The Crisis Of Fordism - Essay Example

? What were the key causes of the crisis of Fordism? College: Introduction Fordism is defined as a mass production of related products using a rigid mode of technology of production line with particular machines and work routines, which leads to increased productivity through intensification of labor, homogenization of the labor force and the economies of scale. The above mentioned process results to a phenomenon of mass worker, controlled in bureaucratic trade unions, which negotiate common wages that increase in relation to the production levels. The common consumption patterns indicate the homogenization of the working class and this leads to a market with homogeneous commodities and a match between demand and supply (Lipietz, 1984, p. 20). Notably, the balance between the supply and demand is achieved through the Keynesian macroeconomic policies, while the balance between wages and profits is obtained through collective bargaining power. The challenges of Fordism are economic, technical and social. To begin with, the technical challenges are characterized by the exhaustion of the increasing productivity by gaining economies of scale, intensifying labor and de-skilling of the workers. Secondly, the economic limits are characterized by declining rate of profits, which is as a result of falling productivity growth or limited market for the homogeneous consumer goods while the income rises. Finally, the social limits are characterized by the rapid growing pressure on managerial prerogative, profitability and on the public financed enhanced by the rising demands of the mass workers (Lipietz, 1984, p.30). From the year 1940 to around 1965, most of the industrialized countries took the advantage of the continuous growth and rapidly increasing rates of wages and profits in a parallel mode. Nevertheless, from the year 1970, the rates of the economic growth fell as a result of the revolution of the New Left against the principles of the assembly lines. In addition, the rapid increase in raw materials of the industrialized countries extensively increased the cost of production for various economies (Lipietz 1984, p.42). Like in the previous decades, several national governments reacted to the above mentioned crisis by implementing reflationary policies. However, unlike in the earlier economic recessions, the above mentioned Fordist strategy did not help. Rather, the industrialized countries encountered a period of currency instability, continuous inflation and rapid growing rate of unemployment. Notably, the failure in the economic policy in the industrialized nations was caused by the globalization of production. For instance, the European, Japanese and American countries had been for a period of over thirty years expanding in order to gain economies of scale on a global level. In absence of any control by national governments, the international trading system practiced by the multinationals was coordinated by the global financial markets. As a result of the decline of the fixed exchange rates, the global competition among various currencies determined the internal economic principles of the international industrialized nations. For instance, reflation in one country was controlled by balance of payment crises, which in turn forced a rapid return to the deflationary policies (Frieden, 2007, p.120). After the governments of the industrialized nations lost control over their economies, the complete circle of increasing consumption and production was discontinued. Rather, the workers in the industrialized nations began to incur cuts in social benefits, mass rate of unemployment and stagnant money wages. As a result of the recurrence of the social difficulties of the past, new ways had to be implemented in order to solve the deepening crisis of Fordism. The Fordist crisis was an over accumulation crisis caused by the rapid spread of the various Fordist productions methods to the Japan and Western Europe, leading to a decline of profit rate and saturation of the global markets in the manufacturing industries. The Fordist crisis was deeply political. It was characterized by cases of interrelatedness in the major economic trends. In particular, the various political aspects of the Fordist crisis were not far away from the European markets; rather they converged on the United States markets (Kirshner, 1999, p.40). The failure of the traditional reflationary remedies made a lot of intellectuals and politicians convinced that Fordist crisis had hit its inherent organizational, social and technological limits. Nevertheless, unlike the New Left, the politicians did not accept that a particular social revolution was needed in order to control the Fordist crisis. Fordism has been over the past two decades going through a deep crisis; in response the state and the capital have introduced a sustained offensive in order to enhance a profound means of restructuring the capitalist economic, political and social relations (Gill & Law, 1988, p.90). The root causes of the crisis of Fordism are in the class struggle over production in which, the surplus value is threatened the increasing rates of mass worker. The mass production in the industrialized industries led to the formation of mass workers in assembly line production. Despite the fact that it was an indication of improved technology over large production, it was not a spontaneous improvement in the labor force. This is because the capitalists divided the workers through the differentiated payments schemes and sectional bargaining which combined the wages to productivity. It is evident that the rapid growing rate of militancy of mass worker challenged the capitalist profitability and this led to the subordination of the labor to capital (Van der