A Century of Social Transformation–Emergence of Knowledge Society from The Essential Drucker No century in human history has experienced so many social transformations and such radical ones as the twentieth century. They, I submit, will turn out to be the most significant events of this century, and its lasting legacy. In the developed free-market countries—only one-fifth of the earth’s population, but the model for the rest—work and workforce, society and polity, are all, in the last decade of this century, qualitatively and quantitatively different both from those of the first years of this century and from anything ever experienced before in human history: different in their configuration, in their processes, in their problems, and in their structures. Far smaller and far slower social changes in earlier periods triggered violent intellectual and spiritual crises, rebellions, and civil wars. The extreme social transformations of this century have hardly caused any stir. They proceeded with a minimum of friction, with a minimum of upheavals, and indeed with altogether a minimum of attention from scholars, politicians, the press, and the public. To be sure, this century of ours may well have been the cruelest and most violent in human history, with its world wars and civil wars, its mass tortures, ethnic cleansings, and genocides. But all these killings, all these horrors inflicted on the human race by this century’s Weltbeglücker—those who establish paradise on earth by killing off nonconformists, dissidents, resisters, and innocent bystanders, whether Jews, the bourgeoisie, kulaks, or intellectuals—hindsight clearly shows, were just that: senseless killings, senseless horrors. Hitler, Stalin, and Mao, the three evil geniuses of this century, destroyed. But they created nothing. Indeed, if this century proves anything, it is the futility of politics. Even the most dogmatic believer in historical determinism would have a hard time explaining the social transformations of this century as caused by the headline-making political events, or explaining the headline-making political events as caused by the social transformations. But it is the social transformations, running like ocean currents deep below the hurricane-tormented surface of the sea, that have had the lasting, indeed the permanent, effect. They—rather than all the violence of the political surface—have transformed the society and the economy, the community, the polity we live in. Farmers and Domestic Servants Before World War I, the largest single group in every country were farmers. Eighty years ago, on the eve of that war, it was considered axiomatic that developed countries—North America being the only exception—would increasingly become unable to feed themselves and would increasingly have to rely on food imports from nonindustrial, nondeveloped areas. Today, only Japan, among major, developed, free-market countries, is a heavy importer of food. (Unnecessarily so—its weakness as a food producer is largely the result of an obsolete rice-subsidy policy that prevents the country from developing a modern, productive agriculture.) All other developed free-market countries have become surplus food producers despite burgeoning urban populations. In all these countries food production is today many times what it was eighty years ago—in the United States, eight to ten times as much. But in all developed free-market countries—including Japan—farmers today are, at most, 5 percent of population and workforce, that is, one-tenth of what they were eighty years ago. The second-largest group in population and workforce in every developed country around 1900 were live-in servants. They were considered as much a “law of nature” as farmers were. The British census of 1910 defined “lower middle class” as a household employing fewer than three servants. And while farmers as a proportion of population and workforce had been steadily shrinking throughout the nineteenth century, the numbers of domestic servants, both absolutely and as a percentage, were steadily growing right up to World War I. Eighty years later, live-in domestic servants in developed countries have become practically extinct. Few people born since World War II, that is, few people under fifty, have even seen any except on the stage or in old films. Farmers and domestic servants were not only the largest social groups, they were the oldest social groups, too. Together they were, through the ages, the foundation of economy and society, the foundation altogether of “civilization.” The Rise and Fall of the Blue-collar Worker One reason, indeed the main reason, why the transformation caused so little stir was that by 1900 a new class, the blue-collar worker in manufacturing industry (Marx’s “proletarian”), had become socially dominant. Early-twentieth-century society was obsessed with blue-collar workers, fixated on them, bewitched by them. The blue-collar worker became the “social question” of 1900 because he was the first “lower class” in history that could be organized and stay organized. No class in history has ever risen faster than the blue-collar worker. And no class in history has ever fallen faster. In 1883, the year of Marx’s death, “proletarians” were still a minority of industrial workers. The majority were then skilled workers employed in small craft shops each containing twenty or thirty workers at most. By 1900, the term “industrial worker” had become synonymous with “machine