Fordism and Post-Fordism: Concepts of Capitalism

Understanding Dawn & Dusk: The Evolution of Capitalism from the Perspectives of Fordism and Post-Fordism.

The pursuit of profit was not a science born perfect. Instead, as one technological or organizational invention after another led to ever increasing rates of incremental improvement in the efficiency and effectiveness of the enterprise. These improvements either reduced the cost structure, increased the market demand or both. It was just such an ‘incremental’ improvement in the early twentieth century that led Henry Ford and his Model T to begin an era of ‘namesake’ capitalism that dominated until the 1980’s and persists even today. The methods that began the period of capitalism known as Fordism was not so much just the additional of an assembly line but rather a line that moved to the worker rather that the other way around. This technology of this method was not new, having been utilized in Chicago slaughterhouses since at least the 1890’s but it was the first time that it have been used on such a scale to consumer goods with the end effect of making the automobile affordable. Perhaps even more importantly, the application of this method to automobile production, enabled the use of additional organizational technologies to be deployed. For example, bottlenecks and other production issues could be readily identified and solved and it became possible for a smaller number of managers to ‘control’ the output of a larger group of workers (Grint, 1991, p. 294-295; Clarke, 1992, p. 17). Because of the organizational paradigm shift, these methods were quickly and successfully adopted at other companies in a many different industries.

Together, changes introduced in technology and management paved the way to broader sociological changes. At the heart of these was the rise of “management” as controlling influence upon workers. While Taylorism implemented strict measures of control and efficiency to the workers, the organizational impact of Fordism harnessed individual productivity back into the firm. In some ways, practices at the Ford Motor Company were quite progressive such as his “Five Dollar Day” policy by which workers were paid for their time. While significant from a labor perspective, it also merits commented on based on the fact that this was compensation. Not just “pay” but rather compensation for becoming a cog in a wheel and a so-called ‘factor of production’ under somewhat harsh conditions. While some might consider Ford to be generous to pay his employees so a sum, others might not that it could also be viewed as a particularly shrewd means to decrease absenteeism, work interruptions, poor quality and perhaps most importantly, as a means to fend off interest in trade unionization by workers. In fact, once instituted, the results were dramatic as the following were observed, “absenteeism fell from 10% to less than 0.5%… turnover fell from nearly 400% to less than 15%…. productivity rose so dramatically that despite the doubling of wages and shortening of the workday production costs fell” (Clarke, 1992, pp. 20-21).

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With regards to organization and sociological implication, in the past, the dominant method of work was the “craftsman” who was a skilled worker and spent [his] time on creating specialized and unique projects and the family was, in a sense the primary economic unit of production (Pietrykowski, 1999, p. 191). Ford needed relatively few craftsmen but rather he needed many comparatively unskilled workers that were willing to submit to Tayloristic-type management in exchange for “…regularly rising wages… as well as general guarantees of employment security” (Freidman 2000, p. 60). The widespread employment of an emerging American middle class by a growing number of large, vertically integrated oligopolistic firms bred the beginning of mass production. With ever increasing levels of productivity as a result of newer technologies and greater organizational control, more goods were produced at even lower cost levels. Not surprisingly, in return, this brought about new levels of mass consumption of mass-produced products by the burgeoning ranks of the working class (Friedman, 2000, pp. 59-60). This produced a cycle that was both self-reinforcing and self-entrenching.

As the system of Fordism perpetuated itself, it began to create a bit of a monster. Almost by definition, Fordism is epitomized and stereotyped by very large corporations. For example, General Motors, employing the same tactics as Ford (General Motorism does not have quite the ring to it of Fordism), became the largest corporation in world in the 1950’s to the extent that this one firm had a macroeconomic impact on the US gross national product (think of Wal-Mart today with over $250,000,000,000 in annual sales). These companies that made their profits on economies of scale on the consumption of goods that were mass-produced and mass-consumed until they hit a bit of a ‘speed bump’ in the 1970’s. These speed bumps took on the form of a number of historical events as well as growing trends. For example, the oil crisis of the 1970’s, a wheat shortage and unrest among organized labor groups in addition to a “saturation of the market in consumer durables” let to the beginning of the end of what had came to be known as the Fordism era. The economy-wide, these changes were greatest for the types of companies that profited most from the technological and organizational developments that created them. Thus, the changes for ‘big’ corporate America came about through the combined phenomena of changes in markets and changes in labor, ironic but fitting as the very things that made them were undoing them, or, at least, causing them to learn to re-make themselves as conditions changed (Pietrykowski, 1999, p. 181).

