The Shift Toward Mass Production Affected Consumers By Fordism | Definition, History, & Facts

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Fordism | Definition, History, & Facts

Fordism, a specific stage of economic development in the 20th century. Fordism is a term widely used to describe (1) the system of mass production that was pioneered in the early 20th century by the Ford Motor Company or (2) the typical postwar mode of economic growth and its associated political and social order in advanced capitalism.Henry Ford helped popularize the first meaning in the 1920s, and Fordism came to signify modernity in general. For example, writing in prison in the interwar period, the Italian communist Antonio Gramsci discussed the economic, political, and social obstacles to the transfer of Americanism and Fordism to continental Europe and highlighted its potential transformative power when controlled by workers rather than conservative forces. Gramsci’s comments inspired research on postwar Fordism and its crisis.In its second meaning, Fordism has been analyzed along four dimensions. First, as an industrial paradigm, it involves mass production of standardized goods on a moving assembly line using dedicated machinery and semiskilled labour. Second, as a national accumulation (or growth) regime, it involves a virtuous cycle of mass production and mass consumption. Third, as a mode of regulation, Fordism comprises (1) an institutionalized compromise between organized labour and big business whereby workers accept management prerogatives in return for rising wages, (2) monopolistic competition between large firms based on cost-plus pricing and advertising, (3) centralized financial capital, deficit finance, and credit-based mass consumption, (4) state intervention to secure full employment and establish a welfare state, and (5) the embedding of national economies in a liberal international economic order. Fourth, as a form of social life, Fordism is characterized by mass media, mass transport, and mass politics.The Fordist mode of growth became dominant in advanced capitalism during postwar reconstruction and is often credited with facilitating the long postwar boom. During the 1970s, however, its underlying crisis tendencies became more evident. The growth potential of mass production was gradually exhausted, and there was intensified working-class resistance to its alienating working conditions; the market for mass consumer durables became saturated; a declining profit rate coincided with stagflation; a fiscal crisis developed; internationalization made state economic management less effective; clients began to reject standardized, bureaucratic treatment in the welfare state; and American economic dominance and political hegemony were threatened by European and East Asian expansion. These phenomena prompted a wide-ranging search for solutions to the crisis of Fordism, either by restoring its typical growth dynamics to produce a neo-Fordist regime or by developing a new post-Fordist accumulation regime and mode of regulation.The term post-Fordism is used to describe both a relatively durable form of economic organization that happened to emerge after Fordism and a new form of economic organization that actually resolves the crisis tendencies of Fordism. In neither case does the term as such have any real positive content. This is why some theorists propose substantive alternatives such as Toyotism, Fujitsuism, Sonyism, and Gatesism or, again, informational capitalism, the knowledge-based economy, and the network economy. Social scientists adopted three main approaches to identifying the post-Fordist regime: (1) a focus on the transformative role of new technologies and practices regarding material and immaterial production, especially new information and communication technologies and their role in facilitating a new, more flexible, networked global economy; (2) a focus on the leading economic sectors that enable a transition from mass industrial production to postindustrial production; and (3) a focus on how major crisis tendencies of Fordism are resolved through the consolidation of a new and stable series of economic and extra-economic institutions and forms of governance that facilitate the rise and consolidation of profitable new processes, products, and markets. However, even decades after the crisis of Fordism emerged in the mid-1970s, debates continue about whether a stable post-Fordist order has emerged and, indeed, whether Fordist stability was a parenthesis in an otherwise disorderly, crisis-prone capitalist system.Those who believe that a stable post-Fordism has already emerged or, at least, is feasible see its key features as: (1) flexible production based on flexible machines or systems and a flexible workforce; (2) a stable mode of growth based on flexible production, economies of scope, rising incomes for skilled workers and the service class, increased demand among the better-off for differentiated goods and services, increased profits based on permanent innovation and the full utilization of flexible capacity, reinvestment in more flexible production equipment and techniques and new sets of products, and so on; (3) growing economic polarization between multiskilled workers and the unskilled, together with a decline in national or industrial collective bargaining; (4) the rise of flexible, lean, and networked firms that focus on their core competences, build strategic alliances, and outsource many other activities; (5) the dominance of hypermobile, rootless, private bank credit and forms of cybercash that circulate internationally; (6) the subordination of government finance to international money and currency markets; (7) a shift from postwar welfare states (as described by John Maynard Keynes) to political regimes that are more concerned with international competitiveness and innovation, with full employability as opposed to jobs for life, and with more flexible, market-friendly forms of economic and social governance; and (8) increasing concern with governing local, regional, supranational, and even global economies.These features of post-Fordism are unevenly developed, and there are important continuities with Fordist conditions even in the advanced capitalist economies. Post-Fordism can also assume different forms in different contexts. And although some commentators believe that post-Fordism will prove stable, others argue that capitalism’s inherent contradictions mean that it is no more likely to prove stable than Fordism before it.

