Abstract
At the beginning of the twentieth century, the advantages of the frontier were fading away, but the US was able to react and began since 1908 to benefit from the Fordist model of development. This concept, which I introduced in 2002, is derived from Gramsci’s concept of Fordism, but it is mainly focused on its potential macro-economic aspects. In the 1910s and in a great part of the 1920s in the US, there were a rapid growth in GDP and a big and enlarging market; large economies of scale; a rapid rise in productivity; a growth in sales; and a reduction in relative prices of important mass-consumption goods such as automobiles, electric domestic appliances, and related sectors, like steel and gasoline. The companies, therefore, had the possibility of conceding higher unit wages and of raising employment. Total wages, consumption, investment, technical progress, knowledge, aggregate demand, and GDP could widely increase. In the US, this model worked up to the great depression and again in the 1950–1973 period, while during the great depression, it worked backwards.
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Notes
- 1.
See Gramsci (1978).
- 2.
- 3.
- 4.
Capital formation can be conventionally divided into extensive investment and intensive investment. Traditionally, extensive investments are the ones which increase output and employment (new plants or new machines added to the older ones and which require additional workers). Intensive investments can increase instead labor productivity, but not output and employment, and thus they can even reduce employment. This happens when there is the substitution of old machines with new ones that need less workers for the production of a given output. Actually, in practice, there is often a combination of extensive and intensive investment and in recent decades is more and more frequent, the introduction of new machines or new techniques that are able to extend output without a parallel increase of employment. There is thus an increase of both output and labor productivity (product/employment). Yet, the stagnation of employment can contribute to raise unemployment and depress the growth rate of internal demand, especially if wages rise less than labor productivity.
- 5.
See, on the relations between capital accumulation, technical progress, and knowledge, Chap. 5.
References
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Boyer, R. 1990. The Regulation School: A Critical Introduction. New York: Columbia University Press.
Gramsci, A. 1978. Americanismo e fordismo. Torino: Einaudi.
Valli, V. 2015. The Economic Rise of China and India. Torino: Accademia University Press.
———. 2017. The Economic Rise of Asia: Japan, India and South Korea. Torino: Accademia University Press.
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Valli, V. (2018). The Fordist Model of Economic Development. In: The American Economy from Roosevelt to Trump. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-96953-4_2
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DOI: https://doi.org/10.1007/978-3-319-96953-4_2
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