As America consumers had consumed about all they could, firms began to logically seek out new markets such as Latin America, Asia or European regions that had yet to be hardly touched with regards to US produced consumer goods. This globalization of business introduced a number of ‘new’ concepts to US firms. Perhaps most importantly, that simply selling the same widget may not be a path to profit. Interestingly enough, the corporate giant General Motors, in the now ubiquitous tale, was one of the first to discover this lesson as management noticed very disappointing sales for the Chevrolet Nova automobile south of the US border. Only later did they learn that “No va” exactly translates to “no go”… a hard but valuable lesson as America goes global.

Within the borders of the US, it was not that consumers no longer wanted to make purchases, rather, they wanted new products. Listening to the market was not a strength of the Fordist system. As Henry Ford himself said in regards to the Model T, “… any color you want, as long as its black”, mass production was not noted for being flexible. The idea of flexibility became central to the emergence of what has come to be known as the post-Fordism era.

“Flexibility” is reflected in post-Fordism in a number of ways. In regards to employment, in an effort to cope with changes in demand, corporations began to turn to the notion of flexible employment arrangements in order to avoid the high fixed costs of maintaining a large workforce in times of low demand. This was reflected by a small, core workforce that was supplemented by subcontractors and part-time workers and, temporary workers, if needed (Pietrykowski, 1999, p. 183). This is much in contrast to the masses of employees who, either through the employer or the Union, operated on the premise of life-time employment.

Another means by which post-Fordism employed the concept of flexibity in employment was the introduction of ideas such as ‘cross-training’. Rather than having a one person – one specific job mantra, the new era of productivity espoused employees who were trained to do any number of tasks. This flexible functionality in production employees was adopted by companies with the idea of being able to adapt faster to changing demand and by employees in order to enrich jobs and to gain increased employment security (Pietrykowski, 1999, p. 187); Grint, 1991, pp. 296-297). In addition, firms began to outsource non-core functions such as cleaning or security in order to achieve lower costs and reduce the size of bureaucracies often accompanying large companies (Friedman 2000, p. 71).

Overall, the change in markets and market pressures as well as the shifts in labor strategies that began to be noticeable in the 1970’s, marked the transition of the dominance of a few oligopolistic firms from a half century reign of mass-production to the current period of ‘mass customization’. Seemingly at odds with one another, the terms “mass customization” reveal an dynamic tension that is as evident on the factory floor and is in the market place.

As technologies emerged that made it possible to store and analyze large amounts of data collided with the ability to precisely control manufacturing processes, the reality of being able to cost effectively introduced customer-requested variances in the processes of production heralded the birth of mass customization. In stark contrast to a ‘one-option’ Model T, General Motors, Ford and Chrysler (the ‘Big 3’) offered a plethora of models and options ranging from color, upholstery and interior appointments, engines, transmissions and more all for largely the same cost as one ‘off the rack’. This flexibility is easily reflected by a conversation with any US person over age 25 when asked what ordering anything but a ‘stock cheeseburger’ was like in the eighties. Now, the experience is much different with Burger King even going to far as to adopt the slogan, “We do it your way.”

While mass customization continues to grow and flourish, mass production is not dead by any means but continues to be redefined in ways that “modify traditional [Fordism] relationships between capital and labor” (Pietrykowski 1999, p. 194). At the heart of Fordism is the congruence between large, vertically integrated firms competing in oligopolistic markets by striving for cost efficiencies through mass production principles. In contrast, post-Fordism is a combined economy / method that makes great use of the ability to deliver relatively customized goods on a large scale by using multi-skilled workers in firm that is strives to be market-sensitive so as to be able match demand (Friedman 2000, pp. 59-60). Though in many ways Fordism and post-Fordism could be viewed as being antagonistic to one another, by understanding the progression of early management styles and the accomplishments in productivity achieved, the idea that one is the necessary precursor to the other cannot be overlooked. And so, in seeking greater understand of these concepts as periods of time during which there is a changing of dominant paradigms, the analogy of “night and day” is not so appropriate as perhaps “dawn and dusk” in that they are two perspectives on the same entity of the path to profitability.

Works Consulted

Clarke, S. (1992). “What in the F—‘s Name is Fordism”. Fordism and Flexibility. (Gilbert, N., Burrows, R., & Pollert, A., eds.). St. Martins Press: New York, New York.

Friedman, A. (2000). “Microregulation and Post-Fordism: Critique and Development of Regulation Theory”. New Political Economy, (5), 1, pp. 59-76.

Grint, K. (1991). The Sociology of Work. Polity Press: Cambridge, UK.

Pietrykowski, B. (1999, June). “Beyond the Fordist/Post-Fordist Dichotomy: Working Through The Second Industrial Divide”. Review of Social Economy, (LVII), 2, pp. 177-198.