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Chapter 9 . Exercises 7-12. Application:International trade.

Chapter 9.Exercises 7-12. Application:International trade. Gregory Mankiw. Principles of Economics.
7. Senator Ernest Hollings once wrote that “consumers do not benefit from lower-priced imports. Glance through some mail-order catalogs and you’ll see that consumers pay exactly the same price for clothing whether it is U.S.-made or imported.” Comment.
8. Write a brief essay advocating or criticizing each of the following policy positions:A. The government should not allow imports if foreign firms are selling below their costs of production (a phenomenon called “dumping”)
B. The government should temporarily stop the import goods for which the domestic industry is new and struggling to survive.
c. The government should not allow imports from countries with weaker environmental regulation than ours.
9. Suppose that a technological advance in Japan lowers the world Price of televisions.A. Assume the U.S. is an importer of televisions and there are no trade restrictions. How does the technological advance affect the welfare of U.S. consumers and U.S. producers? What happens to total surplus in the United States?
b. Now suppose the United States has a quota on televisión imports. How does the japanese tecnhological advance affect the welfare of U.S. consumers, U.S. producers, and the holders of import licences?
10. When the government of Tradeland decides to impose an import quota on foreign cars, three proposals are suggested: (1) Sell the import licenses in an auction. (2) Distribute the licenses randomly in a lottery. (3) Let people wait in line and distribute the licenses on a first come, first served basis. Compare the effects of these policies. Which policy do you think has the largest deadweight losses? Which policy has the smallest deadweight losses?Why? (Hint:The government’s other ways of raising tax revenue all cause deadweight losses themselves.)
11. An article in The Wall Street Journal (June 26, 1990) about sugar beet growers explained that “the government props up domestic sugar prices by curtailing imports of lower-cost sugar. Producers are guaranteed a ‘market stabilization Price’ of $o.22 a pound, about [ytb_des].09 higher tan the current world market Price.” The government mantains the higher Price by imposing an import quota.A. Illustrate the effect of this quota on the U.S. sugar market. Label the relevant prices and quantities under free trade and under the quota.
b. Analyze the effects of the sugar quota using the tolos of welfare analysis
c. The article also comments that “critics of the sugar program say that [the quota] has deprived numerous sugar-producing nations in the Caribbean, Latin America, and Far East of export earnings, harmed their economies, and caused political instability, while increasing Third World demand for U.S. foreign aid.” Our usual welfare analysis includes only gains and losses to U.S. Consumers and producers. What role do you think the gains or losses to people in other countries should play in our economic policy making?
d. The article continues that “at home, the sugar program has helped make posible the spectacular rise of the high-fructose corn syrup industry.” Why has the sugar program had this effect? (Hint: Are sugar and corn syrup subtitles or complement?)
12. Consider a small country that exports Steel. Suppose that a “pro-trade” government decides to subsidize the export of Steel by paying certain amount for each ton sold aborad. How does this export subsidy affect the domestic Price of Steel, the quantity os Steel produced, the quantity of Steel consumed, and the quantity of Steel exported? How does it affect consumer surplus, producer surplus, and total surplus? (Hint: The analysis of an export subsidy is similar to analysis of a tariff.)

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