Fordism and Neo-Fordism in the context of international political economy

By Bill Nordick
May 19, 2016

1. Introduction

Fordism can be defined as “a set of principles that includes technological measures, especially mass production on the assembly line, as well as economic strategies such as supporting mass consumption by lowering prices and increasing wages”[1]. The term is coined by Antonio Gramsci after the name of Henri Ford, a famous US industrialist and the founder of Ford Motor Company.

The concept of Fordism has developed starting from 1910’s to reach its peak in the period between 1940’s to 1960’s. Fordism is closely associated with the notions of mass production and consumption. Prior to mass production assembly lines introduced initially in Ford factories, products were manufactured with the method of craft production, which involved the same workers being engaged in the many stages of manufacturing processes.

The consumption point of Fordism stems from Henri Ford’s belief that company employees need to be able to purchase cars produced by Ford, thus the level of their wages were increased. Thus, it can be reasoned that “Model T, sold in millions, can be viewed as the herald of consumerism, the new phase in human history when consumption came to be seen no just as the means of survival but as the true path to the good and happy life”[2].

This article represents a critical evaluation of the concept of ‘Fordism’ within the settings of international political economy a range of related issues. The article starts with discussions about the evolution of Fordism. This is followed by critical assessment of the concept within modern international political economy. Moreover, the article contains a reflection of criticism associated with Fordism and analysis of circumstances that enabled emergence of Neo-Fordism.

Fordism Neo-Fordism


2. Evolution of Fordism

It has been argued that Fordist method of mass production primarily owes to the teachings of Taylorism, which has created a scene for the development of Fordism[3]. Specifically, according to this viewpoint the concept of assembly line has been initially introduced by Taylor in his Bethlehem Steel, where engineers specified tasks for to workers, marking a certain pattern of specialisation.

Furthermore, it is also argued that Henry Ford has copied the concept of assembly line from slaughterhouses work system in Chicago that involved the meat to be moved and processed along a line.[4] In a manufacturing system that preceded Fordism massive tools and objects were fixed in specific locations within plants and employees were mobile to attend them.

In car manufacturing sector, for instance, highly skilled employees had to assemble details and parts in one location in order to build a car, and those details and parts were manufactured in different workshops by other highly skilled employees. All of such manufacturing practices were revolutionised with the advent of Fordism principles that focused on the mobility of the manufacturing process enabled by an assembly line, rather than the mobility employees.

Interchangeability of identical parts and high level of straightforwardness of attaching these parts through the assembly line can be considered as revolutionary components of Fordism for the first part of the 20th century.[5]

Moreover, the development of the concept of Fordism is based upon specific economic and social pattern of employment. Namely, employment pattern under Fordism involved full-time employment of a male who was a sole breadwinner within his family[6].

3. Fordism in International Political Economy

3.1 Levels of Fordism

The concept of Fordism can be best understood in international political economy through highlighting its mark upon the evolution of capitalist production. Standardisation, i.e. “standardised components, standardised manufacturing processes, and a simple, easy-to-manufacture (and repair) standard product”[7] represent a cornerstone of the concept of Fordism.

Another important feature of Fordism can be specified as its close association with scientific management. Specifically, “Frederick Winslow Taylor (1974), father of scientific management, demonstrated that where employers adopted a rational scientific approach to production, they could maximise productivity, output and efficiency”.

Adherence to this principle involves separation of planning, organising, and controlling organisational processes from the processes of execution and manufacturing on a fundamental level.

Four different levels of Fordism can be specified in the following manner[8]:

Firstly, Fordism as an industrial paradigm. In this level Fordism is perceived as a specific type of labour processes involving mass-manufacturing that is based on automatic assembly line run by moderately-skilled workforce. In Fordism not all business units and each member of the workforce do not have to be engaged in mass-manufacturing in a direct manner, however, mass-manufacturing is the main trait of operations.