operator” in a factory employing hundreds, if not thousands, of people. These factory workers were indeed Marx’s proletarians, without social position, without political power, without economic or purchasing power. The workers of 1900—and even of 1913—had no pension; no paid vacation; no overtime pay; no extra pay for Sunday or night work; no health insurance (except in Germany); no unemployment compensation; no job security whatever. One of the earliest laws to limit working hours for adult males—enacted in Austria in 1884—set the working day at eleven hours, six days a week. Industrial workers, in 1913, everywhere worked a minimum of three thousand hours a year. Their unions were still officially proscribed or, at best, barely tolerated. But the workers had shown their capacity to be organized. They had shown their capacity to act as a class. In the 1950s industrial blue-collar workers had become the largest single group in every developed country, including the Communist ones, though they were an actual majority only during wartime. They had become eminently respectable. In all developed free-market countries they had economically become middle class.” They had extensive job security; pensions; long, paid vacations; comprehensive unemployment insurance or “lifetime employment.” Above all, they had achieved political power. It was not only in Britain that the labor unions were considered to be the “real government,” with greater power than the prime minister and Parliament. In 1990, however, both the blue-collar worker and his union were in total and irreversible retreat. They had become marginal in numbers. Whereas blue-collar workers who made or moved things had accounted for two-fifths of the American workforce in the 1950s, they accounted for less than one-fifth of the workforce in the early 1990s—that is, for no more than they had accounted for in 1900, when their meteoric rise had begun. In the other developed free-market countries the decline was slower at first; but after 1980 it began to accelerate everywhere. By the year 2000 or 2010, in every developed free-market country, blue-collar industrial workers will account for no more than one-tenth or, at most, one-eighth of the workforce. Union power has been going down equally fast. Where in the 1950s and 1960s the National Union of Mineworkers in the United Kingdom broke prime ministers as if they were matchsticks, Margaret Thatcher in the 1980s won election after election by being openly contemptuous of organized labor and by whittling down its political power and its privileges. The blue-collar worker in manufacturing industry and his union are going the way of the farmer. His place is already being taken by a “technologist,” that is, by people who work both with their hands and their theoretical knowledge. (Examples are computer technicians or paramedical technicians such as X-ray technicians, physical therapists, medical-lab technicians, pulmonary technicians, and so on, who have been the fastest-growing group in the United States workforce since 1980.) And instead of a “class,” that is, a coherent, recognizable, defined, and self-conscious group, the blue-collar worker in manufacturing industry may soon be just another “pressure group.” In contrast with Marxist and syndicalist predictions, the rise of the industrial worker did not destabilize society. On the contrary, it emerged as the century’s most stabilizing social development. It explains why the disappearance of farmer and domestic servant produced no social crises. For farmer and domestic servant, industrial work was an opportunity. It was in fact the first opportunity in social history to better oneself substantially without having to emigrate. In the developed, free-market countries, every generation in the last 100 or 150 years could expect to do substantially better than the generation preceding it. The main reason was that farmers and domestic servants could and did become industrial workers. Because industrial workers were concentrated in groups, that is, because they worked in a large factory rather than in a small shop or in their homes, there could be a systematic focus on their productivity. Beginning in 1881—two years before Marx’s death—the systematic study of work, of both tasks and tools, has raised the productivity of manual work (the making and moving of things) by 3 to 4 percent, compounded each year, for a total fiftyfold increase in output per worker over a hundred years. On this rest all the economic and social gains of the past century. And contrary to what “everybody knew” in the nineteenth century—not only Marx but all the “conservatives” as well, such as J. P. Morgan, Bismarck, and Disraeli—practically all these gains have accrued to the blue-collar worker, half of the gains in the form of sharply reduced working hours (with the cuts ranging from 40 percent in Japan to 50 percent in Germany), half of them in the form of a twenty-fivefold increase in the real wages of blue-collar workers making or moving things. There were thus very good reasons why the rise of blue-collar workers was peaceful rather than violent, let alone “revolutionary.” But what explains that the fall of the blue-collar worker has been equally peaceful and almost entirely free of social protest, of upheaval, of serious dislocation, at least in the United States? The Rise of the Knowledge Worker The rise of the “class” succeeding the industrial blue-collar worker is not an opportunity to