Friday, April 01, 2005

WHO WILL CONSUME IN WALLY WORLD?

Henry Ford was that rarest of breeds, an intelligent capitalist. He realized the consumption of manufactured goods was limited by low wages. So he paid his production workers the highest wages in industry. They now had enough money to buy his cars and this ushered in the era of mass production/mass consumption that Antonio Gramsci called "Fordism". The other auto manufacturers denounced Ford as a "communist", but he laughed all the way to the bank. Wealthy before, he soon became the richest man in the world, thanks to mass consumption,

Fast forward 90 years. The capitalists are now trying to undo the "Fordist revolution." Their joy is in beating our wages and working conditions down to a minimum. Rather than a high-wage auto plants, low-wage Walmart and MacDo are the model. Factories are shut down and cheap imports brought in from low wage - lousy working condition countries like China. Governments seek to outsource and corporatize their functions and turn their former employees into insecure cheap labour

Since nothing occurs in isolation, a fact forgotten by our greed-stupified capitalists, "reverse-Fordism" creates a major problem. Who will buy the goods? Someone who goes from a well paid job to a poorly paid one is not about to buy an expensive appliance, a new car, or seek a mortgage. Every person whose job is lost or "privatized" at a lousy wage is a lost customer for some other industry. A rich minority can never sop up all the production that a reasonably well paid work force can – which was the major reason for having a high-wage work force in the first place.

In order to compensate, many people have been running up high levels of debt since their incomes don't match consumption desires. These debts become a chain around their necks and the result is a new kind of debt peonage. Welcome to the future... which turns out to be like 1890! However, large consumer debt, coupled with balance of payments problems (thanks to all those cheap slave-labor imports) coupled with high government debt is a rickety structure like a house of cards and the whole thing could come crashing down at any moment. But even if the debt problem did not exist, a continuing trend of low wages and poor working conditions will eventually lead to economic stagnation and crisis.

2 Comments:

Blogger Kevin Carson said...

Wally World, according to some press reports, relies on local human services departments to augment their associates' (gag!) purchasing power. Wal-Mart HR people are real helpful about telling the "associates" where to go and what forms to fill out, if they're having trouble making ends meet on their measly paychecks.

I think a lot of big business interests have figured out the dangers of "reverse Fordism." Even when elites fear an "accumulation crisis" (like the '70s), overaccumulation is still the fundamental underlying tendency. And regardless of neoliberal rhetoric, there's no way they can take the state back to pre-New Deal levels of spending without a return to permanent depression. Some capitalist circles, I think, decided last year that things had already swung too far from corporate liberalism, and that the polarization of wealth had depressed purchasing power. That's probably one reason Kerry came so close to winning.

7:27 PM  
Blogger Larry Gambone said...

I am sure you are right about at least some big business leaders realizing the dangers of "reverse Fordism". However, it hasn't been converted into action as of yet. And I agree they will not abolish the reforms of the 1930's. But I do think the damage that has been done, and is continuing to be done, will be a continuing drag upon the economy, and coupled with the fiscal crisis in the US may well lead to a serious economic crisis.

8:58 AM  

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