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Peter Drucker on free markets

I am for the free market. Even though it doesn’t work too well, nothing else works at all. But I have serious reservations about capitalism as a system because it idolizes economics as the be-all and end-all of life. It is one dimensional.

For example, I have often advised managers that a 20-1 salary ratio between senior executives and rank-and-file white collar workers is the limit beyond which they cannot go if they don’t want resentment and falling morale to hit their companies.

Today, I believe it is socially and morally unforgiveable when managers reap huge profits for themselves but fire workers. As societies, we will pay a heavy price for the contempt this generates among middle managers and workers.

In short, whole dimensions of what it means to be a human being and treated as one are not incorporated into the economic calculus of capitalism. For such a myopic system to dominate other aspects of life is not good for any society.

Peter Drucker – from Managing the Next Society in The Daily Drucker

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