Post Fordist restructuring

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  • Created by: sikemi__
  • Created on: 29-05-21 19:08

Reasons for weakening of Fordism in the Global Nor

  • Fordism wasn't well established in the global south
  • Changing patterns of trade and investment - increased imports from new international competition. Fordism was a closed system with little competition from abroad
  • Falling levels of productivity, perhaps due to lack of competition
  • Growing unemployment so falling consumer demand
  • Rigidity - strength in a stable system but liability in a period of flux
  • Oil crisis of 1973 = rising oil prices (from $3/barrel in 1973 to $30/barrel in 1980)
  • Stagflation (inflation and unemployment simultaneously) at the end of the post war boom - traditional tools of the state (tax policy and investment) were failing
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How did Fordism collapse?

  • Early deindustrialisation
    • Waves of bankruptcies, mergers and plant closures
    • Rapid and intense deindustrialisation of Britain's manufacturing base
    • Manufacturing decline between 1966 and 1976 - more than 1 million jobs lost (unevenly across country)
    • Growth in sectors such as motor vehicles, aerospace and electrical engineering, often in different places to where traditional industries (ship building, textiles etc) were declining so unemployed workers found it hard to get jobs
  • Firm restructuring
    • Restructuring how and where firms did business - laying off workers, closing plants, offshoring production, breaking the post war compromise
    • Happened internally (getting rid of middle managers) and also the rise of subcontracting occurred - different parts from different countries
  • Relocating production to periphery of Europe (e.g. Ireland, Portugal, Spain) and abroad (e.g. India, China, Mexico)
  • 1970/80 Crisis in labour market restructuring
    • End of post war boom where people normalised the fact that growth rates would continue to be high and manufacturing firms would continue to employ people abroad - protests occurred
    • America's 'Rust Belt' 
      • Uneven distribution of growth across country
      • Rust Belt was the heavy manufacturing region primarily bordering the Great Lakes - began to decline economically during severe recessions of late 1970s and early 1980s and continued to decline
      • 1970-1990, manufacturing went from being 50% of total employment to 37% in US Rustbelt area
      • Decline of industry, communities built around it
      • Led to disinvestment in communities, abandonment and dispossession
    • Britain's Rust Belt
      • Industrial decline was spatially concentrated
      • 1978-81 - West Midlands lost 150,00 manufacturing jobs and 39,000 in Coventry
      • In 1960's, Sheffield steel industry employed over 40% of city's workforce but by 1988 only 16% was still in steel
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Implications of breakdown

  • Political regulation of economy
    • High inflation, loose monetary policy
    • Stagflation between 1969 and 1973
    • Deligitimises earlier approaches to economy (Keynesian approaches where role of state was to be counter balance to consumer demand)
  • Severe recession
    • Undermined post war Fordit compromise between firms, unions and the state
    • Implicit social contract dissolves
  • Income distribution chnages
    • Breakdown of virtuous cycle - growing unemployment, falling deman, competition in open economy, money leaves system and doesn't circulate, demand on welfare system rises dramatically
  • In the US, public sector unionisation rates increased but private manufacturing firms lost unionised workers - part of the politicised economy of subcontracting products to other firms and offshoring which gets rid of unions and reduces their power
  • Boost in productivity but compensation (wages) flattened
    • Led to increased inequality as many skilled/semi-skilled workers were no longer able to increase their pay and wages enough to be part of the virtuous cycle
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State and social restructuring

  • State restructuring
    • Moving away from Keynesian/welfare state policies
    • Neoliberalism - move away from state provision and state ownership towards market oriented solutions
      • This meant privatising public functions, centralising the state in the UK as much of the redistributive function was run by local Labour councils) (in most countries, it was decentralising as their redistributive functions were more federally or state based), deregulating industries and selling off nationalised industries
  • Social restructuring
    • Changing patterns of consumption
    • Changing politics
      • Redistribution of self help
      • Pull back of the state - neoliberalism
      • Different types of social reproduction encouraged - idea of a nuclear family was also reproduced
    • Decline of private sector unions
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Explanations for Fordism crisis

  • Exogenous shocks
    • E.g. oil crisis of 1973 - OPEC effectively increased price and decreased output of oil, leading to a quadrupling of prices in 1973, felt directly by consumers
  • Foreign competition
    • British economy's share of world market dropped, foreign competition increased e.g. Germany and Japan (Honda Civic which was small, low petrol compared to big Ford)
  • Breakdown of mass markets
    • Increased non standard consumption - rigidoty of Fordism became a problem
    • Fewer homogenised goods of mediocre quality
    • Therefore, commodities became cultural lifestyle markers
    • Product differentiation and market fragmentation occurring simultaneously
  • Technological change
    • Older tech loses ability to foster new growth
    • Tech slowly spreads throughout system in process of creative destruction - restructuring for new growth occurs
    • Tech developed in 70s e.g. micro-computer revolution (numerically controlled computers)
    • Some argue it took a long time before the computer had the effect described, so this didn't contribute to the crisis in the 70s
  • Crisis Theory
    • Crises are a natural part of the capitalist system (boom and bust cycle)
    • Economy undergoes periodic bouts of crisis resulting from periodic phases of over accumulation followed by a crisis that devalues that
    • Entails a major restructuring in labour process and the state, leading to a new round of time space compression
  • Crisis in regulation
    • Each system has a regime of accumulation and a mode of regulation that loosely coordinates the system
    • Regimes of accumulation - the form of production, accumulation and consumption e.g. Fordism/post-Fordism
    • Modes of regulation - rules which coordinate the system e.g. Reagonomics, Thatcherism (reduce govt spending, less regulation, privatisation, home ownership)
    • Regulation Theory states that when a regime of accumulation undergoes crisis, the mode of regulation can no longer support it so different policies and strategies are needed and a new mode of regulation, which leads to a new regime of accumulation
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Post-Fordism

  • Economic changes (new production method, system of regulation, post-Fordist economy and a broader system of social relations)
    • Flexibility due to machines and workers; small, batch and niche production; small inventories; flexible use of labour; verticle disintegration; differentiated products; outsourcing and subcontracting
    • Economy more complex and fragmented
    • Restructuring e.g. rise of service economy
    • Vertical disintegration
    • Rise of services
    • New round of time-space compression
  • Institutional changes (political structure, labour law)
    • Unions weakened, temporary worker growth, casual, less steady/well paid jobs
    • Increased proportion of women working
    • Increase in income inequality (still people at the top of labour market distribution, fewer in the middle and growing number at the bottom earning very little)
  • Social changes (gender, class, income structure, unions etc)
  • Changes in the state - move away from post war welfare state
    • Privatising state - subcontracting services once performed, selling off nationalised industry
    • Deregulating state - wave of mergers and acquisitions allowed, deregulating industries in general (war against red tape), allowing internationalisation of services e.g. finance, banking, insurance
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