Fordism

Fordism, named after Henry Ford, refers to various social theories about production and related socio-economic phenomena. It has varying but related meanings in different fields, as well as for Marxist and non-Marxist scholars.

The history behind Fordism

The T-Ford became a symbol of effective mass production. Effectiveness both decreased the price of the cars and allowed Henry Ford to increase the worker's wages. Hence, common workers could buy their own cars.

The Ford Motor Company’s success occurred because of the introduction of a very tough and compact vehicle named Model T. The mass production of this automobile lowered its unit price, making it affordable for the average consumer. Furthermore, Ford substantially increased its workers' wages, giving them the means to become customers. These factors led to massive consumption. In fact, the Model T surpassed all expectations, because it attained a peak of 60% of the automobile output within the United States.

Henry Ford revolutionized a system, which consisted of synchronization, precision, and specialization within a company. These innovative ideas led to Fordism, and as mentioned below, this concept helped increase economic prosperity in the United States in the 1940s to 1960s.

Fordism in the United States

In the United States, Fordism is the system of mass production and consumption characteristic of highly developed economies during the 1940s-1960s. The idea of Fordism was to combine mass consumption with mass production to produce sustained economic growth and widespread material advancement. The 1970s-1990s have been a period of slower growth and increasing income inequality. During this period, the system of organization of production and consumption has, perhaps, undergone a second transformation, which when mature promises a second burst of economic growth. This new system is often referred to as the "flexible system of production" (FSP) or the "Japanese management system." On the production side, FSP is characterized by dramatic reductions in information costs and overheads, Total Quality Management (TQM), just-in-time inventory control, and leaderless work groups; on the consumption side, by the globalization of consumer goods markets, faster product life cycles, and far greater product/market segmentation and differentiation.

Henry Ford was once a popular symbol of the transformation from an agricultural to an industrial, mass production, mass consumption economy. Aldous Huxley's Brave New World (1932), for example, styles the modern era AF -- after Ford. Although partly myth, there is some merit to this attribution. Ford was the creative force behind the growth to preeminence of the automobile industry, still the world's largest manufacturing activity. As Womack, Jones, and Roos (1990: 11) explain: "Twice in this century [the auto industry] has changed our most fundamental ideas about how we make things. And how we make things dictates not only how we work but what we buy, how we think, and the way we live."

The first of these transformations was from craft production to mass production. This helped to create the market as we know it, based on economies of scale and scope, and gave rise to giant organizations built upon functional specialization and minute divisions of labor. Economies of scale were produced by spreading fixed expenses, especially investments in plant and equipment and the organization of production lines, over larger volumes of output, thereby reducing unit costs. Economies of scope were produced by exploiting the division of labor -- sequentially combining specialized functional units, especially overheads such as reporting, accounting, personnel, purchasing, or quality assurance, in multifarious ways so that it was less costly to produce several products than a single specialized one. It also engendered a variety of public policies, institutions, and governance mechanisms intended to mitigate the failures of the market, and to reform modern industrial arrangements and practices (Polanyi, 1944).

Ford workers at the assembly line.
The moving assembly line was instituted by Ford. Through standardization of work and components, he enhanced mass production.

Ford's main contributions to mass production/consumption were in the realm of process engineering. The hallmark of his system was standardization -- standardized components, standardized manufacturing processes, and a simple, easy to manufacture (and repair) standard product. Standardization required nearly perfect interchangeability of parts. To achieve interchangeability, Ford exploited advances in machine tools and gauging systems. These innovations made possible the moving, or continuous, assembly line, in which each assembler performed a single, repetitive task. Ford was also one of the first to realize the potential of the electric motor to reconfigure work flow. Machines that were previously arrayed about a central power source could now be placed on the assembly line, thereby dramatically increasing throughput (David, 1990). The moving assembly line was first implemented at Ford's Model-T Plant at Highland Park, Michigan, in 1914, increasing labor productivity tenfold and permitting stunning price cuts -- from $780 in 1910 to $360 in 1914 Hence, the term Fordize: "to standardize a product and manufacture it by mass means at a price so low that the common man can afford to buy it."

