tyranny,
but so did insufficient performance by a country’s business and public sectors
(Drucker, 1973, pp. ix-x). His latter concern stemmed from growing up in the
1920s and early 1930s near, and later in, a democratic Germany (the Weimar
Republic), which collapsed partly because of deep-seated economic
dissatisfaction. Doubtless he was also aware of the possibility that management
might be used to make despotic regimes more effective and thus to prolong their
existence. After all, management cuts across political and economic systems.
Still, his illustrations of management theories and practices come from the
world of democratic capitalism and reflect his indisputable commitment to its
preservation.
During more than 50 years as the nation’s foremost management theorist and
consultant, Drucker became known for a wide set of views. For instance, he was
the first to see management as a profession – a body of theoretical and practical
knowledge about organizations, tasks, and people. He stressed that
organizations are fundamentally human (not financial) institutions. He forecast
the advent of “knowledge workers” – his name for the new professional
managers and specialists, people with formal education or training, who are
gradually replacing blue-collar employees in organizations. He popularized the
concept of privatization, which he originally called “reprivatization” – mostly,
the contracting out of govemment services. He advocated “management by
objectives” (MBO) – the collective setting of organizational goals, targets, and
measurements. He delineated the facets of leadership – the setting of
organizational direction, an emphasis on performance, and a concern for social
effects. He analyzed the nature of decision making – the understanding of a
need for a policy, constraints and compromises in policy making,
implementation, and feedback. He explained the concepts of “posteriorities”
(tasks to be abandoned or scaled back) and “priorities” (the order of fulfilling
objectives). He championed efficiency (cost control) and effectiveness
(performance) as well as executive development and time management. He saw
a need for the effective management of nonprofit organizations. He analyzed
federal government reform (Drucker, 1954, pp. 121-136; Drucker, 1973, pp. 12,
21-26, 40-46; Drucker, 1957, pp. 75, 78-81, 86, 91, 96-98, 194; Drucker, 1997, p. 5;
Drucker, 1966, pp. 1-51, 100-112, 122-123; Drucker, 1968, p. 234; Drucker, 1990a,
pp. xiii-xiv; Drucker, 1985, pp. 118-121; Drucker, 1995, February, pp. 49-52, 54,
56-57, 60-61).
Journal of Drucker’s views on management pervade the world of business and public
Management organizations. Not surprisingly, his outlooks raise numerous questions,
History including why he considered some kinds of organizations harder to manage
effectively than others. For example, why did he regard public organizations
6,1 (governments and nonprofits) as more difficult to run successfully than
businesses? The central theme of this article is that management historians
50 have devoted attention to Drucker’s thoughts about directing businesses
successfully but may have overlooked (or may not have been aware of) his
appreciation of the inherent difficulties in managing public sector organizations
effectively. Despite such lack of attention, he nevertheless wrote extensively
about two highly important components of this sector: nonprofit organizations
and the federal government.
Let us analyze Drucker’s thoughts under each of these rubrics.

Nonprofit organizations
To Drucker, the effective management of nonprofit organizations involved some
of the problems of running businesses successfully. These difficulties included
an inability of business executives to retain an understanding of their
businesses as such enterprises grew, the challenge of providing leadership in
dynamic organizational environments, and the need of such leaders to use their
time more productively. However, the responsibilities of nonprofit managers
also included five additional, unique facets that made effective management
inherently more difficult but also more critical. First, nonprofits, by definition,
lacked a bottom line such as profits, sales, or market share as measures of
performance. Second, such organizations faced the problem of concentrating on
a single purpose and avoiding pressures to increase their reach beyond their
objective and competence. Third, these institutions tended to equate success
with budget size – in Drucker’s estimation, a substitute for performance
measurement. Fourth, nonprofits served a multitude of constituents, some with
a vested interest in preserving ineffective but still desired activities. Fifth, such
organizations tended toward righteousness (or moralism), which prompted
them to view their goals from an absolute perspective rather than an economic
(or cost-benefit) one. In other words, to Drucker, nonprofits often sought total
success despite such impossibility rather than simply the most return for their
money and efforts. Consequently these institutions failed to establish clear
organizational structures, missions, measurements of results, and systems of
accountability (Drucker, 1980b, p. 211; Drucker, 1985, pp. 179-180; Drucker,
1990a, pp. xiv-xv, 10-11, 107-109, 111, 140-141, 157-158; Drucker, 1992, pp. 218-
219). These five difficulties put an even greater premium on nonprofits than on
businesses to manage effectively. He did not think that nonprofits had yet
solved these problems (Drucker, 1991, p. A14, col. 5).
