Fordism/Post-fordism Fordism Was a Concept

Fordism/Post-Fordism

Fordism was a concept which revolutionized capitalist economic thinking and encouraged the economic development and growth in the United States and Western Europe throughout the period from 1940 to 1960 (in Europe, the period most likely started after the end of World War II). With the idea of mass production and mass consumption and, especially, with the correlation between these two, the fordist theory introduced a permanent cycle of economic growth in which increased production meant increased revenues, which encouraged the company to increase workers' wages and make them financial capable of purchasing their own car, thus sustaining production even further.

The first change to the way things were done in the economic world that Fordism introduced was mass production. Mass production allowed the company to have large scale economies, as well as economies of scope, mainly because production was now done completely differently than the previous craft production, where each product was individually produced by a single worker. With Fordism, labor division meant that each worker could actually specialize in a certain activity where he was most productive, which obviously also increased overall productivity in an organization.

Economies of scale through Fordist production are also similarly vast. First of all, these can also be obtained through the division of labor, but especially because unitary cost is reduced as a result of mass production, with the investment and other fixed costs now spreading evenly over a number of machines and over equipment, thus for a lower unit cost.

The most important part of Fordism, however, was standardization. With standardization, time and money could be saved, because a standardized product would be easier to make and, later on, to fix, but it was also much cheaper to make. At the same time, not only output was increased through standardization and mass production, but also throughput (David, 1990): things moved much easier through the production line with standardization.

Finally, all these meant a significant reduction of price, with profit levels remaining at similar levels. The reduction of cost meant that the company could allow itself to sell at lower prices, which, at the same time, encouraged mass consumption and allowed for the further development and growth of the economy.

Mass production and mass consumption would lead to different phenomena, which were to manifest in the later part of the 20th century. First of all, mass production eventually led to the suprasaturation of the markets, despite mass consumption. In the United States, for example, at some point every family had a least one car, which meant that automotive producers would have to look outside the national market, towards international ones, although these were similarly saturated.

At the same time, at some point, the standard of living equalized, also through the effects of mass consumption, which meant that the population was no longer feeling the positive effects of Fordism. The idea of Fordism was to bring the product on the market at a lower price, while with the industrialization process, this was no longer necessarily a competitive advantage.

At the same time, with higher living standards, the client became much more particular in their picks off the market, which led companies in the U.S. To adapt to this new trend and introduce post-Fordism as a way to counter this and to better suit their needs.

The post-Fordism proposed specialization and customization as a reversal of the standardization that had characterized the Fordism previous. With this, post-Fordism proposed an increased focus on the client and the demand as opposed to the supply. The study of the client in terms of his or her socio-economic and psychological variables would allow for the company to produce customized products. These would necessarily have to be in smaller batches, so that the concept of customization could be better supported and that the workers could pay extra attention to customization needs.