Fordism in Western Europe

According to historian Charles Maier, Fordism proper was preceded in Europe by Taylorism, a technique of labor discipline and workplace organization, based upon supposedly scientific studies of human efficiency and incentive systems. It attracted European intellectuals — especially in Germany and Italy — at the fin de siècle and up until World War I.

After 1918, however, the goal of Taylorist labor efficiency thought in Europe moved to "Fordism", that is, reorganization of the entire productive process by means of the moving assembly line, standardization, and the mass market. The Great Depression blurred the utopian vision of American technocracy, but World War II and its aftermath have revived the ideal.

The principles of Taylorism were quickly picked up by Lenin and applied to nascent Soviet industry.

Later under the inspiration of Antonio Gramsci, Marxists picked up the Fordism concept in the 1930s and in the 1970s developed "Post-Fordism." Antonio and Bonanno (2000) trace the development of Fordism and subsequent economic stages, from globalization through neoliberal globalization, during the 20th century, emphasizing America's role in globalization. "Fordism" for Italian Marxist Antonio Gramsci meant routinized and intensified labor to promote production. They argue that Fordism peaked in the post-World War II decades of American dominance and mass consumerism but collapsed due to political and cultural crises in the 1970s. Advances in technology and the end of the Cold War ushered in a new "neoliberal" phase of globalization in the 1990s. They argue that negative elements of Fordism, such as economic inequality, remained, however, and related cultural and environmental troubles surfaced that inhibited America's pursuit of democracy.

Fordism and the Soviet Union

Historian Thomas Hughes (Hughes 2004) has detailed the way in which the Soviet Union in the 1920s and 1930s enthusiastically embraced Fordism and Taylorism, importing American experts in both fields as well as American engineering firms to build parts of its new industrial infrastructure. The concepts of the Five Year Plan and the centrally planned economy can be traced directly to the influence of Taylorism on Soviet thinking. Hughes quotes Stalin:

American efficiency is that indomitable force which neither knows nor recognises obstacles; which continues on a task once started until it is finished, even if it is a minor task; and without which serious constructive work is impossible . . . The combination of the Russian revolutionary sweep with American efficiency is the essence of Leninism. (Hughes 2004, 251)

Hughes describes how, as the Soviet Union developed and grew in power, both sides, the Soviets and the Americans, chose to ignore or deny the contribution of American ideas and expertise. The Soviets did this because they wished to portray themselves as creators of their own destiny and not indebted to their rivals. Americans did so because they did not wish to acknowledge their part in creating a powerful rival in the Soviet Union.

Other Marxist variations

Mass consumption is the other side of Fordism.

Fordism is also a term used in Western Marxist thought for a "regime of accumulation" or macroeconomic pattern of growth developed in the US and diffused in various forms to Western Europe after 1945. It consisted of domestic mass production with a range of institutions and policies supporting mass consumption, including stabilizing economic policies and Keynesian demand management that generated national demand and social stability; it also included a class compromise or social contract entailing family-supporting wages, job stability and internal labor markets leading broadly shared prosperity -- rising incomes were linked to national productivity from the late 1940s to the early 1970s. At the level of the labor process Fordism is Taylorist and as a national mode of regulation Fordism is Keynesianism.

The social-scientific concept of "Fordism" was introduced by the French regulation school, sometimes known as regulation theory, which is a Marxist-influenced strand of political economy. According to the regulation school, capitalist production paradigms are born from the crisis of the previous paradigm; a newborn paradigm is also bound to fall into crisis sooner or later. The crisis of Fordism became apparent to Marxists in late 1960s.

Marxist regulation theory talks of Regimes of Capital Accumulation (ROA) and Modes of Regulation (MOR). ROAs are periods of relatively settled economic growth and profit across a nation or global region. Such regimes eventually become exhausted, falling into crisis, and are torn down as capitalism seeks to remake itself and return to a period of profit. These periods of capital accumulation are "underpinned", or stabilised, by MOR. A plethora of laws, institutions, social mores, customs and hegemonies both national and international work together to create the environment for long-run capitalist profit.

Fordism is a tag used to characterise the post-1945 long boom experienced by western nations. It is typified by a cycle of mass production and mass consumption, the production of standardized (most often) consumer items to be sold in (typically) protected domestic markets, and the use of Keynesian economic policies. Whilst the standard pattern is post-war America, national variations of this standard norm are well known. Regulation theory talks of National Modes of Growth to denote different varieties of Fordism across western economies.