As early as 1968, Drucker recognized the existence of organizations that
were neither governmental agencies nor businesses. He envisioned a third
sector, although he did not use that phrase. He used the term “non-
governmental institutions” to describe structures for carrying out the objectives
set by governments. However, that phrase was too broad to delineate precisely Drucker on
the set of organizations that he had in mind. He mentioned hospitals and effective public
universities as examples but also included businesses (Drucker, 1968, p. 234). management
But, by 1973, he had found an appropriate name: “public-service institutions”
(or simply “service institutions”). This designation included a potpourri of
structures not obviously business or governmental: churches, professional and
trade organizations, community agencies, hospitals, research laboratories, 51
schools, and universities. However, he also included such traditional
government functions as the administration of justice and defense (Drucker,
1973, pp. 131, 159-161, 164). But by 1988, he excluded governmental activities,
added the categories of arts organizations and social service agencies, and
began using interchangeable phrases such as “nonprofit organizations,”
“nonprofit sector,” and “third sector” (Drucker, 1988, September-October, pp. 68-
69; Drucker, 1990a, pp. xiii-xiv; Drucker, 1996, p. xiv). He conflated these terms
when he finally defined “the ‘Third Sector,’ [namely, as a set of institutions]
comprising nonprofit, nongovernmental community services – both national
and local, secular and religious” (Drucker, 1992, p. 227).
Drucker viewed nonprofits as increasingly important because of their rapid
growth and their potential as more effective alternatives to government in
carrying out social programs and as valuable structures for preserving
communities, especially within cities (Wooldridge, 1997, February 2, p. M3, col.
5). To illustrate the increasing significance of these organizations in US society,
he pointed out that they were easily the country’s largest employer of
volunteers. Approximately 80 million people volunteered an average of three to
five hours a week in this sector, which constitutes about two to three percent of
the gross national product, since 1991, the gross domestic product (GDP). He
reported that almost one million nonprofit organizations were already
operating (Drucker, 1996, p. xiv). But he also noted that the nonprofits’ share of
the national output had not changed in four decades (Drucker, 1989, July-
August, p. 88; Drucker, 1990a, p. xiii).
Drucker was among the earliest observers – sociologist Amatai Etzioni was
another (Etzioni, 1973, pp. 314-316, 322) – to recognize the importance of the
emerging nonprofit sector. Drucker’s interest in this domain set the stage for
scholars like Lester Salamon to define the nonprofit sector empirically and to
undertake national and international research in the 1990s (Salamon, 1995,
pp. 53-54; Salamon, 1996, pp.xvii-xviii, 13-15).
Drucker’s insights expanded the concept of the non-governmental, non-
business realm inside and outside the USA. Before his appreciation of the
subject, the nonprofit world had been widely considered synonymous with the
scope of private donations (Salamon and Anheier, 1996, p. 4).
Otherwise, in Drucker’s view, what could be turned over to other sectors for
performance should be as a matter of systematic national policy (Drucker, 1968,
p. 234). The federal government would refrain from trying to run operations
outside its sphere and would confine its efforts to the effective management of
what, based on experience, it could do best. Even in the area of national defense,
Journal of the federal government would delegate the fulfillment of its missions to the non-
Management governmental sectors. For instance, instead of establishing its own weapons
History plants, the federal government would continue to entrust weapons production
to the business world but would set the standards for building such armaments.
