The History of Fordism and Post-Fordism

The history of Fordism and Post-Fordism is the history of industrial production and labor management from the early 20th century to the present day. Launched by Henry Ford in 1914, Fordism was based on a production system that emphasized efficiency and the segmentation of work tasks. Despite initial resistance and challenges such as the Great Depression, Fordism flourished after World War II, driven by state intervention and the Second Industrial Revolution, leading to significant economic growth and improved living standards. However, the rigidity of Fordism began to show cracks, giving rise to Post-Fordism in the 1970s and 1980s. This new regime, characterized by flexibility in labor, production, and consumption, responded to the limitations of Fordism, leading to a shift towards economies based on the service sector and on the information sector. The transition from Fordism to Post-Fordism was essential for the development of the modern economy, with enduring effects for the world.

The Origins of Fordism

In 1911, Frederick Winslow Taylor introduced the theory of management that would be known as Taylorism in his book “Principles of Scientific Management”. According to him, industrial production had to be executed efficiently and without waste of materials. He emphasized the segmentation of work tasks and strict time management to enhance productivity.

A few years later, in 1914, Henry Ford built upon these ideas when opening the first automated assembly line in history at the Ford Motor Company factory in Highland Park. Henry Ford revolutionized the manufacturing industry by introducing an eight-hour workday and a daily wage of five dollars for his workers. These changes marked the beginning of Fordism, a system that blended mass production with mass consumption.

Despite its innovative approach, Fordism did not immediately take hold. Several factors contributed to the delay in its widespread adoption. Ford believed that a new society could only be formed with the participation of corporate power. For instance, during the Great Depression (1929-1939), Ford increased wages to try and curb the decline in demand. However, this initiative alone was not sufficient. There were two significant obstacles hindered the consolidation of Fordism during the interwar period:

• First, society was initially resistant to a production system that imposed long, mechanized workdays with little control over the production process. In the United States, Ford relied on immigrant workers who were more adaptable, while in other developed countries, the Fordist-Taylorist system initially failed to take root.
• Second, the success of Fordism hinged on state intervention in the economy, but states were initially reluctant to engage in economic affairs. However, that was beginning to change, because, faced with a global economic crisis, many states came to the conclusion that intervening in the economy was a better alternative than finding militaristic and racist solutions to the crisis — like those seen in Germany, Italy and Japan.

The Boom of Fordism after 1945

During the Second World War (1939-1945), societies all around the world came to accept economic rationalization, because it increased economic productivity when it was most needed — that is, when states had to produce enough weapons to defend themselves. After 1945, the role of the state in the economy was well-defined, allowing Fordism to flourish during a prolonged economic boom until 1973. This period saw significant improvements in living conditions, containment of economic crises, and the preservation of democracy.

The economy became increasingly based on technologies that matured during World War II, such as automobiles, ships, steel, and petrochemicals. Demand was driven by the privileged classes in various industrialized regions, including the Midwest in the United States, the Ruhr and Rhineland in Germany, and the Tokyo-Yokohama area in Japan. Infrastructure development became a state responsibility, boosting both demand and supply.

The phenomenal economic growth from 1945 to 1973 depended on the collaboration and commitments between three main actors: the state, corporate capital, and organized labor unions. In the immediate post-World War II period, labor unions were politically defeated in an atmosphere of repression and anti-communism, exemplified by the Wagner and Taft-Hartley Acts in the United States. Despite this, unions retained some power, such as control over promotions and worker safety. They became tools for disciplining workers to accept Fordism.

Corporations embraced scientific rationalizations to increase productivity, simultaneously improving worker wages and capitalist profits. Corporations accepted unions, provided they controlled their members. The state took on numerous responsibilities, including investing in infrastructure, managing economic cycles through monetary and fiscal policies, and providing social welfare. The extent of state intervention varied by country, but governments of different ideologies maintained a stable pattern of economic growth and improved living standards.

The post-war Fordist model represented a comprehensive way of life, centered on mass production and consumption, interacting with modernism. It had an international dimension, expanding global economic flows to incorporate the entire capitalist world, consequently boosting various economic activities such as tourism and international finance. The system was sustained by the financial, economic, and military hegemony of the United States, which financed the world in exchange for opening economies and resources to large corporations.

The Decline of Fordism

Despite its successes, Fordism did not benefit everyone equally, leading to various forms of discontent. There were tensions between the privileged and disadvantaged sectors of the economy, with the latter not fitting into the mass consumption logic due to lower-paying jobs. This disparity spurred civil movements, including those advocating for racial and gender equality. Unions were criticized by the disadvantaged for catering only to their own interests, and the state became a primary target of discontent for failing to ensure social welfare for all. Consumers criticized the blandness of mass consumption and the culture and aesthetics of capitalist modernism, such as unremarkable suburbs and economic centers. The Third World questioned its subjugation, receiving few tangible economic benefits in return for adopting Fordist principles.

Despite the discontent, the Fordist regime remained intact until 1973, spreading its benefits to various components. However, signs of trouble began to emerge in the mid-1960s. The completion of European and Japanese reconstruction, declining corporate productivity, import substitution policies in the Third World, and increasing competition between American, European and Japanese companies signaled potential issues. The problem was that Fordism was too rigid, so it could not be properly adapted to changing times.