Pilj, 1988, p.15). The Fordist mass production depended on the creation of a dual labor market and falling minority of both the relatively skilled and the well-paid workers. The crisis of Fordism was not only a crisis of capitalist production, but also a defined crisis of the capitalist states. Within the limited framework of the reformist social democracy, the politicization process of the class struggles politicized all the processes of state planning that were meant to increase the reproduction levels of capital. In addition, the process of rationalizing production levels was compromised by the workers desire to defend the source of their income (Kerney & Florida, 1987, p.17). Notably, the efforts to plan the education, welfare and health services in relation to the requirements of the reproduction of the labor force for the capital was hindered by the increasing demand of the working class for common guaranteed provision of rising and adequate demands. Moreover, the efforts to coordinate the pace of accumulation in relation with the various needs of the capitalist reproduction were challenged by the working class request for full employment. As a result of the above mentioned crisis, the international markets were not able to carry out their planning functions for the capital as a result of the rapid growth of the politicization class struggle. Therefore, the states had to maintain their radicalization by increasing the public expenditure and this meant a double fiscal and inflation crisis to the states. Consequently, the recession in the inflations rates caused political and fiscal pressures on the states and this compromised the states’ reproduction. The crisis of Fordism limited the social democracy causing it to monopolize the political stage in the international markets. Therefore, the crisis of Fordism was both a crisis of social democracy and a crisis of political representative of the working class (Strange, 1989, p.30). Literature review There are three fields within the political economy that are broadly engaged in various types of flexibility debate about the causes of Fordism and they include unequal degree of cross-fertilization and communication. Among the above mentioned fields include international capitalism or crisis theory, labor or process studies and geography literature. This paper explains the literature on the crisis of Fordism in each of the above mentioned fields and it also emphasizes the diversity of the approaches of the crisis (Strange, 1989, p.52). The Fordism thesis explains that crisis of Fordism as a means of capitalist production that achieved it high point within the top leading industrial nations such as the United States of America, Europe and in Japan between the years 1920s and 1960s. Nevertheless, in the year 1970s, some of the above mentioned nations incurred a crisis of mass unemployment, quick slowdown in economic growth and various challenges associated with the economic restructuring. One of the most and first influential literatures to consider the above mentioned possibility was Michael Piore and Charles Sabel’s.The industrialized nations was the current systems of production that could not match up the rate of consumption and production of goods. The crisis of Fordism aimed to the mass production of undifferentiated and standardized goods. Nevertheless, the production of the standardized and undifferentiated goods reached its limit levels in an era that was mainly characterized by rising fluctuations in the supply of resources, more unpredictable and international markets and differentiated consumer demand. According to Piore and Sabel labor or process theory, the Fordist systems of mass production were not adequate to deliver goods within a defined socio-economic method (Piore & Sabel, 1984, p.22). In accordance with Piore and Sabel, the inflexibility of product-specific machinery was characterized by the existence of labor management techniques, various controls on labor movements in welfare economies and post-war trading and international monetary systems. Piore and Sabel saw two defined routes to the economic regeneration. The first was rapidly extending the system of related regulatory institutions and mass production and the second one led to the implementation of a strategy of permanent innovation, which embraced change and flexibility (Piore & Sabel, 1984, p.30). The theory of flexible specialization mainly addressed the economic measures of the newly introduced market place that was characterized by continuous vitality and change. In addition, the flexible specialization strategy placed a lot of emphasis of highly skilled employees undertaking various tasks and changing roles. Piore and Sabel argued that there was no hidden dynamic of the historical law of capitalist development that would enhance flexible specialization in order to curb the crisis that was facing the growing industrial societies. This is because flexible specialization did not perform as a defined model of production nor work organization. The above mentioned authors presented a critique analysis of the challenges of Fordism under the demand of a changing economic order and high-performance paradigm, which involved employee involvement, innovation and high skill levels among the employees. Notably, towards the end of the year 1980, the unemployment levels in the industrialized levels increased and the labor unions weakened. This was a crisis of efficiency and it was worse than the crisis of work that was introduced in order to control the implementation of the newly introduced approached to work organization and production (Piore &Sabel, 1984, p.40). Piore and Sabel realized that flexible specialization was the only alternative to mass production in the industrialized markets. Moreover, Piore