him. It is a challenge. The newly emerging dominant group are “knowledge workers.” Knowledge workers amount to a third or more of the workforce in the United States, that is, to as large a proportion as industrial blue-collar workers ever were, except in wartime. The majority of knowledge workers are paid at least as well as blue-collar workers ever were, or better. And the new jobs offer much greater opportunities to the individual. But—and it is a big but—the new jobs require, in the great majority, qualifications the blue-collar worker does not possess and is poorly equipped to acquire. The new jobs require a good deal of formal education and the ability to acquire and to apply theoretical and analytical knowledge. They require a different approach to work and a different mind-set. Above all, they require a habit of continual learning. Displaced industrial workers thus cannot simply move into knowledge work or services work the way displaced farmers and displaced domestic workers moved into industrial work. Even in communities that were totally dependent on one or two mass-production plants that have gone out of business or have cut employment by two-thirds—steel cities in western Pennsylvania or eastern Ohio, for instance, or car cities like Flint, Michigan—unemployment rates for adult, nonblack men and women fell within a few short years to levels barely higher than the U.S. average. And that means to levels barely higher than the U.S. “full-employment” rate. And there has been no radicalization of America’s blue-collar workers. The only explanation is that for the nonblack, blue-collar community the development came as no surprise, however unwelcome, painful, and threatening to individual worker and individual family. Psychologically—in terms of values perhaps, rather than in terms of emotions—America’s industrial blue-collar workers must have been prepared to accept as right and proper the shift to jobs that require formal education and that pay for knowledge rather than for manual work, whether skilled or unskilled. One possible factor may have been the GI Bill of Rights after World War II, which by offering a college education to every returning American veteran established advanced education as the “norm” and everything less as “substandard.” Another factor may have been the draft the United States introduced in World War II and maintained for thirty-five years afterward, as a result of which the great majority of American male adults born between 1920 and 1950—and that means the majority of American adults alive today—served in the military for several years where they were forced to acquire a high-school education if they did not already have one. But whatever the explanation, in the United States the shift to knowledge work from blue-collar manual work making and moving things has largely been accepted (except in the black community) as appropriate or, at least, as inevitable. In the United States the shift, by 1990 or so, had largely been accomplished. But so far only in the United States. In the other developed free-market countries, in western and northern Europe, and in Japan, it was just beginning in the 1990s. It is, however, certain to proceed rapidly in these countries from now on, and perhaps to proceed there faster than it originally did in the United States. Will it then also proceed, as it did by and large in the United States, with a minimum of social upheaval, of social dislocation, of social unrest? Or will the American development turn out to be another example of “American exceptionalism” (as has so much of American social history and especially of American labor history)? In Japan, the superiority of formal education and of the formally educated person is generally accepted so that the fall of the industrial worker—still a fairly recent class in Japan and outnumbering farmers and domestic servants only since well after World War II—may well be accepted as appropriate as it has been in the United States, and perhaps even more so. But what about industrialized Europe—the United Kingdom, Germany, France, Belgium, northern Italy, and so on—where there has been a “working-class culture” and a “self-respecting working class” for well over a century, and where, despite all evidence to the contrary, the belief is still deeply ingrained that industrial, blue-collar work, rather than knowledge, is the creator of all wealth? Will Europe react the way the American black has reacted? This surely is a key question, the answer to which will largely determine the social as well as the economic future of the developed free-market countries of Europe. And the answer will be given within the next decade or so. The Emerging Knowledge Society Knowledge workers will not be the majority in the knowledge society. But in many countries, if not most developed countries, they will be the largest single group in the population and the workforce. And even if outnumbered by other groups, knowledge workers will be the group that gives the emerging knowledge society its character, its leadership, its social profile. They may not be the ruling class of the knowledge society, but they already are its leading class. And in their characteristics, their social position, their values, and their expectations, they differ fundamentally from any group in history that has ever occupied the leading, let alone the dominant, position. In the first place, the knowledge worker gains access to work, job, and social