Secondly, Fordism as a regime of accumulation. Specifically, this presumes growth at a macroeconomic levels enabled or contributed by mass-manufacturing through increased levels of productivity, economies of scale, increasing wages triggering demand, increase in the level of production capacity utilisation and rising profits.

Thirdly, Fordism as a mode of regulation. In accordance with the concepts of Taylorism, Fordism appears to advocate separation between ownership and control. Moreover, Fordism stands for centralised control for managing large corporations, and accordingly, it is a mode of social and economic regulation that involve monopoly pricing, recognition of unions, and collective bargaining.[9]

Fourthly, Fordism as a general pattern of social organisation. Namely, as a social organisation Fordism involves the purchase and utilisation of commodities of standard nature. Moreover, the issues involving capital and labour conflicts in regards to individual and social wages are also dealt with within the framework of Fordism.


3.2 Advantages of Fordism in Practical Levels

Substantial advantages gained by Ford and other manufacturing companies through implementing the practices of mass production include economies of scale and economies of scope.  Specifically, manufacturers were able to achieve the economies of scale through spreading the cost of fixed expenses ever the large volume of output, thus decreasing the costs of each unit.[10]

Economies of scope, on the other hand, were achieved by maximising the impact of human resources input through specialisation of functional units, and overheads such as accounting, purchasing or quality control.

Furthermore, according to Fordism, “bureaucratic management structures based on a rigid division of labour, power and responsibility between managers and workers”[11]. Advantages of Fordism in practical levels are seen as optimising manufacturing processes and bringing down the costs of units manufactured and allowing blue-collar workers to consume mass-produced goods through increasing their wages.


3.3 The Implications of Fordism to International Political Economy

The introduction of Fordism manufacturing principles have contributed to dramatic improvement of manufacturing practices mainly through two main innovations: production of identical parts and the adoption of scientific methods of operations time measurements[12].

Adoption of the practice of producing identical parts for a car and other products have freed workers from the necessity of screening and correcting individual components and has resulted in significant optimisation employee time and consequently, cost-savings. The adoption of scientific methods of operations time measurements, on the other hand, has enabled the development of timing benchmarks required to perform a specific task within the assembly line and thus potential has increased to improve the levels of operational efficiency.

Generally, the implications of Fordism to international political economy can be best analysed through discussing five main features of Fordism paradigm: economies of scale, industrial gigantism, centralisation, vertical integration, and political and institutional model.


3.3.1 Economies of Scale

Economies of scale can be defined as “the increase in efficiency of production as the number of goods being produced increases”[13]. Rapid expansion in the scope of application of Fordism practices has enabled businesses to decrease manufacturing cost per unit by increasing the volume of manufacturing.

Economic advantages gained through the economies of scale have had significant implications on the formation of international political economy over the last 100 years. Specifically, manufacturers were able to cut fixed costs through the economies of scale. Application of economies of scale has enabled many large manufacturers to decrease their manufacturing costs, bringing down the costs of their products, and ultimately increase the level of profitability.


3.3.2 Industrial Gigantism

Fordism is closely associated with the concept of industrial gigantism due to the fact that Ford manufacturing plants needed to be large because the core principle of Fordism implies conducting all manufacturing operations within the same plant. Another important aspect of Fordism related to industrial gigantism involves gaining and maintaining control over the production of all components in manufacturing so that regular production flows can be maintained.

This specific aspect of Fordism has also had tremendous impact on the formation of modern international political economy. Specifically, in order to maintain stable production flows manufacturers today strive to maintain control over their supply-chain management.


3.3.3 Centralisation

Centralisation as an integral characteristic of Fordism concept implies unquestionable adherence to formal rules and regulations in terms of employee behaviour. Accordingly, Fordism establishes strict hierarchy amongst employees and requires total compliance from employees at all levels. This principle might have been beneficial to international political economy in the first part of the last century because it has assisted in ensuring stable production flow; however, the same principle fails to meet the demands of modern marketplace.