and Sabel emphasized the significance of political factors in determining the ways in which the industrialized companies adapt to the crisis of Fordism either by means of mass production or flexible specialization. Nevertheless, the strategy of flexible specialization required modern institutional framework, which included labor relations and national industry policy. On the basis of labor and job process, the strategy of flexible specialization held out the promise of more rewarding, satisfying work for the individuals that were below the mass production (Piore & Sabel, p.50). It is evident that Piore and Sabel were arguing about the crisis of Fordism from an institutional tradition. Basically, their story emphasized on market and technology demand and they portrayed a society that is susceptible of rational evaluation. In addition, Piore and Sable are criticized for not emphasizing the issue of distribution of costs and the benefits of the new systems. According to the crisis theory, the crisis of Fordism was as a result of capitalism and the whole process of restructuring in the year 1970. In the crisis theory described the general characteristics of the capitalist world order from the 1920s to the 1972s. The period of the crisis of Fordism was characterized by assembly-line production, economies of scale, separation of execution and control in the work place and division of labor (Aglietta, 1979, p.15). The increased levels of mass consumptions, which were implemented by the institutional supports, included the Keynesian demand policies in business and labor. In the theory of capitalist regulation, Michel Aglietta argued that the crisis of Fordism was a period of great depression in both realization and production of surplus value. Notably, Michel Aglietta focused on the United States of America experience. Under the Fordist crisis, the scientific pattern was characterized by the standardization of particular procedures and products and the Taylorist models of the execution and the division of conception which led to increased production levels. In addition, during the crisis of Fordism, there was rapid growth in mass consumption and this was aimed at balancing the mass production between the public sector and the non-productive workers. The type of regulation comprised of the institutional support of collective bargaining power and the role of the Keynesian model in controlling demand. According to crisis theory, the crisis of Fordism was measured on various dimensions such as labor process, production process, corporate structure, spatial implications and corporate structure. As a result of weakened labor movement, various approaches were introduced and they were based on managerial initiatives and uncontrolled neo-liberalism. Notably, instead of constituting a break from the Fordist crisis, modern approaches were involved in the establishment of neo-fordism (Aglietta, 1979, p. 22). In addition, the aim of the Fordist principles was to join the process and product innovations with the Taylorist-style model to labor control and management. Atkinson’s model defined the labor market flexibility model, which was used to analyze the functions and numbers of the employees in accordance to the demands of the market. The above mentioned model characteristically defines employee effort with workers employed or withdrawn depending on market and environmental conditions. Under the labor market flexibility model, employees are described as one of the factors of production in the company. Much of the concern during the crisis of Fordism of the past two decades was with the shifting of geography of capitalism as described by the Marxist geography theory. Various urban and regional scholars contributed to the above mentioned literature on the spatial implications, deindustrialization and reindustrialization of restructuring during the crisis of Fordism. The writers in the Marxist geography theory emphasized on important variable of space in analysis the Fordist crisis (Marcussen & Torp, 1982, p.45). In regard to the above mentioned theory, space was used in analyzing the global shifts in the capitalist centre and in the determination of economies of scope and in the operation of network companies. The Marxist geography theory relates space dimension to the Fordist crisis and it explains how political and economic processes are greatly shaped by their geography. Therefore, the insights of the geographers have provided a significant contribution into the labor literature. This is because geographers assist in the location dimension of an industrial organization in the market. According to the Marxist geography theory, the introduction of the modern technologies led to vertical quasi-integration and specialized firms. Nevertheless, this was achieved through integration or disintegration of various forms of labor relations (Block, 1977, p.150). Case Study The Fordism crisis was a period during which the industrialized nations experienced both economic and social system. During the Fordist crisis, workers in the companies did not have the important tools they had before in the handicraft system of production. These included their basic skills, their knowledge, their wisdom and their experience. Before the crisis of Fordism, workers in the companies were allowed to have power on the technology and the production cycle. However, the workers decided to react against the above mentioned situation and this resulted to the crisis of Fordism. Notably, unions were controlling the labor force through defined closed shop system in hiring new employees (Frieden, 1981, p.408). Therefore, during the crisis of Fordim, the employees changed their bargaining power and skills. The Fordism crisis occurred in the early 1920s and it is