Mature Industries

From “Innovation and Entrepreneurship” by Peter F. Drucker

The industries that fueled the long economic expansion after World War II – automobiles, steel, rubber, electrical apparatus, consumer electronics, telephone, but also petroleum – perfectly fit the Kondratieff cycle. Technologically, all of them go back to the fourth quarter of the nineteenth century or, at the very latest, to before World War I. In none of them has there been a significant breakthrough since the 1920s, whether in technology or in business concepts. When the economic growth began after World War II, they were all thoroughly mature industries. They could expand and create jobs with relatively little new capital investment, which explains why they could pay sky-rocketing wages and workers’ benefits and simultaneously show record profits.  Yet, as Kondratieff had predicted, these signs of robust health were as deceptive as the flush on a consumptive’s cheek. The industries were corroding from within. They did not become stagnant or decline slowly. Rather, they collapsed as soon as the “oil shocks” of 1973 and 1979 dealt them the first blows. Within a few years they went from record profits to near-bankruptcy. As soon became abundantly clear, they will not be able to return to their earlier employment levels for a long time, if ever.