Specifically, today employee creativity is seen as an important source of competitive advantage for the company, and thus centralisation aspect of Fordism does not offer practical benefits for modern businesses.


3.3.4 Vertical Integration

Vertical integration feature of Fordism is related to its centralisation feature discussed above and it implies attempts of a manufacturer to merge with or to acquire its main suppliers. The main rationale behind such a behaviour for manufacturer would be to reduce the bargaining power of suppliers, and avoid a situation where dramatic price change by supplier or disruption of supply negatively impacts company performance.

The implications of this specific Fordism feature on international political economy can be seen through large numbers of mergers and acquisitions in a global scale that include mergers and acquisitions between manufacturers and suppliers. At the same time, it can be argued that the importance of vertical integration has decreased in the modern marketplace due to intensifying level of competition amongst suppliers, and accordingly increasing bargaining power of manufacturers.


3.3.5 Political and Social Model

Fordism as a philosophy has had great political and social implications at a macroeconomic level as well. Henry Ford has strived to isolate the process of manufacturing from the external world and this had created certain social realities for workers employed within Ford plants, for whom the workplace was a place free from social interactions. For example, Ford Motor Company manufacturing plants were always bordered with high walls, and the gates were guarded by security men, that included armed guards.[14]

Although such practices have proved to be beneficial from economic viewpoint in the first part of the last century, Fordism social model in its traditional form would prove to be counter-productive for modern organisations. On the contrary, nowadays companies are aiming to create specific pattern of social model in the workplaces were social interactions are encouraged in some occasions when they contribute to the level of creativity of employees.

For example, on the contrary to Fordism principles, the offices of new technological companies such as Google and Facebook are designed in such a manner that they resemble comfort of the home, and encourage brainstorming and constructive discussion amongst employees.


4. Criticism Associated with Fordism and Emergence of Neo-Fordism

4.1 Emergence of Fordism Shortcomings

The concept of Fordism has attracted criticism from business researchers and the amount of this criticism is increasing. Specifically, criticism of mass production include physically demanding and boring work environment implants and belief that “the Fordism model is unable to adapt to the needs of a fast-changing society”.

The famous remark of Henry Ford ‘you can have any colour so long it is black’ summarises the main the reason for the unsuitability of Fordism to meet the dynamic changes in the marketplace. Specifically, the changes relate to the increasing forces of competition and the need to remain flexible and keep innovating for businesses in order to remain competitive in the marketplace.

Ford Motor Company in particular was ‘penalised’ because of inflexible approach of its founder by losing its leadership position to its main competitor General Motors, headed by another business academic and practitioner Alfred Sloan, who has perceived creativity, differentiation, and decentralised administrative control structure as important sources of competitive edge.

Moreover, concerns are expressed over the applicability of Fordism principles in modern manufacturing environment due to long-link technological feature of the model. Namely, long-link technological feature implies continuous manufacturing operations in a given rate regardless of internal and external circumstances.

For a manufacturing business internal unforeseen circumstances may include disruptions in supply of workforce or components, whereas external circumstances include changes in demand for the product, or other changes in the marketplace.

Long-link technology has benefited Ford Motor Company and other car manufacturers during the first part of the last century mainly because the volume of demand for cars was greater compared to the volume of supply during that period and thus there were no changes in the marketplace with negative implications on the level of manufacturing output.

The current economic environment, on the other hand, is marked with changes in external circumstances in general, and the level of demand for products in particular, and therefore, manufacturers in most industries cannot afford to rely on long-link technology.

However, arguably the most substantial disadvantage of Fordist model that makes the concept inapplicable in modern marketplace relates to the definition of the role of employees. Fordism advocates the employment of low-skilled employees who operate in a highly regulated working environment and manufacturing employees are discouraged from being creative in their workplace and make initiatives regarding improving the level of productivity.

The current realities of competitive market environment, on the other hand, require the contribution from employees at all levels beyond their daily direct responsibilities and functions. Such contribution can be made through displaying creativity and innovativeness in relation to various business processes from employees and initiatives of such nature are highly valued by majority of private sector enterprises in modern marketplace.