position through formal education. The first implication of this is that education will become the center of the knowledge society, and schooling its key institution. What knowledge is required for everybody? What mix of knowledges is required for everybody? What is quality in learning and teaching? All these will, of necessity, become central concerns of the knowledge society, and central political issues. In fact, it may not be too fanciful to anticipate that the acquisition and distribution of formal knowledge will come to occupy the place in the politics of the knowledge society that acquisition and distribution of property and income have occupied in the two or three centuries that we have come to call the Age of Capitalism. We can also predict with high probability that we will redefine what it means to be an “educated person.” The knowledge society will inevitably become far more competitive than any society we have yet known—for the simple reason that with knowledge being universally accessible, there are no excuses for nonperformance. There will be no “poor” countries. There will only be ignorant countries. And the same will be true for individual companies, individual industries, and individual organizations of any kind. It will be true for the individual, too. In fact, developed societies have already become infinitely more competitive for the individual than were the societies of the early twentieth century—let alone earlier societies, those of the nineteenth or eighteenth centuries. Then, most people had no opportunity to rise out of the “class” into which they were born, with most individuals following their fathers in their work and in their station in life. But knowledge workers, whether their knowledge is primitive or advanced, whether they possess a little of it or a great deal, will, by definition, be specialized. Knowledge in application is effective only when it is specialized. Indeed, it is more effective, the more highly specialized it is. Equally important is the second implication of the fact that knowledge workers are, of necessity, specialists: the need for them to work as members of an organization. It is only the organization that can provide the basic continuity that knowledge workers need to be effective. It is only the organization that can convert the specialized knowledge of the knowledge worker into performance. By itself, specialized knowledge yields no performance. The surgeon is not effective unless there is a diagnosis, which, by and large, is not the surgeon’s task and not even within the surgeon’s competence. Market researchers, by themselves, produce only data. To convert the data into information, let alone to make them effective in knowledge action, requires marketing people, production people, service people. As a loner in his or her own research and writing, the historian can be very effective. But to produce the education of students, a great many other specialists have to contribute—people whose speciality may be literature, or mathematics, or other areas of history. And this requires that the specialist have access to an organization. This access may be as a consultant. It may be as a provider of specialized services. But for a large number of knowledge workers, it will be as employees of an organization—full-time or part-time—whether a government agency, a hospital, a university, a business, a labor union, or any of hundreds of others. In the knowledge society, it is not the individual who performs. The individual is a cost center rather than a performance center. It is the organization that performs. The Employee Society The knowledge society is an employee society. Traditional society, that is, society before the rise of the manufacturing enterprise and the blue-collar manufacturing worker, was not a society of independents. Thomas Jefferson’s society of independent small farmers, each being the owner of his own family farm and farming it without any help except for that of his wife and his children, was never much more than fantasy. Most people in history were dependents. But they did not work for an organization. They were working for an owner, as slaves, as serfs, as hired hands on the farm; as journeymen and apprentices in the craftsman’s shop; as shop assistants and salespeople for a merchant; as domestic servants, free or unfree; and so on. They worked for a “master.” When blue-collar work in manufacturing first arose, they still worked for a “master.” In Charles Dickens’s great 1854 novel Hard Times, the workers work for an “owner.” They do not work for the “factory.” Only late in the nineteenth century did the factory rather than the owner become the employer. And only in the twentieth century did the corporation rather than the factory, then become the employer. Only in this century has the “master” been replaced by a “boss,” who, himself, ninety-nine times out of a hundred, is an employee and has a boss himself. Knowledge workers will be both “employees” who have a “boss” and bosses who have employees. Organizations were not known to yesterday’s social science, and are, by and large, not yet known to today’s social science. The first “organization” in the modern sense, the first that was seen as being prototypical rather than exceptional, was surely the modern business enterprise as it emerged after 1870—which is why, to this day, most people think of “management,” as being “business management.” With the emergence of the knowledge society, we