6,1 In addition, nonprofit organizations, such as hospitals, would compete among
themselves to furnish social services but would receive federal help through tax
52 breaks and mandates for citizens to join private health insurance programs
(Drucker, 1986, pp. 336337). The business sector would carry out an expanding
set of functions, including garbage collection and mail deliveries. He went so far
as to predict: “The increasing inability of government to tackle effectively the
social needs of contemporary society creates a major opportunity for non-
governmental institutions and especially for the most flexible and the most
diverse of non-governmental institutions: business” (Drucker, 1986, p. 336).
But, for Drucker, devolution and privatization were not always panaceas.
There was a risk of excessive decentralization and localization. He mentioned
Southern California as a region where the emergence of metropolitan areas (like
Los Angeles) and the proliferation of independent governmental units had
greatly inhibited the cooperation necessary to accomplish anything of
significance, such as the improvement of schools. Moreover, he favored strong
local governments but warned that, if problems at this level are not managed
well or at all, they would come to be widely perceived as major concerns.
Widespread impetus for national action would follow. The federal government
would then be diverted from its non-delegatable functions. More bureaucracy,
paperwork, and regulations would result, greatly slowing the operations of the
federal govemment. However, the greater problem for him has been mostly too
much centralization. He cited federal regulations of electrical power, housing,
and transportation that apply to (but do not fit all localities in a diverse country
(Wooldridge, 1997, p. M3, cols. 3-4; Drucker, 1957, pp. 214-216, 219).
Information about this sector had been sparse before the 1980s, during
which time it grew rapidly, albeit from a low base (Salamon, 1995, p. 55;
Salamon, 1996, pp. 3-4). However, for decades, nonprofits had functioned as
unpublicized partners of the federal government in performing major social
tasks. The size and reach of nonprofit organizations expanded with the growth
of the welfare state and had, by the late 1970s, operated as the prime set of
mechanisms for delivering government-subsidized services. At the same time,
the federal government had become the leading source of funds for such
organizations through grants and contracts (Salamon, 1995, pp. 1,204). Drucker
wrote that, with popular disillusionment in the ability of government to carry
out such functions effectively, the role of nonprofits as replacements expanded
further in the 1980s, at least as measured by the number of volunteers,
responsibilities, and contributions to the nation, although not by their portion of
the GDP (Drucker, 1989, July-August, p. 88; Drucker, 1991, p. A14, col. 4). Still, if
such growth were as substantial as he stated, one might have also expected an
increase in the nonprofit organizations’ share of the GDP. The absence of such a
gain suggests the possibility that his preference for such a transformation is Drucker on
still a hope, not an imminent reality. effective public
Drucker’s attitude toward the normative function of nonprofits in a welfare management
state reflects another of his hopes: an expansion in the scope of the scholarly
debate on this sector. So far, the discourse has consisted mostly of two sides:
those who favored substantially continuing the partnerships between
nonprofits and the federal government versus advocates of competition 53
between the two domains in providing public services (Salamon, 1995, pp. 203-
4). He favored a third model: a replacement of the government role to the
maximum extent possible with a greatly enlarged nonprofit sector. However, he
did not describe his model in detail. He did not indicate precisely what federal
governmental functions should be turned over to the nonprofit domain. Nor did
he spell out what the proper confines of this sphere ought to be or what the
practical limits of this sector might be.
Recently, Drucker mentioned a new function for nonprofit organizations: the
task of providing job training for able-bodied welfare mothers as well as care for
physically and emotionally disabled children. “We now need to learn”, he wrote,
“that ‘non-profitization’ may for modern societies be the way out of
mismanagement by welfare bureaucracies” (Drucker, 1991, p. A14, co1.6). He
recently summed up his view of this sector as an eventual successor to the
welfare state when he declared:
The nonprofit sector is and has been the true growth sector in America’s society and economy.
It will become increasingly important during the coming years as more and more of the tasks
that government was expected to do during the last 30 or 40 years will have to be taken over
by community organizations, that is, by nonprofit organizations (Drucker, 1996, p. xiv). He
also noted that this sector contains “the largest number of leadership jobs in the United
States… ”(Drucker, 1996, p. xiv).