defined as a period when the production system in the industrialized markets was based on a particular technology. It was a method of coordinating the working process depending on a concept of an assembly line within one production unit. Fordist crisis meant engineered factory and mechanical technology characterized by mass production performed on a single assembly line. In addition, Fordism is defined as a system of accumulation whereby an economic model is based on both mass production and mass consumption. Fordism means a social and political system; this is because political system in the industrialized nations supports mass consumption and mass production (Frieden, 1981, p.420). During the crisis of fordism, all the public authorities and institutions ensured the availability of adequate labor and distributed wealth to all the social classes. Therefore, Fordism increased the efficiency of labor force by enhancing various welfare services such as health care, social protection and housing facilities. During the crisis of Fordism, the above mentioned components underwent particular changes such as the two World Wars, fascism, economic crisis and union challenges. The above mentioned conditions were experienced throughout the 20th century and they entered a crisis in the final 25 years (Hirst & Jonathan, 1991, p.15). There was the initial Fordism that was also known as the American Fordism of Henry Ford and the introduction of the automobile industry. The crisis of Fordism in the year 1929 was a clear evidence of the challenges that the economic and social model had brought about. After the World War 11, Fordism was experienced in the production system of all industrialized countries. A case study of crisis of Fordism and its causes is identified when Henry Ford invented the assembly line in Detroit in his Highland Park factory. Henry Ford had a basic invention and he used the organizational system of the Chicago abattoir, where the meat was being moved along a particular line before processing. Henry Ford’s important innovation was to implement the above mentioned production system to a modern product, which was in this case a car. He had a brilliant idea of changing the production of cars from the handicraft fashion to mass production (Hirst & Jonathan, 1991, p. 30). Notably, Ford’s invention was revolutionary; this is because it considerably changed the world. The 20th century was dominated by an industrial divide, which was a turning point between the old industrial system and the modern production method. During the old industrial production system, the objects in the companies were stationery and only employees moved around. For instance, in the car industry, the highly experience workers, who were familiar with all the operations in the factory were supposed to make the product. They had to move around the body of the car and collect the important parts that were produced in minor external workshops by other skilled employees. The above mentioned production model in the 20th century was coordinated in such as a way that the factory was defined as assembly operations terminal point (Herbst, 1990, p.950). This is because various components produced in other places on a handicraft basis by skilled employees were assembled. To build a car under the above mentioned conditions required a lot of working hours and effort. In the late 1800s when the initial manufactures began to build the cars, all the automobiles were as a result of hand build efforts and they aimed at satisfying the wishes of all the customers. The cars needed hand-fitted craftsmanship from workers who were highly experienced in design and machine operations. When Henry Ford introduced the assembly line, he caused a Copernican revolt in the industrialized countries. Ford’s revolution was characterized by consistent and complete interchangeability of common parts and fixing them using the assembly line and this enhanced mass production of cars. Notably, mass production made cars affordable to all consumers and the simple interchangeability of the parts increased reliability and cheap maintenance as compared with the craft production of cars. In a nutshell, manufacturing of products in the old factories were made by specialized employees and they were hand-made using cheap technologies. Nevertheless, with the introduction of standardized production method, it was not possible to manufacture tailor-made cars; this is because they were similar. After the innovation of Henry Ford, vehicles came off the assembly in large quantities (Corbridge, 1993, p.24). In addition, the cars were standardized and produced by unskilled workers. In a Fordist factory, the workers learnt the basic of their job in a short time as compared in the past when the workers required a lot of time to learn the basics of their job. As a result of Fordism, markets absorbed industrial production and all the production flows were regular and smooth. However, challenges came up when the external and internal conditions rapidly changed. The markets became saturated and the labor force could not implement the innovation introduced by the Fordist environment. Therefore, the above mentioned situation meant job reduction, fragmentation of worker’s power and production cycles. Analysis It is imperative to note that there are a number of significant lessons which can be drawn from both the merits as well as the weaknesses of the Fordist model. Arguably, all that this model does is kind of revolving around the issue of the reduction of the unforeseen events to the very minimum. As a matter of fact, this model was afraid of the likely collapse if not in control of the above mentioned unanticipated events, both internally and externally. In this model, the foremost limit was that it happened to