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.
Henry Ford worked as an apprentice in different Michigan machine shops and in later years as a qualified engineer for the Edison Illuminating Company. Here he received the first hand knowledge of how industries were being run. Although Henry Ford was not the inventor of the automobile, he developed unprecedented methods of production and marketing that allowed the automobile to become accessible to the American working class. Ford wanted to make cars that his workers could afford. He created the Ford Motor Company, which was one of a dozen small automobile manufacturers that emerged in the early 20th century. After three years of production, he introduced the Model T, which was simple and light yet sturdy enough to drive on the country's very rudimentary road system. Henry Ford's success and revolutionary techniques of production were then termed Fordism.
It is true that Fordism was a method used mainly in the automotive industry; it improved productivity, but it was also 'a model of economic expansion and technological progress based on the mass production: the manufacture of standardized products in huge volumes using special purpose machinery and unskilled labour'. This principle could be applied to any kind of manufacturing process and for a time it was. Major success stemmed from three major principles:
These principals coupled with a technological revolution during Henry Ford's time allowed for his revolutionary form of labour to flourish. It is true that his assembly line was revolutionary, but it was in no way original, his most original take was with his decomposition of complex tasks into simpler ones with the help of specialised tools. This allowed for a very adaptable flexibility allowing the assembly line to change its components if need be, or whenever the vehicle in production evolved enough to warrant a change. In reality, the assembly line had already been around before Ford, but not in quite the same effectiveness as Ford would create, his real accomplishment was recognizing the potential, breaking it all down into its components only to build it back up again in a more effective and productive combination. The major advantages of such a change was that it cut down on the man power necessary for the factory to operate, not to mention that it deskilled the labour itself, cutting down on costs of production.
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.
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 ((It is important however to remember that Aldous Huxley intended his work to be a criticism of Fordism and not propaganda for it)). 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'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). Ford did not invent the assembly line itself, Ransom E. Olds invented the basic concept and started the Detroit area automobile industry. 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."
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 grand appeal of Fordism in Europe was that it promised to sweep away all the archaic residues of pre-capitalist society by subordinating the economy, society and even human personality to the strict criteria of technical rationality. The Great Depression blurred the utopian vision of American technocracy, but World War II and its aftermath have revived the ideal.
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.
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:
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.
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 implies 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.
The concept may also refer to some of Ford's social views:
The period after Fordism has been termed Post-Fordist. Fordism as a Regime of Accumulation (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 following attributes:
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 principal 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.