Comparing the Digital Age with the Fordist Era

In considering the question of whether the digital era has really lived up to the hype for it one option would seem to be to compare this ostensible economic revolution with the rather unquestionable economic revolution that preceded it, which we broadly speak of as "Fordism." Centering on the switchover from steam to electricity as the power source for the factory (enabling assembly lines and powered machine tools), it exploited that development by way of high-tech and high-capital standardized mass production and mass consumption oriented toward consumer culture as we know it.

In considering Fordism one should acknowledge that the development was a lengthy process, and that it did not equally affect all manufacturing. (Consider how the textile industry works to this day.) Still, this type of production was both sufficiently revolutionary in productivity, and sufficiently widespread, that in the first half of the twentieth century U.S. manufacturing as a whole saw its workers on a per-head basis produce two and even three times as much per hour as the country's closest industrial rivals Britain and Germany, while it enjoyed a still greater edge over other countries.

The result was that the U.S. had an economic output far, far out of proportion to its share of the world's population (accounting for perhaps half of world manufacturing value added at the end of World War II). And without romanticizing or oversimplifying what was a very complex and not always happy social reality this productivity meant that American incomes and living standards were higher than for their foreign counterparts, and indeed enabled the development in America of a novel way of life that much of the rest of the world aspired to imitate (auto-subtopian consumerism). Meanwhile, the combination of wealth and its utilization translated to an extraordinary position of U.S. power in the world, not just the "hard" power that came from immense American resources and their usage in ways from leveraging international financial institutions to foreign aid programs to the country's global military establishment, but the "soft" power that came with America's demonstrated ability to generate riches, and the way in which at least its better-off residents lived (or at least appeared to). One may add that it was other countries' assimilating that American-created model that enabled them to achieve their post-war "economic miracles" (exemplified by the German and Japanese cases, and later Korea and China), exploding their incomes and living standards and diminishing the American lead.

It would be very hard to argue that the digital revolution, which can be regarded as similarly having emerged in America given that the fundamental inventions (the transistor and the MOSFET transistor, computer networks like the ARPANet) were generally the product of research by American government agencies and American businesses like IBM, AT & T and Xerox, did anything like that for America's economy, living standards, power. Indeed, when we look away from the hype we find that the digital age has been one of, by comparison with what America enjoyed in the early and middle twentieth century, productivity growth so weak that it has been an "embarrassment" for economists. (Yes, the robotized car factory, the "mini-mill" that yields a ton of steel with as little as half a man-hour of labor, are wonders, but the big picture is another matter--with it seeming ironic that those heavy "smokestack" industrial areas where productivity growth has been meaningful are the exact ones that the champions of the digital age sneered at as "declining" and "sunset" industries irrelevant to the country's prosperity.) All this has been reflected in weaker economic growth, with the extent to which growth has been seen at all as very likely "hollow" given such evidences of "deindustrialization" (from stagnating and declining manufacturing value added, to chronic and colossal manufactured goods trading deficits, to the falling high-tech content of production exemplified by petroleum products replacing aircraft and microchips as America's biggest export of the type).

Amid stagnant productivity, weak growth, deindustrialization, the experience of the American worker has been one of working harder for less--and indeed working Americans less and less able to enjoy that standard of living and that auto-subtopian way of life that once fascinated so many onlookers. The result is that these decades have, in spite of the bullishness of a significant part of the commentariat sure that deindustrialization must somehow be a matter of mere "growing pains" of the digital age (a view worn very thin as the experience has worn on), widely been perceived as an era of decline for American economic and especially industrial vitality, affluence and power at home and abroad--decline that the digital revolution obviously failed to stem, even though the world as a whole has suffered an epoch of slow productivity improvement and growth.

The result is that if there seem to be areas in which computers have brought new efficiencies and conveniences anyone looking to them for a genuine industrial revolution to compare with what Fordism wrought would seem to still be waiting for that to happen--just as Robert Gordon concluded was the case a quarter of a century ago. One may argue over why this is the case--whether there was potential for much more. What, for example, might have been the case had economic policymaking, in one form or another, favored investment in material production over "financialization," and raising labor productivity rather than lowering the price of labor? (After all, Fordism would not have developed anywhere near so fully as it did in the absence of the industrial policy, and other policy, that enabled it.) Still, however useful an exercise this might be (for instance, as a way of considering what courses of policy might be desirable now), they only affirm that in actuality we are in a very different place, one that in this case has been a disappointment as compared with what those who sang digitalization promised the world as the benefit of compliance with their vision.