Rjan:
Carryfast:
Rjan:
…
It is true that, perhaps once the whole thing was established, if there had been room to cut wages and gouge out higher rates of profit per car (and bosses are always looking to gouge out higher rates of profit), someone probably went into the back room and did the sums, and recognised that any reduction in wages would lead to reduced spending on luxury items like cars amongst the workforce, and that itself would threaten the profitability of the line (because of how the line required a large minimum number of units to be sold to be profitable).
…Read the article.As it says the global free market has introduced massive downward pressure on wages in real terms.
The result still being the Fordist production model with even better productivety but ‘without’ the Fordist wages to buy the products.Which is why China and Eastern Europe for example are dragging the whole global free market cluster zb down the tubes.
So what you’re saying is that the capitalists are doing the very thing that Ford (and his would-be competitors) saw the folly in - cutting wages to squeeze out a higher rate of profit, and thereby undermining your own effective demand.
I can certainly agree that this may be part of the problem today - ruinous competition, in other words. Notably, prevailing government ideology is to promote competition - monopolies are not being allowed to form naturally in the economy.
Also bearing in mind that better productivety at the expense of using less workers to turn out more products actually adds to the problems of low wages.IE redundant unemployed workers don’t buy stuff and can’t pay the mortgage.
Indeed. Under automation, there should be downward pressure on working time (to distribute remaining work more evenly), but the UK in particular keeps resisting the compulsory reduction in the maximum working week. Again, I see your point that what capital owners are doing is keeping as much as possible of the profits attributable to automation, and are eliminating headcount (rather than easing working hours and sharing profits by increasing wages, which would maintain effective demand at the cost of more moderate rates of profit).
The market failure here is a “free rider” problem. High wages are necessary to sustain effective demand, but any one business can pay low wages without having much effect on aggregate effective demand. Every business therefore has the incentive to pay low wages itself, whilst relying on others to pay high wages to sustain demand. But even if industrialists could see the folly in this, the effect of competition forces every business to cut wages or go bust - competition actually puts out of business, the very businesses who are bearing the burden of sustaining effective demand! It’s time to return to the era of monopolies who could act strategically in the market!
And the political problem preventing the remedy to this market failure is, increased wages at the bottom necessitate either reduced profits, reduced wage inequality, or increased consumer prices (any of which reduce overall inequality and therefore threaten the better off in our society). The wealthy only let go of their wealth last time and accepted economic reform following two world wars in short succession, and a failed gamble on fascism.
As I said we can solve these problems with the required shift back towards the lost high ‘wage’/incomes component of the Fordist system,together with the realisation that productivety at the expense of redundant workers is a net burden on the economy.But it will take a massive shift in the Labour movement away from Socialism towards a Capitalist but nationalist protectionist stance which might just get a better hearing from the Capitalist ranks when it sees the sense in the idea compared to where we’ll end up if we stay on the present course.IE what I’m describing is the need for another Kennedy not another Reagan,Thatcher or Wilson and Callaghan.