have become a society of organizations. Most of us work in and for an organization, are dependent for our effectiveness and equally for our living on access to an organization, whether as an organization’s employee or as a provider of services to an organization—as a lawyer, for instance, or a freight forwarder. And more and more of these supporting services to organizations are, themselves, organized as organizations. The first law firm was organized in the United States a little over a century ago—until then lawyers had practiced as individuals. In Europe there were no law firms to speak of until after World War II. Today, the practice of law—is increasingly done in larger and larger partnerships. But that is also true, especially in the United States, of the practice of medicine. The knowledge society is a society of organizations in which practically every social task is being performed in and through an organization. Most knowledge workers will spend most if not all of their working life as “employees.” But the meaning of the term is different from what it has been traditionally—and not only in English but in German, Spanish, and Japanese as well. Individually, knowledge workers are dependent on the job. They receive a wage or salary. They are being hired and can be fired. Legally, each is an “employee.” But collectively, they are the only “capitalists”; increasingly, through their pension funds and through their other savings (e. g., in the United States through mutual funds), the employees own the means of production. In traditional economics (and by no means only in Marxist economics), there is a sharp distinction between the “wage fund”—all of which went into consumption—and the “capital fund.” And most social theory of industrial society is based, one way or another, on the relationship between the two, whether in conflict or in necessary and beneficial cooperation and balance. In the knowledge society, the two merge. The pension fund is “deferred wage” and, as such, a wage fund. But it is also increasingly the main source of capital, if not the only source of capital, for the knowledge society. Equally important, and perhaps more important, is that in the knowledge society the employees, that is, knowledge workers, again own the tools of production. Marx’s great insight was the realization that the factory worker does not and cannot own the tools of production and, therefore, has to be “alienated.” There was no way, Marx pointed out, for workers to own the steam engine and to be able to take the steam engine with them when moving from one job to another. The capitalist had to own the steam engine and had to control it. Increasingly, the true investment in the knowledge society is not in machines and tools. It is in the knowledge worker. Without it, the machines, no matter how advanced and sophisticated, are unproductive. The industrial worker needed the capitalist infinitely more than the capitalist needed the industrial worker—the basis for Marx’s assertion that there would always be a surplus of industrial workers, and an “industrial reserve army” that would make sure that wages could not possibly rise above the subsistence level (probably Marx’s most egregious error). In the knowledge society the most probable assumption—and certainly the assumption on which all organizations have to conduct their affairs—is that they need the knowledge worker far more than the knowledge worker needs them. It is up to the organization to market its knowledge jobs so as to obtain knowledge workers in adequate quantity and superior quality. The relationship increasingly is one of interdependence with the knowledge worker having to learn what the organization needs, but with the organization also having to learn what the knowledge worker needs, requires, and expects. One additional conclusion: because the knowledge society perforce has to be a society of organizations, its central and distinctive organ is management. When we first began to talk of management, the term meant “business management”—since large-scale business was the first of the new organizations to become visible. But we have learned this last half-century that management is the distinctive organ of all organizations. All of them require management—whether they use the term or not. All managers do the same things whatever the business of their organization. All of them have to bring people—each of them possessing a different knowledge—together for joint performance. All of them have to make human strengths productive in performance and human weaknesses irrelevant. All of them have to think through what are “results” in the organization—and have then to define objectives. All of them are responsible to think through what I call the “theory of the business,” that is, the assumptions on which the organization bases its performance and actions, and equally, the assumptions that organizations make to decide what things not to do. All of them require an organ that thinks through strategies, that is, the means through which the goals of the organization become performance. All of them have to define the values of the organization, its system of rewards and punishments, and with it its spirit and its culture. In all of them, managers need both the knowledge of management as work and discipline and the knowledge and understanding of the organization itself, its purposes, its values, its environment and markets, its core competencies. Management