Lecture 2 Powerpoint -- CT 121

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					Making Modern Capitalism II
Fordism and Its Decline
I. The Consolidation of Fordism: Capitalism’s
        “Golden Age”, 1945-1975

        1.0 Post-War Prosperity
        2.0 The Philosophy of Capitalism: J.M. Keynes
        3.0 The Welfare State
               3.1 Definition
               3.2 Case Study: Canada
               3.3 The Wider World

II. The Neoliberal Age: Fordism’s Decline, 1975 to the present

        1.0   Globalization, Free Markets and A New Attitude
        2.0   Corporate Re-Structuring
        3.0   State Re-Structuring
        4.0   Effects on Ordinary People
Fordism: Capitalism’s “Golden Age”, 1945-1975

1.0 Post-War Prosperity


    a period of unprecedented economic growth

    favoured “developed” countries more than
      “developing” ones

    general expansion of the industrial world
Fordism: Capitalism’s “Golden Age”, 1945-1975

2.0 Philosophy of Capitalism


John Maynard Keynes

   The state should “prime the economic pump”

   allowed for mass consumption

   Keynes sought to “save capitalism”, not replace
      it  “managed capitalism
Fordism: Capitalism’s “Golden Age”, 1945-1975

3.0 The Welfare State
3.1 Definition --

an amalgam of state policies which attempt to patch-up or
gloss-over basic social needs which are not met by the
simple functioning of the capitalist mode of production
Fordism: Capitalism’s “Golden Age”, 1945-1975

3.0 The Welfare State
3.2 Case Study: Canada

  pre-WWII – not much of a welfare state in Canada

   but, Depression of 1930s exposes risks of leaving things
this way

  in postwar world, the state decides it must intervene,
and it does this in a variety of ways …..
Fordism: Capitalism’s “Golden Age”, 1945-1975

3.0 The Welfare State
Social Programmes

 Unemployment Insurance (1941)
 Family Allowances (1945)
 Old-Age Pensions (1927, expanded 1951)
 Social Assistance
 Canada Pension Plan (1965)
 Housing
 Medical Insurance (1968)
 Education
Fordism: Capitalism’s “Golden Age”, 1945-1975

3.0 The Welfare State
State Income Policies


 Government attempts to smooth out business cycles
     using monetary and fiscal policy

 Policy of “full employment”

 New tax policies help redistribute income
Fordism: Capitalism’s “Golden Age”, 1945-1975

3.0 The Welfare State
Collective Bargaining


  PC 1003 (1944) – legal recognition of unions – wartime
     measure

  Industrial Disputes and Investigations Act (1948) –
      permanent
Fordism: Capitalism’s “Golden Age”, 1945-1975

3.0 The Welfare State
“The Total Package”

  Sustained economic growth

  Wage growth and increasing family incomes

  Expansion of welfare state


  Fordism:      Mass Production/Mass Consumption
                  economy
Fordism: Capitalism’s “Golden Age”, 1945-1975

3.0 The Welfare State
3.3 The Wider World


Great Britain

Clement Atlee
“New Jerusalem”
Beveridge Report
“commanding heights” of the economy
Fordism: Capitalism’s “Golden Age”, 1945-1975

3.0 The Welfare State
3.3 The Wider World


France

   state control: “Planned economy”
Fordism: Capitalism’s “Golden Age”, 1945-1975

3.0 The Welfare State
3.3 The Wider World


Germany

   “Social Market Economy”
Fordism: Capitalism’s “Golden Age”, 1945-1975

3.0 The Welfare State
3.3 The Wider World


United States

   “regulated economy”



Securities and Exchange Commission (SEC)
Federal Communications Commission (FCC)
Fordism: Capitalism’s “Golden Age”, 1945-1975

3.0 The Welfare State
3.3 The Wider World


India

   state-sponsored industrialization




“Permit Raj”
Planning Commission
PC Mahalanobis
  II. Neoliberal Age: Fordism’s Decline, 1975 and on

