“Business enterprises are . . . organs of society. They do not exist for their own sake, but to fulfill a specific social purpose.”
–Peter Drucker, Management: Tasks, Responsibilities, Practices
Of all the damning emails that have emerged in the Goldman Sachs scandal, one in particular would have surely caught Peter Drucker’s eye: In a January 2007 missive, Goldman Sachs trader Fabrice Tourre described having created a financial product “which has no purpose, which is absolutely conceptual.” To Drucker, such a notion runs completely counter to what a business should be all about.
To be sure, Drucker understood the nature of risk, and the need to manage it. But “none of our institutions exists by itself and is an end in itself,” Drucker asserted. “Every one is an organ of society and exists for the sake of society. Business is no exception. Free enterprise cannot be justified as being good for business; it can be justified only as being good for society.”
In this edition of Drucker Apps, we invite you to join our conversation about Goldman’s actions. Joining in will be regulatory and financial experts, as well as those who’ve been closely tracking all the drama on Wall Street, including Matthew Bishop, co-author of The Road from Ruin: How to Revive Capitalism and Put America Back on Top.
We open things up with this question: Does business always need to serve a social purpose and, if so, did something go awry at Goldman?