be so rigid, and as a result this inflexibility led to the failure of the system (Eichengreen, 1996, p.61). To begin with, the earlier known virginity of the market was no longer there due to the ever increasing saturation. This inflexibility was also noted among the labor force. As the sun was setting in the 1960s, a real mass revolt and uprising against the characteristics of Fordism were noted against the alienation of the worker, as a result, a technological revolution was born; a revolution which saw the mechanical technology of the assembly line be rendered obsolete. All the aforementioned facts were the key causes of the Fordist model; characterized by too high costs and intolerability as a result of the absence of flexibility. With the so-regarded as giant Fordist companies been displaced from the float zone, several problems and weaknesses of the Fordist model were evident; a greater percentage of which were in relation to control/management of the workforce of these companies, market growth and expansion and the heightened global competition (Hoogvelt, 2001, p.55). Following its going into a crisis towards the end of the 1960s and its subsequent downfall, Fordism was perfectly replaced by post-Fordism, commonly known as the industrial models. The latter substituted the former’s centralization of the production process with outsourcing as well as the search for external suppliers and sub-supplying systems. This ushered in the setting up of decentralized worldwide networks of production. In the eyes of many, the post-Fordism era did away with all the drawbacks, defects and the unpleasant consequences of the Fordism system in favor of both greater flexibility and greater opportunity of participation by the worker. Although this transition came with it the above mentioned positive aspects, negativities also accompanied them. The negative sides of the post-Fordism system included unemployment and breaking the rapport between industrial growth and employment growth (Gill & David, 1988, p.90). Factually, Fordism was a model grounded on full employment; with its no-limit growth principle also being rooted on the employment principle. Through the provisions of this principle, each and everybody was in a position of working in any factory, be it big-, small- or medium-sized. Besides, the strength of the company in the Fordist model was so measured on the basis of employee numbers; with those companies having employed more workers being considered to be stronger. The opposite was true in the post-Fordist model. In getting a clear understanding of the inherent problem, it is crystal clear that under the new circumstances, the re-engineering processes of both the organizational and technical structures of these companies withdrew the relationship between growth and employment. Nevertheless, this does not negate the benefits of the changes borne of the transition in production, including smoothing the economic system and realizing more flexibility. With markets maturing up, their growth rate has considerably fallen (Griesgraber & Gunter, 1996, p.22). In the present day, capital flows can freely move around the world. Plainly, Fordism has not all the time facilitated economic independence among countries and to some extent, the working conditions in these countries have hardly improved. In some instances, the positive relationship between higher productivity and higher wages and/or salaries has not been evidenced. Even in some countries, Fordism has been in the absence of labor rights being granted to the workers. Conclusion The foremost barrier to economic development- giving birth to good results in a social perspective- is the uneven distribution of resources at a worldwide level. Though globalization unifies the world, poverty has continuously been dividing it. The gap between the developed and the developing countries has over and again been overshadowing the development of new industrial models. In addition, the same has given rise to a mechanism that is characteristically perverse. More regular developments have become a function of wealth that is more evenly distributed; what can be considered as a global new deal deficient of economic catastrophe. In the present day, what is needed is a world state that will govern the redistribution of wealth as well as see through the development of policies founded on the social dimension of globalization as opposed to neo-liberal social and economic policies. Both productive and economic systems of the era we are living in, the structure of the labor market and the consumption trends of this contemporary time do point out the necessity of re-discussing the economic paradigm that has propelled industrial development of the 20th century. Moreover, there is a hurried need to address in detail the principal issue of environmental sustainability of the present day production patterns (Helleiner, 1995, p.115). On the aspect of economic models, they have to be so thought of in line with the people, communities and environment at their very central position and not simply industrial productivity and economic growth as was the case in the previous development cycle. Sustainable development ought to be embraced since it is the only form of development which has the capacity of availing a framework under which communities can develop by speaking of economic, social and environmental issues. References Agiletta, M 1979, A Theory of Capitalist Regulation, London: New Left Books Block, F 1977, The Origins of International Economic Disorder. Berkeley: University of California Press. Corbridge, S 1993, ‘Discipline and Punish: The New Right and the Politics of the International Debt Crisis’ in Riley, G, ed. The Politics of Global Debt. 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