We Can Assume the People’s Liberation Army Is Already Aware of This Post

In Management Challenges for the 21st Century, Peter Drucker noted that information was unlike other basic resources because it wasn’t subject to the same laws of scarcity. “If I impart information, I still have it,” he wrote. “And in fact, information becomes more valuable the more people have it.”

Of course, while that’s true most of the time, Drucker was speaking of information in terms of a general rule, not an absolute one. He was not, for instance, writing with warfare in mind—or Chinese cyberspies from the People’s Liberation Army. Although shadowy actors in China have found trade secrets of American companies to be valuable, American firms certainly have not gotten much benefit from that value increase.

It is, in any case, a testament to the power of information in our new economy that the U.S. government has felt compelled to hand down indictments against five members of “Unit 61398” in the People’s Liberation Army—Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu and Gu Chunhui—for economic espionage. More than 3,000 companies, many of them with innovative private technologies, reportedly have been hacked by the Chinese cyberwarriors.

President Barack Obama “has argued that it is far more pernicious to use the intelligence instruments of the state for commercial competitive advantage,” the New York Times reported today. “The United States may do all it can to learn about China’s nuclear arsenal, or about Beijing’s intentions in its territorial disputes with Japan, but it does not, the administration says, steal from China Telecom to help AT&T.” The Chinese, by contrast, apparently see less of an ethical distinction, if any, between economic and military espionage.

One clear lesson from this episode is Drucker’s warning, in The Changing World of the Executive, that managers must “come to grips with some critical questions about the role of information in their organizations.” Among them: “How can information be protected against fraud, industrial espionage or prying and gossip-mongering?”

As for the actions of China, Drucker would probably point out that they’re related to the general approach to world trade that China has chosen to pursue. In The New Realities, Drucker wrote of “complementary trade,” “competitive trade” and “adversarial trade.” As we’ve noted, Drucker viewed Japan, for instance, as a non-malicious but still adversarial trader, driven by logic to expand exports while protecting its home markets.

Similarly, Drucker might have seen logical reasons for China’s aggressive and adversarial approach to economic competition. Still, he would not have blessed its behavior. “Adversarial trade changes the basic rules, and drastically,” he wrote. “It can no longer be assumed that competition is entirely beneficial—the basic postulate of the economist.”

How do you think the United States should respond to China’s alleged economic espionage?