There’s a lovely nostalgia to Robin Murray’s classic article: Life After Henry (Ford).
Here’s how he opens, describing, from the vantage point of 1988, the UK’s move away from Fordist mass-production to an economy driven by services:
“During the first two centuries of the industrial revolution the focus of employment shifted from the farm to the factory. It is now shifting once more, from the factory to the office and the shop. A third of Britain’s paid labour force now work in offices. A third of the value of national output is in the distribution sector. Meanwhile 2.5m jobs have been lost in British manufacturing since 1960. If the Ford plants at Halewood and Dagenham represented late industrialism, Centrepoint and Habitat are the symbols of a new age.”
Murray goes on to explain how the Fordist paradigm took hold in the first place:
“Ford’s Model T sold for less than a tenth of the price of a craft-built car in the US in 1916, and he took 50% of the market.”
It was that 10X improvement that made Ford’s approach so disruptive. So how did the company do it? By combining four principles of production:
- Standardise as many parts as possible
- Mechanise production
- Taylorise labour by splitting out specialised tasks
- Run factories with assembly lines – move parts past people, not people to parts
None of these ideas was new. But, combined together, they were. Together, when run at scale, they led to a 10-fold reduction in cost, and that triggered an entirely new era.
That trigger was pressed, though, not by cheap cars per se, but by cheap everything else. Ford’s four principles diffused into other sectors and it was this transferability that made Fordism revolutionary.
This is also what makes ‘paradigm’ the right word for Fordism, because it entailed not just a new mode of production but a new way of life: it changed everything.
So, for example, Fordism was highly capital-intensive, requiring significant investment in new plants and custom machinery, and that had major implications for finance, accounting, and company structures. As a flipside, the new model was low marginal cost, meaning it incentivised a consumer economy run on large volumes of highly standardised products. This, in turn, entailed the boom in branding and the need to drive consumer demand through advertising. Thus Fordism begat Madison Avenue.
Workplace relations followed too. Workers had lost the individualism they’d had as craftsmen. Now working, in large numbers, as part of the production process, they had been standardised too. And that helped unions form, recruit, and push for higher wages on the basis of workers’ productivity. And, although those unions defined themselves in opposition to employers, their approach was Ford’s approach: hierarchical, standardised, bureaucratic, divided into distinct departments, and male. (Words that, for the most part—though not everywhere—still describe unions today.)
So the technological breakthroughs that enabled Fordism grew into a technological paradigm. And that takes you to a key question:
Are we now, in 2018, entering a new paradigm, to replace the post-Fordism of Murray’s Centrepoint and Habitat? Or are we merely entering a more refined and accentuated of that post-Fordist world?
Here’s the case for the former: lots of the characteristics Murray describes as post-Fordist are still familiar in 2018. For example, Murray notes:
- How “retailers had been using computers to transform the distribution system…. With computerised control of stocks in the shop, transport networks, automatic loading and unloading, Sainsbury’s flow-line ‘make to order’ system has conquered the Fordist problem of stocks.” Not all that different to Amazon.
- How companies had begun to “overcome the limits of the mass product. For, in contrast to the discount stores which are confined to a few, fast-selling items, Sainsbury’s, like the new wave of high street shops, can handle ranges of products geared to segments of the market. […] The point of this new anthropology of consumption is to target both product and shops to particular segments.” He also notes that “a centrepiece of this new retailing is design.” Again, familiar to today’s discussion of personalised products.
- That new approaches, like Toyota’s, had “adopted quite different methods of labour control and organisation. Toyota saw that traditional Taylorism did not work.” This entails “parallel changes in corporate organisation. […] Greater central control has allowed the decentralisation of work. Day-to-day autonomy has been given to work groups and plant managers. Teams linking departments horizontally have replaced the rigid verticality of Fordist bureaucracies.” Autonomy is a feature today too.
Overall, then, all these comments feel at most quantitatively different from where we are today, from Amazon’s capabilities in retail to the way technology has allowed an increasing personalisation of products and a decentralisation of firms (Uber, etc.).
The case against, I suppose, lies in the aspects of today’s economy that do feel qualitatively different to the post-Fordist Habitat world. For example:
- The way today’s mode of production, such as those applied by SpaceX or by disruptors like Monzo, are leading to another 10X reduction in costs, over and above the 10X reduction that was achieved by the Fordist assembly line.
- The way today’s companies have entirely different cost models that come close to zero marginal cost, particularly in the software side of the technology sector.
- The way entirely new dynamics, particularly the network effects of the social economy, are now playing out in ways that were not imagined when Murray was writing in 1988.
This might all seems like semantics but it’s a question of importance. It tells us whether we’re in the post-Fordist, Habitat-world, or the post-post-Fordist, post-Habitat world. And that tells us whether we need simply to evolve the political, social, and policy approaches of the last 30 years, or else develop radically new ones.