Finally, a convergence of forces may bring about the result that Drucker favors.
These include the fragmented structure of the US political system, a tradition of
third-party delivery of some governmental services, strong anti-federal-
government sentiment, powerful free-market ideology, the political ascendancy
of elected officials with such outlooks, and widespread experimentation with
devolution (for instance, privatization and welfare reform). However, the
difficulties inherent in managing nonprofits effectively may preclude a transfer
of governmental functions on the magnitude that Drucker contemplates. Such
problems suggest that the potential of this sector for further expansion may not
be so great as he had assumed.

Federal government
Despite such problems, Drucker still advocated transfering as many
responsibilities as possible from the federal government to the nonprofit and
business sectors. He considered the obstacles inherent to effective management
at the national level to be more formidable. “Government is a poor manager”, he
commented. “It is, of necessity, concerned with procedure, for it is also, of
necessity, large and cumbersome … [E]very government is, by definition, a
Journal of ‘government of forms”’ (Drucker, 1968, p. 229). To him a devolution of functions
Management would result in replacing greater problems with lesser ones and would therefore
History represent a net gain for the country. He perceived two distinct categories of
management problems unique to the ability of the federal government to be run
6,1 successfully. One focused on limits in its ability to manage the national
economy. This rubric includes two subdivisions.
54
Primacy of the market
Under the first subdivision, Drucker saw economic prosperity (or growth) as
resulting from the primacy of the market. He viewed the market as a complex
web of sellers and consumers and considered any attempt by the federal
government to guide the market as likely to fail. He believed the market’s great
scope and complexity put it beyond the understanding of federal planners and
hence made direct political control counterproductive. When such officials
made mistakes, they would be huge because of the market’s enormity. By
contrast, the errors of individual market participants, even the largest
corporations, would be minor because their share of the market was still small.
Moreover, the vast number of individuals and institutions virtually guaranteed
that their mistakes would collectively cancel each other out and that the market
would be stable and would change gradually (Drucker, 1964, pp. 211-212).
Although saying that the market could manage itself better than the federal
government could, Drucker still recognized that the latter had some
indispensable functions to perform. The federal government could influence the
market indirectly but effectively through a network of regulations that set the
boundaries within which the market could function freely (Drucker, 1964,
pp. 215, 235).
To be effective, regulations would have, in Drucker’s view, to fulfill two
criteria. They would have to be loose enough to allow the market ample
opportunity to rectify its shortcomings and resume its course toward economic
progress. But the rules would also have to be tight enough to protect society
from any dangers that the market may pose to labor, land, and money –
essential components for the continued survival of a society. He wrote:
To limit the operations of the market for the sake of the maintenance of the social fabric has
been the purpose of most of our economic policy in the last 100 years [since roughly the mid-
1800s]. It is the rationale for the regulation of work and employment, of the labor of women
and children, of the conservation of natural resources, of central banking, of slum clearance,
but also for the supervision of the trade in narcotics drugs … The whole purpose of the
market system is change, namely, economic expansion. But society requires a considerable
stability and predictability to survive. Above all the individual can only function in a social
habitat with which he is familiar, which he understands, and for which he has traditions
(Drucker, 1964, p. 210).
Drucker did not specify comprehensively where the regulatory boundaries
might be or should be. Nor did he initially demarcate the scope of the federal
government that might be necessary for it to perform its regulatory
responsibilities successfully. But in 1995, he estimated that the boundaries
would probably encompass between three-fifths and two-thirds of existing Drucker on
federal government agencies and programs (Drucker, 1995, February, p. 57). effective public
Moreover, he showed a degree of sympathy for efforts to reinvent the national management
government, but he recognized that political reality in the form of powerful
constituencies would prevent more than piecemeal efforts toward the
substantial cutbacks and consolidations that he considered necessary
(Wooldridge, 1997, p. M3, co1.5). He regarded such changes as necessary 55
because some federal agencies had unclear or obsolescent missions (Drucker,
1995, February, p. 54).