as a practice is very old. The most successful executive in all history was surely that Egyptian who, forty-seven hundred years or more ago, first conceived the pyramid—without any precedent—and designed and built it, and did so in record time. With a durability unlike that of any other human work, that first pyramid still stands. But as a discipline, management is barely fifty years old. It was first dimly perceived around the time of World War I. It did not emerge until World War II and then primarily in the United States. Since then, it has been the fastest-growing new business function, and its study the fastest-growing new academic discipline. No function in history has emerged as fast as management and managers have in the last fifty to sixty years, and surely none has had such worldwide sweep in such a short period. Management, in most business schools, is still taught as a bundle of techniques, such as the technique of budgeting. To be sure, management, like any other work, has its own tools and its own techniques. But just as the essence of medicine is not the urinalysis, important though it is, the essence of management is not techniques and procedures. The essence of management is to make knowledge productive. Management, in other words, is a social function. And in its practice, management is truly a “liberal art.” The Social Sector The old communities—family, village, parish, and so on—have all but disappeared in the knowledge society. Their place has largely been taken by the new unit of social integration: the organization. Where community membership was seen as fate, organization membership is voluntary. Where community claimed the entire person, organization is a means to a person’s end, a tool. For two hundred years a hot debate has been raging, especially in the West: are communities “organic” or are they simply extensions of the person? Nobody would claim that the new organization is “organic.” It is clearly an artifact, a human creation, a social technology. But who, then, does the social tasks? Two hundred years ago social tasks were being done in all societies by the local community—primarily, of course, by the family. Very few, if any, of those tasks are now being done by the old communities. Nor would they be capable of doing them. People no longer stay where they were born, either in terms of geography or in terms of social position and status. By definition, a knowledge society is a society of mobility. And all the social functions of the old communities, whether performed well or poorly (and most were performed very poorly, indeed), presupposed that the individual and the family would stay put. Family is where they have to take you in, said a nineteenth-century adage; and community, to repeat, was fate. To leave the community meant becoming an outcast, perhaps even an outlaw. But the essence of a knowledge society is mobility in terms of where one lives, mobility in terms of what one does, mobility in terms of one’s affiliation. This very mobility means that in the knowledge society, social challenges and social tasks multiply. People no longer have “roots.” People no longer have a “neighborhood” that controls where they live, what they do, and indeed, what their “problems” are allowed to be. The knowledge society, by definition, is a competitive society; with knowledge accessible to everyone, everyone is expected to place himself or herself, to improve himself or herself, and to have aspirations. It is a society in which many more people than ever before can be successful. But it is therefore, by definition, also a society in which many more people than ever before can fail, or at least can come in second. And if only because the application of knowledge to work has made developed societies so much richer than any earlier society could even dream of becoming, the failures, whether poverty or alcoholism, battered women or juvenile delinquents, are seen as failures of society. In traditional society they were taken for granted. In the knowledge society they are an affront, not just to the sense of justice but equally to the competence of society and its self-respect. Who, then, in the knowledge society takes care of the social tasks? We can no longer ignore them. But traditional community is incapable of tackling them. Two answers have emerged in this century—a majority answer and a dissenting opinion. Both have been proven to be the wrong answers. The majority answer goes back more than a hundred years, to the 1880s, when Bismarck’s Germany took the first faltering steps toward the welfare state. The answer: the problems of the social sector can, should, and must be solved by government. It is still probably the answer that most people accept, especially in the developed countries of the West—even though most people probably no longer fully believe it. But it has been totally disproven. Modern government, especially since World War II, has become a huge welfare bureaucracy everywhere. And the bulk of the budget in every developed country today is devoted to “entitlements,” that is, to payment for all kinds of social services. And yet, in every developed country, society is becoming sicker rather than healthier, and social problems are multiplying. Government has a big role to play in social tasks—the role of policy-maker, of standard setter, and, to a substantial extent, the role of paymaster. But as the agency to run social services, it has proven itself almost totally