Fordism as an ROA broke down, dependent on national experiences, somewhere between the late 1960s and the mid-1970s. Western economies experienced slow or nil economic growth, rising inflation and growing unemployment. The period after Fordism has been termed Post-Fordist and Neo-Fordist. The former implies that global capitalism has made a clean break from Fordism (including overcoming its inconsistencies) whilst the latter that elements of the fordist ROA continued to exist. The Regulation School preferred the term After-Fordism (or the French Après-Fordisme) to denote that what comes after Fordism was, or is, not yet clear.

Other meanings

The concept may also refer to some of Ford's social views:

• It may also be applied to the fictional religion-like ideology described in Aldous Huxley's novel Brave New World. 'Our Ford', a parody on Our Lord, provides a centre-point in the religious celebration in Brave New World's society, and the name is used both as an incantation and source of authority throughout the book.

• It often describes the paternalistic "taking care of the worker" - a "family-like" mentality seen first in the auto-industry (Ford). The paternalism could be kindly (providing benefits) or restrictive (for example, Ford discouraged smoking even off premises).
• In a broader sense, Fordism refers to the classical 20th century consumer society: high productivity allows for high wages, mass production allows for mass consumption. (e.g. during the "economic miracle" of post-war West-Germany)

Post-Fordism

Main article: Post-fordism

Information technology, white-collar work and specialization are some of the attributes of Post-fordism.

The period after Fordism has been termed Post-Fordist . Fordism as a Return on assets (ROA) broke down, dependent on national experiences, somewhere between the late 1960s and the mid-1970s. Western economies experienced slow or nil economic growth, rising inflation and growing unemployment. The economies of western countries had shifted away from manufacturing and industry and towards service and the knowledge economy. Meanwhile, industry has moved from the west to second- and third-world countries, where production is cheaper. Most employees in the Fordist structure were able to purchase the product they produced. Indeed post-Fordism has arisen in part due to the increasing interconnectedness of the world. The movement of capital has become more fluid, and nation-states have withdrawn significantly from the economic sphere. Post-Fordism has arisen in part due to globalization. In Ford's time, laborers were relatively unskilled, but they could form unions, and these labor unions became very strong because capital was not so fluid.

Post-Fordism can be characterized by the several attributes:

• New information technologies.

• Emphasis on types of consumers in contrast to previous emphasis on social class.

• The rise of the service and the white-collar worker.

•' The feminization of the work force.

• The globalization of financial markets.

Instead of producing generic goods, firms now found it more profitable to produce diverse product lines targeted at different groups of consumers, appealing to their sense of taste and fashion. Instead of investing huge amounts of money on the mass production of a single product, firms now needed to build intelligent systems of labor and machines that were flexible and could quickly respond to the whims of the market. Modern just in time manufacturing is one example of a flexible approach to production.

Post-Fordism is very much driven by information technology. Advancement in computer technologies allows for just-in-time manufacturing. There is no longer a need to stock-up on a given product. Products are made and then they are out the door. The key to production flexibility lies in the use of informational technologies in machines and operations. These permit more sophisticated control over the production process. With increasing sophistication of automated processes and, especially, the new flexibility of electronically controlled technology, far-reaching changes in the process of production need not necessarily be associated with increased scale of production. Indeed, one of the major results of the new electronic and computer-aided production technology is that it permits rapid switching from one part of a process to another and allows - at least potentially - the tailoring of production to the requirements of individual customers. Traditional automation is geared to high-volume standardized production; the newer ‘flexible manufacturing systems’ are quite different, allowing the production of small volumes without a cost penalty. This creates less space needed, which creates less rent. Modular processes can be taken advantage of to create custom & limited products for niche markets. Focus is now on the principle task of manufacturing. Companies are smaller and subcontract many tasks. Likewise, the production structure began to change on the sector level. Instead of a single firm manning the assembly line from raw materials to finished product, the production process became fragmented as individual firms specialized on their areas of expertise. As evidence for this theory of specialization, proponents claim that clusters of integrated firms, have developed in places like Silicon Valley, Jutland, Småland, and several parts of Italy.

See also

• Division of labour

Bibliography

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