Size of the national economy

Under the second subdivision, Drucker perceived another inherent difficulty in
the ability of the federal government to manage effectively: the size of the
national economy. He saw no possibility of a successfully managed national
economy. As early as 1939, the year that his first book was published, he noted
that depressions and extremes of wealth had undermined popular faith in the
desirability of laissez faire (Drucker, 1939, p. 49). Generally, he opposed
replacing such non-interference with federal management of the country’s
economy because in his view elected officials would rely on economists, who,
despite their credentials and professional reputations, did not understand social
realities well enough to predict accurately the consequences of governmental
actions. He compared such experts to philosopher kings of the eighteenth
century, individuals who possessed power as well as knowledge and hence the
ability to carry out their ideas. He also thought that economists would serve as
planners as well as managers. But he forecast that such officials would achieve
no more success than these philosopher kings had (Drucker, 1939, pp. 48-50).
To Drucker, economists were filled with hubris because they ultimately
discerned no boundaries on the ability of the federal government to manage the
national economy effectively, regardless of their philosophical outlooks. They
merely differed over which single tool to use for such oversight (Drucker, 1986,
p. 108; Drucker, 1993, p. 125). He summed up his outlook by writing:
[John Maynard] Keynes knew the answer: whatever ails you, just create more purchasing
power. Milton Friedman, who may be the last surviving member of the great generation,
refined it and said, “You don’t even have to do that. All you have to do is just make sure the
money supply grows”. For the supply-siders it was even easier: just cut taxes. What could be
nicer and more pleasant? (Drucker, 1992, p. 28).
Drucker noted that before 1929, when the Great Depression struck, few thought
that the federal government could or should run the nation’s economy. Most
observers considered markets self-controlling over the long term and eventually
able to correct any short-run swings (Drucker, 1993, p. 124).
Finally, despite such criticisms, Drucker still favored a degree of federal
planning and mentioned several examples. One was the US Government’s
system of checks and balances, which exemplified the Constitutions framers’
planning for a central government. A second was the Northwest Ordinance of
1787, which in part provided for the admission of three to five states to the
Journal of Union from the Northwest Territory on petition from those segments whose
Management population had reached or exceeded 60,000. One-third was the Homestead Act
History of 1862, which fostered the settlement of areas west of the Mississippi River by
offering citizens title to 160 acres of land if they settled on it and cultivated it for
6,1 five years. A fourth was the transcontinental railroads of the late 1800s, which
facilitated the economic development of the West. He defended such planning
56 by the federal government because of its pragmatism and experimental nature,
but opposed total planning because of its dogmatic outlook toward the future
(Drucker, 1970, p. 201).
A second distinct category of unique federal government management
problems concerned internal limits, those affecting its ability to run itself and
other programs. Drucker discussed five limits under this rubric.

Broad scope of governmental responsibilities

Drucker perceived one difficulty intrinsic to the ability of the federal
government to manage effectively: the broad scope of its responsibilities. In
1954, he first broached this subject and noted that, in the business world, the
primary task of management was the achievement of economic performance
consistent with the need to strengthen society and to adhere to its political and
ethical beliefs (Drucker, 1954, p. 7). “What to the manager must the main focus”,
he commented, “is to the politician, of necessity, only one factor among many”
(Drucker, 1954, p. 9). However, in government, economic performance was
merely one consideration. For example, he cited military actions, which require
decision-makers, such as military leaders, to put national security first and to
disregard economic consequences. Concern for the latter might limit the reach
of military decisions but could not influence their direction. A reversal of such
priorities would amount to a subversion of a military’s basic function – a
“betrayal of its responsibility and dangerous malpractice” (Drucker, 1954, p. 8).