4.2 Neo-Fordism and its Implications

A range of factors discussed above including increasing negative implications of boring work environments, and lack of choice and flexibility have caused global transition from ‘specialisation’ to ‘flexibilisation’, also known as “Neo-Fordism” framework. According to the latter framework “the ‘flexible’ worker lacks a job for life, but instead moves and retrains to meet altered market demands”[15]. Moreover, the level of flexibility of post-Fordist workers relate to working hours, salaries and benefits received, standards of health and safety etc.

Moreover, social and economic model known as ‘post-Fordism’ or ‘Neo-Fordism’ has emerged during the technological revolution in 1970’s and 1980’s.

Significant technological changes resulting in the development of computer-aided design (CAD), computer-aided manufacturing (CAM), computer-integrated manufacturing (CIM), computer numerical control (CNC) and others in 1970’s have altered manufacturing processes with negative implications to Fordism.

All of these have given rise to the emergence of alternative frameworks and systems to Fordism that include total quality management (TQM), lean manufacturing, just-in-time (JIT). Importantly, “the post-Fordist regime of accumulation replaces the Fordist one with an emphasis on quality-competitive production for shifting and differentiated markets using qualified and highly skilled flexible labour, and is supported by a post-Fordist mode of regulation in which there is reduction state intervention on labour markets, a shift from responsibility to welfare provision from the state to the employers or private individuals, and a more flexible and varied approach to employment relations”.

In other words, global market environment in the second half of the twentieth century and the beginning of the twenty first century became highly uncertain and competitive with increasing numbers of businesses finding additional sources of competitive advantages through technological breakthroughs and greater integration of information technology in various organisational processes.

Therefore, post-Fordist era has emerged with fundamentally alternative values and principles to Fordism to enable businesses to meet the requirements of new global business landscape realities.

5. Conclusions

International political economic environment is becoming ever-dynamic fuelled by intensifying level of competition and accordingly, constant changes in the global marketplace. Reliance of ‘Fordism’ concept in its pure form is not effective strategy for businesses today to be able to meet complex business challenges of the 21st century. Due to the increasing level of competition in the global marketplace and abundance of supply over the demand customers appreciate customised approach in terms of products and services they purchase.

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[2] Gabriel, Y. (2009) “Organising Words: A Critical Thesaurus for Social and Organisation Studies” Oxford University Press

[3] Tyleote, A & Vertova, G. (2004) “The Rise and Decline of Fordism and the ‘Sea Change’ in the Technological Advantage of Nations” Sheffield University Management School

[4] Amin, A. (2008) “Post-Fordism: A Reader” John Wiley & Sons

[5] Nolan, P. (2008) “Capitalism and Freedom: The Contradictory Character of Globalisation” Anthem Press

[6] Sabillon, C. (2008) “On the Causes of Economic Growth: The Lessons of History” Algora Publishing

[7] Jayne, M. (2006) “Cities and Consumption” Routledge

[8] Jessop, B. (1995) “The regulation approach, governance and post-fordism: alternative perspectives on economic and political change?” Economy and Society, Routledge pp.307-333

[9] Jessop, B. (1995) “The regulation approach, governance and post-fordism: alternative perspectives on economic and political change?” Economy and Society, Routledge pp.307-333

[10] Polanyi, K. (1944) “The Great Transformation”. Boston: Beacon Press, 1985.

[11] Slattery, M. (2003) “Key Ideas in Sociology” Nelson Thornes

[12] Sabillon, C. (2008) “On the Causes of Economic Growth: The Lessons of History” Algora Publishing

[13] Economies of Scale (2016) Investopedia, Available at:

[14] Weber, M. (2007) “General Economic History” Cosimo, Inc

[15] Scholte, J.A. (2000) “Globalisation: A Critical Introduction” Palgrave Macmillan

Category: Management