Topics in Political Economy – Fordism: the national perspective

The period from the First Industrial Revolution to the First World War saw an extensive regime of accumulation where capital accumulation was a means to expand the scale of production. However, in the post Second World War era the dominant regime of accumulation has been intensive where capital accumulation is a means to further the capitalist reorganisation of labour in order to increase productivity growth (Lipietz; 1987; p33). This intensive regime of accumulation was based upon mass consumption and its growth, which in turn was determined by the mode of regulation. During this same period the Fordist production methods determined the system of production or capital-labour relations.

These methods were first developed in the 1920s by the Ford automobile company, and its argument was one of technological innovation and the resulting mechanisation of the labour process which in turn yielded a greater level of control over the speed and intensity of the production process. This production process also included Taylorist principles of rationalisation or ‘scientific management’ of the labour process, which endured technical, bureaucratic, machine-paced and rule-directed systems of control (Marglin & Schor; 1990; p11). Due to this type of work organisation of the automated assembly line, the division of labour increased meaning the importance of technological progress had replaced labour skills. However, to overcome the potential problem of worker resistance to Taylorisation, the Fordist compromise was implemented. This involved a new social-democratic compromise between management and workers whereby there would be a ‘sharing out’ of productivity gains. From this, both social knowledge and labour skill requirements were reduced which allowed for the inclusion of cheaper labour into the labour markets providing firms with increased labour productivity. These characteristics of the Fordist methods of production also made it easy to be generalised and thereby allowed for the internationalisation of the division of labour.

The Great Depression of the 1930s was believed by many economists to be caused by the generalisation of the Fordist methods of production, as it allowed for increased productivity growth and hence the major crisis of over production. At the time the mode of regulation was competitive based on the responsiveness of flexible prices to changes in demand, and adequate to the extensive regime of accumulation, great importance was placed on the exogenous markets in order to avoid the problem of over production. However, the combination of these led to the final demand not keeping pace with productivity increases, thereby leading to under consumption and eventually the crisis of over production in the 1930s. To make sure this crisis did not occur again, the Fordist strategies in producing the Golden Age in the 1950s and 1960s were to transform the regime of accumulation to an intensive one and to implement the Fordist compromise. The successes of these new strategies were maintained up until the 1970s by converting the mode of regulation from a competitive form to a monopolistic form.

This new monopolistic mode of regulation also incorporated the Fordist compromise which allowed for the co-existence of mass production of the Golden Age and mass consumption. Workers saw their purchasing power (or their consumption of goods) match the rise in productivity, the implication being that wage-earners had in effect been included into capitalist accumulation. The establishment of this was mainly achieved through binding collective agreements between trade unions and employers, accompanied with the social legislation for minimum wages and the creation of a social insurance system (or welfare state) in the advanced capitalist nations. This guaranteed all permanent income earning workers were still able to consume regardless of ill health and unemployment (Lipietz; 1987; p34). Overall, this amounted to a period of social consensus during the Golden Age in most countries, only interrupted by short phases of social upheaval as the capitalist features exploitation and domination were still ever present (De Vroey; 1984; p56).

For firms the Fordist strategies of the Golden Age period allowed profits to remain high and to be a constant share of output, as well as there being a balance between mass production and mass consumption, or in other terms between productivity and wage growth. This all translated into greater investment demand which led to capital accumulation continuing to increase at a stable rate. However this balance between productivity growth and wage growth (or consumption) was achieved predominantly through constant state-intervention; this was part of the monopolistic mode of regulation. The main instruments used by the state were Keynesian Demand Management policies. Therefore, during cyclical crises and unemployment mass consumption was maintained via reflating or deflating the economy (using the Keynesian counter-cyclical policies) which ensured that business cycles were kept in check. The operation of the mode of regulation outlined together with the generalisation of Fordism within the labour process provided for intensive accumulation in the OECD nations, which in turn enjoyed high and regular long-term growth for twenty years.


By Mawdud Choudhury

16 March 1998


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