incompetent—and we now know why. The second dissenting opinion was first formulated by me in my 1942 book The Future of Industrial Man. I argued then that the new organization—and fifty years ago that meant the large business enterprise—would have to be the community in which the individual would find status and function, with the plant community becoming the place in and through which the social tasks would be organized. In Japan (though quite independently and without any debt to me) the large employer—government agency or business—has indeed increasingly attempted to become a “community” for its employees. “Lifetime employment” is only one affirmation of this. Company housing, company health plans, company vacations, and so on, all emphasize for the Japanese employee that the employer, and especially the big corporation, is the community and the successor to yesterday’s village and to yesterday’s family. But this, too, has not worked. There is a need indeed, especially in the West, to bring the employee increasingly into the government of the plan(t) community. What is now called “empowerment” is very similar to the things I talked about more than fifty years ago. But it does not create a community. And it does not create the structure through which the social tasks of the knowledge society can be tackled. In fact, practically all those tasks, whether providing education or health care; addressing the anomalies and diseases of a developed and, especially, of a rich society, such as alcohol and drug abuse; or tackling the problems of incompetence and irresponsibility such as those of the “underclass” in the American city—all lie outside the employing institution. The employing institution is, and will remain, an “organization.” The relationship between it and the individual is not that of “membership” in a “community,” that is, an unbreakable, two-way bond. To survive, it needs employment flexibility. But increasingly also, knowledge workers, and especially people of advanced knowledge, see the organization as the tool for the accomplishment of their own purposes and, therefore, resent—increasingly even in Japan—any attempt to subject them to the organization as a community, that is, to the control of the organization; to the demand of the organization that they commit themselves to lifetime membership; and to the demand that they subordinate their own aspirations to the goals and values of the organization. This is inevitable because the possessor of knowledge, as said earlier, owns his or her “tools of production” and has the freedom to move to wherever opportunities for effectiveness, for accomplishment, and for advancement seem greatest. The right answer to the question, Who takes care of the social challenges of the knowledge society? is thus neither the government nor the employing organization. It is a separate and new social sector. Increasingly, these organizations of the social sector serve a second and equally important purpose. They create citizenship. Modern society and modern polity have become so big and complex that citizenship, that is, responsible participation, is no longer possible. All we can do as citizens is to vote once every few years and to pay taxes all the time. As a volunteer in the social sector institution, the individual can again make a difference. Nothing has been disproved faster than the concept of the “organization man,” which was almost universally accepted forty years ago. In fact, the more satisfying one’s knowledge work is, the more one needs a separate sphere of community activity. The New Pluralism The emergence of the society of organizations challenges the function of government. All social tasks in the society of organizations are increasingly being done by individual organizations, each created for one, and only one, social task, whether education, health care, or street cleaning. Society, therefore, is rapidly becoming pluralist. Yet our social and political theories still assume a society in which there are no power centers except government. To destroy or at least to render impotent all other power centers was, in fact, the thrust of Western history and Western politics for five hundred years, from the fourteenth century on. It culminated in the eighteenth and nineteenth centuries when (except in the United States) such original institutions as still survived—for example, the universities or the established churches—all became organs of the state, with their functionaries becoming civil servants. But then, immediately beginning in the mid-nineteenth century, new centers arose—the first one, the modern business enterprise, emerged around 1870. And since then one new organization after another has come into being. In the pluralism of yesterday, the feudalism of Europe’s Middle Ages, or of Edo Japan in the seventeenth and eighteenth centuries, all pluralist organizations, whether a feudal baron in the England of the War of the Roses or the daimyo—the local lord—in Edo Japan, tried to be in control of whatever went on in their community. At least they tried to prevent anybody else from having control of any community concern or community institution within their domain. But in the society of organizations, each of the new institutions is concerned only with its own purpose and mission. It does not claim power over anything else. But it also does not assume responsibility for anything else. Who then is concerned with the common good? This has always