Best Business Books: Thomas Donaldson's Picks
Thomas Donaldson, professor, The Wharton School of the University of Pennsylvania
The Peloponnesian War
An Athenian general's firsthand account of the war between Athens and Sparta from 431 to 404 B.C. It is one of the first examples of scholarly history.
Why it's a must-read: "Very much like Peter Drucker, this man understood that to advise people about what to do in the future, you had to, in the present, be able to see in the midst of the battle. He was an astute observer of human behavior, especially in the context of leadership. He outlined one of the constant themes in management today of the contrast between the revolutionary and the conservative—these two types of people, the on-the-go innovation of the Athenians and the slower, self-confident, but more cautious approach of the Spartans. He saw the strengths and weaknesses of both. This is a person writing for leaders and saying you'd better respect the competition; you'd better respect what Sparta, with its very different approach, can do."
Concept of the Corporation
After 18 months of research at General Motors, Drucker was the first to describe the corporation as a social structure.
Why it's a must-read: "Drucker once wrote that he had embarked on a mission to the dark continent of management–and a dark continent it was, at the time. He was one of the first to articulate the idea of planned abandonment: Corporations tend to stick to what's worked in the past, when they need to be planning the next step that moves them out of the rut they've already formed. The irony is that [Alfred] Sloan and the company in the end weren't all that happy with Drucker's account. It was laudatory, but it was also critical. It wasn't General Motors but General Electric that carried on a lot of those ideas."
Modern Corporation and Private Property
The first book to explain how modern corporate capitalism is dominated by oligopolies and is defined by the separation of management from ownership.
Why it's a must-read: "This is a book that was not only prophetic about what would happen in the next 80 years on the topic of corporate governance but also for the first time identified the stubborn tension between managers and owners. It showed that the theories circulating about economics and business weren't matched by the real world, where shareholders and owners can be tripped up at every turn by managers. You can really see the history of the last few years as a continuation of that conflict, with those who own corporations attempting to re-exert control."
Capitalism, Socialism, and Democracy
An elegant defense of capitalism by an Austrian economist and political scientist, who believed capitalism would ultimately give way to socialism, but not for the usual Marxist reasons
Why it's a must-read: "This was one of the most eloquent defenders of capitalism in the modern era. He predicted wrongly that capitalism would become socialism, not because it was inferior but because it was so superior that it would lull people into complacency. His notion of 'creative destruction' is the most famous concept from his work. Schumpeter said the world never stops long enough for a perfect market to develop–and that's not bad. The guy who can come up with the iPod or the lightbulb can, for a little while, make profits above what free-market theory says he should. Schumpeter thinks that's wonderful–that it provides the motives for the entrepreneur to continually bring life and advancement."
The Wealth of Nations
Widely considered the father of capitalism, Smith was the first to make a scientific argument defending the principles of political economy and the value of self-interest.
Why it's a must-read: "Smith shows how regrettable and inevitable self-interest–the "invisible hand"–can, in the right context, be directed to the common good. Even more important, forgotten by even greats like Milton Friedman, is the fact that Smith never forgot that this remarkable system does not work well without the moral cooperation of its participants. If you look at troubles in economies like Russia today, where corruption is playing such a negative role, Adam Smith foresaw that and believed that we all as economic citizens have the responsibility to maintain the integrity of the system. Until Smith, you could be as rich as you wanted and not be respected. He made being a businessman respectable."
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