Peter F. Drucker Boxed Set (8 Books) (The Drucker Library)

CHAPTER FOURTEEN

Managing Capital Productivity

A HUNDRED YEARS AGO, Karl Marx based his prediction of the inevitable and imminent collapse of what we now call “capitalism” or the “free enterprise system” (both terms were not coined until long after Marx’s death) on the “law” of the diminishing return on capital.

What happened instead is that for a century the productivity of capital in the developed countries with a market economy—has been going up except during the most severe depression years. This is one of the major achievements of modern business and the one on which the other achievements perhaps ultimately rest. In part, this achievement ...