The Rise of Post-Fordism

The economic and political landscapes of the 1970s and 1980s underwent significant restructuring, giving rise to what is known as “Post-Fordism” or “Flexible Accumulation” — a response to the limitations of the Fordist system. This new regime marked a departure from the rigidity of Fordism, introducing flexibility in labor, production, and consumption. It emphasized adaptability and responsiveness to changing market conditions. This flexibility allowed for greater control over workers, with increased unemployment, declining wages, and temporary or part-time contracts becoming common as companies reacted to a more competitive environment. Yet the changes also facilitated the development of previously underdeveloped areas, such as Silicon Valley, increased employment in the service sector, and led to the “time-space compression”, meaning the reduction in the time horizons adopted by states and individuals.

The labor market under Post-Fordism became divided into a core of privileged workers and multiple peripheries, including less important, temporary, or part-time workers. While this shift initially seemed beneficial, potentially opening up opportunities for minorities by reducing the number of privileged white workers, the negative consequences soon became apparent. Unemployment rose, job security diminished, and income inequality increased.

Post-Fordism brought significant changes to industrial organization. Outsourcing became prevalent, allowing small businesses and traditional enterprise systems, such as family businesses and even mafia operations, to thrive alongside exploitative “sweatshops”. The power of labor unions waned as workers directed their discontent towards outsourced firms, often family-run, rather than the large corporations that exploited their social class. Although women’s participation in the workforce increased, it did not lead to progressive changes; instead, women often faced exploitation.

The transition to flexible accumulation posed problems for companies accustomed to the previous regime, leading to bankruptcies and restructurings. At the same time, numerous new enterprises emerged, replacing the economies of scale with economies of scope, where small businesses produced multiple related goods. This shift was accompanied by a reliance on economic innovation, often targeting niche markets. Postmodern aesthetics demanded different, ephemeral, and fashionable products, further driving the need for adaptability.

As anticipated, the expansion of the service sector became a hallmark of the Post-Fordist era, driven by the increased productivity of Fordist industries that required fewer workers for the same tasks. This expansion created new employment opportunities but also highlighted the growing divide between secure, well-paid jobs and precarious, low-wage positions.

The changes brought about by flexible accumulation favored large businesses, which had the resources to manage market uncertainty, ephemerality, and global competition. This advantage led to a surge in corporate acquisitions, forming monopolies in strategic sectors. Capitalism became more geographically dispersed but remained organized, flexible, and innovative. This organization was facilitated by two parallel advancements: the transformation of information into a commodity and the reorganization of the international financial system.

In the Post-Fordist era, companies competed for rapid, up-to-date information, access to cutting-edge technology and science, and control over information flows and popular tastes. This transformation turned information into a critical asset, driving competition and innovation.

The Political and Economic Impact of Post-Fordism

The adoption of Post-Fordism in the early 1970s marked a turning point, with significant changes in the global political economy. The United States, for instance, became more dependent on international trade. These economic shifts were accompanied by the rise of neoconservatism in the United States and Western Europe, exemplified by the elections of leaders like Margaret Thatcher and Ronald Reagan. The welfare state, which depended on economic growth for funding, faced challenges when growth stagnated, necessitating alternatives to Keynesian policies. The dismantling of the welfare state began as a necessity during the crisis of 1973-1975 but soon became a “virtue” for state policy.

Cultural and political factors played significant roles in the rise of neoconservatism. The entrepreneurial mindset promoted by neoconservatism appeared more favorable than state or corporate control over the economy. The transition to neoconservatism had roots predating flexible accumulation but became intertwined with it, as people sought stability in institutions like family, religion, and the state during times of economic fragmentation and insecurity.

Despite the ideological shift towards market non-intervention, governments were often forced to intervene in economic crises. For example, the U.S. provided aid during Mexico’s debt crisis in 1987. Continuities between Fordism and Post-Fordism remained, with states still able to declare moratoriums on their debts to force renegotiations and international institutions like the IMF and World Bank acting as central authorities in the financial system. In addition, the United States continued Keynesian practices, such as raising the debt ceiling, and state intervention in the economy became more crucial than ever.

In addition, the international financial system underwent significant changes, with the formation of conglomerates and new financial products and markets, making the system highly complex. This complexity blurred the lines between commercial, industrial, and financial interests, leading to a “paper entrepreneurship” in which new ways of generating money emerged beyond mere production. The financial system became more autonomous and uncontrollable, even by the most powerful capitalist states, leading to predictions of potential chaos.

Conclusion

Fordism, introduced by Henry Ford in 1914, was a revolutionary approach to industrial production and labor management that significantly shaped the 20th-century economy. By combining mass production with mass consumption, Fordism laid the foundation for a modern, democratic society. Despite facing numerous challenges and periods of discontent, the Fordist model remained influential until the early 1970s. Post-Fordism, or flexible accumulation, represents a fundamental shift in the economic and political landscape that emerged in the 1970s and 1980s. This regime introduced flexibility in labor, production, and consumption, leading to significant changes in industrial organization, labor markets, and economic policies. Understanding Fordism and Post-Fordism provides valuable insights into the complexities of modern industrial history and the relations between workers, companies and states.