The broad scope of the federal government’s responsibilities resulted from its
tendency to assume far more responsibilities than it could manage effectively
(Drucker, 1961, p. 14; Gazell, 1992, p. 189). Drucker attributed this inclination to
a widespread expectation that the federal government could bring peace,
prosperity, and happiness through its policies and programs. He wrote that this
ethos dominated the nation’s thought for a century (1873 to 1973) but that,
between 1965 and 1973, its power dissolved (Drucker, 1990b, pp. 3-4, 8-9). He
ascribed its collapse to popular disillusionment with President Lyndon
Johnson’s Great Society programs (especially the War on Poverty) and to
growing public doubts about whether there was one right answer to any social
problem and whether government knew what that solution was. Drucker
viewed this collapse as part of a worldwide phenomenon and as an end of a
political philosophy that he called “salvation by society” (as opposed to
“salvation by faith”). The former had originated in the eighteenth century and,
in both its democratic and totalitarian forms, had sought progress toward an
earthly paradise largely through government actions (Drucker, 1990b, pp. 10-
14, 59).
 However, it is unlikely that Johnson or any of his supporters thought that the Drucker on
full enactment and funding of his proposals would constitute more than a few effective public
steps toward such an end. Drucker did not expect a massive rollback in the management
present level of federal governmental responsibilities. But he expected future
proposals for expanding federal obligations to be considered individually and
decided on the basis of their specific costs and benefits (Drucker, 1990b, pp. 11,
67-68). 57
To Drucker, the eventual size of the federal government would represent the
net effect of two sets of changes: considerable downsizing, but also some
upsizing. For instance, he advocated closing the Veterans Administration’s (VA)
hospitals and nursing homes on a variety of grounds—duplication with civilian
facilities, mediocre quality, high cost, and transportation distance for users. He
favored transfering the VA’s services, with federal aid, to local hospitals and
health maintenance organizations. However, he also raised the possibility of
expanding the Occupational Safety and Health Administration to promote
greater workplace safety (Drucker, 1995, February, p. 56). As he indicated in the
Introduction, he did not assume that downsizing was always desirable. Instead,
it might be beneficial—but only if warranted by a diagnosis of an agency’s
mission. Nonetheless, if appropriate, downsizing might generate revenue to pay
for new federal priorities or for the better performance of old but still desired
ones.

Governmental inability to abandon activities

Drucker recognized a second intrinsic difficulty: an inability of the federal
government to abandon policies and programs that had become obsolete or
unsuccessful and to transfer such activities to other organizations that might
discharge them better. In 1961, he first broached this subject and urged that
such responsibilities “be ruthlessly pruned” (Drucker, 1961, p. 14). Several years
later, he repeated this proposal but understood that pruning was often
impractical. Federal initiatives on enactment frequently acquired political
constituencies and became entrenched with strong interest groups to defend the
existence, funding, and staffing of various activities. The performance of
federal initiatives was not critical to their survival. His examples included the
Interstate Commerce Commission (eliminated in 1995), farm support programs,
the military draft (abolished in 1973), research projects, endowments of the arts,
and welfare policies (Drucker, 1966, p. 105; Drucker, 1968, pp. 226-7). He coined
the term “posteriorities” to describe activities that should be abandoned or
shifted to a lower level of government or to the nonprofit and business sectors
(Drucker, 1966, p. 110; Drucker, 1968, pp. 233-4).
Furthermore, Drucker noted that, if the federal government could set
“posteriorities”, it could then more effectively serve its purpose as the
mechanism for providing a national vision and for deciding the main goals of
society (Drucker, 1961, p. 14; Drucker, 1968, pp. 225, 234). To establish
“posteriorities”, he advocated what are commonly called “sunset laws” –
statutes which are enacted for specific time period but which automatically
Journal of expire unless expressly re-authorized (Drucker, 1968, p. 232; Drucker, 1961,
Management p. 313). However, he became disenchanted with such laws on a variety of
History grounds: the absence of objective standards for determining when federal
activities had become counterproductive, a lack of systematic procedures for
6,1
ending such undertakings, the presence of constituencies to defend a
continuation of government enterprises, and a failure to devise alternatives for
58 unsuccessful programs and regulations (Drucker, 1985, pp. 259-260; Drucker,
1986, p. 313; Gazell, 1992, pp. 191-2).