been a central problem of pluralism. No earlier pluralism solved it. The problem is coming back now, but in a different guise. So far it has been seen as imposing limits on these institutions, that is, forbidding them to do things in the pursuit of their own mission, function, and interest that encroach upon the public domain or violate public policy. The laws against discrimination—by race, sex, age, education, health, and so on—that have proliferated in the United States in the last forty years all forbid socially undesirable behavior. But we are increasingly raising the question of the “social responsibility” of these institutions: ‘What do these institutions have to do—in addition to discharging their own functions—to advance the public good? This, however—though nobody seems to realize it—is a demand to return to the old pluralism, the pluralism of feudalism. It is a demand for “private hands to assume public power.” That this could seriously threaten the functioning of the new organizations the example of the school in the United States makes abundantly clear. The new pluralism has the old problem of pluralism—who takes care of the common good when the dominant institutions of society are single-purpose institutions? But it also has a new problem: how to maintain the performance capacity of the new institutions and yet maintain the cohesion of society? This makes doubly important the emergence of a strong and functioning social sector. It is an additional reason why the social sector will increasingly be crucial to the performance, if not to the cohesion, of the knowledge society. As soon as knowledge became the key economic resource, the integration of the interests—and with it the integration of the pluralism of a modern polity—began to fall apart. Increasingly, noneconomic interests are becoming the new pluralism, the “special interests,” the “single-cause” organizations, and so on. Increasingly, politics is not about “who gets what, when, how” but about values, each of them considered to be an absolute. Politics is about “the right to live” of the embryo in the womb as against the right of a woman to control her own body and to abort an embryo. It is about the environment. It is about gaining equality for groups alleged to be oppressed and discriminated against. None of these issues is economic. All are fundamentally moral. Economic interests can be compromised, which is the great strength of basing politics on economic interests. “Half a loaf is still bread” is a meaningful saying. But “half a baby,” in the biblical story of the judgment of Solomon, is not half a child. Half a baby is a corpse and a chunk of meat. There is no compromise possible. To an environmentalist, “half an endangered species” is an extinct species. This greatly aggravates the crisis of modern government. Newspapers and commentators still tend to report in economic terms what goes on in Washington, in London, in Bonn, or in Tokyo. But more and more of the lobbyists who determine governmental laws and governmental actions are no longer lobbyists for economic interests. They lobby for and against measures they—and their paymasters—see as moral, spiritual, cultural. And each of these new moral concerns, each represented by a new organization, claims to stand for an absolute. Dividing their loaf is not compromising. It is treason. There is thus in the society of organizations no single integrating force that pulls individual organizations in society and community into coalition. The traditional parties—perhaps the most successful political creations of the nineteenth century—no longer can integrate divergent groups and divergent points of view into a common pursuit of power. Rather, they become battlefields for these groups, each of them fighting for absolute victory and not content with anything but total surrender of the enemy. This raises the question of how government can be made to function again. In countries with a tradition of a strong independent bureaucracy, notably Japan, Germany, and France, the civil service still tries to hold government together. But even in these countries the cohesion of government is increasingly being weakened by the special interests and, above all, by the noneconomic, the moral, special interests. Since Machiavelli, almost five hundred years ago, political science has primarily concerned itself with power. Machiavelli—and political scientists and politicians since him—took it for granted that government can function once it has power. Now, increasingly, the questions to be tackled are: What are the functions that government and only government can discharge and that government must discharge? and How can government be organized so that it can discharge those functions in a society of organizations? The twenty-first century will surely be one of continuing social, economic, and political turmoil and challenge, at least in its early decades. The Age of Social Transformations is not over yet. And the challenges looming ahead may be more serious and more daunting still than those posed by the social transformations of the twentieth century that have already happened. Yet we will not even have a chance to resolve these new and looming problems of tomorrow unless we first address the challenges posed by the developments that are already accomplished facts. If the twentieth century was one of social transformations, the twenty-first century needs to be one of social and political innovations.