1.0 Globalization, Free Markets, New Attitudes


    1945-75 – “global gradualism”

    Ideologies: Adam Smith, Frederich von Hayek, Milton
        Friedman and free market thinkers

   Deceleration of economic growth by 1970s; economic
       crisis, OPEC, Vietnam War

   “ability to pay” for Fordist compromise becomes a
          problem
  II. Neoliberal Age: Fordism’s Decline, 1975 and on

1.0 Globalization, Free Markets, New Attitudes
  Neoliberalism

  OECD Report (1978) – “New Protectionism”



              STRUCTURAL RIGIDITIES
  II. Neoliberal Age: Fordism’s Decline, 1975 and on

1.0 Globalization, Free Markets, New Attitudes
  Neoliberalism

  OECD Report (1978) – “New Protectionism”
  STRUCTURAL RIGIDITIES
  -- need to attack:
  1. "attitudes and institutional developments which
  evolved during a period of uninterrupted high levels of
  employment"
  II. Neoliberal Age: Fordism’s Decline, 1975 and on

1.0 Globalization, Free Markets, New Attitudes
  Neoliberalism

  OECD Report (1978) – “New Protectionism”
  STRUCTURAL RIGIDITIES
  -- need to attack:
  2. “the rapid growth of the public sector and of social
  programmes and regulations which, however,
  desirable in themselves, sometimes had unintended
  adverse side effects on incentives to work, save and
  invest.”
  II. Neoliberal Age: Fordism’s Decline, 1975 and on

1.0 Globalization, Free Markets, New Attitudes
  Neoliberalism

  OECD Report (1978) – “New Protectionism”
  STRUCTURAL RIGIDITIES
  -- need to attack:
  3. “attempts by governments to alleviate the social
  consequences of structural change by preserving
  given production and employment structures”


  Remember: Creative Destruction
  II. Neoliberal Age: Fordism’s Decline, 1975 and on

1.0 Globalization, Free Markets, New Attitudes
  Neoliberalism

  OECD Report (1978) – “New Protectionism”
  STRUCTURAL RIGIDITIES

  4. “most importantly, slow growth itself makes
  structural adjustment more difficult”
II. Neoliberal Age: Fordism’s Decline, 1975 and on

2.0 Corporate Re-Structuring
To compete internationally companies:

  create a more “flexible” workforce
  restructure labour processes
  reduce workforce size, drive remaining workers
      harder
  outsource and/or relocate to lower wage
      environments
  get “lean”

Royal Commission on Canadian Economy – McDonald
Report (1985)
II. Neoliberal Age: Fordism’s Decline, 1975 and on

3.0 The State
To better compete globally, governments try to
“harmonize” social policy with other free trade
jurisdictions. In this “race to the bottom” they:

  get tough with public sector unions
  curb wages increases for their employees
  turn back on “full employment”: embrace
      “monetarism”
  gut social programmes
  generally attempt to cut “social costs”
II. Neoliberal Age: Fordism’s Decline, 1975 and on

4.0 Effects on Ordinary People
Erosion of Fordist security
– little evidence that promises of neoliberalism
have “trickled down”

% Increase/Decrease in Real Deposable Income/yr*
(Canada)
1960s – 3.9%
1970s – 3.0%
1980s – 1.1%
1990s – -3.3%
*after tax
Source: A. Jackson et al. Falling Behind. Canadian Centre for Policy
Alternatives, (2000)
MAKE THE PIE HIGHER by George W. Bush
I think we all agree, the past is over.
This is still a dangerous world.
It's a world of madmen and uncertainty
and potential mental losses.

Rarely is the question asked
Is our children learning?
Will the highways of the Internet become more few?
How many hands have I shaked?

They misunderestimate me.
I am a pitbull on the pantleg of opportunity.
I know that the human being and the fish can coexist.
Families is where our nation finds hope, where our wings
take dream.

Put food on your family!
Knock down the tollbooth!
Vulcanize society!
Make the pie higher! Make the pie higher!

				
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