Governmental monopoly status

Drucker discussed a third unique problem in successfully managing the federal
government: its monopoly status with regard to several functions that he
deemed essential. These included money and credit, the administration of
justice, infrastructure (such as electrical power and education), police and
military power, and foreign policy. Such functions could not be delegated or
abandoned. There could be no abdication. Nor could there be any market test
such as competition. Even if these tasks could not be effectively managed, the
federal government had to persevere and do its best because the alternative
would be worse if any of these functions were delegated. That alternative was
the fragmentation of society into sections and factions with the grave threat of
eventual dissolution and subsequent anarchy (Drucker, 1964, p. 209; Drucker,
1961, pp. 15-16, 18).
One kind of faction that Drucker feared was any political or economic
group that had the ability to cripple the functioning of a nation. He used
several phrases to describe his fear – “organized resistance”, “private forces of
resistance”, and “a private army”. He observed that labor unions could call
industry-wide strikes, even during national emergencies. To him this “power
… comes perilously close to the power of levying a private army” (Drucker,
1961, p. 16). He favored “the exclusive [federal government] control over
organized resistance” (Drucker, 1961, p. 15) or “an absolute ban on private
forces of resistance” (Drucker, 1961, p. 16). He viewed such strikes not only as
actions against employers, but also as attacks on society (Drucker, 1961, p.
17). He declared that an effective federal government could not allow such
shutdowns. He noted that his opposition to such strikes did not signify his
opposition to collective bargaining in the business world – only to the use of
this method of strengthening labor’s bargaining position. He later said that
the federal government’s duties included much of what labor sought, such as
providing the public with “protection against fraud, extreme exploitation,
collusion, unsafe working conditions, and deprivation of civil rights”
(Drucker, 1986, p. 336). The Taft-Hartley Act, passed in 1947, lessened his fear
since it empowered the federal government to obtain an 80-day injunction to
stop such shutdowns, or even the threat of them, if the health or safety of the
country were at stake.
Unclear missions and priorities Drucker on
Drucker saw a fourth intrinsic difficulty in the federal government’s ability to effective public
manage effectively: its frequently unclear missions and priorities. Missions management
were often lofty, vague, and numerous, hindering the establishment of priorities.
This problem affected not only the federal government in general, but also the
President in particular (Drucker, 1976, p. 13, col. 2; Drucker, 1980a, p. 103;
Drucker, 1993, September 22, p. A18, col. 3). He pointed out that what purport 59
to be missions are really statements of noble intentions. Federal agency goals
such as promoting health care, law and order, or farmers signify nothing
operationally. Such purposes were, to him, just “a multiplicity of possible
objectives – each of them ambiguous” (Drucker, 1976, p. 14, col. 1 ). He noted
that health care might denote the prevention of illness, the treatment of the sick,
or the best medical care for such people among other possibilities (Drucker,
1976, pp. 13-14; Drucker, 1980a, p. 103, col. l). The pursuit of law and order
might signify a variety of goals: the prevention of crime, the enforcement of all
laws, the protection of the person and property of law-abiding citizens, safety in
the streets and homes, or the elimination and prevention of police corruption.
The stated aims of agricultural policy might be to help small family farms and
to make them more efficient, but the latter goal would be served by reducing the
number of such units (Drucker, 1976, p. 14). He once commented:
The purpose of an objective is to make possible the organization of work for its attainment.
This means that objectives must be operational: capable of being converted into specific
performance, into work, and into work assignments. However, almost no public service
agency has operational objectives (Drucker, 1976, p. 13, co1.2).
But Drucker cited a few illustrations of federal agencies with clear missions and
priorities. One was the Rural Electrification Administration (REA), established
in 1935, in the midst of the New Deal. Its first objective was to install electricity
in at least 25 percent of US farms by 1938. He saw this mission as limited,
measurable, and feasible – one that created work and performance. He went so
far as to say that the REA was perhaps the most successful government
organization in the federal govemment’s administrative history. He also praised
the Tennessee Valley Authority for narrowing its focus from a half-dozen initial
objectives to a single one: power production. He lauded the head-start program
for pursuing a primary objective: the instruction of children in the ability to
read numbers and letters (Drucker, 1980a, pp. 103-4). He also commended this
program for its autonomy and local management, both of which made head-
start more effective (Drucker, 1993, p. 135).

