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Richard Barbrook
media freedom

The Crisis of Fordism
part 11

From the late-1940s onwards, the economies of the industrialised countries enjoyed continuous growth, with wages and profits steadily increasing in parallel. However, in the early-1970s, the rate of growth suddenly went into decline. In part, this slowdown in the economy was caused by the revolt of the New Left against the disciplines of the assembly-lines. At the same time, a rapid rise in the price of oil and other raw materials substantially increased the costs of production for most businesses. As in previous decades, national governments responded to the crisis by adopting reflationary policies. But, unlike in earlier recessions, this Fordist strategy didn't work. Instead, the world economy entered a period of persistent inflation, currency instability and growing unemployment. This failure in economic policy was caused by the globalisation of production. For over thirty years, American, European and Japanese companies had been slowly expanding to obtain economies of scale on an international level. Outside the control of any one national government, the global trading system created by these multinationals was regulated by the world financial markets. Following the collapse of fixed exchange rates, the international competition between different currencies increasingly determined the internal economic policies of the industrialised countries. For example, reflation in a single country was prevented by balance of payments crises, which forced a return to deflationary policies. Once the governments of the industrialised countries lost control over their own national economies, the virtuous circle of rising production and consumption was broken. Instead of steadily increasing wages and welfare benefits, workers now faced cuts in social benefits, stagnant money wages and mass unemployment. Faced with the reemergence of the social problems of the past, new solutions had to be found to tackle the deepening crisis of Fordism. 
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