As mentioned earlier, the world configuration of the Fordist era was also affected by the breakdown in Fordism and its intensive regime of accumulation. In the 1960s and the 1970s there was a search for a larger scale of production and for regions with lower wages. This led to an internationalisation of Fordist productive processes which stood contrast to the national character of economic regulation. Accordingly, the productivity growth rates of Europe and Japan (especially Japan) were ‘catching-up’ with those of the USA which threatened American competitiveness and its industrial hegemony. The American industrial hegemony and its balance of payments surplus were also reduced by increasing competition from the Newly Industrialised Countries; cheap labour replaced the highly-paid (or skilled) workers.
The breakdown of the Fordist era on the world stage was also due to the abandonment of the Bretton Woods fixed international monetary system and the fall in the value of the dollar. This was replaced by greater free trade involving ‘flexible’ exchange rates and the policy of achieving balance of payments equilibrium rather than surpluses. These circumstances did not allow the USA to redistribute its current account surplus into direct foreign investment abroad and consequently it retreated from Keynesian Demand Management policies for a more Monetarist approach of interest rate policy and restrictive monetary policies.
By Mawdud Ehsan Choudhury
16 March 1998