Insufficient governmental experimentation and feedback

Drucker observed a fifth unique problem in the federal government’s ability to
manage successfully: its reluctance to experiment at state and local levels and
to generate feedback before considering whether to create organizations,
policies, or programs with national jurisdiction or application (Drucker, 1980a,
p. 104). He pointed out that such reluctance spawns top-down policies, risks of
Journal of great failure, and a reluctance to try again. For instance, he attributed the two
Management most notable setbacks of the New Deal to a lack of earlier state and local pilot
History programs. These failures were the National Recovery Administration (NRA),
established in 1933, which set up codes to fix hours, wages, and prices in
6,1 industry during the Depression, and the Works Progress Administration
(WPA), enacted in 1935, which provided loans and grants for businesses to
60 stimulate employment (Drucker, 1986, p. 334; Drucker, 1980a, p. 104, col. 2).
In contrast, Drucker reported: “It is no coincidence that practically all
successful New Deal programs had been pilot tested as small-scale experiments
in states and cities over the preceding 20 years – in Wisconsin, New York State,
New York City, or by one of the Chicago reform administrations” (Drucker,
1980, p. 334). He noted that experimentation produced indispensable feedback,
permitted the correction or alleviation of mistakes, and increased the possibility
that programs could be successfully extended to the national level. However, if
the federal government embraced such extensions, the implementation of
programs would rest with state and local governments, nonprofits, and
businesses (Drucker, 1968, pp. 233-4, 241; Drucker, 1985, pp. 10-11,184-5;
Drucker, 1992, pp. 185, 199). Furthermore, Drucker commented that the federal
government sometimes failed to apply widely its own successful experiments in
management practice. He reported that the respective secretaries of the
Department of Agriculture and the Department of the Interior (Henry Wallace
and Harold Ickes) went to great lengths in the 1930s to create informed dissent
in their organizations and to use it intelligently in their decision making. Such
dissent helped their departments to uncover the range of alternatives and find
out the attitudes of their subordinates before setting missions and priorities
(Drucker, 1976, p. 18, col. l; Drucker, 1980a, pp. 104-5; Drucker, 1992, p. 185).

Conclusion
A review of Peter F. Drucker’s overlooked thoughts on effective public
management engenders several closing comments. First, the current in his
thoughts on this subject still forms a wide stream even though it is merely a
small part of his voluminous writings. His books, articles, and interviews have
concentrated mostly on the business sector and on concomitant aspects of that
world – such as organizational purposes, performance, social responsibilities,
the nature of work, and the management of organizations, executives, and other
employees (Drucker, 1954, pp. 16-7; Drucker, 1973, pp. 39-43). The copious
writings about Drucker’s outlooks have mirrored this concentration. Therefore,
it is not surprising that management historians passed over (or were not
conscious of) his views toward running the public sector successfully and that
his thoughts on this subject went unpublicized. Second, Drucker recognized the
unique difficulties facing public management and complicating its quest for
greater effectiveness. Such problems extended beyond those of the business
sector. He made clear his recognition that public managers face a harder
challenge than their business counterparts. His many comments leave no doubt
that he appreciated the magnitude of that undertaking. Finally, his observations
reveal an underlying respect for the role of government and his desire to Drucker on
strengthen it by focusing its missions and priorities on what it must do and effective public
what its does best and identifying what it does poorly and should thus delegate management
to nonprofits and businesses. He showed that respect again when he recently
wrote:
By now it has become clear that a developed country can neither extend big government, as
the (so-called) liberals want, nor abolish it and go back to nineteenth-century innocence, as the 61
(so-called) conservatives want. The government we need will have to transcend both groups.
The megastate that this century built is bankrupt, morally as well as financially. It has not
delivered. But its successor cannot be “small government”. There are far too many tasks,
domestically and internationally. We need effective government – and that is what voters in all
developed countries are actually clamoring for (Drucker, 1995 February, p. 61, col. 2).

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